ASSET PURCHASE AGREEMENT
by and among
PHYSICIAN COMPUTER NETWORK, INC.,
VERSYSS INCORPORATED
PCN HP VENTURE CORP.
INTEGRATED HEALTH SYSTEMS, INC.
XXXXXX*XXXXXX, INC.,
MEDICAL MANAGER HEALTH SYSTEMS, INC.
and
MEDICAL MANAGER CORPORATION
---------------------------
Dated as of December 7, 1999
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ASSET PURCHASE AGREEMENT
AGREEMENT, dated as of December 7, 1999, by and among Physician
Computer Network, Inc., a New Jersey corporation ("PCN"), VERSYSS Incorporated,
a Delaware corporation ("Versyss"), Xxxxxx*Xxxxxx, Inc., a Washington
corporation ("WM"), Integrated Health Systems, Inc., a California corporation
("IHS"), PCN HP Venture Corp. , a Delaware corporation ("HP" and together with
PCN ,Versyss, WM and IHS, the "Sellers"), Medical Manager Corporation, a
Delaware corporation ("Medical Manager"), and Medical Manager Health Systems,
Inc., a Delaware corporation (the "Purchaser").
BACKGROUND
The Sellers are engaged in the business of, among other things: (i)
publishing medical practice management software products (the "PMS Software");
(ii) providing physicians, hospitals, medical clinics and other facilities
providing medical services with practice management software systems using the
PMS Software; (iii) providing maintenance and support for such systems; and (iv)
providing related products and services, including, without limitation,
electronic data interchange services, billing services and printed products, to
the users of such systems (whether conducted by PCN, Versyss, HP, WM, IHS or any
of their respective Affiliates, all of the foregoing being referred to
hereinafter as the "Business"). The Sellers desire to sell and the Purchaser
desires to purchase substantially all of the Sellers' assets, including, without
limitation, the Business as a going concern, on the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto hereby agree as follows:
1. PURCHASE AND SALE OF ASSETS
1.1. Sale of Assets. On the terms and subject to the conditions set forth
in this Agreement, the Sellers agree to sell, convey, transfer, deliver and
assign to the Purchaser, and the Purchaser agrees to purchase, on the Closing
Date (as hereinafter defined), all of the Sellers' tangible and intangible
assets, rights, interests and properties of every kind, wherever located and by
whomever possessed as the same may exist on the Closing Date (other than the
Retained Assets (as defined in Section 1.2 hereof)) (the "Assets"), including,
without limitation, all of the following:
(a) the Business as a going concern and the goodwill pertaining thereto;
(b) all customer lists utilized in the Business;
(c) all rights of the Sellers (or any of them), their
successors and assigns under all license, sublicense, service, development,
maintenance and support agreements (whether related to computer software,
hardware or both), between any one or more of the Sellers and any licensee,
sublicensee or other permitted user ("End-Users") of the products or services of
the Business (collectively, the "End-User Agreements");
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(d) all rights of the Sellers (or any of them) in and to any
source-codes, object- codes, manuals and other documentation and materials
(whether or not in written form) and all versions thereof, together with all
other patents, licenses, trademarks, service marks, tradenames (whether
registered or unregistered), domain names, copyrights, proprietary computer
software, proprietary inventions, proprietary technology, technical information,
discoveries, designs, proprietary rights and non-public information, whether or
not patentable, in each case used or usable in the conduct of the Business
(collectively, the "Intellectual Property");
(e) all accounts and other receivables of any one or more of
the Sellers (the "Accounts Receivable");
(f) all items of inventory of the Sellers, including, without
limitation, all computer hardware products, peripherals, supplies (including,
without limitation, packaging and shipping materials) used in connection with
the Business, work-in-progress and finished goods (collectively, the
"Inventory");
(g) all rights of the Sellers (or any of them), their
successors and assigns under any agreement with any third party (insofar as it
related to the Business) (collectively, but without including the End User
Agreements, the "Third Party Agreements") (other than those which constitute
Retained Assets), including, without limitation: (i) all of the rights of any
one or more of the Sellers under agreements (collectively, "Reseller
Agreements") with resellers or distributors of or persons otherwise providing
support for any of the Sellers' products and services (collectively,
"Resellers"); (ii) all of the rights of any one or more of the Sellers as tenant
under any real property lease (the "Real Property Leases"), including, but not
limited to, any rights with respect to security deposits of any of the Sellers
held by the landlord under any such Real Property Leases and by any utility
company with respect to utilities used by any of the Sellers at the premises
demised under any of the Real Property Leases; (iii) all of the rights of any
one or more of the Sellers under any agreement with Xxxxxxxx Systems, Inc. (the
"Commercial Agreements"); (iv) all of the rights of PCN under the Exclusive
Electronic Gateway and Network Services Agreement, dated July 2, 1999, with
Medical Manager, as amended by agreement of even date herewith (the "Web
Agreement"); and (v) any and all rights of any one or more of the Sellers under
or with respect to any original equipment manufacturing or similar agreement
(each an "OEM Agreement");
(h) all items of equipment, machinery, furniture or fixtures
used by any one or more of the Sellers (the "Equipment");
(i) the rights of any one or more of the Sellers under any
equipment leases to which any one or more of the Sellers are a party (the
"Equipment Leases"), including, but not limited to, any rights with respect to
security deposits of any of the Sellers held by the lessors under any such
Equipment Leases;
(j) copies of all books of account, records, files, invoices,
customer lists, supplier lists, designs, drawings, business records and plans,
computer print-outs and software, plans and
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specifications, warranties, trade correspondence, sales or promotional
literature, operating data and other books and records related to the Business
as it is conducted on the Closing Date, including, without limitation, those
required to be kept under applicable law, and other data or information
associated with, used or employed in connection with the Business (all of which
are collectively referred to hereinafter as the "Books and Records");
(k) the right to receive mail and other communications
regarding the Business addressed to any of the Sellers (including, without
limitation, mail and communications from End- Users, customers, suppliers,
resellers, distributors and others);
(l) all creative materials (including, without limitation,
films, art work, color separations and the like), advertising and promotional
materials and all other printed or written materials related to the Business,
its products or services;
(m) all claims, refunds, causes of action, choses in action,
rights of recovery and rights of set-off of every kind and nature related to the
Business, except to the extent included in the Retained Liabilities;
(n) subject to Section 1.7 hereto, the names "Physician
Computer Network", "PCN" and "Versyss" and all permutations thereof;
(o) all other tangible or intangible, personal or mixed
property of the Sellers, including, without limitation, all assets of the
Sellers identified on the Audited Statements (as defined in Section 5.6 below),
in each case to the extent it is not included in the Retained Assets;
(p) all Excess Cash (as hereinafter defined), which amount the
Sellers agree will remain in the Transferred Accounts (as defined in Section
1.1(q) below). As used herein, "Excess Cash" shall mean the amount of all cash
and cash equivalents (other than cash deposited as, or to secure, bonds posted
by any one or more of the Sellers with respect to Retained Litigation or tax
liabilities of the Sellers) held by the Sellers on the Closing Date (including,
without limitation, any part of the DIP Loan (as defined in Section 2.2(b))
advanced by the Purchaser to the PCN pursuant to the last sentence of Section
2.2(b) hereof) in excess of the amount of: (i) income tax obligations of the
Sellers which were incurred prior to the date on which the Petition (as defined
in Section 7.1 below) is filed with the Bankruptcy Court (as defined in Section
7.1 below), but which remain unpaid as of the Closing Date; and (ii) PCN's
reasonable, good faith estimate (as reflected on a written statement to be
delivered by PCN to the Purchaser at the Closing) of the amount of legal and
other professional fees and disbursements and transaction expenses incurred by
PCN through, but unpaid on, the Closing Date. In no event shall any portion of
the Cash Payment (as defined in Section 2.1(a)) or any Reimbursement Amount (as
defined in Section 3.4 below) be deemed to be included as part of Excess Cash;
and
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(q) all of the Sellers right, title and interest in and to the
all of its bank accounts, except for the Retained Accounts (as defined in
Section 1.2(k) below) (all such bank accounts other than the Retained Accounts
being referred to herein as the "Transferred Accounts").
For purposes of this Agreement, the term "Affiliate" shall
mean any entity that directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with any other entity.
For purposes of this definition, "control" of a person means the power, directly
or indirectly, to direct or cause the direction of the management and policies
of such person, whether by contract or otherwise.
1.2. Retained Assets. The following properties, assets, rights and
interests of the Sellers (the "Retained Assets") are expressly excluded from the
purchase and sale contemplated hereby and, as such, are not included in the
Assets:
(a) the Sellers' rights under this Agreement;
(b) all cash and cash equivalents other than Excess Cash (and
not including Accounts Receivable) and marketable securities of the Sellers and
their Affiliates, including, without limitation, any cash deposited as, or to
secure, bonds posted by any one or more of the Sellers with respect to any
Retained Litigation and tax liabilities of the Sellers, which cash the Sellers
agree to deposit into the Closing Account (as defined in Section 1.2(k) below)
immediately prior to the Closing;
(c) the shares of capital stock of any of the direct or
indirect subsidiaries of any one or more of the Sellers;
(d) any and all tax attributes of any one or more of the
Sellers, including, without limitation, any net operating loss carryforwards and
tax refunds;
(e) any and all of the rights of any one or more of the
Sellers under, with respect to or related to all claims, causes of action,
choses in action and rights of recovery (collectively, "Claims") any one or more
of the Sellers has, or may have, against: (i) KPMG Peat Marwick LLP ("KPMG") or
any of its Affiliates; (ii) Genesis Insurance Company, Federal Insurance Company
or any of their respective Affiliates (collectively, the "Insurance Companies");
or (iii) any one or more parties (but only insofar as those Claims against any
one or more of such other parties relate to the subject matter of the Claims
against any one or more of KPMG and the Insurance Companies referred to above or
any of the Retained Claims (as hereinafter defined)) whether or not currently
pending;
(f) all rights of set off or recoupment held by any one or
more of the Sellers against any creditor whose claims are not included in the
Assumed Liabilities (as hereinafter defined), in each case, to the extent
related to those claims;
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(g) all avoiding power causes of action arising under Chapter
5 of Title 11 of the United States Code (the "Bankruptcy Code");
(h) any and all of the rights of any one or more of the
Sellers under, with respect to or related to any of the agreements
(collectively, the "Retained Agreements") between any one or more of the Sellers
and: (i) Xxxxxxx & Marsal, Inc.; (ii) Xxxxxx Xxxxxxxx LLP; and (iii) Xxxxxx
Brothers, Inc.;
(i) the right, if any, of PCN to receive payment of the
"Second Cash Payment" from Medical Manager Northwest, Inc. ("MMN") pursuant to
Article 2 of the Asset Purchase Agreement dated as of July 2, 1999, among PCN,
WM, Medical Manager and MMN (the "SmartPractice Agreement");
(j) copies of all: (i) minute books and related corporate
records of any one or more of the Sellers; and (ii) books of account, records,
files, invoices, business records and plans, computer print-outs and other
related books and records as are reasonably necessary to permit the Sellers to
maintain and prepare such tax returns, financial statements and other financial
information as is required to be maintained and prepared by any one or more of
the Sellers following the Closing Date, including, without limitation, those
required to be kept under applicable law; and
(k) all of the Sellers right, title and interest in and to any
one or more new bank accounts established by the Sellers after the date hereof
and prior to the Closing Date which are not used in connection with the
operation of the Business (the "Closing Account" and, together with the Medical
Account, the "Retained Accounts").
1.3. Instruments of Transfer. On the Closing Date, the Sellers will
deliver to the Purchaser, or will cause to be delivered to the Purchaser, duly
executed instruments of transfer and assignment in form and substance reasonably
satisfactory to the Purchaser and its counsel, sufficient to vest in the
Purchaser good and valid title to, and all of the Sellers' right, title and
interest in and to, the Assets, including, without limitation, one or more of
each of the following:
(a) a xxxx of sale;
(b) an assumption agreement;
(c) an instrument of transfer and assignment of the
Intellectual Property;
(d) assignments by the Sellers of their rights under all
End-User Agreements, Third Party Agreements, Equipment Leases and any other
contracts, licenses, and similar instruments which are included in the Assets;
and
(e) such other instruments of transfer and assignment as may
be reasonably necessary to transfer and assign the Assets to the Purchaser.
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1.4. Delivery of Possession. At the Closing, the Seller will deliver
possession to the Purchaser of the Assets, at the locations where, in the
ordinary course of business, such are usually and customarily located.
1.5. Consents to Assignment. This Agreement shall not constitute an
agreement to assign or otherwise sell, convey or transfer any concession, claim,
contract, license, lease, commitment, sales order, or purchase order, or any
benefit arising thereunder or resulting therefrom, if an attempted assignment
thereof, without the consent required or necessary for such assignment, would
constitute a breach thereof or in any way adversely affect the rights of the
Purchaser or any one or more of the Sellers thereunder. If such consent is not
obtained, or if an attempted assignment would be ineffective or would adversely
affect the Sellers' rights thereunder so that the Purchaser would not in fact
receive all such rights, the Sellers shall cooperate in any arrangement the
Purchaser may at its option reasonably request in writing to provide for the
Purchaser the benefits under any such concession, claim, contract, license,
lease, commitment or order, including enforcement for the benefit of the
Purchaser of any and all rights of the Sellers with respect to the Business
against any other party thereto arising out of the breach or cancellation
thereof by such party or otherwise; provided, however, that nothing contained in
this Section 1.5 shall relieve the Sellers, or constitute a waiver by the
Purchaser, of any obligation of the Sellers provided for elsewhere in this
Agreement to obtain any such consent or approval or shall affect the liability,
if any, of the Sellers, and the rights, if any, of the Purchaser, pursuant to
this Agreement, for the failure of the Sellers to have disclosed the need for,
and for having failed to obtain, any such consents or approvals.
Notwithstanding the foregoing, this provision 1.5 shall not be applicable
and shall have no force or effect to the extent that provision for the
assignment and assumption of any one or more concessions, claim, contract,
license, lease, commitment, sales order or purchase order is provided for in the
Plan (as defined in section 7.1 hereof).
1.6. Collection of Accounts Receivable. From and after the Closing Date,
the Sellers shall: (i) instruct all account debtors of any Accounts Receivable
and other accounts receivable created by the Purchaser following the Closing
with respect to the Business (together with the Accounts Receivable, the
"Purchaser Receivables") to forward all checks or other forms of payment on
account of any Purchaser Receivable (each a "Payment") directly to the
Purchaser; and (ii) promptly (but in no event more than two (2) business days
following receipt) deliver to the Purchaser all Payments received by any of the
Sellers.
1.7. Certain Ownership Rights. The name "Versyss" and all permutations
thereof are included in the Assets to be acquired by the Purchaser in accordance
with the terms of this Agreement; provided, however, that, the Purchaser hereby
acknowledges that the ownership and use of the name "Versyss" is subject to the
provisions of the Asset Purchase Agreement, dated as of April 26, 1999, among
Versyss, PCN and Xxxxxxxx Systems, Inc.
2. PURCHASE PRICE; FINANCING
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2.1. Consideration. The aggregate purchase price to be paid by the
Purchaser in full consideration for the Assets shall be as follows
(collectively, the "Purchase Price"):
(a) $15,500,000 in immediately available funds (the "Cash
Payment") which amount shall be payable by wire transfer at the Closing to the
Closing Account (as defined in Section 1.2(k) hereto) designated by PCN prior to
the Closing Date;
(b) subject to Sections 2.4 and 2.5 below, the issuance to PCN
of a number of shares of the common stock, $.01 par value, of Medical Manager
(the "Medical Manager Stock") which, on the third business day prior to the
Closing Date (the "Trigger Date") has an aggregate Market Price (as defined in
Section 2.4 below) of $37,500,000 (subject to adjustment as provided for in
Section 2.3 below) (the "Stock Payment");
(c) the assumption by the Purchaser at the Closing of the
Assumed Liabilities as provided in Section 3.1 hereof; and
(d) the assumption by the Purchaser of all of the Sellers'
obligations with respect to the Pre-Petition Loan and the DIP Loan (as defined
in Section 2.2 below).
2.2. Pre-Petition and Debtor-In-Possession Financing. (a) Each of the
parties hereto acknowledges that, simultaneously with the execution and delivery
of this Agreement, pursuant to the Assignment, Intercreditor and Subordination
Agreement, Medical Manager has purchased from each of PCN's Lenders (as defined
therein) the respective Lender's pro rata share of $1,500,000 of the Lenders'
outstanding principal balance of their loans and the Lenders have advanced such
funds to PCN (the "Pre-Petition Loan") .
(b) Subject to the approval of the Bankruptcy Court (as defined in
Section 7.1 below), promptly following the filing by PCN of the Petition (as
defined in Section 7.1 below), Medical Manager will commit to lend to PCN, from
time to time on the terms set forth in the DIP Loan Agreement (as defined
below), the principal sum of $3.5 million (the "DIP Loan"). The loan agreement
(the "DIP Loan Agreement") evidencing the DIP Loan will be substantially in the
form of the DIP Loan Agreement attached hereto as Exhibit 2.2(b). Medical
Manager agrees that any amount of the DIP Loan which has not been advanced to
PCN prior to the Closing Date will be advanced by Medical Manager to PCN
contemporaneously with the payment of the Cash Payment.
2.3. Adjustment to the Purchase Price. (a) Two business days prior to the
Closing, PCN shall, with the assistance, review and cooperation of the Purchaser
(which assistance, review and cooperation the Purchaser agrees to provide)
deliver to the Purchaser the PCN Estimated Closing Date Net Worth Statement
(which net worth statement, PCN agrees shall: (x) constitute PCN's best estimate
of the values of the Assets to be acquired and Assumed Liabilities to be assumed
by the Purchaser at the Closing; (y) be prepared with the participation,
suggestions and review of a designee of the Purchaser and (z) have been prepared
by PCN acting reasonably and in good faith and shall be in the form, and
prepared in a manner and using methodology consistent with, each of the Audited
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Statements (as defined in Section 5.6 hereto) and the statement attached hereto
as Schedule 2.3). At the Closing, the Purchaser shall take from: (A) the Stock
Payment a number of shares of Medical Manager Stock which, using whole share
numbers, have a Designated Value as closely as practicable equal to two-thirds
(2/3) of the Adjustment Deposit and deposit them with the Escrow Agent; and (B)
the Cash Payment an amount equal to the remainder of the Adjustment Deposit and
deposit it with the Escrow Agent. As soon as practicable following the Closing:
(i) but in no event later than thirty (30) days following the Closing Date, the
Purchaser shall, with the full cooperation of any PCN officers not employed by
the Purchaser from and after the Closing Date (including, without limitation,
the chief financial officer of PCN) (which cooperation PCN agrees to cause to
occur), close the books of accounts of the Sellers at the Closing Date and,
based upon such closed books of account, prepare the balance sheet of the
Business at the Closing Date (the "Closing Date Balance Sheet") and the
Purchaser Closing Date Net Worth Statement (which balance sheet and net worth
statement, the Purchaser agrees, shall have been prepared by it acting
reasonably and in good faith and shall be in the form, and prepared in a manner
and using methodology consistent with, each of the Audited Statements and the
statement attached hereto as Schedule 2.3); and (ii) but in no event later than
sixty (60) days after the date on which the Closing Date Balance Sheet and
Purchaser Closing Date Net Worth Statement are required to have been delivered
pursuant to the immediately preceding clause, the Purchaser shall: (w) cause the
Closing Date Balance Sheet to be audited by Xxxxxx Xxxxxxxx LLP, or such other
nationally recognized accounting firm as shall be reasonably agreed upon by each
of PCN and the Purchaser (the "Auditors"), (x) deliver to PCN the Closing Date
Balance Sheet, reported upon by the Auditors (which, for purpose of conducting
such audit, will use substantially the same methodology and level of inquiry as
Xxxxxx Xxxxxxxx LLP used in connection with its audit of the Audited Statements)
(the "Audited Closing Date Balance Sheet"), (y) based upon the Audited Closing
Date Balance Sheet, in good faith itself prepare and the deliver to PCN the
Audited Purchaser Closing Date Net Worth Statement (which Audited Purchaser
Closing Date Net Worth Statement, the Purchaser agrees shall be prepared by it
acting reasonably and in good faith and shall be in the form, and prepared in a
manner and using methodology consistent with the statement attached hereto as
Schedule 2.3).
(b) Within ten (10) business days following delivery of the Audited
Purchaser Closing Date Net Worth Statement by the Purchaser to PCN, PCN shall:
(i) provide the Purchaser with written notice (an "Acceptance Notice") that it
agrees with the calculation of the Purchaser Adjustment Amount, in which event,
upon receipt by the Purchaser of the Acceptance Notice, the Purchaser Adjustment
Amount shall be deemed to be the Final Amount; or (ii) provide the Purchaser
with written notice (a "Disagreement Notice") that it disagrees with the
methodology upon which any one or more of the Audited Closing Balance Sheet, the
Audited Purchaser Closing Date Net Worth Statement and the calculation of the
Purchaser Adjustment Amount was prepared. Notwithstanding the foregoing, in the
event that PCN fails to deliver either an Acceptance Notice or a Disagreement
Notice to the Purchaser by 11:59 p.m. on the tenth (10th) business day following
delivery of the Audited Purchaser Closing Date Net Worth Statement by the
Purchaser to PCN, PCN shall be deemed to have delivered an Acceptance Notice at
such time and the Purchaser Adjustment Amount shall be deemed to be the Final
Amount.
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(c) If a Disagreement Notice shall be timely delivered by PCN to the
Purchaser pursuant to Section 2.3(b) above, the parties shall, during the ten
(10) business days following such delivery, use their reasonable efforts to
reach agreement on the disputed items or amounts in order to determine the
amount of the Final Amount. If, during such period, the parties are unable to
reach such agreement, they shall promptly thereafter cause an independent
accounting firm of nationally recognized standing reasonably satisfactory to all
of the parties (which firm shall not have any material relationship with any of
the parties), promptly to review this Agreement and the disputed items or
amounts for the purpose of calculating the Final Amount. In making such
calculation, such independent accountants shall consider only those items or
amounts in the Audited Purchaser Closing Date Net Worth Statement as to which
PCN has disagreed. Such independent accountants shall deliver to PCN and the
Purchaser, as promptly as practicable, a report setting forth such calculation.
Such report shall be final and binding on the parties hereto. The cost of such
review and report shall be borne equally by PCN and the Purchaser.
(d) The parties hereto agree that they will cooperate and assist in the
preparation of PCN Estimated Closing Date Net Worth Statement, the Closing Date
Balance Sheet, the Purchaser Closing Date Net Worth Statement, the Audited
Closing Date Balance Sheet, the Audited Purchaser Closing Date Net Worth
Statement, the calculation of the Final Amount and in the review, if any,
contemplated by Sections 2.3 (b) and (c) above, including, without limitation,
the making available to the extent necessary of books, records, work papers and
personnel. PCN agrees that it will use all reasonable efforts to cause the chief
financial officer of PCN to fully cooperate and assist the Purchaser in
connection with the preparation of the Purchaser Closing Date Net Worth
Statement, the Closing Date Balance Sheet, the Audited Closing Date Balance
Sheet and the Audited Purchaser Closing Date Net Worth Statement.
(e) On the Release Date, if the Final Amount is an Adjustment Amount:
(x) number of shares of Medical Manager Stock which, using whole share numbers,
have a Designated Value as closely as practicable equal to two-thirds (2/3) of
such Final Amount shall be released by the Escrow Agent to the Purchaser and any
remaining shares of Medical Manager Stock constituting part of the Adjustment
Deposit shall be released by the Escrow Agent to PCN; and (y) an amount of cash
equal to the remaining portion of such Final Amount shall be released by the
Escrow Agent to the Purchaser and any remaining cash held by the Escrow Agent
shall be released by the Escrow Agent to PCN. In no event shall PCN have any
obligation to Medical Manager or the Purchaser for the payment of any amount of
cash or shares of Medical Manager Stock in excess of the amounts thereof held by
the Escrow Agent as the Adjustment Deposit pursuant to this Section 2.3.
(f) On the Release Date, if the Final Amount is an Excess Amount: (i)
all cash and shares of Medical Manager Stock held by the Escrow Agent shall be
released by the Escrow Agent to PCN; and (ii) the Purchaser shall pay to PCN an
amount in cash equal to: (x) if the Excess Amount is $250,000 or less, zero; (y)
if the Excess Amount is greater than $250,000 but equal to or less than
$500,000, the amount by which the Excess Amount exceeds $250,000; or (z) if the
Excess Amount is greater than $500,000, $250,000 plus 50% of the amount by which
the Excess Amount exceeds $500,000; provided, however, that, notwithstanding the
foregoing, in no event shall the amount to
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be paid by the Purchaser to PCN pursuant to this clause (ii) exceed the amount
of the Excess Cash (as defined in Section 1.1 above) included in the Assets on
the Audited Purchaser Closing Date Net Worth Statement less $250,000.
(g) For purposes of this Section 2.3, each of the following capitalized
terms shall have the meaning ascribed to it below:
"Adjustment Amount" means the amount, if any, by which the Liability
Excess Amount exceeds the Permitted Liability Excess Amount.
"Adjustment Deposit" means an amount equal to the greater of: (i) 150% of
the amount disclosed as the Adjustment Amount, if any, on the PCN Estimated
Closing Date Net Worth Statement; and (ii) $2.5 million.
"Audited Purchaser Closing Date Net Worth Statement" means the Purchaser
Net Worth Closing Statement reported upon by the Auditors and required to be
delivered by the Purchaser to PCN after the Closing.
"Closing Date Net Worth Statement" means any Net Worth Statement dated as
of the Closing Date prepared pursuant to this Section 2.3, including, without
limitation, the PCN Estimated Closing Date Net Worth Statement.
"Designated Value" means the Market Price of the Medical Manager Stock on
the Trigger Date.
"Escrow Agent" means an escrow agent designated by PCN and the Purchaser
prior to the Closing (each hereby agreeing to do so) pursuant to such
agreements, instruments and documents reasonably acceptable to each of PCN and
the Purchaser.
"Excess Amount" means the amount, if any, by which the Permitted Liability
Excess Amount exceeds the Liability Excess Amount.
"Final Amount" means the amount agreed upon as or determined to be the
final Adjustment Amount or the final Excess Amount as provided for in Sections
2.3(b) and (c) above.
"Liability Excess Amount" means the amount, if any, by which the values
ascribed to liabilities on any Closing Date Net Worth Statement exceed the
values ascribed to assets on that Closing Date Net Worth Statement.
"Net Worth Statement" means PCN's Regular Balance Sheet, assuming,
however, for this purpose, that PCN had no assets other than tangible assets
that would constitute Assets and had no liabilities other than liabilities that
would constitute Assumed Liabilities (exclusive, however, for this purpose, of
Assumed Liabilities which would constitute Severance Obligations, Rejection
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Liabilities and liabilities with respect to the Pre-Petition Loan, the DIP Loan
and the Assigned Loans).
"PCN Estimated Closing Date Net Worth Statement" means the estimated Net
Worth Statement required to be delivered by PCN to the Purchaser at the Closing.
"PCN's Regular Balance Sheet" means a balance sheet of PCN prepared in
accordance with generally accepted accounting principles, applied on a basis
consistent with those applied in the Audited Statements.
"Permitted Liability Excess Amount" means $13 million.
"Purchaser Adjustment Amount" means the amount, if any, disclosed as the
Adjustment Amount on the Audited Purchaser Closing Date Net Worth Statement;
provided, however, that if the Purchaser does not timely deliver either the
Purchaser Closing Date Net Worth Statement to PCN as provided for in Section
2.3(a) above or the Audited Closing Date Net Worth Statement to PCN as provided
for in Section 2.3(a) above, the Purchaser Adjustment Amount, if any, shall be
deemed to be the Adjustment Amount, if any, on the PCN Estimated Closing Date
Net Worth Statement.
"Purchaser Closing Date Net Worth Statement" means the Net Worth Statement
required to be delivered by the Purchaser to PCN after the Closing.
"Release Date" means the first to occur of: (i) if the Purchaser has not
delivered the Purchaser Closing Date Net Worth Statement to PCN by 11:59 p.m. on
the thirtieth (30th) day following the Closing Date, the thirty-first (31st) day
following the Closing Date; (ii) if the Purchaser has not delivered the Audited
Purchaser Closing Date Net Worth Statement to PCN by 11:59 p.m. on the ninetieth
(90th) day following the Closing Date, the ninety-first (91st) day following the
Closing Date; or (iii) the date on which there is agreement or final
determination of the calculation of the Final Amount as provided for in this
Section 2.3.
2.4. Stock Payment. (a) As used in this Agreement, "Market Price" shall
mean the average of the closing sale price of a share of Medical Manager Stock
during the ten (10) trading days immediately preceding (and not including) the
Trigger Date as reported on the NASDAQ Stock Market (or, if shares of Medical
Manager Stock are not then traded on the NASDAQ Stock Market, as reported on the
primary exchange on which such shares are so traded).
(b) All shares of Medical Manager Stock issued by Medical Manager as
part of the Stock Payment shall be duly authorized, validly issued, fully paid
and non-assessable shares of Medical Manager Stock.
(c) As promptly as practicable following the date hereof, Medical
Manager will seek, and take all steps reasonably necessary to obtain, from the
Staff of the Division of Corporation Finance of the Securities and Exchange
Commission (the "SEC") a no action letter (the "No Action Letter")
11
that, in reliance on the exemption provided by Section 1145(a) of the Bankruptcy
Code: (i) the Medical Manager Stock to be issued by Medical Manager as part of
the Stock Payment may be issued to holders of PCN's common stock and preferred
stock and others with claims of or against PCN (collectively, the
"Distributees") pursuant to the Plan without registration under the 1933 Act;
and (ii) the shares of Medical Manager Stock issued under the Plan may be resold
without registration under 1933 Act by selling security holders who are neither
affiliates of Medical Manager nor underwriters within the meaning of Section
1145(b)(i) of the Bankruptcy Code. Medical Manager agrees that, for purposes of
obtaining the No Action Letter, it will acknowledge that, for purposes of
Section 1145(a) of the Bankruptcy Code, Medical Manager will be a "successor" to
the Sellers.
(d) In the event that on or before the sixtieth (60th) day following
the date hereof, Medical Manager has not obtained the No Action Letter or
received reasonable assurance from the staff of the Division of Corporation
Finance of the SEC that the No Action Letter will be issued on or before March
31, 2000, each of the Sellers and Medical Manager will seek an order of the
Bankruptcy Court (the "Order") that in reliance on the exemption provided by
Section 1145(a) of the Bankruptcy Code: (i) the Medical Manager Stock to be
issued by Medical Manager as part of the Stock Payment may be issued to the
Distributees pursuant to the Plan without registration under the 1933 Act; and
(ii) the shares of Medical Manager Stock issued under the Plan may be resold
without registration under 1933 Act by selling security holders who are neither
affiliates of Medical Manager nor underwriters within the meaning of Section
1145(b)(i) of the Bankruptcy Code.
(e) In the event that on or before the seventieth (70th) day following
the date hereof, Medical Manager has not (x) obtained the No Action Letter or
received reasonable assurance from the staff of the Division of Corporation
Finance of the SEC that the No Action Letter will be issued on or before March
31, 2000 or (y) obtained the Order, Medical Manager will, as soon as practicable
after such 70th day, at its own cost and expense, prepare and file with the SEC
a registration statement (a "Registration Statement") to register under Section
5 of the 1933 Act the distribution by PCN of Medical Manager Shares to the
Distributees and the sale by all Distributees of such shares following receipt
thereof. Medical Manager will use all reasonable efforts to cause such
Registration Statement be declared effective by the SEC on or before March 31,
1999. Medical Manager will also provide PCN as many copies of the prospectus
contained in any such registration statement as it may reasonably request.
(f) Prior to the Closing Date, Medical Manager will take all required
action to permit it to issue the number of shares of Medical Manager Stock
required to be issued by it pursuant to this Agreement, including, without
limitation, filing for listing of such shares on the NASDAQ Stock Market prior
to the Closing Date.
2.5. Cash Election. Anything contained in this Agreement to the contrary
notwithstanding, at any time prior to the fifth (5th) business day prior to the
date on which the Confirmation Order (as defined in Section 7.1 hereof) is
signed by the Bankruptcy Court, the Purchaser may by written notice delivered to
PCN irrevocably elect to pay the entire Purchase Price in cash rather than part
in
12
cash and part in shares of Medical Manager Stock (the "Cash Election"). In the
event that the Purchaser exercises the Cash Election: (i) all references in this
Agreement to the Stock Payment shall be deemed to refer to an additional cash
payment in the amount of $37,500,000 (subject to adjustment as provided for in
Section 2.3 above); (ii) the provisions of Section 2.3 and the adjustments to
the Purchase Price contained therein shall be deemed appropriately modified to
reflect the fact that the entire Purchase Price will be paid in cash; (iii) the
provisions of Section 2.4 above shall no longer apply; and (iv) the conditions
to the Closing contained in Section 11.1(e) and 11.3(g) below shall no longer
apply.
2.6. Allocations of Purchase Price. Within sixty (60) days following the
Closing Date, the Purchaser shall prepare a schedule of the allocation of the
Purchase Price. Subject to the consent of PCN, which consent shall not be
unreasonably withheld, the Sellers and Purchaser shall use and cause to be used
such allocation for all federal, state and local income tax purposes, including,
without limitation, the preparation and filing of their respective counterparts
of Form 8594 (or any other form hereafter mandated by the Internal Revenue
Service ("IRS")) as required by the regulations under Section 1060 of the
Internal Revenue Code of 1986, as amended ("Code").
3. ASSUMPTION OF LIABILITIES
3.1. Assumption. Upon transfer of the Assets on the Closing Date, and
subject to Section 3.2 hereof, the Purchaser will assume and thereafter pay,
perform and discharge, when due, to the extent not paid, performed or discharged
by the Sellers on or before the Closing Date, the Assumed Liabilities. As used
herein the term "Assumed Liabilities" means, collectively, the following
obligations and liabilities, other than any such obligations and liabilities
that are Retained Liabilities (as defined in Section 3.2 below):
(a) all liabilities and obligations of the Sellers at
September 30, 1999 which are reflected in the column "Net Worth Statement" on
Schedule 2.3 hereto (the "Liability Statement") (as supplemented by the schedule
of "Accrued Other" attached to Schedule 2.3);
(b) all liabilities and obligations of any one or more of the
Sellers which are of the type reflected in the column "Net Worth Statement" on
the Liability Statements (as supplemented by the schedule of "Accrued Other"
attached to Schedule 2.3) and are incurred in the ordinary course of the
Business since September 30, 1999, including, without limitation: (i) any
liabilities and obligations of the Sellers for accounts payable (the "Accounts
Payable") existing on the Closing Date; (ii) to the extent appropriately
reflected on the Audited Purchaser Closing Date Net Worth Statement, (x) such
obligations of any one or more of the Sellers, if any, to any employee for
accrued compensation, benefits and vacation days existing on the Closing Date
and (y) such obligations arising as a result of the Sellers no longer operating
as going-concerns from and after the Closing Date;
13
(c) the obligations of any one or more of the Sellers relating
to or arising under: (i) the End-User Agreements (such as, by way of example
only, any such liability or obligation for which deferred software support
liability, deferred hardware maintenance liability or both has been recorded on
the Sellers' books (the "Deferred Revenue Account"); (ii) any warranty or
service commitments of the Sellers to any End User or Reseller; (iii) the Third
Party Agreements; and (iv) commitments by the Sellers to install their medical
practice management software products (and related hardware);
(d) all liabilities or damages arising from the rejection by
any one or more of the Sellers of any Unexpired Leases (as hereinafter defined)
and Unexpired Executory Contracts (as hereinafter defined) as provided for in
Section 7.1 hereof (the "Rejection Liability");
(e) all liabilities and obligations of any one or more of the
Sellers to Medical Manager with respect to the $2,000,000 principal amount of
the Assigned Loans (as defined in the Assignment and Intercreditor Agreement (as
defined in Schedule 3.2(g) hereto)); and
(f) all liabilities and obligations of any one or more of the
Sellers with respect to the Pre-Petition Loan and the DIP Loan.
Nothing contained in this Section 3.1 is intended to, or shall
be construed so as to create any third party beneficiaries of this Agreement or
otherwise confer any rights upon any person, firm or corporation that is not a
party hereto, including, without limitation, any employee, customer or creditor
of any one or more of the Sellers, the Purchaser or any of their respective
Affiliates. Without in any way limiting the foregoing, it is not the intention
of either the Purchaser or the Sellers that the assumption by the Purchaser of
the Assumed Liabilities shall in any way enlarge the rights of third parties
under contracts or arrangements with the Purchaser or the Sellers. Nothing
contained herein shall prevent the Purchaser from contesting in good faith any
of the Assumed Liabilities with any third party.
3.2. Limitations on Assumption. Any other provision of this Agreement to
the contrary notwithstanding, neither the Purchaser nor any of its Affiliates
will or does assume any liability or obligation of any one or more of the
Sellers (whether now existing or hereafter arising, whether known or unknown)
relating to or arising out of any of the following (all liabilities and
obligations not so assumed collectively referred to as the "Retained
Liabilities" and, accordingly, the definition of "Assumed Liabilities" shall not
include any of the following):
(a) any liability or obligation of any one or more of the Sellers,
absolute or contingent, known or unknown, not expressly included in the
definition of Assumed Liabilities provided for in Section 3.1 above;
(b) the preparation or presentation of the Sellers' financial
statements or any other accounting matters, including, without limitation, the
matters referred to in the litigation referred to as "In Re Physician Computer
Network Securities Litigation" (the "Class Action Litigation");
14
(c) any liability or obligation of any one or more of the Sellers with
respect to any action, suit, proceeding, arbitration, investigation or hearing
pending as of the Closing Date (the "Retained Litigation"), including, without
limitation:
(i) the Class Action Litigation or any other action, suit,
proceeding, arbitration, investigation or hearing related to the subject matter
thereof, including, without limitation, the Claims asserted against PCN by any
one or more of Xxxxxx Xxxxxx, Xxxxxx Xxxxx, Xxxx Xxxxxxx and Genesis Insurance
Company;
(ii) any investigation by a governmental agency or authority,
including, without limitation, the United States Securities and Exchange
Commission or the United States Attorney's Office for the District of New
Jersey, in each case, pending on the Closing Date;
(d) any Claims for damages against PCN, to the extent the subject
matter of those Claims involves the sale or other issuance of PCN securities
(such Claims, together with the Class Action Litigation and the Retained
Litigation, being referred to herein as the "Retained Claims");
(e) any Claims of any person for contribution or indemnification from
any one or more of the Sellers, to the extent the subject matter of those Claims
involves any one or more of the items referred to in subsection (b), (c) or (d)
of this Section 3.2;
(f) any Claims against the Sellers for payment of:
(i) any domestic (federal, state or local) or foreign sales,
use, payroll, unemployment, withholding or franchise taxes, together with
interest and penalties thereon, due or due to become due from any one or more of
the Sellers: (x) on account of the operation of the Business prior to the
Closing Date (except to the extent appropriately accrued for on Liability
Statement (which amounts shall constitute Assumed Liabilities)); or (y) on
account of the transactions called for by this Agreement;
(ii) any domestic (federal, state or local) or foreign income
taxes, together with interest and penalties thereon, due or to become due from
any one or more of the Sellers;
(g) any Claims against any one or more of the Sellers under the
Sellers' senior credit facility referred to on Schedule 3.2 (g) hereto (the
"Bank Debt") (other than with respect to the Assigned Loans);
(h) any obligation of any one or more of the Sellers to pay any legal,
accounting, investment banker or other professional fees incurred by any one or
more of the Sellers: (i) in connection with or related to the negotiation of
this Agreement, the consummation of the transactions contemplated by this
Agreement or the bankruptcy proceedings described in Article 7 below; or (ii)
except as accrued for on the Liability Statement and arising in the ordinary
course of
15
the Sellers' Business (which amounts shall, notwithstanding the provisions of
Section 3.2(c) above, constitute Assumed Liabilities), in connection with any
other matter;
(i) liabilities or obligations incurred as a result of activities of
any one or more of the Sellers, their respective Affiliates and their respective
successors and assigns after the Closing Date;
(j) liabilities or obligations of any one or more of the Sellers or any
of their respective Affiliates (x) under or pursuant to any of the Retained
Agreements or (y) with respect to the Sale Bonuses;
(k) except for the agreements of the Purchaser and Medical Manager
specifically provided for in Section 10.4 below, any liabilities or obligations
of any one or more of the Sellers to any person arising from the publication,
sale or distribution by any one or more of the Sellers of any software or
hardware product which is not Y2K Compliant (as defined in Section 5.14(d)
below);
(l) liabilities or obligations of any one or more of the Sellers to the
extent arising from or relating to the breach by any one or more of the Sellers
occurring on or before the Closing Date of any of the terms or provisions of any
Third Party Agreement, End User Agreement, warranty or service commitments or
installation commitments;
(m) liabilities or obligations of any one or more of the Sellers to any
of their shareholders, warrant holders or option holders, in their capacity as
shareholders, warrant holders and option holders, respectively; and
(n) liabilities or obligations of any one or more of the Sellers under
or with respect to the PCN 401(k) Plan.
3.3. Right of Enforcement and Settlement. From and after the Closing Date,
the Purchaser will have complete control over the payment, settlement or other
disposition of the Assumed Liabilities and the right to commence, conduct and
control all negotiations and proceedings with respect thereto. The Sellers will
notify the Purchaser promptly of any claim made with respect to any such Assumed
Liabilities and will not, except with the Purchaser's prior written consent,
volun tarily make any payment of, settle or offer to settle, or consent to any
compromise or admit liability with respect to any such Assumed Liabilities. The
Sellers will cooperate with the Purchaser in any reasonable manner requested by
the Purchaser in connection with any negotiations or proceedings involving any
Assumed Liabilities.
3.4. Reimbursement in Lieu of Assumption. In the event that any one or
more of the Assumed Liabilities constitutes an obligation to pay money to a
third party on or immediately following the Closing Date, with the mutual
agreement of the parties hereto, which agreement shall not be unreasonably
withheld, subject to the provisions of the Bankruptcy Code and any applicable
order of the Bankruptcy Court, such obligation: (i) shall be retained by the
Sellers; and (ii)
16
contemporaneously with the payment by the Purchaser to the Sellers of the
Purchase Price, the Purchaser shall also pay to the Sellers the amount necessary
for the Sellers to fully pay and satisfy such obligation (any such payments,
together with the Agreed Reimbursement Amount (as defined in Section 10.2(b)
hereof), being referred to herein, collectively, as the "Reimbursement Amount");
provided, however, that, to the extent that any such obligation would have, but
for the provisions of this Section 3.4, constituted an Assumed Liability to be
included on a Closing Date Net Worth Statement and taken into account in the
calculations required in accordance with Section 2.3 hereof, such obligation
shall be deemed to continue to constitute an Assumed Liability for such purpose.
4. CLOSING
The closing of the transactions to be effected hereunder (the
"Closing") will occur within two business days following the satisfaction of the
condition set forth in Section 11.1(a) below (the "Closing Date"). The Closing
shall take place at the offices of Xxxxxx Xxxxxx Xxxxxxx Shalov & Xxxx, LLP 000
Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000 or at such other
place and at such other time as the parties hereto may agree. For purposes of
preparing any Closing Date Net Worth Statement, the Closing shall be deemed to
have occurred at 11:59 PM on the Closing Date.
5. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers hereby represent and warrant to the Purchaser and Medical
Manager that the following are true and correct:
5.1. Existence and Authority. (a) PCN is a corporation duly organized,
validly existing and in good standing under the laws of the State of New Jersey.
Each of Versyss and HP are corporations duly organized, validly existing and in
good standing under the laws of the State of Delaware. WM is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Washington. IHS is a corporation duly organized, validly existing and in good
standing under the laws of the State of California. Each of the Sellers is
authorized or licensed to do business in each jurisdiction in which the
character and location of its assets or the nature of its business makes such
qualification necessary, except to the extent that the failure to so qualify
would not have an adverse effect on any one or more of the Sellers or the
Business. Each of the Sellers has all requisite power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby and has all requisite power and authority, licenses, permits
and franchises to own or lease and operate its properties and carry on its
business as it is presently being conducted.
(b) The principal executive offices of PCN, HP, Versyss, IHS
and WM are located at 0000 Xxx Xxxxxxxx Xxxx, Xxxxxx Xxxxxx, Xxx Xxxxxx. Since
January 1, 1994: (i) the name of PCN has been "Physician Computer Network, Inc."
and, except as set forth on Schedule 5.1(b) hereto, it has neither used nor done
business under any other name in any jurisdiction; (ii) the name of Versyss has
been "VERSYSS Incorporated" and it has neither used nor done business under any
17
other name in any jurisdiction; (iii) the name of WM has been "Xxxxxx*Xxxxxx,
Inc." and it has neither used nor done business under any other name in any
jurisdiction; and (iv) the name of IHS has been "Integrated Health Systems,
Inc." and it has neither used nor done business under any other name in any
jurisdiction. Since the date of its formation, the name of HP has been "PCN HP
Venture Corp." and, except as set forth on Schedule 5.1(b) hereto, it has
neither used nor done business under any other name in any jurisdiction.
(c) Except as set forth in Schedule 5.1(c) hereto, none of the
Sellers: (i) has any direct or indirect Subsidiaries (whether or not active); or
(ii) owns or holds any capital stock, partnership interest, membership interest
or other similar equity interest in any other person or entity.
5.2. Authorization of Agreement. Except as set forth on Schedule 5.2
hereto, the execution, delivery and performance of this Agreement and the
Ancillary Documents (as hereinafter defined) by any of the Sellers which are
parties thereto, and the consummation of the transactions contemplated hereby
and thereby, have been duly and validly authorized by all necessary corporate
action. This Agreement has been and, when executed by the Sellers which are
parties thereto, the applicable Ancillary Documents will be duly and validly
executed and delivered by each of the Sellers which are parties thereto. Subject
to the approval of the Bankruptcy Court, this Agreement constitutes and, when
executed by the Sellers which are parties thereto, and the applicable Ancillary
Documents will constitute valid and binding obligations of each of the Sellers
party thereto, each enforceable in accordance with its terms.
5.3. Effect of Agreement, Etc. Except as set forth on Schedule 5.3 hereto
and except as may be required by the Bankruptcy Code, the execution, delivery
and performance of this Agreement and the applicable Ancillary Documents by the
Sellers and consummation by the Sellers of the transactions contemplated hereby
and thereby, will not, with or without the giving of notice and the lapse of
time, or both: (a) violate any provision of law, statute, rule, regulation or
executive order to which any one or more of the Sellers, the Business or the
Assets is subject; (b) violate any judg ment, order, writ or decree of any court
to which any one or more of the Sellers, the Business or the Assets is subject;
or (c) result in the breach of or conflict with any term, covenant, condition or
provision of, result in or permit any other party to cause the modification or
termination of, constitute a default under, or result in the creation or
imposition of any lien, security interest, charge or encum brance upon any of
the Assets pursuant to any partnership agreement, corporate charter or by-laws,
commitment, lease, mortgage, contract or other agreement or instrument
(including, without limitation, any of the End-User Agreements) to which one or
more of the Sellers is a party or by which any of the Assets are bound or
affected.
5.4. Restrictions; Burdensome Agreements. Except as set forth on Schedule
5.4 hereto, none of the Sellers is a party to any contract, commitment or
agreement, nor, except for the Bankruptcy Code, are any of the Sellers or any of
the Assets subject to, or bound by, any order, judgment, decree, law, statute,
ordinance, rule, regulation or other restriction of any kind or character, which
would prevent any of the Sellers from entering into this Agreement or from
consummating the transactions contemplated by this Agreement as it is written.
18
5.5. Governmental and Other Consents. Except for compliance with the
provisions of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1996, as
amended (the "HSR") and the Bankruptcy Code, and except those consents the
failure of which to obtain will not prohibit or delay the consummation of the
transactions contemplated by this Agreement, except as set forth on Schedule 5.5
hereto, no consent, authorization or approval of, or exemption by or filing
with, any foreign or domestic governmental, public or self-regulatory body or
authority is required in connection with the execution, delivery and performance
by any of the Sellers of this Agreement or the applicable Ancillary Documents or
the taking of any action herein or therein contemplated.
5.6. Financial Statements. PCN has delivered to Medical Manger, and
included as Schedule 5.6 hereto, are correct and complete copies of: (i) the
consolidated balance sheets of PCN and its consolidated subsidiaries as at
December 31, 1998, 1997 and 1996 (as restated), and the related consolidated
statements of operations, changes in shareholders' equity (deficit) and cash
flows for the years ended December 31, 1998 and 1997, together with the report
thereon by Xxxxxx Xxxxxxxx LLP (the "1998 Statements"); and (ii) the
consolidated balance sheet of PCN and its consolidated subsidiaries as at
September 30, 1999, and the related consolidated statements of operations,
changes in shareholders' equity (deficit) and cash flows for the nine month
period ended September 30, 1999, together with the report thereon by Xxxxxx
Xxxxxxxx LLP (the "Audited Statements" and, together with the 1998 Statements,
the "Financial Statements"). Also included as part of Schedule 5.6 hereto, but
not included within the definition of the "Financial Statements", is the
statement of operations, changes in shareholders' equity (deficit) and cash
flows of PCN and its consolidated subsidiaries for the year ended December 31,
1996. The Financial Statements: (i) are in accordance with the books and records
of the Sellers; (ii) have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
involved (except as indicated in the notes thereto); and (iii) fairly present in
all material respects in accordance with applicable requirements of GAAP the
consolidated balance sheets of PCN and its consolidated subsidiaries as at their
respective dates and the consolidated statements of operations, changes in
shareholders' equity (deficit) and cash flows for the periods then ended.
5.7. Absence of Certain Changes or Events. Except as set forth on Schedule
5.7 hereto, since September 30, 1999 none of the Sellers have: (i) suffered any
adverse change in, or the occur rence of any events (exclusive of general market
or industry information) which, individually or in the aggregate, have had, or
might reasonably be expected to have, a material adverse effect on the Business'
condition (financial or otherwise), results of operations, properties or
business or on the Assets; (provided, however, that each of the Sellers, Medical
Manager and the Purchaser acknowledge the liquidity problems suffered by the
Sellers, as well as the disclosure of certain accounting improprieties with
respect to PCN's financial statements and agrees that, for purposes of this
Section 5.7, such liquidity problems and disclosure shall not constitute an
adverse change); (ii) incurred damage to or destruction of any of the Assets by
casualty, whether or not covered by insurance, or suffered or became subject to
any pending or threatened condemnation of property; (iii) incurred any material
obligations or liabilities (fixed or contingent) except (A) in the ordinary
course of business, none of which were entered into for an inadequate
consideration, (B) obligations and liabilities under the Commitments (as
hereinafter defined) to the extent required thereby, and (C)
19
obligations and liabilities under this Agreement; (iv) made any change in the
nature of the Business; (v) mortgaged, pledged, assigned, hypothecated or
subjected to lien or any other encumbrance any of the Assets; (vi) sold,
transferred or leased any of the Assets, except in each case in the ordinary
course of business and consistent with past practice; (vii) sold, assigned,
transferred, or granted any rights under or with respect to, any of its
licenses, agreements, patents, inventions, trademarks, trade names, copyrights
or formulae or with respect to know-how or any other intangible asset in each
case to the extent related to the Business and, in each case, other than in the
ordinary course of business consistent with past practice; (viii) amended or
terminated any of its contracts, agreements, leases or arrangements relating to
the Business other than in the ordinary course of business consistent with past
practice; (ix) waived or released any other rights with respect to the Business
other than in the ordinary course of business consistent with past practice; (x)
had work performed which could give rise to mechanics liens with respect to any
of the Assets which has not been paid or which payment has not been provided
for; or (xi) entered into any other material transaction with respect to the
Business not in the ordinary course of business.
5.8. Deferred Revenue Account. (a) Schedule 5.8(a) hereto contains a true
and correct schedule and calculation of obligations included in the Deferred
Revenue Account as of September 30, 1999 which constitute liabilities and
obligations of the Sellers to provide to End Users maintenance and support
services for application software products of or supported by the Business (the
"Deferred Software Maintenance Obligations"). All Deferred Software Maintenance
Obligations have arisen in the ordinary course of business consistent with past
practice.
(b) Schedule 5.8(b) hereto contains a true and correct
schedule and calculation of obligations included in the Deferred Revenue Account
as of September 30, 1999 which constitute liabilities and obligations of the
Sellers to provide to End Users maintenance and support services for computer
hardware, operating system software, parts and related equipment (the "Deferred
Hardware Maintenance Obligations"). Except as set forth on Schedule 5.8(b), all
Deferred Hardware Maintenance Obligations have arisen in the ordinary course of
business consistent with past practice.
5.9. Accounts Receivable. Set forth on Schedule 5.9 hereto is a true,
correct and complete schedule (the "Account Receivable Schedule") setting forth:
(i) all of the Accounts Receivable as of September 30, 1999; and (ii) the aging
thereof. The Accounts Receivable listed on the Accounts Receivable Schedule are
valid and genuine, have arisen only from bona fide transactions in the ordinary
course of business and are properly recorded in the Sellers' books and records.
The Sellers do not have any knowledge or any reason to believe that, subject to
the reserve listed on Schedule 5.9, such receivables are not collectible in the
ordinary course of business, consistent with the Sellers' past collection
practice.
5.10. Accounts Payable. Schedule 5.10 hereto contains a true and complete
list of all Accounts Payable as of September 30, 1999. All Accounts Payable set
forth on Schedule 5.10 have arisen in the ordinary course of business consistent
with past practice.
20
5.11. Title to the Assets; Absence of Liens and Encumbrances, Etc.
Except as set forth on Schedule 5.11(a) hereto: (a) any one or more of the
Sellers has good and valid title to, and owns outright, the Assets, free and
clear of all mortgages, claims, liens, charges, leases, subleases, encum
brances, security interests, restrictions on use or transfer or other material
defects of any nature, whether or not recorded; and (b) the sale and delivery of
the Assets pursuant hereto will vest in the Purchaser good and valid title to
the Assets free and clear of all mortgages, claims, liens, charges,
encumbrances, leases, subleases, security interests, restrictions on use or
transfer, or other defects of any nature except (i) as set forth on Schedule
5.11(b) hereto, (ii) obligations arising under the terms of the Commitments,
(iii) those which would not impair the use and enjoyment of the property (and do
not require the payment of money), (iv) liens for taxes not yet due and payable
and (v) claims which in the aggregate do not exceed $50,000.
5.12. Contracts.
5.12.1. Attached hereto as Schedule 5.12.1(a) are copies of
the standard form of End-User Agreements, including, without limitation, the
standard form of license agreement, standard form of software support agreement,
standard form of hardware service agreement and standard form of purchase
agreement for each of the PMS Software products and related hardware and
services (collectively, the "Standard Agreements"). Except as described on
Schedule 5.12.1(b) hereto, none of the End-User Agreements contain any term or
provision which: (i) restricts the Sellers from assigning its rights and
obligations under such agreements; (ii) requires any of the Sellers to deliver
the source-code for any software product to any third party (other than
source-code escrow arrangements); (iii) requires any of the Sellers to provide
maintenance, support or other services to any End-User free of charge for any
period of time (other than for a period not to exceed one year following the
installation of a system); (iv) requires any of the Sellers to provide services
for more than a one year period; (v) requires any of the Sellers to deliver any
material modification to or materially enhanced functionality for any software
product (other than updates and bug-fixes); (vi) requires any of the Sellers to
deliver a new or next generation product (other than updates); (vii) requires
any of the Sellers to provide future discounts or fixed rates on future hardware
and/or software purchase by the End-User (except to the extent such discounts or
rates will not result in costs to the Purchaser of $250,000 or more in the
aggregate); and (viii) other than with the giving of due notice, prevents or
restricts any of the Sellers from ceasing to provide support for any product
after the end of the then current term of the End-User Agreement.
5.12.2. Set forth on Schedule 5.12.2 is a true and complete
list, as of the date hereof, of all of the Reseller Agreements. Attached to
Schedule 5.12.2 are: (i) copies of PCN's standard form of independent
value-added reseller agreement for resellers of PCN's Health Network practice
management software product; and (ii) a representative sample of VERSYSS' form
of independent value-added reseller agreement for resellers of the MENDS
practice management software product.
5.12.3. Set forth on Schedule 5.12.3 is a true and complete
list, as of the date hereof, of all Equipment Leases, Commercial Agreements and
OEM Agreements.
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5.12.4. Except as set forth on Schedule 5.12.4, except for the
End-User Agreements, the Reseller Agreements, the Equipment Leases, the
Commercial Agreements, the OEM Agreements, the Real Property Leases, the Web
Agreement, the Pre-Petition Loan, this Agreement and any other agreement between
any one or more of the Sellers, on the one hand, and any one or more of Medical
Manager and its Affiliates on the other hand, none of the Sellers is a party to
and none of the Assets is bound by any:
(a) lease of: (i) personal property requiring payments by any
one or more of the Sellers of more than $25,000 on an annualized basis; or (ii)
real property;
(b) license agreement, assignment or contract (whether as
licensor or licensee, assignor or assignee) relating to trademarks, trade names,
patents or copyrights (or applications therefor), software, unpatented designs
or processes, formulae, know-how or technical assistance or other property
rights, including without limitation, the Intellectual Property (other than
standard licenses of the Business's software products entered into in the
ordinary course of business and licenses of off-the-shelf software products);
(c) employment, consulting agreement, severance agreements,
other agreement with any employee of any one or more of the Sellers;
(d) agreement with any value-added reseller, business partner,
distributor, dealer, sales agent or representative with respect to the sale or
licensing of the Business' products or services;
(e) any original equipment manufacturing agreement;
(f) joint venture or partnership agreement;
(g) agreement for the borrowing or lending of money;
(h) agreement granting to any person a lien, security interest
or mortgage on any of the Assets, including, without limitation, any factoring
agreement or agreement for the assignment of accounts receivable or inventory;
(i) source-code escrow agreement;
(j) agreement which restricts any one or more of the Sellers
from conducting the Business anywhere in the world;
(k) claims clearing agreement or electronic data interchange
agreement;
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(l) agreement regarding any acquisition or disposition of any
assets used in the Business by any one or more of the Sellers other than in the
ordinary course of business containing any currently operative provisions;
(m) currently operative agreement regarding the settlement of
any litigation;
(n) agreement with any Affiliate of any one or more of the
Sellers;
(o) other Third Party Agreement not otherwise described above
relating to the Assumed Liabilities providing for payment by any one or more of
the Sellers of an amount in excess of $50,000 on an annualized basis and which
have a remaining term of one year or more; and
(p) other agreements entered into outside of the ordinary
course of business providing for payment by any one or more of the Sellers of an
amount in excess of $25,000 on an annualized basis and which have a remaining
term of one year or more.
Correct and complete copies of all such agreements, leases and
other instruments and written amendments thereto (or, where they are oral, true
and complete written summaries thereof) required to be shown on Schedule 5.12.4
(together with each End-User Agreement, each Reseller Agreement, each Equipment
Lease, each of the Commercial Agreements, each OEM Agreement and each Real
Property Lease, such agreements, leases and instruments are collectively
referred to herein as the "Commitments"), have been provided or otherwise made
available to the Purchaser on or prior to the date hereof.
5.12.5. Except as set forth on Schedule 5.12.5(a) hereto, each
of the Commitments is valid, in full force and effect and enforceable by the
Seller which is a party thereto in accordance with its terms. Except as set
forth on Schedule 5.12.5(b) hereto, all of the Commitments which are included in
the Assets or as part of the Assumed Liabilities are, or at the Closing will be,
whether as a result of the application of the provisions of Section 365 of the
Bankruptcy Code or otherwise, assignable by the Seller which is a party thereto,
as applicable, to the Purchaser without the consent of any other party thereto.
5.12.6. Except as set forth on Schedule 5.12.6, the Sellers
have fulfilled, or have taken all action reasonably necessary to have been taken
to date to enable each of them to fulfill when due, all of their respective
obligations under the Commitments. Except as indicated on Schedule 5.12.6, there
has not occurred any default by any of the Sellers or any event which, with the
giving of notice or the lapse of time or both, and/or the election of any person
other than the Sellers will become such a default by any of the Sellers, nor, to
the knowledge of the Sellers, has there occurred any material or monetary
default by others or any event which, with the lapse of time and/or the election
of any of the Sellers, will become such a default under any of the Commitments
(including, without limitation, the End-User Agreements). None of the Sellers
nor, to the best of Sellers' knowledge, any other party is in arrears in respect
of the performance or satisfaction of any non-monetary term
23
or condition to be performed or satisfied by it under any of the Commitments,
and no waiver or indulgence has been granted by any of the Sellers thereunder.
None of the Sellers nor any other party is in arrears in respect of the
performance or satisfaction of any monetary term or condition to be per formed
or satisfied by it under any of the Commitments, and no waiver or indulgence has
been granted by any of the Sellers thereunder.
5.13. End-Users. Set forth on Schedule 5.13(a) is a true and correct
list, as of the date hereof, of all End-Users who or which, as the case may be,
are parties to End User Agreements directly with one or more of the Sellers with
respect to Health Network, Mends and MDX (each as defined in 5.14(b) below);
provided, however, that the representation and warranty contained in this
Section 5.13 shall not be deemed to constitute a representation or warranty that
any particular End User is currently using any particular PMS Software product.
5.14. Intellectual Property; Y2K Compliance. (a) Schedule 5.14(a)
hereto sets forth a true and correct description of all of the Intellectual
Property used in and material to the operation of the Business (other than
off-the-shelf software products that can be purchased for $5,000 or less per
single user license). The PMS Software does not violate or infringe on the
rights of any other person. To the best knowledge of the Sellers, the other
software utilized by the Sellers in the operation of the Business neither
violates nor infringes on the rights of any other person. The Sellers have not
received any notice of or alleging any violation of the asserted rights of
others with respect to the Intellectual Property. The Sellers are not aware of
any third party that is infringing or violating any of the rights of the Sellers
with respect to the Intellectual Property. Except as provided for in the license
agreements referred to on Schedule 5.14(a) hereof, no royalties, license fees or
other similar payments are required for the continued use by Purchaser of the
Intellectual Property used in and material to the operation of the Business.
None of the Intellectual Property has ever been declared invalid or
unenforceable.
(b) The Sellers have developed or cause to be developed, and
published: (i) updates (each such update being referred to herein as a "Y2K
Update") required to make the most recent non-Y2K Compliant version of each of
the following PMS Software products distributed and supported by any one or more
of the Sellers Y2K Compliant (as defined below): (x) PCN Health Network ("Health
Network"); (y) MENDS ("Mends"); and MDX ("MDX"); and (ii) patches (the "Y2K
Patches") for the Sellers' proprietary operating system programs and hardware
platforms identified on Schedule 5.14(b)(ii) ("Operating Software"). Schedule
5.14(b)(ii) identifies the versions of each such PMS Software product and each
such Operating Software product which is Y2K Compliant.
(c) Schedule 5.14(c) hereto identifies, with respect to each
End-User who or which, as the case may be, is, as of the date hereof, a party to
a currently effective software support agreement directly with one or more of
the Sellers, whether or not, as of the date specified on Schedule 5.14(c), the
Sellers have either one or both of distributed and caused to be installed with
such End User a Y2K Update to the PMS Software used by such End User.
24
(d) As used xxxxxx, "X0X Compliant" means that a
particular version of a software product: (i) will operate prior to, during, and
after the calendar year 2000 A.D., both on a stand-alone basis and when
interacting or inter-operating with third-party hardware, in a manner consistent
with the software and systems without error and without human intervention,
other than original date entry; (ii) will accept, process, display, and report
all century-based data consistently and accurately to the extent that the
third-party hardware and software used in combination with that software
properly exchanges date data, including century-based, data with it; and (iii)
that neither the occurrence of any date nor the change of century will adversely
affect the processing, calculating, comparing, sequencing, or other use of data
by that software including, without limitation causing (x) any error relating to
or resulting from century-based data, (y) any abnormal ending or provision of
invalid or incorrect results as a result of any century-based data, and (z) any
error relating to the century recognition or calculations accommodating
century-based data, values or formulae to the extent that the third-party
hardware and software used in combination with that software properly exchanges
date data, including century-based data, with it.
(e) Prior to the date hereof, the Seller has delivered to
each Reseller a software disk containing the Y2K Updates and Y2K Patches for
each of the PMS Software products and Operating Software products supported by
such Resellers.
5.15. Real Estate Leases. (a) The leasehold estates and Real Property
Leases listed in Schedule 5.15(a)(i) are all of the leasehold estates under
which, as of the date hereof, any of the Sellers are lessees or sublessees of
any real property or interest therein. Except as set forth on Schedule
5.15(a)(ii), none of the Sellers is a sublessor of any leasehold estate demised
to it under any Real Property Lease.
(b) Except as set forth on Schedule 5.15(b), none of the
Sellers is in default or has received any notice of any default, or failed to
take any action that could result in a default, under the Real Property Leases.
To the Sellers' knowledge, no other party to any such lease is in material or
monetary default thereunder.
5.16. Compliance With Laws. Except as set forth on Schedule 5.16
hereto, each of the Sellers has complied and is in compliance with all
applicable laws and rules and regulations of foreign, federal, state and local
governments and all agencies thereof and other regulatory bodies related to the
operation of the Business or ownership of the Assets the failure to comply with
which has or reasonable would have an adverse effect on the Business or the
Assets, and there are no pending claims which have been filed against any of the
Sellers or any of their respective Affiliates (relating to the operation of the
Business or the ownership of the Assets) alleging a violation of any such law or
regulation. No notice has been received by any of the Sellers with respect to
any such violation of any such legal requirements.
5.17. Litigation. Except as set forth on Schedule 5.17 hereto, there
are no claims, actions, suits, proceedings, arbitrations, investigations or
hearings or notices of hearing pending or, to the best knowledge of the Sellers
threatened, before any court or governmental or administrative
25
authority or private arbitration tribunal against or relating to either: (i) the
transactions contemplated hereby; or (ii) any one or more of the Sellers with
respect to the Business or any of the Assets (including, without limitation, any
End-User Agreement).
5.18. Labor Matters. (a) Schedule 5.18(a) hereto contains a true and
correct schedule of: (i) the names, job descriptions and current annual salary
rates of all present employees of each of the Sellers (the "Employees"); (ii)
the amount of severance payable to each such employee (assuming for such purpose
that the Closing Date was the date on which such person's employment was
terminated) (the "Severance Obligations"); (iii) the dollar value of all accrued
vacation days of each such employee as of the date specified on Schedule
5.18(a); and (iv) the amount and description of bonus or other compensation
payable by any of the Sellers to any such employee upon or as a result of the
occurrence of such employee remaining employed by any of the Sellers beyond a
specified date (the "Stay-Put Bonuses").
(b) No employee of any of the Sellers is represented by
any union or collective bargaining agent, and, to the best knowledge of the
Sellers, there has been no union organizational efforts in respect of the
employees of the Seller.
(c) Except for the agreement between PCN and Xxxxxxx &
Marsal, Inc. (the "AM Agreement") (which is a Retained Agreement and a Retained
Liability), Schedule 5.18(c) hereto contains a true and correct list and
description of all agreements between PCN, on the one hand, and each senior
executive of PCN, on the other hand, regarding any bonus or other compensation
payable by PCN to any such executive upon or as a result of the sale of the
Business (the "Sale Bonuses").
5.19. Taxes. Each of the Sellers has filed or obtained valid extensions
for the filing of all tax and information returns and reports relating to the
Business and the Assets required to be filed, and all taxes, fees, assessments
or other governmental charges, withholdings of any nature, including franchise
taxes, use and occupancy taxes and sales taxes, have been paid (except those
being contested in good faith), or adequate provision for the payment thereof
has been made and is provided for on the Financial Statements (to the extent
applicable as of the date of such statements), in each case as of the date
hereof, in all taxing jurisdictions in which the conduct of the Business or the
ownership of the Assets subjects any of the Sellers to any taxes, fees,
assessments or other governmental charges.
5.20. Entire Business. The Assets constitute all of the assets
reasonably necessary to, immediately following the Closing Date, operate the
Business as currently conducted, assuming for such purposes only, that,
immediately following the Closing Date, the Purchaser itself was to: (i) employ
all of the Employees (including management personnel) currently employed by the
Sellers in connection with the Business immediately prior to the Closing Date;
and (ii) assume all of the liabilities with respect to all of the facilities and
all equipment leases used in such facilities to the same extent currently used
by the Sellers in the operation of the Business. No portion of the Business is
conducted by any person or entity other than the Sellers.
26
5.21. Brokers. Except as set forth on Schedule 5.21 hereto, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon any arrangement made by or on behalf of the Sellers.
5.22. Employee Benefit Plans. (a) Except as set forth on Schedule
5.22(a) hereto, none of the Sellers has any employee benefit plans or
arrangements, 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 any Employees, their spouses or dependents participate ("Employee Benefit
Plans").
(b) Controlled Group Liability. Except as set forth on
Schedule 5.22(b), none of the Sellers, nor any entity that would be aggregated
with either 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 under Title IV of ERISA; (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 Pension Benefit
Guaranty Corporation (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 or failed to comply with the Health Insurance Portability and
Accountability Act of 1996 ("HIPAA") with respect to any group health plan
within the meaning of Section 5000(b)(1) of the Code, except for any such
violation or failure which would not result in any liability to the Purchaser or
Medical Manager.
(c) Other Liabilities. (i) Except for the Stay-put Bonuses,
the Sale Bonuses and the obligations of PCN under the AM Agreement, none of the
Sellers is under any obligation 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) and (ii) all required or discretionary (in
accordance with historical practices) payments, premiums, contributions,
reimbursements, or accruals under the Employee Benefit Plans for all periods
ending prior to or as of the date hereof for the Employees have been paid or are
disclosed on Schedule 5.22(c).
(d) Compliance. Each employee benefit plan covering any
Employee is in compliance with all applicable laws and regulations and has been
operated in accordance with its terms and provisions, except as to any such
noncompliance or operation which would not result in any liability to the
Purchaser With respect to each employee benefit plan covering any Employee there
are no actions, claims or disputes pending by any third party and no audits,
proceedings, claims
27
or demands pending by any governmental authority which would result in any
liability to the Purchaser.
6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND MEDICAL
MANAGER
The Purchaser and Medical Manager hereby represent and warrant
to each of the Sellers that the following are true and correct:
6.1. Organization, Etc. Medical Manager is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware. The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the state of Delaware. The Purchaser is a direct
wholly owned subsidiary of Medical Manager. Each of the Purchaser and Medical
Manager has all requisite power and authority to execute, deliver and perform
this Agreement and to consummate the transactions contemplated hereby. Each of
the Purchaser and Medical Manager is authorized or licensed to do business in
each jurisdiction in which the character and location of its assets or the
nature of its business makes such qualification necessary, except to the extent
that the failure to so qualify would not have an adverse effect on the
Purchaser, Medical Manager or, following the Closing, the Business. Each of the
Purchaser and Medical Manager has all requisite power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby and has all requisite power and authority, licenses, permits
and franchises to own or lease and operate its properties and carry on its
business as it is presently being conducted.
6.2. Authorization of Agreement. The execution, delivery and
performance of this Agreement and the Ancillary Documents by the Purchaser and
Medical Manager and the consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all necessary corporate
action, including approval by the Purchaser's and Medical Manager's respective
Boards of Directors. This Agreement has been and, when executed by one or both
of the Purchaser and Medical Manager, as applicable, the applicable Ancillary
Documents will be duly and validly executed and delivered by each of the
Purchaser and Medical Manager. This Agreement constitutes and, when executed by
the Purchaser and Medical Manager, to the extent they are parties thereto, the
applicable Ancillary Documents will constitute valid and binding obligations of
each of the Purchaser and Medical Manager, each enforceable in accordance with
its terms.
6.3. Effect of Agreement, Etc. The execution, delivery and performance
of this Agreement by each of the Purchaser and Medical Manager and consummation
by each of the Purchaser and Medical Manager of the transactions contemplated
hereby, will not, with or without the giving of notice and the lapse of time, or
both: (a) violate any provision of law, statute, rule, regulation or executive
order to which either one or both of the Purchaser and Medical Manager is
subject; (b) violate any judgment, order, writ or decree of any court to which
either one or both of the Purchaser and Medical Manager is subject; (c) result
in the breach or conflict with any term,
28
covenant, condition or provision, result in or permit any other party to cause
the modifications or terminations of, constitute a default under, or result in
the creation or imposition of any lien, security interest, charge or encumbrance
upon any of the Purchaser's or Medical Manager's assets pursuant to any
partnership agreement, corporate charter or by-laws, or any commitments,
contract or other agreement or instrument to which either one or both of the
Purchaser and Medical Manager is bound.
6.4. Governmental and Other Consents. Except for compliance with the
provisions of HSR and the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder or as specifically contemplated elsewhere in
this Agreement, and except those consents the failure of which to obtain will
not prohibit or delay the consummation of the transactions contemplated by this
Agreement, no consent, authorization or approval of, or exemption by or filing
with, any govern mental, public or self-regulatory body or authority is required
in connection with the execution, delivery and performance by either the
Purchaser or Medical Manager of this Agreement or any of the instruments or
agreements herein referred to, or the taking of any action herein contemplated.
6.5. Restrictions; Burdensome Agreements. Neither the Purchaser nor
Medical Manager is a party to any contract, commitment or agreement, nor is
either one or both of the Purchaser and Medical Manager subject to, or bound by,
any order, judgment, decree, law, statute, ordinance, rule, regulation or other
restriction of any kind or character, which would prevent either one or both of
the Purchaser and Medical Manager from entering into this Agreement or from
consummating the transactions contemplated by this Agreement as it is written.
6.6. Litigation. As of the date hereof, except as described in the
Medical Manager SEC Documents (as defined in Section 6.8 below) there are no
claims, actions, suits, proceedings, arbitrations, investigations or hearings or
notices of hearings pending or, to the best knowledge of the Purchaser and
Medical Manager, threatened against the Purchaser, Medical Manager or any of
their Affiliates, before any court or governmental or administrative authority
or private arbitration tribunal relating to the transaction contemplated hereby
or which could have a material adverse effect on the transactions contemplated
hereby.
6.7. Issuance of Medical Manager Stock. All shares of Medical Manager
Stock which are to be issued as part of the Stock Payment will be, when issued
in accordance with the terms hereof, validly issued, fully paid and
non-assessable and not subject to preemptive rights.
6.8. SEC Documents; Financial Statements. (a) Medical Manager has filed
all forms, reports and documents required to be filed by Medical Manager with
the SEC, including, without limitation, its Annual Report on Form 10-K for the
fiscal year ended June 30, 1999 (the "Medical Manager 10-K"), its Quarterly
Report on Form 10-Q for the period ending September 30, 1999 (the "Medical
Manager 10-Q") and any Current Reports on Form 8-K filed by Medical Manager with
the SEC since September 30, 1999 (the "Medical Manager 8-Ks" and, together with
the Medical Manager 10-K, the Medical Manager 10-Q and any other form, report
and document required to be filed by Medical Manager with the SEC, the "Medical
Manager SEC Documents"). As of their respective dates: (i) the Medical Manager
SEC Documents complied in all material respects with
29
the requirements of the Securities Act or the Exchange Act, and the rules and
regulations of the SEC thereunder applicable to such Medical Manager SEC
Documents; and (ii) none of the Medical Manager SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(b) The financial statements of Medical Manager included in
the Medical Manager SEC Documents complied as to form in all material respects
with the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited statements, as
permitted by Rule 10-01 of Regulation S-X of the SEC) and fairly present in all
material respects in accordance with applicable requirements of GAAP (subject,
in the case of the unaudited statements, to normal, recurring audit adjustments)
the consolidated financial position of Medical Manager and its consolidated
subsidiaries as at their respective dates and the consolidated results of
operations and the consolidated cash flows of Medical Manager for the periods
then ended.
6.9. Absence of Certain Changes or Events. Since June 30, 1999 to the
date hereof (except as disclosed in the Medical Manager SEC Documents) there has
not been any material adverse change in the business, results of operations,
properties (including intangible properties), financial condition, assets or
liabilities of Medical Manager and its subsidiaries taken as a whole.
6.10. Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon any arrangement made by
and on behalf of the Purchaser or Medical Manager.
7. BANKRUPTCY PROCEEDINGS
7.1. Each of Medical Manager, the Purchaser and the Sellers agrees that
the Closing shall occur as part of a proceeding under the Bankruptcy Code. In
that regard, the Sellers will cause the following to occur:
(a) Chapter 11 Case. The Sellers will file petitions for
relief (together, the "Petition") under Chapter 11 of the Bankruptcy Code no
later than the close of business on the business day next succeeding the date
hereof.
(b) Chapter 11 Plan. The Sellers will file a proposed
plan (the "Plan") containing such terms with respect to the transactions
contemplated hereby as are substantially similar to those provided for in
Exhibit 7.1(b)(i) hereto and a disclosure statement (the "Disclosure Statement")
describing the terms of this Agreement and the transactions contemplated hereby
in a manner substantially similar to those provided for in Exhibit 7.1(b)(ii)
hereto with the Bankruptcy Court (the "Bankruptcy Court") contemporaneously with
the filing of the Petition. The Sellers,
30
Medical Manager and the Purchaser each agree to cooperate with one another
regarding the preparation of any required amendments or modifications to the
Plan or the Disclosure Statement, including, without limitation, any disclosure
regarding Medical Manager, the Purchaser and the Medical Manager Stock. The Plan
will provide for, inter alia, the sale of the Assets to and the assumption of
the Assumed Liabilities by the Purchaser as provided for and pursuant to this
Agreement. Without limiting the foregoing, the Plan shall make provision for and
provide the mechanism for the assumption by the Sellers and the assignment to
the Purchaser of all unexpired leases and executory contracts, including,
without limitation, licenses and End User Agreements, as are required by and
selected by the Purchaser in its sole discretion; provided that, with respect to
any leases and contracts not so assumed, all liability or damages arising from
the rejection of Unexpired Leases (as hereinafter defined) or Executory
Contracts (as hereinafter defined) shall constitute Assumed Liabilities. As used
herein, (x) "Unexpired Leases" means unexpired leases not required by and
selected by the Purchaser, as aforementioned; and (y) "Executory Contracts"
means executory contracts not required by and selected by the Purchaser, as
aforementioned.
(c) Scheduling Order and Related Matters. As soon as
practicable after the filing of the Plan and the Disclosure Statement, the
Sellers will move for an order (the "Scheduling Order") from the Bankruptcy
Court: (i) granting provisional approval of the Disclosure Statement; (ii)
authorizing the Sellers to solicit acceptances of the Plan from impaired classes
of claims and interests; (iii) scheduling a combined hearing on confirmation of
the Plan and final approval of the Disclosure Statement (the "Confirmation
Hearing"); (iv) approving the Assumption and Assignment Procedures (as defined
Section 7.1(d) below); and (v) approving the form and scope of notice of the
foregoing. The Sellers will seek to schedule the Confirmation Hearing for a date
approximately ninety days after the filing of the Petition. Further, as soon as
reasonably practicable after the filing of the Plan and the Disclosure
Statement, the Sellers shall move for orders from the Bankruptcy Court: (w)
approving the assumption by PCN of the Web Agreement; (x) approving the
provisions regarding the payment of the Break-Up Fee contained in Section 12.2
(c) below; (y) approving the provisions of Section12.2(b) below and (z)
authorizing the Sellers to enter into the Services Agreement (as defined below).
(d) Assumption and Assignment Procedures. In connection
with the assumption by, and assignment to, the Purchaser of the End User
Agreements and the Reseller Agreements pursuant to the Plan, the Sellers will be
required to: (i) cure, or provide adequate assurance that they will promptly
cure, any defaults; (ii) compensate, or provide adequate assurance that they
will promptly compensate, for any actual pecuniary loss resulting from such
default; and (iii) provide adequate assurance of future performance under such
agreements. In connection with the foregoing, the Sellers will seek approval of
the following procedures (the "Assumption and Assignment Procedures"):
(x) The Sellers will give written notice (the
"Assumption and Assignment Notice") of all
defaults under End User Agreements and Reseller
Agreements including the proposed cure amounts and
compensation amounts, to all known End Users and
Resellers. Such
31
notice will contain a detailed description of the
Company's past or current Y2K Obligations (as
defined below) and defaults thereof, if any. Such
notice will also include a detailed description of
the limited obligations undertaken by the
Purchaser in accordance with Section 10.4 hereof.
In addition, the Sellers will give notice by
publication as approved by the Bankruptcy Court;
(y) The notice referred to in clause (x) above
will provide that all parties will be bound,
barred and estopped by the provisions of the
Assumption and Assignment Notices, including,
without limitation, the description of Y2K
Obligations, unless an objection is timely filed
with the Bankruptcy Court and served upon the
Sellers; and
(z) At the Confirmation Hearing, PCN will obtain,
as part of the Confirmation Order, a determination
of the Bankruptcy Court that the Purchaser has not
assumed and shall have no responsibility for any
Y2K Obligations except as specifically provided
for in Section 10.4. In support of such
determination, the Sellers will introduce such
evidence into the record as is reasonably
necessary to support such findings of fact and
conclusions of law.
As used xxxxxx, "X0X Obligations" shall mean any Claims by any
customer, End User or reseller against any one or more of the Sellers to the
extent the subject matter of those Claims involves the failure of any product
published, sold or distributed by the Sellers to be Y2K Compliant (as defined in
Section 5.14(d) hereof).
(e) As used herein, the "Services Agreement" shall mean an
agreement to be entered by the Purchaser and the Sellers pursuant to which: (i)
the Sellers shall be entitled to request that the Purchaser make available to
the Sellers the skills and expertise of its personnel related to the operation
of the Business and otherwise aid the Sellers in connection with the operation
of the Business prior to the Closing Date; and (ii) the Purchaser agrees to make
such services available to the Sellers. The Purchaser and the Sellers agree that
(x) subject to the Sellers obtaining an order of the Bankruptcy Court
authorizing the Sellers to enter into the Services Agreement, the Purchaser and
the Sellers shall enter into the Services Agreement as soon as reasonably
practicable following the date hereof and (y) the Services Agreement shall be in
form and substance reasonably satisfactory to the Purchaser and the Sellers.
8. PRE-CLOSING COVENANTS OF THE SELLERS
8.1. Conduct of Business of the Company Pending the Closing. During the
period from the date of this Agreement to the Closing, the Sellers agree that
(except (x) as contemplated or expressly permitted by this Agreement, including,
without limitation, the filing of the Petition as contemplated by Article 7
hereto; (y) any actions reasonably taken by any one or more of the Sellers
32
in connection with the bankruptcy cases contemplated by Section 7.1 hereto or
(z) to the extent that Medical Manager shall otherwise consent in writing (which
consent Medical Manager will not unreasonably withhold or delay)):
(a) The Business shall be conducted only in the ordinary
course of business and in a manner consistent with past practice (since March
1998).
(b) The Sellers shall, except in the ordinary course of
business consistent with past practice since March 1998, use their reasonable
commercial efforts to: (i) preserve intact the Sellers' business organization;
(ii) except as provided for in Section 9.6 hereof, keep available the services
of its present officers, employees and consultants; and (iii) preserve its
present relationships with End Users, other customers, Resellers, suppliers and
other persons with which it has a significant business relationship.
(c) The Sellers shall not make any capital expenditures or
material dispositions of the Sellers' equipment or other assets (tangible or
intangible) or otherwise enter into any transaction outside of the ordinary
course of business, other than as described in Schedule 8.1(c) hereto.
(d) The Sellers shall not acquire or agree to acquire by
merging or consolidating with, or by purchasing a substantial equity interest in
or a substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any material amount of
assets other than in the ordinary course of business.
(e) The Sellers shall not sell, lease, encumber or otherwise
dispose of, or agree to sell, lease (whether such lease is an operating or
capital lease), encumber or otherwise dispose of any portion of the Assets,
other than in the ordinary course consistent with past practice.
(f) None of the Sellers shall, except as provided for in
Section 9.6 hereof: (i) except to the extent required by applicable law or as
required by the terms of any currently effective employment agreement, increase
or agree to increase the compensation (whether cash or non-cash) payable or to
become payable to their officers or employees, except for increases in salary or
wages of employees, other than officers who are currently paid annual
compensation in excess of $125,000, of any one or more of the Sellers (whether
in such capacity or otherwise) in accordance with past practices and not to
exceed 5% on an annual basis; (ii) increase or agree to increase the
compensation payable or to become payable to any executive officer of any of the
Sellers who currently receives annual compensation in excess of $125,000; (iii)
grant any severance or termination pay to, or enter into any employment or
severance agreement with any executive officer, director, or employees of any of
the Sellers; (iv) enter into any collective bargaining agreement; or (v)
establish, adopt, enter into or amend any Benefit Plan or any of the following
plans, trusts, funds, policies or arrangements for the benefit of any directors,
officers or employees: any bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred
33
compensation, employment, termination, severance or other plan, trust, fund,
policy or arrangement for the benefit of any directors, officers or employees.
(g) The Sellers shall account for all transactions and
business of the Sellers in accordance with GAAP, consistently applied and
consistent with the Audited Statements.
(h) Except to the extent contemplated by the Plan, required by
the Bankruptcy Code or otherwise specifically authorized by the Bankruptcy
Court, use its reasonable business efforts to: (i) collect the Accounts
Receivable in the ordinary course consistent with past practice (including,
without limitation, as to manner and timing of such collections); and (ii) pay
or compromise the Accounts Payable arising after the filing of the Petition with
the Bankruptcy Court in the ordinary course consistent with past practice
(including, without limitation, as to the manner and timing of such payments or
compromise);
(i) The Sellers will promptly notify Medical Manager in the
event that any of them fails to operate its business in accordance with this
Section 8.1.
(j) Notwithstanding anything in this Agreement to the
contrary, between the date of this Agreement and the Closing, PCN agree that, to
the fullest extent permitted by applicable law PCN shall use all reasonable
business efforts to advise a designated representative of Medical Manager and
the Purchaser of any matter of material significance to the Business as promptly
as practicable and, to the extent reasonably practicable, permit such
representative to provide input and suggestions in connection with the
deliberation and the decision-making with respect thereto.
8.2. Access to Information. From the date hereof to the Effective Time,
the Sellers shall afford to Medical Manager and its officers, employees,
accountants, counsel and other representatives, access at all reasonable times
to its officers, employees, agents, properties, offices, plants, other
facilities and to all books and records , and shall furnish to Medical Manager
all financial, operating and other data and information as Medical Manager
through its officers, employees or agents, may reasonably request.
8.3. Y2K Updates and Patches. (a) Without limiting anything contained
in Section 7.1 above, through and including the Closing Date the Sellers shall
use all reasonable commercial efforts to, as applicable: (i) distribute the
applicable Y2K Updates and Y2K Patches to each End User who or which, as the
case may be, is a party to a currently effective license agreement with one or
more of the Sellers for Health Network, Mends or MDX (each such End User, an
"Eligible End User"); (ii) cause the applicable Y2K Updates and Y2K Patches to
be installed at each Eligible End User who or which, as the case may be, is a
party to a currently effective software support agreement directly with one or
more of the Sellers with respect to Health Network or Mends (each such Eligible
End User being referred to herein as a "Direct End User"); and (iii) distribute
the appropriate Y2K Updates and Y2K Patches to those Resellers who or which, as
the case may be, constitute Resellers of any one or more of Health Network,
Mends and MDX ("Eligible Resellers").
34
(b) Without limiting anything contained in Section 7.1 above,
through and including the Closing Date, to the extent that any Year 2000 "patch"
or other update has been developed or is otherwise made available by any third
party publisher or manufacturer of operating system software or computer
hardware provided by any of the Sellers to any End Users or by Resellers to any
End Users (but only if so provided in connection with that Reseller's
distribution of PMS Software), the Sellers shall use their reasonable commercial
efforts to, as applicable: (i) distribute such update or patch to each Eligible
End User who or which, as the case may be, uses the operating system or hardware
to which such update or patch relates, and to each Eligible Reseller; and (ii)
distribute such update or patch to, and cause such update or patch to be
installed at each Direct End User who or which, as the case may be, uses the
operating system or hardware to which such update or patch relates.
9. PRE-CLOSING COVENANTS OF THE PURCHASER, MEDICAL MANAGER AND
THE SELLERS
9.1. Advice of Changes; Governmental Filings. Each party shall confer
on a regular and frequent basis with the other, report on operational matters
regarding the Business and the transactions contemplated by this Agreement and
promptly advise the other orally and in writing of any event which occurs after
the date hereof that would under this Agreement have been required to be
disclosed on the date of the execution and delivery of this Agreement had such
event occurred on or prior to the date hereof or would have resulted in a breach
of any representation, warranty, covenant or agreement contained herein.
9.2. No Action. Except as contemplated by this Agreement, no party
hereto will take or agree or commit to take any action that is reasonably likely
to make any of its representations or warranties hereunder inaccurate in any
material respect at the date made (to the extent so limited) or as of the
Closing Date.
9.3. Legal Conditions to Closing. Each of the Seller, the Purchaser and
Medical Manager will take all reasonable actions necessary to comply promptly
with all legal requirements which may be imposed on itself with respect to the
Closing (including (x) furnishing all information required under the HSR and in
connection with approvals of or filings with any governmental agency or
authority and (y) in the case of the Sellers, to the extent required by
applicable law, providing any notices required to be delivered to their
employees under the Worker Adjustment Relocation Notification Act ("WARN")) and
will promptly cooperate with and furnish information to each other in connection
with any such requirements imposed upon any of them in connection with the
Closing.
9.4. Additional Agreements; Reasonable Efforts. Subject to the terms
and conditions of this Agreement, each of the parties hereto agrees to use all
reasonable commercial efforts to take, or cause to be taken, all action 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 by this Agreement, including, without limitation,
using its reasonable commercial
35
efforts to obtain all necessary waivers, consents and approvals and to cause the
conditions set forth in Section 11 hereto to be satisfied as promptly as
practicable. Without limiting the foregoing, the parties hereto will execute and
deliver, or cause to be executed and delivered, all such documents and
instruments, in addition to those specifically required by the provisions of
this Agreement, in form and substance reasonably satisfactory to the parties
hereto, as may be reasonably necessary or desirable to carry out and implement
the provisions of this Agreement.
9.5. Confidentiality. With respect to information that is made
available by: (i) the Sellers or any of their Affiliates pursuant to Section 8.3
hereof; (ii) the Sellers or any of their Affiliates to any one or more of
Medical Manager, the Purchaser or any of their Affiliates pursuant to this
Agreement to any other provision of this Agreement; or (iii) Medical Manager,
the Purchaser or any of their Affiliates to any one or more of the Sellers or
any of their Affiliates pursuant to any provision of this Agreement, the
receiving party shall comply with, and shall cause its representatives to comply
with, the provisions relating to confidentiality contained in the
Confidentiality Agreement (the "Confidentiality Agreement") dated February 11,
1999 between PCN and Medical Manager.
9.6. Employee Matters. (a) As promptly as practicable following the
date hereof, the Purchaser shall use its reasonable commercial efforts to
determine and identify to PCN which employees of the Sellers, if any, the
Purchaser does not wish to employ from and after the Closing Date (the
"Designated Employees"). Anything contained in this Agreement to the contrary
notwithstanding, following the identification by the Purchaser to PCN of any
Designated Employees, the Sellers may, in their sole and absolute discretion,
terminate the employment of any one or more of the Designated Employees prior to
the Closing Date and incur a Severance Obligation (as defined in Section 5.18
above) as a result thereof (a "Designated Employee Severance Obligation");
provided, however, to the extent that any Designated Employee is, as of the date
hereof, eligible to receive a Sale Bonus (as defined in Section 5.18 hereof),
the Designated Employee Severance Obligation with respect to such Designated
Employee shall be deemed to be the severance obligation of PCN set forth in the
agreement between PCN and such Designated Employee establishing the terms upon
which the Sale Bonus will be paid to any such Designated Employee.
(b) As promptly as practicable following the date hereof, the
Purchaser and PCN shall seek to establish and implement a bonus or incentive
plan pursuant to which certain employees of the Sellers identified by the
Purchaser and PCN will receive bonuses (the "Medical Manager Retention Bonuses")
in the event that such employees remain in the Sellers' and/or the Purchaser's
employ for a specified period of time following the date hereof.
9.7. Solion Assets. Each of the parties hereto acknowledges that,
except to the extent (x) ordered by the Bankruptcy Court or another court of
competent jurisdiction or (y) the Order of Preliminary Injunction described on
Schedule 5.4 hereto is vacated or is otherwise no longer applicable, nothing
contained in this Agreement is intended to encumber or otherwise constitute an
encumbrance upon any of the equipment or other physical property located in the
Commonwealth of Massachusetts and used by PCN as part of or primarily in
connection with the operation of PCN's
36
"Solion Division". The foregoing shall in no way limit or modify the Purchaser's
right to acquire all of the Sellers' assets (other than the Retained Assets) at
the Closing (the acquisition of which being a condition to the Closing), which
right may be waived by the Purchaser, in its sole discretion, at the Closing.
9.8. Medical Manager SEC Documents. From the date hereof through the
Closing Date, Medical Manager shall, promptly after the filing by Medical
Manager of such document with the SEC, deliver to PCN copies of any Medical
Manager SEC Document filed by Medical Manager with the SEC.
9.9. Subsequent Financial Statements and Related Matters. To the extent
reasonably determined by Medical Manager's legal counsel and independent
accountants to be required to be included in, or incorporated by reference into,
any filing to be made by Medical Manager under or pursuant to Section 5 of the
1933 Act, PCN shall use all reasonable efforts to:
(a) as soon as practicable but in no event later than the 40th
day following the end of each fiscal quarter between the date of this Agreement
and the Closing, if the Closing has not yet occurred, deliver to Medical Manager
financial statements for the Business that comply in all material respects with
the rules of the SEC applicable to financial statements required to be included
in a Quarterly Report on Form 10-Q for such quarter (the "Subsequent Interim
Financial Statement");
(b) as soon as practicable but in no event later than March
25, 2000, if the Closing has not yet occurred, deliver to Medical Manager
audited financial statements for the Business for the year ended December 31,
1999 that comply in all material respects with the rules of the SEC applicable
to financial statements required to be included in an Annual Report on Form 10-K
for such fiscal year (the "Subsequent Audited Financial Statements" and,
together with the Subsequent Interim Financial Statements, the "Subsequent
Financial Statements"); provided, however, that, in the event that after the
date hereof (x) Medical Manager has filed a registration statement with the SEC
under the 1933 Act and (y) Medical Manager is reasonably advised by its
independent accountants that, in order for such registration statement to be
declared effective by the SEC, the Subsequent Audited Financial Statement must
be included in, or incorporated by reference into, such registration statement,
PCN shall, following written notice by Medical Manager of the occurrence of such
events, use all reasonable efforts to deliver the Subsequent Audited Financial
Statements to Medical Manager within ten (10) days following the date on which
PCN receives such notice from Medical Manager (but, in no event shall PCN be
required to deliver such Subsequent Audited Financial Statements to Medical
Manager prior to March 3, 2000).
(c) provide, and to use its reasonable business efforts to
cause the Sellers' accountants to provide, promptly and from time to time, such
certifications and consents regarding financial information of the Business for
any period prior to the Closing Date as Medical Manager and its accountants may
reasonably consider necessary in connection with any filings or reports that
Medical Manager is required to file with the SEC or any other governmental
authority, whether as
37
a result of the transaction contemplated hereby, an issuance of securities or
Medical Manager's periodic reporting obligations under the Securities Exchange
Act of 1934, as amended. Each request for a certification or consent shall be
made no less than 15 days prior to the date such certificate or consent must be
delivered to Medial Manager. In addition, the Sellers shall cooperate with
Medical Manager and its accountants, and shall use their reasonable business
efforts to cause their accountants to cooperate with Medical Manager and its
accountants, in connection with the preparation of financial statements of
Medical Manager to be included in any such filings or reports.
10. POST-CLOSING COVENANTS
10.1. Further Assurances. The Sellers, on the one hand, and the
Purchaser and Medical Manager, on the other hand, at the request of the other,
at or after the Closing, will execute and deliver, or cause to be executed and
delivered, to the other such documents and instruments, in addition to those
specifically required by the provisions of this Agreement, in form and substance
reasonably satisfactory to the other, as may reasonably be necessary or
desirable to carry out or implement any provision of this Agreement.
10.2. Employee Matters. (a) The Purchaser and Medical Manager agree
that, on the Closing Date, either Medical Manager or the Purchaser shall offer
employment to all of the Employees who the Purchaser or Medical Manager wish to
employ. Without limiting the foregoing, the Purchaser or Medical Manager, as the
case may be, agrees to credit to any Employee who becomes employed by the
Purchaser or Medical Manager, as applicable, following the Closing Date all
unused vacation time such Employee has accrued with the Sellers as of the
Closing Date as set forth on Schedule 5.18(a), for the benefit of such Employee
subject to and in accordance with the Purchaser's and Medical Manager's vacation
policy in effect from time to time. Except as provided in the three immediately
preceding sentences, nothing contained in this Section 10.2 shall in any way
limit the Purchaser's and Medical Manager's right or ability to, in its sole
discretion, deal with any such employee in any manner it determines, including,
without limitation, the right to terminate or sever any such employee, change or
alter the nature of the Business, or change or alter the organizational
structure of the Business. Nothing contained in this Section 10.2 shall in any
way limit or modify the Purchaser's agreement to assume any of the Assumed
Liabilities, including, without limitation, the obligation to satisfy the
Severance Obligations with respect to any Employee who is not offered employment
with the Purchaser or Medical Manager on the Closing Date and whose employment
with the Sellers is terminated on or following the Closing Date.
(b) On the Closing Date, contemporaneously with the payment by
the payment by the Purchaser to the Sellers of the Purchase Price, the Purchaser
shall also pay to the Sellers an amount equal to the sum of (the "Agreed
Reimbursement Amount"):
(i) the amount of all obligations of any one or more
of the Sellers to any one or more of its employees with respect to: (A) any
Severance Obligations set forth on Schedule 5.18(a) actually payable by the
Sellers arising as a result of (x) the failure of the Purchaser to,
38
contemporaneously with the Closing, offer to any employee of any one or more of
the Sellers employment with the Purchaser or one of its Affiliates on terms
substantially comparable to those of each such employee's current employment
with the Sellers or (y) the termination of the employment of any Designated
Employee (as provided for in Section 9.6 hereof) whether or not the Designated
Employee Severance Obligation (as defined in Section 9.6 hereof) resulting
therefrom is paid by the Sellers prior to the Closing Date; (B) the obligations
of any one or more of the Sellers to pay any Stay-Put Bonuses (other than any
Sale Bonuses (as defined in Section 5.18 )) (which obligation shall, for
purposes of the preparation of the Closing Date Net Worth Statement and the
calculations required to be made in accordance with Section 2.3 hereof only, be
deemed to constitute an Assumed Liability); and (C) Medical Manager Retention
Bonuses (as defined in Section 9.6(b) hereof); and
(ii) the amount of all obligations of the Sellers
existing on the Closing Date to make any matching contributions to the PCN
401(k) Plan; provided, however, that such obligation shall, for purposes of the
preparation of the Closing Date Net Worth Statement and the calculations
required to be made in accordance with Section 2.3 hereof only, be deemed to
constitute an Assumed Liability.
10.3. Maintenance of Records; Assistance. (a) The Purchaser shall keep
and maintain all documents and records relating to any one or more of the
Business, the Assets and the Assumed Liabilities for a period of five (5) years
after the Closing Date. Upon request made by PCN or its successor to the
Purchaser after the Closing Date, the Purchaser shall make such documents and
records available to PCN or its successor for inspection and copying, at PCN's
expense, during regular business hours, in order to permit the Sellers to:
(i) administer the claims procedure and
post-confirmation items in connection
with the Sellers' Bankruptcy case
contemplated by Section 7 hereof;
(ii) prepare for, dispute or respond to, any
litigation, action, claim or proceeding,
including, without limitation, audits in
connection with tax returns;
(iii) comply with governmental requirements
applicable to the Sellers; and
(iv) administer the winding-up of the Sellers'
business and operations, including, without
limitation, preparing and filing tax returns
and the termination of the Sellers' employee
benefit plans;
provided, however, that any such inspection pursuant to this Section 10.3 shall
be conducted in such a manner so as not to unreasonably interfere with the
normal conduct of business by the Purchaser. Notwithstanding anything contained
in this Agreement to the contrary, the Sellers may, at any time prior to the
Closing, furnish to Purchaser a list of documents and records relating any one
or more of the Assets and the Assumed Liabilities which the Sellers and their
representatives would like to
39
retain or copy in connection with the matters specified in clauses (i) through
(iv) above. The Sellers may retain such designated documents and records which
the Purchaser determines, in the exercise of its reasonable discretion, that it
does not need. With respect to any designated documents or records which the
Purchaser determines, in the exercise of its reasonable discretion, not to
permit the Sellers to retain, the Sellers shall be entitle to copy same or to
request that the Purchaser provide copies of the same to the Sellers at the
Sellers' expense.
(b) After the Closing Date, the Purchaser and Medical Manager
shall make any of the Employees employed by the Purchaser or Medical Manager
available to PCN or its successor, as the case may be, in connection with the
matters referred to in clauses (i) through (iv) of Section 10.3 above (the
"Specified Functions") or otherwise in connection with any litigation,
governmental investigation and like matters, provided that such assistance shall
be provided in such a manner so as not to unreasonably interfere with the normal
conduct of business by the Purchaser and PCN or its successor, as the case may
be, shall reimburse the Purchaser and Medical Manager for all reasonable
out-of-pocket expenses incurred by the Purchaser and Medical Manager in making
such employees available. Without limiting the foregoing, the Sellers may, at
any time prior to the Closing, furnish to Purchaser a list of Employees whose
services PCN or its successor, as the case may be, will reasonably require after
the Closing Date in connection with the Specified Functions (each such Employee,
a "Specified Employee"). The Purchaser and Medical Manager agree that, so long
as a Specified Employee becomes and remains an employee of either the Purchaser
or Medical Manager, until the first to occur of (the "End Date") (x) the first
anniversary of the Closing Date, (y) the day on which the Designated Employee's
employment with the Purchaser or Medical Manager is terminated and (z) the
thirtieth (30th) day following written notice by PCN to Medical Manager that PCN
no longer requires the services of the Specified Employee, the Specified
Employee shall be permitted to, on PCN's behalf, spend a reasonable amount of
the Specified Employee's working time to perform any one or more of the
Specified Functions; provided, however, that, in no event shall such functions
materially or unreasonably interfere with the normal conduct of any such
Specified Employee's normal working obligations to the Purchaser. In
consideration of the Purchaser and Medical Manager permitting the Specified
Employee to perform services on PCN's behalf in accordance with the immediately
preceding sentence, PCN or its successor, as the case may be, shall pay to
Medical Manager within five (5) business days following the end of each calendar
month occurring prior to the End Date, an amount with respect to each Specified
Employee reasonably agreed upon by PCN and Medical Manager (each agreeing to act
reasonably and in good faith) taking into account the percentage of working time
such Specified Employee is reasonably expected to devote to the performance of
the Specified Functions.
10.4. Y2K Updates and Patches. (a) Without limiting anything contained
in Section 7.1 above, from and after the Closing Date, if the Purchaser is
contacted or otherwise requested by any Eligible End User, Eligible Reseller or
any of the Sellers with respect to the distribution or installation of any Y2K
Update or Y2K Patch, the Purchaser will, at its own cost and expense, on the
Sellers' behalf, use all reasonable commercial efforts to, as applicable: (i)
distribute the applicable Y2K Updates and Y2K Patches to each Eligible End User
and to whom or which, as the case may be, any such Y2K Updates or Y2K Patches
have not been distributed by the Sellers prior to the Closing; (ii) cause the
applicable Y2K Updates and Y2K Patches to be installed at each Direct
40
End User and to whom or which, as the case may be, any such Y2K Updates or Y2K
Patches have not been installed by the Sellers prior to the Closing; and (iii)
distribute the appropriate Y2K Updates and Y2K Patches to Eligible Resellers and
to whom or which, as the case may be, any such Y2K Updates or Y2K Patches have
not been distributed by the Sellers prior to the Closing.
(b) Without limiting anything contained in Section
7.1 above, from and after the Closing Date, to the extent that any Year 2000
"patch" or other update has been developed or is otherwise made available by any
third party publisher or manufacturer of operating system software or computer
hardware provided by any of the Sellers to any End Users or by Resellers to any
End Users (but only if so provided in connection with that Reseller's
distribution of PMS Software), the Purchaser shall, at it own expense, on the
Sellers' behalf, use its reasonable commercial efforts to, as applicable: (i)
distribute such update or patch to each Eligible End User who or which, as the
case may be, uses the operating system or hardware to which such update or patch
relates, and to each Eligible Reseller and to whom or which, as the case may be,
any such update or patch has not been distributed by the Sellers prior to the
Closing; and (ii) distribute such update or patch to, and cause such update or
patch to be installed at each Direct End User who or which, as the case may be,
uses the operating system or hardware to which such update or patch relates and
to whom or which, as the case may be, any such update or patch has not been
installed by the Sellers prior to the Closing.
10.5. The Facility. (a) The Purchaser and Medical Manager agree that,
with respect to PCN's offices located at 0000 Xxx Xxxxxxxx Xxxx, Xxxxxx Xxxxxx,
Xxx Xxxxxx (the "Facility"), during the period (a "Facility Transition Period")
commencing on the Closing Date and ending on the first to occur of: (x) the date
on which PCN moves all of its employees and representatives out of the Facility
(a "Facility Termination Date"); (y) the date on which the Purchaser has
terminated its lease for the Facility (the "Lease Termination Date"); and (z)
the 180th day following the Closing Date, the Purchaser and Medical Manager
shall permit PCN to utilize the Facility and utilize the computer hardware and
other equipment and telephone lines, numbers and services located therein in
connection with the matters specified in clauses (i) through (iv) of Section
10.3 above (provided, however, that (x) PCN shall be permitted to have a maximum
of 10 employees utilize the Facility and such equipment and (y) the Purchaser or
Medical Manager, as the case may be, shall have the right to place any such
employees in a part of the Facility which is separated from the Purchaser's and
Medical Manager's employees located at the Facility). In consideration for
providing PCN with the use of the Facility, during the Facility Transition
Period, PCN shall reimburse the Purchaser for all out-of-pocket costs and
expenses incurred by the Purchaser in connection with PCN's use of the Facility.
Anything contained in this Section 10.5 to the contrary notwithstanding, Medical
Manager or the Purchaser shall provide PCN with at least sixty (60) days'
written notice prior to a Lease Termination Date. Unless otherwise agreed to by
Medical Manager or the Purchaser, PCN shall vacate the Facility no later than
five (5) days prior to a Lease Termination Date.
10.6. Use of Name. The Sellers agree that as promptly as reasonably
practicable following the Closing Date: (i) (x)PCN shall change its corporate
name from "Physician Computer Network"; (y) Versyss shall change its corporate
name from "VERSYSS Incorporated"; and (z) WM shall
41
change its corporate name from "Xxxxxx*Xxxxxx, Inc."; (ii) the Sellers shall
execute all such documents and instruments reasonably necessary in order to
permit the Purchaser to use the name "Physician Computer Network", "PCN",
"VERSYSS" and "Xxxxxx*Xxxxxx" in all jurisdictions in which the Sellers are
currently using such names or any variations or abbreviations thereof; and (iii)
none of the Sellers will use such names or any variations or abbreviations
thereof; provided, however, that may use such names, for a period not to exceed
sixty (60) days, for: (A) de minimis temporary uses such as exhausting on-hand
supplies of letterhead and related materials that may contain a reference to
such name; or (B) any other temporary transitional.
10.7. Bank Accounts. For a period of sixty (60) days following the
Closing Date, the Purchaser shall either: (i) not permit the amount of cash
maintained in any Transferred Account (as defined in Section 1.1(q) above) to
fall below the amount of cash contained in that Transferred Account at the time
of the Closing; or (ii) assure that the amount of cash maintained in any such
account remains sufficient to cover any checks written by the Sellers prior to
the Closing against funds maintained in such Transferred Account at the time of
the Closing (regardless of whether such checks are in respect of the payment of
Assumed Liabilities or Retained Liabilities). For purposes of preparing any
Closing Date Net Worth Statement, the amount of any such check shall be deemed
to debit the amount of cash held by the Sellers on the Closing Date.
11. CLOSING CONDITIONS
11.1. Conditions to Obligation of Each Party to Effect the Closing. The
respective obligations of each party to effect the Closing shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) Confirmation Order. An order (the "Confirmation
Order") confirming the Plan (without any modifications thereto which are adverse
to the Purchaser's and Medical Manager's rights hereunder) shall have been
signed by the Bankruptcy Court and shall have become final and non-appealable.
(b) Effectiveness of the Plan. Each of the conditions
to the effectiveness of the Plan shall have occurred or have been duly waived.
(c) HSR. The waiting period applicable to the
consummation of the transactions contemplated by this Agreement under the HSR
shall have expired.
(d) No Injunction. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction prohibiting the consummation of the transactions
contemplated hereby shall be in effect; provided, however, that prior to
invoking this condition, each party shall use all reasonable efforts to have any
such decree, ruling, injunction or order vacated.
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(e) No Action Letter or Registration Statement.
Medical Manager shall have obtained the No Action Letter or the Order or the
Registration Statement shall have been declared effective by the SEC.
11.2. Additional Conditions to Obligations of the Purchaser and Medical
Manager. The obligations of the Purchaser and Medical Manager to effect the
Closing are also subject to the following conditions (any one or more of which
may be waived by Medical Manager, but only in a writing signed by Medical
Manager):
(a) Representations and Warranties. Each of the
representations and warranties of any one or more of the Sellers contained in
this Agreement or in any document or instrument delivered by either one or more
of the Sellers in connection herewith, shall be true and correct, individually
and in the aggregate, in all material respects (except that any specific
representation or warranty that is qualified as to materiality must be true as
written) on and as of the Closing Date, except for changes specifically
contemplated by this Agreement, with the same force and effect as if made on and
as of the Closing Date, except that any such representations or warranties made
as of a specified date shall have been true on and as of such date.
(b) Agreements and Covenants. The Sellers shall have
performed or complied in all material respects with all of their agreements and
covenants contained in this Agreement to be performed or complied with by any
one or more of the Sellers at or prior to the Closing Date (except that any
specific agreement or covenant that is qualified as to materiality must have
been performed as written).
(c) No Material Adverse Change. There shall have been
no change in the business, results of operations, properties (including
intangible properties), financial condition, assets or liabilities of the
Business since the date of this Agreement to the Closing Date which,
individually or in the aggregate, has had a material adverse effect on the
Business' condition (financial or otherwise), results of operations, properties
or business or on the Assets (a "Material Adverse Effect"); provided, however
that: (i) no Material Adverse Effect shall be deemed to have occurred (and it
shall not constitute a failure of the Sellers to satisfy the conditions set
forth in Section 11.2(a) or (b)) solely on account of any one or more of the
following: (x) if the Sellers incur any liability, absolute, contingent or
otherwise, which does not constitute an Assumed Liability; or (y) any one or
more of the Sellers files the Petition; and (ii) for purposes of this Section
11.2(c) only, a decrease in the Sellers' revenues for any three consecutive full
calendar month following the date hereof by not more than 20% from the greater
of (A) the Sellers' average revenues for any three consecutive calendar months
during the preceding 12 months (exclusive of revenues attributable to business
units sold or otherwise disposed by the Sellers' during the preceding 12 months)
and (B) the Sellers' revenues for the corresponding three calendar months during
the immediately preceding calendar year (exclusive of revenues attributable to
business units sold or otherwise disposed by the Sellers during the preceding 12
months) shall not be deemed to constitute a Material Adverse Effect.
43
(d) Third Party Consents. The Sellers shall have
obtained, and Purchaser shall have received copies of, all of the approvals,
waivers, consents and releases of third parties listed on Schedule 11.2(d)
hereto, none of which shall have been withdrawn, revoked or modified as of the
Closing Date; provided, however, that no such approval, waiver, consent or
release shall be required to be obtained to the extent that the transfer of the
Assets from the Sellers to the Purchaser and the assignment by the Sellers to
the Purchaser and assumption by the Purchaser, of the Assumed Liabilities,
without the Sellers having obtained any such approval, waiver, consent or
release is provided for in the Plan.
(e) Closing Deliveries. The Sellers, as applicable,
shall have executed and delivered to the Purchaser the following instruments,
documents and agreements (such instruments, documents and agreements being
referred to herein as the "Ancillary Documents"):
(i) The agreements and instruments referred to in
Section 1.3 hereto to which either one or more of the Sellers are parties;
(ii) Such certificates to evidence compliance with
the conditions set forth in this Agreement as may be reasonably requested by
Medical Manager, including, without limitation, certificates of the secretary of
each of the Sellers as to corporate resolutions and incumbency.
(f) Certificates. Each of the Sellers shall have
obtained, and Medical Manager shall have received copies of a certificate of the
Secretary of State of that Seller's state of incorporation as to the due
incorporation and good standing of such Seller.
(g) Entire Business. The Business to be sold by the
Sellers to the Purchaser as part of the Assets shall include all of the business
units, divisions and operations of the type generally constituting the Business
as of the date hereof.
(h) Adjustment Amount. The Adjustment Amount (as
defined in Section 2.3(g) above) reflected on the PCN Estimated Closing Date Net
Worth Statement shall not exceed $4,000,000.
11.3. Additional Conditions to Obligation of the Sellers. The
obligation of the Sellers to effect the Closing are also subject to the
following conditions (any one or more of which may be waived by PCN, but only in
a writing signed by PCN):
(a) Representations and Warranties. Each of the
representations and warranties of Purchaser and Medical Manager contained in
this Agreement or in any document or instrument delivered by either one or both
of the Purchaser and Medical Manager in connection herewith, shall be true and
correct, individually and in the aggregate, in all material respects (except
that any specific representation or warranty that is qualified as to materiality
must be true as written) on and as of the Closing Date, except for changes
specifically contemplated by this Agreement, with
44
the same force and effect as if made on and as of the Closing, except that any
such representations or warranties made as of a specified date shall have been
true on and as of such date.
(b) Agreements and Covenants. The Purchaser and
Medical Manager shall have performed or complied in all material respects with
all of its agreements and covenants contained in this Agreement to be performed
or complied with by it at or prior to the Closing Date (except that any specific
agreement or covenant that is qualified as to materiality must have been
performed as written).
(c) No Material Adverse Change. There shall have
been no material adverse change in the business, results of operations,
properties (including intangible properties), financial condition, assets or
liabilities of Medical Manager and its subsidiaries taken as a whole from the
date of this Agreement to the Closing Date. For purposes of this Section
11.3(c), it shall be considered a material adverse effect if (x) Medical Manager
has received a notice from the NASDAQ Stock Market that the Medical Manager
Stock is threatened to be, or the Medical Manager Stock otherwise is, delisted
from trading, on the NASDAQ Stock Market; or (y) Medical Manager fails to timely
file with the SEC any Medical Manager SEC Document required to be so filed with
the SEC under applicable laws, rules and regulations.
(d) Third Party Consents. Medical Manager and the
Purchaser shall have obtained, and PCN shall have received copies of, all of the
approvals, waivers, consents and releases of third parties listed on Schedule
11.3(d) hereto, none of which shall have been withdrawn, revoked or modified as
of the Closing Date.
(e) Closing Deliveries. The Purchaser and Medical
Manager, as applicable, shall have executed and delivered to PCN the following
instruments, documents and agreements:
(i) The agreements and instruments referred to in
Section 1.3 hereto to which the Purchaser is a party;
(ii) Such certificates to evidence compliance with
the conditions set forth in this Agreement as may be reasonably requested by
PCN, including, without limitation, certificates of the secretary of the
Purchaser as to corporate resolutions and incumbency.
(f) Certificates. Medical Manager and the Purchaser
shall have obtained, and PCN shall have received copies of, a certificate of the
Secretary of State of the states of incorporation of Medical Manager and the
Purchaser, respectively, as to the due incorporation and good standing of
Medical Manager and the Purchaser, respectively.
(g) Opinion of Counsel. PCN shall have received an
opinion of outside legal counsel to Medical Manager, in form and substance
reasonably satisfactory to PCN, that the Medical Manager Stock is validly issued
and, in the event that the Registration Statement is filed, that the
Registration Statement is effective.
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12. TERMINATION, AMENDMENT AND WAIVER
12.1. Termination. This Agreement may be terminated at any
time prior to the Closing Date:
(a) By mutual consent of the Purchaser and Medical
Manager, on the one hand, and the Sellers, on the other hand; or
(b) By either Medical Manager or PCN, if the
transaction contemplated by this Agreement shall not have been consummated by
May 31, 2000 (the "Termination Date") (provided that the right to terminate this
Agreement under this Section 12.1(b) shall not be available to any party whose
failure to fulfill any obligation hereunder has been the cause of or resulted in
the failure of the Closing to occur on or before such date); or
(c) By either Medical Manager or PCN if there has
been a material breach of any representation, warranty, covenant or agreement on
the part of the other party set forth in this Agreement, which breach has not
been cured within ten (10) business days following receipt by the breaching
party of notice specifying such breach in reasonable detail; or
(d) By either Medical Manager or PCN if a court of
competent jurisdiction or governmental regulatory or administrative agency or
commission having proper jurisdiction and authority thereof shall have issued an
order, decree or ruling (which order, decree or ruling the parties hereto shall
use their best efforts to lift) prohibiting the transactions contemplated by
this Agreement and such order, decree or ruling shall have become final and
non-a ppealable; or
(e) By Medical Manager if the Petition is not filed
by the close of business on the business day next succeeding the date hereof; or
(f) By Medical Manager by delivery to PCN of notice:
(i) at any time after PCN has failed to deliver any Subsequent Financial
Statement on or prior to the date required under Section 9.9(a) or 9.9(b), of
this Agreement, respectively, if, on the date on which such notice is received
by PCN, such failure is continuing; or (ii) at any time after the Sellers or
their accountants have failed to deliver any consent or certification on or
prior to the date specified therefor pursuant to Section 9.9(c) of this
Agreement if such failure continues for a period of at least five days following
receipt by PCN of such notice; provided, however, that Medical Manager may not
terminate this Agreement pursuant to this Section 12.1(f) unless, in the notice
delivered by Medical Manager to PCN pursuant to this Section 12.1(f), Medical
Manager represents to PCN that, at the time that such notice is so delivered,
Medical Manager has begun the preparation of such a registration statement.
46
(g) By Medical Manager if any one or more of the
Sellers: (i) appears before the Bankruptcy Court or otherwise files papers with
the Bankruptcy Court in support of any plan of reorganization other than the
Plan; (ii) enters into a memorandum of understanding, agreement in principal or
definitive agreement with any person or entity (the "Third Party"), other than
the Purchaser, Medical Manager or one of its Affiliates, relating to any
Acquisition Proposal. As used herein, an "Acquisition Proposal" shall mean any
proposal or offer (x) for a merger or other business combination involving PCN,
(y) to acquire all of the common stock of PCN or (z) to acquire all or
substantially all of the Sellers' assets other than the transaction contemplated
by this Agreement; or (iii) publicly announces its intention to do any of the
foregoing.
(h) Prior to the Closing Date by Medical Manager in
the event that the Adjustment Amount (as defined in Section 2.3(g) above)
reflected on the PCN Estimated Closing Date Net Worth Statement exceeds
$4,000,000.
12.2. Effect of Termination. (a) Upon the termination of this
Agreement as provided for in Section 12.1, this Agreement shall forthwith become
void and there shall be no liability or further obligation on the part of any
party hereto; provided, however, that any such termination shall not be deemed
to in any way limit or relieve any liability of any party hereunder with respect
to a breach by any party occurring prior to such termination of any of its
representations, warranties, covenants or agreements contained herein; provided,
further, that the provisions of this Section 12.2 and Section 9.5 shall survive
any such termination.
(b) In the event of termination of this Agreement
pursuant to Section 12.1(c) due to a breach of any representation, warranty,
covenant or agreement which would have been capable of cure if reasonable
efforts had been made by the breaching party, but which breach remains uncured
at the time of the termination, the non-terminating party shall pay to the
terminating party (the "Terminating Party") an amount equal to all out-of-pocket
costs and expenses, including, without limitation, reasonable fees and
disbursements of counsel, incurred by the Terminating Party in connection with
the preparation and negotiation of this Agreement and the transaction
contemplated hereby up to a maximum of: (i) in the case of the Purchaser and
Medical Manager, $500,000 of such costs and expenses; and (ii) in the case of
the Sellers, $500,000 of such costs and expenses.
(c) In the event of a termination of this Agreement
pursuant to Section 12.1(g), upon consummation of an Acquisition Proposal giving
rise to such termination under circumstances in which the consideration to be
paid (including, without limitation, the liabilities to be assumed) by such
Third Party for substantially all of the assets of the Sellers will exceed the
Purchase Price, the Sellers shall pay to the Purchaser $2,000,000 in cash (the
"Break-Up Fee") plus an amount in cash equal to all out-of-pocket costs and
expenses, including, without limitation, reasonable fees and disbursements of
counsel, incurred by the Purchaser in connection with the preparation and
negotiation of this Agreement and the transaction contemplated hereby up to a
maximum of $500,000 of such costs and expenses.
47
(d) The termination of this Agreement as provided in
Section 12.1 shall in no way limit, restrict or modify any of the obligations of
the Sellers to either one or both of the Purchaser and Medical Manager with
respect to the Assigned Loans, the Pre-Petition Loan and the DIP Loan.
12.3. Extension; Waiver. At any time prior to the Closing
Date, the parties hereto may, to the extent legally allowed: (a) extend the time
for the performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party to be bound thereby.
13. INDEMNIFICATION
13.1. Indemnification of the Purchaser and Medical Manager. Each of the
Sellers, jointly and severally, hereby covenants and agrees with Medical Manager
and the Purchaser that it shall indemnify Medical Manager and the Purchaser
(each a "Purchaser Indemnified Party") and hold them harmless from, against and
in respect of any and all costs, losses, claims, liabilities, fines, penalties,
damages and expenses (including court costs and reasonable fees and
disbursements of counsel) (collectively "Losses") resulting from or arising out
of:
(a) any liabilities which are not Assumed
Liabilities, and any claim or demand by a third party (whether or not
successful) to cause or require a Purchaser Indemnified Party to pay, perform or
discharge any debt, obligation, liability or commitment referred to in this
clause (a); or
(b) any breach of any of the covenants or agreements
made by any one or more of the Sellers contained in this Agreement or in any
Ancillary Document.
Nothing contained in this Section 13.1 shall in any way be
deemed to limit, restrict or in any way impact upon the Sellers rights to
liquidate, distribute its assets and wind-up its operation in accordance with
the terms of the Plan.
13.2. Indemnification of the Sellers by the Purchaser and Medical
Manager. Each of Medical Manager and the Purchaser, jointly and severally,
hereby covenants and agrees with the Sellers that it shall indemnify each of the
Sellers (individually a "Seller Indemnified Party") and hold them harmless from,
against and in respect of any and all Losses resulting from or arising out of:
(a) the Assumed Liabilities, and any claim or demand
by a third party (whether or not successful) to cause or require a Seller
Indemnified Party to pay, perform or discharge any debt, obligation, liability
or commitment referred to in this clause (a); or
48
(b) any breach of any of the covenants or agreements
made by any one or both of Medical Manager or the Purchaser contained in this
Agreement or in any Ancillary Document.
13.3. Survival of Representations, Warranties, Covenants, Agreements
and Indemnities. (a) The representations and warranties of each of the parties
hereto, and the indemnities of each of the parties hereto in connection with any
breach of any such representations or warranties contained in this Agreement or
in any Ancillary Document shall not survive the Closing.
(b) All covenants and agreements of any each of the parties
hereto contained in this Agreement or any Ancillary Document shall survive the
Closing for a period specified in such provision or, if not specified,
indefinitely.
13.4. Right to Defend, Etc. If the facts giving rise to any such
indemnification pursuant to this Article 13 shall involve any actual claim or
demand by any third party (a "Third Party Claim") against a Purchaser
Indemnified Party or a Seller Indemnified Party, as the case may be (an
"Indemnified Party") the party required to indemnify such Indemnified Party
pursuant to Sections 13.1 or 13.2, as the case may be (the "Indemnifying Party")
shall be entitled to notice of such claim. At such time as the remedy sought in
the Third Party Claim is solely money damages or if Medical Manager otherwise
permits, then Sellers, at their sole cost and expense, may assume the defense of
the Third Party Claim. If Sellers assume the defense of a Third Party Claim,
then Sellers shall select counsel reasonably satisfactory to Medical Manager to
conduct the defense. Sellers shall not consent to a settlement of, or the entry
of any judgment arising from, any Third Party Claim, unless (i) the settlement
or judgment is solely for money damages and Seller admits in writing its
liability to hold Medical Manager and the Purchaser harmless from and against
any losses, damages, expenses and liabilities arising out of such settlement or
judgment or (ii) Medical Manager reasonably consents thereto. Sellers shall
provide Medical Manager with ten (10) days prior written notice before it
consents to a settlement of, or the entry of a judgment arising from, any Third
Party Claim. Medical Manager and the Purchaser shall be entitled to participate,
at their own expense, in the defense of any Third Party Claim, the defense of
which is assumed by Sellers with its own counsel. With respect to Third Party
Claims in which, and for so long as, the remedy sought is not money damages and
Medical Manager does not permit Sellers to assume the defense, Sellers shall,
upon notice to Medical Manager within fifteen (15) days after Sellers receives
notices of the Third Party Claim, be entitled to participate in the defense with
his own counsel at its own expense. In such instance, or if Sellers does not
assume or participate in the defense of any Third Party Claim in accordance with
the terms of this Section, Sellers shall be bound by the results obtained by
Medical Manager with respect to the Third Party Claim. Medical Manager shall
provide Sellers with ten (10) days prior written notice before it consents to a
settlement of, or the entry of a judgment arising from, any such Third Party
Claim.
13.5. Tax Effect. The amount of any indemnification due to an
Indemnified Party pursuant to this Section 13, as the case may be, shall be
calculated after taking into account the amount of all insurance, cash or other
direct financial benefits payable to such Indemnified Party (including any
49
such benefits payable by third parties) and after taking into account the United
States federal, state and local and foreign national, provincial and local tax
benefits or detriments to the Indemnified Party, as the case may be, calculated
assuming the Indemnified Party were a taxpayer subject to tax at the highest
marginal rate in effect when the payment is made, of the payments made in
respect of such loss, claim, demand, cost or expense giving rise to the
indemnification and the payments, including indemnification payments made in
respect thereto.
13.6. Settlement of Certain Claims. Without limiting anything contained
in this Article 13, in the event that any of the Sellers or their successors, on
the one hand, or Medical Manager or the Purchaser, on the other hand, becomes
aware of any claim asserted by any person which constitutes a Retained Liability
(an "Unassumed Claim"), each party shall promptly notify the other party and the
Purchaser and Medical Manager shall cooperate with the Sellers in any reasonable
manner requested by the Sellers or their successors, as the case may be, or
otherwise reasonably suggested by the Purchaser, with any negotiations or
proceedings involving any such Unassumed Claim. Without limiting the foregoing,
at the request and on behalf of the Sellers (and, in each case, so long as the
Sellers, or their successors, first provide to the Purchaser and Medical Manager
reasonable evidence of the Sellers' or their successors', as the case may be,
ability to pay the amounts required to be paid to the Purchaser or Medical
Manager provided for below in this Section 13.6), the Purchaser and Medical
Manager provide such services or products (including providing additional or
alternate hardware or software) to any End User or other person asserting an
Unassumed Claim reasonably requested by PCN (in each case consistent with the
Purchaser's and Medical Manager's customary business practices and subject to
the Purchaser's and Medical Manager's available resources) in order to remedy
and settle such Unassumed Claim ("Remedial Services"). With respect to any
Remedial Services performed by the Purchaser or Medical Manager in satisfaction
of an Unassumed Claim, the Sellers shall pay to the Purchaser an amount equal
to: (i) all actual direct costs incurred by the Purchaser and Medical Manager in
providing such services (including, without limitation, (A) the cost to the
Purchaser and Medical Manager of any equipment, supplies or other items
(including the costs of the shipping and handling thereof) provided by the
Purchaser or Medical Manager to the End User or other person in connection
therewith, (B) travel costs incurred by the Purchaser and Medical Manager in
connection therewith, and (C) to the extent the Purchaser or Medical Manager is
required to utilize third party contractors to perform any of the services, the
amounts payable by the Purchaser or Medical Manager to third party contractors
for providing such services); and (ii) the amount reasonably necessary to
reimburse the Purchaser and Medical Manager for the amount of time devoted by
the Purchaser's and Medical Manager's employees to perform such services, which
amount referred to in this clause (ii) shall be calculated at a rate equal to
80% of Medical Manager's then published hourly rates for software support
services, hardware support and services, training, programming and the like;
provided however, that, none of the Sellers nor any of their successors shall
have any obligation to pay the Purchaser or Medical Manager any such amount
unless, prior to the time that the Remedial Services are performed by the
Purchaser or Medical Manager, the Sellers or their successors have consented to
or otherwise requested the performance of such Remedial Services; provided,
further, however, that, in the event that, in the exercise of its reasonable
business judgment, the Purchaser determines that certain services (including,
without limitation, providing additional or alternate hardware or software)
should be provided to a person
50
in order to remedy or settle an Unassumed Claim ("Suggested Remedial Services"),
the Purchaser shall provide PCN or its successor, as the case may be, with
written notice thereof and, if, within ten (10) business days following receipt
of such notice PCN or its successor has not responded to the Purchaser's
suggestions contained therein, PCN or its successor, as the case may be, shall
be deemed to have consented to the Purchaser providing the person in question
with the Suggested Remedial Services for which PCN or its successor shall
obligated to reimburse the Purchaser as provided for in this Section 13.6.
14. GENERAL
14.1. Expenses, Etc. Except as otherwise specifically provided herein,
the parties hereto shall pay their own respective taxes, expenses, costs and
fees incurred in connection with this Agreement and the transactions
contemplated hereby, including, without limitation, the fees and expenses of
their respective counsel and accountants and other experts. Without limiting the
foregoing, Medical Manager shall be responsible for the payment of the HSR
filing fee.
14.2. Waivers. Any breach of any obligation, covenant, agreement or
condition contained herein shall be deemed waived by the non-breaching party
only by a writing, setting forth with particularity the breach being waived and
the scope of the waiver, but such waiver shall not operate as a waiver of, or
estoppel with respect to, any subsequent or breach. No waiver shall be implied
from any conduct or action of the non-breaching party. No failure or delay by
any party in exercising any right, power or privilege hereunder or under any
Ancillary Document, and no course of dealing by any party, shall operate as a
waiver of any right, power or privilege hereunder or under any Ancillary
Document, nor shall any single or partial exercise of any other right, power or
privilege.
14.3. Definition of Knowledge. As used in this Agreement, the term
"knowledge" means knowledge which supervisory, managerial, and executive
employees have after making due inquiry and exercising due diligence with
respect thereto.
14.4. Binding Effect; Benefits. This Agreement shall inure to the
benefit of, and shall be binding upon, the parties hereto and their respective
successors and permitted assigns. This Agreement may not be assigned by any
party hereto without the prior written consent of the other parties hereto
except that no such consent shall be required for assignment to a party
acquiring all or substantially all of either party's stock or assets provided
that such party assumes all of the assigning party's obligations hereunder.
Except as otherwise set forth herein, nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties hereto or
their respective successors and permitted assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement.
14.5. Notices. All notices, requests, demands and other communications
which are required to be or may be given under this Agreement shall be in
writing and shall be deemed to have been duly given when delivered in person, or
transmitted by facsimile, or upon receipt after dispatch
51
by certified or registered first class mail, postage prepaid, return receipt
requested, to the party to whom the same is so given or made, at the following
addresses or facsimile numbers (or such others as shall be provided in writing
hereinafter):
If to Medical Manager, to:
Medical Manager Corporation
000 Xxxxx Xxxxx, Xxxxxx 0
Xxxxxxx Xxxx, XX 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
If to the Purchaser, to:
Medical Manager Health Systems, Inc.
c/o Medical Manager Corporation
000 Xxxxx Xxxxx, Xxxxxx 0
Xxxxxxx Xxxx, XX 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
With copies (in the case of a notice to Medical Manager, the
Purchaser or both) to:
Akerman Senterfitt & Xxxxxx
Sun Trust International Center
Xxx Xxxxxxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to any one or more of the Sellers, to:
Physician Computer Network, Inc.
0000 Xxx Xxxxxxxx Xxxx
Xxxxxx Xxxxxx, XX 00000
Attention: President
Facsimile No.: (000) 000-0000
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With copies (in the case of a notice delivered to any of the
Sellers) to:
Xxxxxx Xxxxxx Xxxxxxx Shalov & Xxxx LLP
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
14.6. Entire Agreement. This Agreement (including the Schedules and
Exhibits hereto) constitutes the entire agreement and supersede all prior
agreements and understandings, oral and written, between the parties hereto with
respect to the subject matter hereof; provided, however, that the
Confidentiality Agreement shall survive the execution of this Agreement.
14.7. Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not be deemed to be a part
of this Agreement or to affect the meaning or interpretation of this Agreement.
14.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall be deemed to be one and the same instrument.
Delivery of an executed signature page by telecopy shall be effective as
delivery of a manually signed counterpart of such signature page.
14.9. Governing Law; Submission to Jurisdiction. This Agreement shall
be construed as to both validity and performance and enforced in accordance with
and governed by the laws of the State of New Jersey, without giving effect to
the conflicts of law principles thereof. Following the filing of the Petition,
any dispute hereunder shall be determined by the court having jurisdiction with
respect to such bankruptcy case until such time as the Release Date.
14.10. Third Party Beneficiaries. Nothing in this Agreement or any
Ancillary Document is intended to, or shall be construed so as to create any
third party beneficiary to this Agreement or otherwise confer any rights upon
any person, firm or corporation that is not a party hereto, including, without
limitation, any employee or End-User.
14.11. Severability. If any term or provision of this Agreement shall
to any extent be invalid or unenforceable, the remainder of this Agreement shall
not be affected thereby, and each term and provision of the Agreement shall be
valid and enforced to the fullest extent permitted by law.
14.12. Publicity. The initial press release relating to this Agreement
shall be a joint press release, the text of which shall be agreed to by each of
PCN and Medical Manager. Unless otherwise required by applicable law or by
obligations pursuant to any listing agreements with or rules of any securities
exchange, the parties hereto shall consult with each other before issuing any
press release
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or otherwise making any public statement with respect to this Agreement or the
transactions contemplated hereby and shall not issue any such release or make
any such statements without the prior written consent of the other party (which
consent will not be unreasonably withheld or delayed).
14.13. Amendments. This Agreement may not be modified or changed except
by an instrument or instruments in writing signed by the party against whom
enforcement of any such modification or amendment is sought.
14.14. Drafting Conventions. Any use herein of the phrase "and/or"
shall be deemed to mean both "and" and "or". Any use herein of the phrase
"including" shall be deemed to mean "including, without limitation". The
masculine gender used herein shall be deemed to include the feminine and neuter
genders, and vice-versa, and the singular or plural shall be deemed to include
the plural or singular, as the case may be, when required by context. All terms
defined herein shall be deemed to include the past tense of such terms.
14.15. Joint and Several Liability. (a) All representations, covenants,
agreements and obligations of any one or more of the Sellers under this
Agreement shall be deemed to have been made or incurred jointly and severally by
all of the Sellers.
(b) All representations, covenants, agreements and obligations
of either one or both of the Purchaser and Medical Manager under this Agreement
shall be deemed to have been made or incurred jointly and severally by each of
the Purchaser and Medical Manager. Without limiting the foregoing, Medical
Manager hereby absolutely and unconditionally guaranties the obligations of the
Purchaser hereunder and under the Ancillary Documents, including, without
limitation, the obligation to pay the Purchase Price.
15. GLOSSARY
For purposes of this Agreement, the following terms shall have
the definitions ascribed to them below.
"Account Receivable Schedule" is defined in Section 5.9 of the Agreement.
"Accounts Payable" is defined in Section 3.1(b) of the Agreement.
"Accounts Receivable" is defined in Section 1.1(e) of the Agreement.
"Affiliate" is defined in Section 1.1 of the Agreement.
"Agreed Reimbursement Amount" is defined in Section 10.2(b) of the Agreement.
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"Agreement" shall mean this Asset Purchase Agreement.
"AM Agreement" is defined in Section 5.18(c) of the Agreement.
"Ancillary Documents" is defined in Section 10.2(e) of the Agreement.
"Acquisition Proposals" is defined in Section 12.1(g) of the Agreement.
"Assets" is defined in Section 1.1 of the Agreement.
"Assigned Loans" is defined in Section 3.1(f) of the Agreement.
"Assignment and Assumption Notice" is defined in Section 7.1(d) of the
Agreement.
"Assignment and Assumption Procedures" is defined in Section 7.1(d) of the
Agreement.
"Assignment and Intercreditor Agreement" is defined in Section 3.1(f) of the
Agreement.
"Assumed Liabilities" is defined in Section 3.1 of the Agreement.
"Audited Statements" is defined in Section 5.6 of the Agreement.
"Auditors" is defined in Section 2.3 of the Agreement.
"Bank Debt" is defined in Section 3.2(g) of the Agreement.
"Bankruptcy Code" is defined in Section 1.2(g) of the Agreement.
"Bankruptcy Court" is defined in Section 7.1 of the Agreement.
"Books and Records" is defined in Section 1.1(j) of the Agreement.
"Break-Up Fee" is defined in Section 12.2 of the Agreement.
"Business" is defined in the Background section to the Agreement.
"Cash Payment" is defined in Section 2.1 of the Agreement.
"Claims" is defined in Section 1.2(e) of the Agreement.
"Class Action Litigation" is defined in Section 3.2(a) of the Agreement.
"Closing" is defined in Section 4 of the Agreement.
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"Closing Account" is defined in Section 1.2(k) of the Agreement.
"Closing Date" is defined in Section 4 of the Agreement.
"Closing Date Net Worth Statement" is defined in Section 2.3(f) of the
Agreement.
"Code" shall mean the Internal Revenue Code of 1986.
"Commercial Agreements" is defined in Section 1.1(g) of the Agreement.
"Commitments" is defined in Section 5.12.4 of the Agreement.
"Confidentiality Agreement" is defined in Section 9.5 of the Agreement.
"Confirmation Hearing" is defined in Section 7.1(c) of the Agreement.
"Confirmation Order" is defined in Section 11.1(a) of the Agreement.
"Deferred Revenue Account" is defined in Section 3.1(b) of the Agreement.
"Designated Employees" is defined in Section 9.6 of the Agreement.
"Designated Employees Severance Obligation" is defined in Section 9.6 of the
Agreement.
"DIP Loan" is defined in Section 2.2(b) of the Agreement.
"DIP Loan Agreement" is defined in Section 2.2(b) of the Agreement.
"Direct End Users" is defined in Section 8.4(a) of the Agreement.
"Disclosure Statement" is defined in Section 7.1(b) of the Agreement.
"Distributees" is defined in Section 2.4(c) of the Agreement.
"Eligible End Users" is defined in Section 8.4(a) of the Agreement.
"Eligible Resellers" is defined in Section 8.4(a) of the Agreement.
"Employees" is defined in Section 5.18(a) of the Agreement.
"Employee Benefit Plans" is defined in Section 5.22(a) of the Agreement.
"End-User Agreements" is defined in Section 1.1(c) of the Agreement.
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"End-Users" is defined in Section 1.1(c) of the Agreement.
"Equipment" is defined in Section 1.1(h) of the Agreement.
"Equipment Leases" is defined in Section 1.1(i) of the Agreement.
"ERISA" is defined in Section 5.22 of the Agreement.
"Excess Cash" is defined in Section 1.1(p) of the Agreement.
"Excluded Provisions" is defined in Section 13.3(b) of the Agreement.
"Executory Contract" is defined in Section 7.1(b) of the Agreement.
"Financial Statements" is defined in Section 5.6 of the Agreement.
"GAAP" is defined in Section 5.6 of the Agreement.
"Health Network" is defined in Section 5.14(b) of the Agreement.
"HIPAA" is defined in Section 5.22(b) of the Agreement.
"HP" is defined in the preamble to the Agreement.
"HSR" is defined in Section 5.5 of the Agreement.
"IHS" is defined in the preamble to this Agreement.
"Indemnified Party" is defined in Section 12.4 of the Agreement.
"Indemnifying Party" is defined in Section 12.4 of the Agreement.
"Insurance Companies" is defined in Section 1.2(e) of the Agreement.
"Intellectual Property" is defined in Section 1.1(d) of the Agreement.
"Inventory" is defined in Section 1.1(e) of the Agreement.
"IRS" shall mean the Internal Revenue Service.
"KPMG" is defined in Section 1.2(e) of the Agreement.
"Liability Statement" is defined in Section 3.1(a) of the Agreement.
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"Losses" is defined in Section 13.1 of the Agreement.
"Market Price" is defined in Section 2.4(a) of the Agreement.
"Material Adverse Effect" is defined in Section 5.7 of the Agreement.
"MDX" is defined in Section 5.14(b) of the Agreement.
"Medical Account" is defined in Section 1.2(b) of the Agreement.
"Medical Manager" is defined in the preamble of the Agreement.
"Medical Manager Retention Bonuses" is defined in Section 9.6 of the
Agreement.
"Medical Manager SEC Documents" is defined in Section 6.8(a) of the
Agreement.
"Medical Manager Stock" is defined in Section 2.1(b) of the Agreement.
"Medical Manager 8-K" is defined in Section 6.8(a) of the Agreement.
"Medical Manager 10-K" is defined in Section 6.8(a) of the Agreement.
"Medical Manager 10-Q" is defined in Section 6.8(a) of the Agreement.
"Mends" is defined in Section 5.14(b) of the Agreement
"MMN" is defined in Section 1.2(i) of the Agreement.
"1933 Act" is defined in Section 2.4(c) of the Agreement.
"No Action Letter" is defined in Section 2.4(c) of the Agreement.
"Order" is defined in Section 2.4(d) of the Agreement.
"OEM Agreement" is defined in Section 1.1(g) of the Agreement.
"Operating Software" is defined in Section 5.14(b) of the Agreement
"Payment" is defined in Section 1.6 of the Agreement.
"Petition" is defined in Section 7.1(a) of the Agreement.
"Plan" is defined in Section 7.1(b) of the Agreement.
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"PBGC" is defined in Section 5.22(b) of the Agreement.
"PCN" is defined in the preamble to this Agreement.
"PMS Software" is defined in the Background section to the Agreement.
"Pre-Petition Loan" is defined in Section 2.2(a) of the Agreement.
"Purchase Price" is defined in Section 2.1 of the Agreement.
"Purchaser" is defined in the preamble to the Agreement.
"Purchaser Indemnified Party" is defined in Section 13.1 of the Agreement.
"Purchaser Receivables" is defined in Section 1.6 of the Agreement.
"Real Property Leases" is defined in Section 1.1(g) of the Agreement.
"Registration Statement" is defined in Section 2.4(e) of the Agreement.
"Reimbursement Amount" is defined in Section 3.4 of the Agreement.
"Reseller Agreements" is defined in Section 1.1(g) of the Agreement.
"Retained Accounts" is defined in Section 1.2(k) of the Agreement.
"Retained Agreements" is defined in Section 1.2(h) of the Agreement.
"Retained Assets" is defined in Section 1.2 of the Agreement.
"Retained Claims" is defined in Section 3.2(d) of the Agreement.
"Retained Liabilities" is defined in Section 3.2 of the Agreement.
"Retained Litigation" is defined in Section 3.2(c) of the Agreement.
"Sale Bonuses" is defined in Section 5.18(c) of the Agreement.
"Scheduling Order" is defined in Section 7.1(c) of the Agreement.
"SEC" is defined in Section 2.4(c) of the Agreement.
"Sellers" is defined in the preamble to the Agreement.
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"Seller Indemnified Party" is defined in Section 13.2 of the Agreement.
"Services Agreement" is defined in Section 7.1(c) of the Agreement.
"Severance Obligations" is defined in Section 5.18(a) of the Agreement.
"SmartPractice Agreement" is defined in Section 1.2(i) of the Agreement.
"Specified Employees" is defined in Section 10.3(b) of the Agreement.
"Standard Agreements" is defined in Section 5.12.1 of the Agreement.
"Stay-Put Bonuses" is defined in Section 5.18(c) of the Agreement.
"Stock Payment" is defined in Section 2.1(b) of the Agreement.
"Subsequent Audited Financial Statements" is defined in Section 9.9(b) of the
Agreement.
"Subsequent Financial Statements" is defined in Section 9.9(b) of the
Agreement.
"Subsequent Interim Financial Statements" is defined in Section 9.9(a) of the
Agreement.
"Termination Date" is defined in Section 12.1(b) of the Agreement.
"Third Party Agreements" is defined in Section 1.1(g) of the Agreement.
"Third Party Claim" is defined in Section 12.4 of the Agreement.
"Transferred Accounts" is defined in Section 1.1(q) of the Agreement.
"Trigger Date" is defined in Section 2.1(d) of the Agreement.
"Unexpired Lease" is defined in Section 7.1(b) of the Agreement.
"Versyss" is defined in the preamble to this Agreement.
"Web Agreement" is defined in Section 1.1(g) of the Agreement.
"WM" is defined in the preamble to this Agreement.
"Y2K Compliant" is defined in Section 5.14(d) of the Agreement.
"Y2K Obligations" is defined in Section 7.1 of the Agreement.
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"Y2K Patches" is defined in Section 5.14(b) of the Agreement.
"Y2K Updates" is defined in Section 5.14(b) of the Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed in their respective names by an officer thereunto duly
authorized on the date first above written.
PHYSICIAN COMPUTER NETWORK, XXXXXX*XXXXXX, INC.
INC.
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxx X. Xxxxxxxx
President Vice President
VERSYSS INCORPORATED PCN HP VENTURE CORP.
By: /s/ Xxxx X. Xxxxxxxx By: /s/ Xxxx X. Xxxxxxxx
Vice President Vice President
INTEGRATED HEALTH SYSTEMS, INC. MEDICAL MANAGER HEALTH
SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxxxx By: /s/ Xxxx X. Sessions
Vice President
MEDICAL MANAGER
CORPORATION
By: /s/ Xxxx Xxxx
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