Asset Purchase Agreement - InfoCure Corp. and Commercial Computers Inc.
ASSET PURCHASE AGREEMENT
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THIS AGREEMENT is entered into this 14th day of November, 1997, but
effective as of October 1, 1997 (the "Effective Date"), by and among CCI
Acquisition, Inc., a Florida corporation ("PURCHASER"), InfoCure Corporation, a
Delaware corporation and sole Shareholder of PURCHASER ("InfoCure"), Commercial
Computers, Inc., a Florida corporation ("SELLER"), Marjorie Willensky ("M.
Willensky") and Harvey Willensky ("H. Willensky") (M. Willensky and H. Willensky
sometimes referred to collectively as the "Shareholders"). PURCHASER, InfoCure,
SELLER and the Shareholders are referred to collectively as the "Parties."
RECITALS:
A. SELLER is in the business of selling and maintaining computer hardware
and software to medical providers (the "Health Care Business") and the aviation
industry.
B. SELLER desires to sell to PURCHASER and PURCHASER desires to purchase
substantially all of the assets of SELLER's Health Care Business. The parties
acknowledge that SELLER shall retain, and continue to operate, the aviation
portion of its business.
C. SELLER desires PURCHASER to assume and PURCHASER desires to assume the
Liabilities of SELLER's Health Care Business.
THE PARTIES AGREE AS FOLLOWS:
ARTICLE 1. SALE AND PURCHASE OF ASSETS.
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1.1 Sale and Purchase. SELLER agrees to sell and PURCHASER agrees to
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purchase the assets of SELLER's Health Care Business owned by the SELLER as of
the Effective Date or in which SELLER has any right, title or interest, on the
Closing Date, including, but not limited to, tangible and intangible personal
property, customer lists, all software, hardware and other intellectual property
used in connection with the Health Care Business, goodwill, furniture, fixtures,
and equipment, owned or used by SELLER in connection with its Health Care
Business and all profits (or losses) generated in the ordinary course of
business from the operation by SELLER of the Health Care Business between the
Effective Date and the Closing Date, all as specifically enumerated in EXHIBITS
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A, L, M and W attached hereto and all rights under all contracts referenced in
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EXHIBITS B or E or relating to the customers disclosed in EXHIBIT B, and
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hereinafter referred to as the "Assets."
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1.2 Specific Exclusions. Without expanding the property to be conveyed
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pursuant to Section 1.1 above, the parties agree that the following assets of
SELLER are specifically excluded from the purchase and sale hereunder:
1.2.1 The consideration delivered to SELLER pursuant to this
agreement for the Assets;
1.2.2 The right of the SELLER to enforce the obligations of PURCHASER
to pay or discharge the Liabilities and obligations of the SELLER assumed by
PURCHASER and all other rights of the SELLER under this Agreement;
1.2.3 The SELLER's articles of incorporation, corporate seals, minute
books, stock books, and other corporate records having exclusively to do with
the corporate organization and capitalization of the SELLER;
1.2.4 Shares of the capital stock of the SELLER, including shares
held by the SELLER as treasury shares;
1.2.5 SELLER's accounts receivable, including those of the Health
Care Business;
1.2.6 Those assets ("Shared Assets") relating to the aviation portion
of SELLER's business which are not utilized in the Health Care Business (other
than those certain assets owned by SELLER and leased to PURCHASER pursuant to
the Sublease and Facilities Sharing Agreement set forth on EXHIBIT X) and which
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are not set forth on EXHIBIT A; and
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1.2.7 SELLER's corporate name, Commercial Computers, Inc., subject to
PURCHASER's right to use such name in perpetuity pursuant to the Tradename
Restriction Agreement described on EXHIBIT U.
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1.3 Purchase Price. The total purchase price of the Assets is
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$1,225,000.00, [HAND CHANGED TO $1,231,468.00, INITIALED MW,HW] subject to
Adjustments and Prorations as herein set forth, plus the Assumed Liabilities (as
hereinafter defined), payable as follows:
1.3.1 Delivery to SELLER at Closing of an unsecured promissory note
(the "Long-Term Note"), issued by PURCHASER and InfoCure, as co-makers, in the
principal amount of $612,500.00 (with all documentary stamps required by law
affixed thereto), bearing interest at six percent (6%) per annum, convertible
under certain circumstances, in whole or in part, into common capital stock of
PURCHASER as more particularly set forth in EXHIBIT A-1, prepayable without
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penalty, but upon prior notice, with a maturity date three (3) years from the
date of Closing, and otherwise as substantially set forth on EXHIBIT A-1.
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1.3.2 The balance of the Purchase Price constituting the sum of
$612,500.00 shall be made by delivery to SELLER at Closing of an unsecured
promissory note (the "Short-
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Term Note"), issued by PURCHASER and InfoCure, as co-makers, which shall be due
and payable on January 1, 1998, without demand, notice, protest or other notice
of any kind, all of which are hereby expressly waived, and shall be otherwise in
substantially the form of EXHIBIT A-2 attached
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hereto.
1.4 Gross Profit Adjustment. For the six (6) month period beginning
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October 1, 1997, and ending March 31, 1998, for every dollar of Gross Profit in
excess of $603,000.00, SELLER shall receive a multiple of five (5) times such
excess subject to a maximum payment (the "Earn-Out Payment") of $250,000.00.
For purposes of this paragraph "Gross Profit" shall be defined and calculated as
set forth on EXHIBIT A- 3 by BDO Seidman, L.L.P. (the "Accountants"). Fifty
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percent (50%) of the Earn-Out Payment, if any, due to SELLER shall be made by
PURCHASER on or before June 30, 1998, by delivery of a certified check or wire
transfer of funds to an account specified by SELLER. The other fifty percent
(50%) of the Earn-Out Payment shall be paid to SELLER by delivery of a
promissory note in the face amount of such fifty percent (50%) of the Earn-Out
Payment and providing terms identical in the form of the Long-Term Note, which
note shall be dated as of March 31, 1998. In the event SELLER disagrees with
PURCHASER's calculation of the Earn-Out Payment, SELLER shall have the right,
upon reasonable notice, to examine PURCHASER's books and records relating to the
Assets and Assumed Liabilities.
1.5 Net Worth Adjustment. If the Net Worth of SELLER at Closing is
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greater than zero (0), the Purchase Price shall be increased by the difference
between the actual Net Worth and zero (0). If the Net Worth of SELLER at
Closing is less than zero (0) the Purchase Price shall be reduced by the
difference between zero (0) and the actual Net Worth. Increases or reductions,
as the case may be, in the Purchase Price shall be made in equal portions to the
Short-Term and Long-Term Notes. For purposes of this paragraph "Net Worth"
shall be based upon a calculation of the net worth of the Health Care Business
being acquired by PURCHASER as of the opening of business on October 1, 1997,
prepared by the Accountants in the manner described in EXHIBIT A-4. In order to
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ensure the parties hereto that both the Earn-Out and the Net Worth portions of
the Purchase Price are computed by the Accountants in accordance with this
Agreement in a fair and disinterested manner, the parties agree as follows:
Each party shall have the right to examine during normal business hours such
books and records of the other party as may be reasonably necessary in order to
verify any determination of the Accountants under this Agreement. If any party
disagrees with any such determination, then that party may submit, at its sole
expense, within thirty (30) days, an alternate determination prepared by a
certified public accountant, which the other party may accept or reject in its
reasonable discretion. If the other party rejects the alternate determination,
then the contesting party shall be entitled to submit such dispute to a
certified public accountant acceptable to both parties who shall determine the
accuracy and correctness of the Accountant's original determination. Both
parties shall each bear one-half (1/2) of the expenses of such certified public
accountant. Any additional amounts payable by a party as a result of the other
party's alternate determination shall be made within fifteen (15) days following
the acceptance of such alternate determination or the resolution of such
dispute, as the case may be.
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1.6 Prorations. In addition, in calculating "Net Worth", appropriate
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prorations will be made as of the Effective Date for all utilities, personal
property taxes and other operating expenses for the premises, and the entire
amount of all deposits and prepaid items relating to the Health Care Business or
Assets which will inure to the benefit of PURCHASER. The parties shall make a
good faith effort at Closing to calculate all post September 30, 1997 expenses
relating to the Health Care Business (and approved by PURCHASER on or before
Closing) that have been paid by SELLER, and SELLER shall be reimbursed in cash
at Closing for such expenses, subject to final adjustment upon calculation of
Net Worth as set forth in Paragraph 1.5 above. SELLER shall also tender to
PURCHASER at Closing all cash receipts received by SELLER from the operation of
the Health Care Business between October 1, 1997 and Closing relating to
services rendered and products sold after September 30, 1997. In addition,
SELLER shall transfer and assign all accounts receivable in existence as of
Closing which arose out of the operation of the Health Care Business between
October 1, 1997 and Closing relating to services rendered and products sold
after September 30, 1997.
1.7 Allocation of Purchase Price. The Purchase Price shall be allocated
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as set forth on EXHIBIT C.
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1.8 Conditions of Tangible Personal Property. All tangible personal
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property comprising the Assets are sold "AS IS" and "WHERE IS" as of the
Effective Date, ordinary wear and tear accepted to the Closing Date.
ARTICLE 2. INSTRUMENTS OF CONVEYANCE AND TRANSFER.
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2.1 Instruments. On the Closing Date (as defined in Article 10.),
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SELLER shall deliver to PURCHASER the bill of sale, licenses, endorsements,
assignments and other good and sufficient instruments of conveyance and
transfer, reasonably satisfactory in form and substance to PURCHASER and its
counsel, as shall be effective to vest in PURCHASER all right, title and
interest in and to the Assets. (A copy of the Bill of Sale, the Intellectual
Property Assignment, Conveyance Transfer and License Agreement and Assignment
and Assumption Agreement is attached as EXHIBITS D-1, D-2 and D-3,
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respectively). Simultaneously with delivery, SELLER will take all additional
steps as may be requisite to put PURCHASER in possession and ownership of the
Assets and entitle PURCHASER to operating control of the Assets.
2.2 Acceleration. EXHIBIT E lists the Assets which cannot be assigned
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without an acceleration or change in the terms and conditions thereof or without
the consent of a third party. Except with regard to the consent from Execu-
Flow, failure to obtain an assignment of any Asset shall not be grounds for
termination of this Agreement by PURCHASER, or grounds for adjournment of the
Closing Date, provided SELLER (i) has, prior to the Closing Date employed a good
faith effort to secure the assignment of the Asset; (ii) at the Closing, SELLER
executes such documents, as reasonably requested by PURCHASER to transfer to
PURCHASER whatever right, title and interest SELLER is able to convey and (iii)
continues following Closing to reasonably assist in the transfer of such Assets
to PURCHASER.
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ARTICLE 3. ASSUMPTION OF LIABILITIES.
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On the Closing Date PURCHASER agrees to assume only those liabilities of the
SELLER pertaining to SELLER's Health Care Business which are specifically listed
on EXHIBIT B (the "Assumed Liabilities") (a copy of the Assignment and
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Assumption Agreement is attached as EXHIBIT D-3). Under no circumstances shall
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PURCHASER be responsible or liable for any liabilities not referenced on EXHIBIT
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B including, without limitation, the following:
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3.1 Equity Holders. Liabilities of the SELLER to its stockholders and
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liabilities of the SELLER to any persons in connection with SELLER's equity
interests including, without limitation, liabilities for unpaid dividends,
except loans payable to Stockholder-Employees of SELLER as of October 1, 1997,
which are specifically assumed by PURCHASER and referenced on EXHIBIT B. To the
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extent Stockholder-Employee loans are payable on the books of SELLER, payments
made prior to the Closing shall be deemed to be made by SELLER in the ordinary
course of its business and to the extent the loans have not been paid in full at
the time of Closing it shall be assumed by PURCHASER and paid by PURCHASER,
without interest.
3.2 PURCHASER. Liabilities to PURCHASER as the PURCHASER of the Assets
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under this Agreement or in connection with any of the transactions contemplated
by this Agreement.
3.3 SELLER's Attorneys and Accountants. Liability of the SELLER or
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Shareholders to their attorneys or accountants in connection with this Agreement
or the transactions contemplated thereby not paid by SELLER prior to the
Closing Date.
3.4 Taxes. Any federal, state or local taxes arising out of the
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operation of SELLER's business (including the Health Care Business) through
and including September 30, 1997.
3.5 Non-Health Care Business and Other Liabilities. Liabilities relating to
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the aviation portion of SELLER's business (unless listed on EXHIBIT B.)
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3.6 Existing Employment Contracts and Benefits. Liabilities of SELLER
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arising out of any of its existing employment contracts with its employees
and any benefits payable to such employees, except as set forth in EXHIBIT B.
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ARTICLE 4. INDEMNITY BY SELLER FOR LIABILITIES NOT ASSUMED.
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All liabilities and obligations not assumed by PURCHASER shall be the sole
responsibility of, and shall be satisfied by SELLER, and SELLER shall indemnify
PURCHASER pursuant to Article 12. INDEMNIFICATION, subject to the limitations
set forth in Article 12.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS.
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SELLER and Shareholders, jointly and severally, represent and warrant to
PURCHASER as of the Effective Date and as of the Closing Date the following:
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5.1 Organization, Standing and Power of SELLER. SELLER is a corporation
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duly organized, validly existing and in good standing under the laws of the
State of Florida and has corporate power to carry on its business as it is now
being conducted and is not qualified or licensed to do business as a foreign
corporation in any other jurisdiction. SELLER has not amended its Articles of
Incorporation or By-Laws since the date hereof to Closing.
5.2 Capital Structure. The authorized capital stock of SELLER on the
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Effective Date consists of five thousand (5,000) shares of common stock with par
value of One and No/100 Dollar ($1.00) each, of which as of the Effective Date
six hundred forty (640) shares were outstanding with unexercised stock options
for an additional zero (0) shares.
5.3 Authority. The execution, delivery and performance of this
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Agreement shall be duly and validly authorized and approved by SELLER's Board of
Directors and by the Shareholders prior to the Closing. The execution and
delivery of this Agreement does not, and the consummation of the transactions
described will not result in or constitute a default, breach or violation of the
Articles of Incorporation of SELLER, or the By-Laws of SELLER, or any agreement,
other than those disclosed in the exhibits, to which SELLER or either
Shareholder is a party or by which any of the Assets are bound or creation or
imposition of any lien, charge or encumbrance on any of the Assets. The
authorizations of the Directors and Shareholders shall be delivered at Closing.
5.4 Financial Statements. The financial statements and balance sheet of
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SELLER provided to PURCHASER have been prepared on a consistent basis throughout
the periods indicated, and present fairly the financial position of SELLER as of
the respective dates of the balance sheets included in the financial statements
and the results of SELLER's operations for the respective periods, copies of all
of which financial statements and balance sheets are attached hereto as EXHIBIT
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V.
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5.5 Valid Transfer. At the Closing SELLER will convey to PURCHASER all
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right, title and interest in the Assets free of any liens, claims, charges,
encumbrances or assessments of any nature whatsoever except for liens or
encumbrances relating to such Assets which arise out of the Assumed Liabilities
set forth in EXHIBIT B.
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5.6 Absence of Specified Changes. Except as may be disclosed in the
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exhibits to this Agreement, since September 1, 1997, there has been no:
5.6.1 Material adverse change in the Assumed Liabilities, other non-
Assumed Liabilities or Assets, of SELLER.
5.6.2 Transaction by SELLER except in the ordinary course of business
as conducted on that date.
5.6.3 Capital expenditures or commitments by SELLER for the Health
Care Business exceeding, in the aggregate, $5,000.00.
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5.6.4 Commitment exceeding $2,500.00 in the aggregate by SELLER for
the Health Care Business outside the ordinary course of business.
5.6.5 Failure to maintain in full force and effect substantially the
same level and types of insurance coverage as in effect on that date, or any
destruction, damage to, or loss of any Asset of SELLER (whether or not covered
by insurance) that materially and adversely affects the business or prospects of
SELLER's Health Care Business.
5.6.6 Sale, assignment or transfer of any tangible or intangible
Asset of SELLER, including any rights to industrial or intellectual property,
except in the ordinary course of business.
5.6.7 Mortgage, pledge or other encumbrance of any tangible or
intangible Asset of SELLER.
5.6.8 Amendment, expiration or termination of any contract or license
to which SELLER is a party for the Health Care Business, except in the ordinary
course of business.
5.6.9 Loan by SELLER to any person which is not reflected in the
financial statements delivered to PURCHASER and set forth in EXHIBIT V.
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5.6.10 Borrowing of money except indebtedness which may be prepaid
without penalty or premium on not more than thirty (30) days' notice.
5.6.11 Agreement by SELLER to take any of the actions described
above.
5.6.12 Waiver or release of any material right or claim of SELLER's
Health Care Business.
5.6.13 Material change in accounting methods or practices by SELLER.
5.6.14 Any labor trouble adversely affecting SELLER's Health Care
Business or the Assets.
5.7 Absence of Proceedings. No action at law or in equity, and no
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investigations or proceedings of any kind are now pending or threatened to
declare any of the corporate rights, powers or privileges of SELLER to be null
and void or otherwise than in full force and effect.
5.8 Absence of Undisclosed Liabilities. SELLER has no material
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liability or obligation of any nature, accrued, absolute or contingent or
otherwise, and whether due or to become due, that is not reflected or reserved
against in SELLER's balance sheet provided to PURCHASER and set forth in EXHIBIT
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V, except for those that (i) may have been incurred after the date of such
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balance sheet in the ordinary course of business or (ii) are not required by
generally accepted accounting principles to be included in a balance sheet or
the footnotes thereto.
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5.9 Tax Returns and Audits. Within the time and manner prescribed by
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law, SELLER has filed all federal, state, local and foreign tax returns required
by law, which returns are true and correct in all material respects, and has
paid all taxes, assessments, and penalties, if any, due and payable except as
may be set forth in EXHIBIT G. SELLER has neither given nor requested any
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waivers of statutes of limitations with respect to any tax matters. Tax returns
for the years 1996, 1995 and 1994 have previously been provided to PURCHASER.
5.10 Assets.
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5.10.1 Real Property. SELLER leases the real property at which it
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operates the Health Care Business, a copy of which lease is attached hereto as
EXHIBIT H.
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5.10.2 Tangible Personal Property. The books and records of SELLER
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contain a complete and accurate description, and specify the location, of all
vehicles, machinery, computer equipment and all other tangible personal property
owned, in the possession of, or used by SELLER in its Health Care Business.
Except as set out in EXHIBIT I, none of the Assets is subject to any lease,
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security agreement or other security arrangement or is other than in the
possession of SELLER. Each of the items of personal property used by SELLER in
its Health Care Business is in good operating condition and repair, and there
exists no condition which interferes with its economic value or use.
5.10.3 Accounts Receivable. EXHIBIT J contains an accounts
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receivable aging summary, which is an accurate summary of SELLER's Health Care
Business accounts receivable as of September 30, 1997.
5.10.4 Accounts Payable. EXHIBIT K contains an Accounts Payable
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aging summary which is an accurate summary of SELLER's accounts payable as of
October 1, 1997.
5.10.5 Trade Names, Trademarks, Service Marks, Patents and
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Copyrights. EXHIBIT L contains a schedule of trade names, trademarks, service
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marks, patents and copyrights owned by SELLER or in which SELLER has any rights
or licenses for its Health Care Business, together with a brief description of
each. Except as set out in EXHIBIT L, SELLER is not a party to any license,
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agreement or arrangement, whether as licensor, licensee or otherwise, with
respect to any trade names, trademarks, service marks, patents, or applications
for them, or any copyrights which are used by SELLER in its Health Care
Business. SELLER owns or has the right to use without restriction (and such is
transferable to PURCHASER) all trade names, trademarks, service marks, patents
and copyrights necessary for SELLER's Health Care Business as now conducted and
the actual use thereof does not conflict with or infringe upon or otherwise
violate any rights of others. All license agreements are in full force and
SELLER is not in default under any of them, nor does SELLER have any knowledge
of any claim that is in default or that an event of default has occurred, which,
with the giving of notice or passage of time, would become a default.
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5.10.6 Data Bases and Computer Software. EXHIBIT M contains a list
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of all of SELLER's data base and software programs and related documentation and
materials which are owned or used by SELLER and used by SELLER in the operation
of its Health Care Business. All such software programs and materials perform
in all material respects as intended and are free of catastrophic bugs or
defects. Except as set forth in EXHIBIT M, SELLER is the sole owner and
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original developer of all such software programs and materials, and the actual
use thereof does not conflict with or infringe upon or otherwise violate any
rights of others. The information utilized by SELLER in the construction of
SELLER's data base was lawfully obtained and SELLER has the lawful right to use
the information.
5.10.7 Title to and Adequacy of Assets. Except as may be set forth
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in the exhibits, SELLER has good and marketable title to all the Assets, whether
tangible or intangible. Except as provided in EXHIBITS E, I and L, the Assets
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are free and clear of restrictions on or conditions to transfer or assignment
and free and clear of mortgages, liens, pledges, charges, encumbrances, claims,
easements, rights of way, covenants, conditions or restrictions. The Assets
constitute, in the aggregate, all of the property necessary for the conduct of
the Health Care Business in the manner in which and to the extent to which it is
currently being conducted (except for the Shared Assets).
5.11 Existing Employment Contracts and Benefits. EXHIBIT N contains a
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list of all employment contracts (except those arising solely by operation of
law) and collective bargaining agreements, and all bonus, profit-sharing, stock
option, health and life insurance policies and benefits and other agreements
providing for employee remuneration or benefits to which SELLER is a party or is
bound, which the Parties agree PURCHASER or InfoCure is not assuming
responsibility hereunder. All employment contracts and arrangements are in full
force and effect, and SELLER is not in default under any of them nor has it
knowledge of any claim that it is in default or that there is a claim that
events have occurred, which, with the giving of notice or passage of time, would
become events of default. There are no pension or profit-sharing plans in
effect.
5.12 Labor Relations; Employees. SELLER employs a total of
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approximately thirty (30) employees. Except as set forth in EXHIBIT N, (i)
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SELLER has paid in full to, or accrued on behalf of, all employees all wages,
salaries, commissions, bonuses and other direct compensation for all services
performed by them to the date thereof and all amounts required to be reimbursed
to such employees; (ii) upon termination of the employment of any employee,
SELLER will not, by reason of anything done prior to the Closing, be liable to
any employee for "severance pay" or any other payments in excess of four (4)
weeks compensation; (iii) SELLER is in substantial compliance with all federal,
state, local and foreign laws and regulations respecting employment and
employment practices, terms and conditions of employment and wages and hours;
(iv) there is no unfair labor practice complaint pending against SELLER before
the National Labor Relations Board or any comparable state, local or foreign
agency; (v) there is no labor strike, dispute, slowdown or stoppage actually
pending or threatened against or involving SELLER; (vi) no labor representation
question is pending respecting the employees of SELLER; (vii) no grievance which
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might have an adverse effect on SELLER or the conduct of its business nor any
arbitration proceeding arising out of or under collective bargaining agreements
is pending and no claim therefor has been asserted and (viii) no collective
bargaining agreement is currently being negotiated by SELLER.
5.14 Insurance Policies. EXHIBIT O contains a list of all insurance
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policies of SELLER, specifying the insurer, amount of coverage and type of
insurance. Each policy is in full force and all premiums are currently paid.
To the best of SELLER's knowledge and belief, the policy's coverage's are in
sufficient amounts to adequately insure the SELLER's properties and businesses
against losses.
5.15 Compliance With Laws. The Health Care Business of SELLER has not,
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and as presently conducted, does not violate any federal, state, local or
foreign laws, regulations or orders, the violation of which would have a
material adverse effect upon SELLER nor has SELLER received notice of any
violation which remains uncorrected.
5.16 Litigation. Except as set forth in EXHIBIT P, there is no suit,
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action, arbitration, or legal, administrative, or other proceeding, or
governmental investigation pending, or to the best of SELLER's knowledge,
threatened against or affecting SELLER, its business, assets, or financial
condition. If the matters set forth in EXHIBIT P were decided adversely, they
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would not result in a material adverse change in the business, assets or
financial condition of SELLER. SELLER has caused to be made available to
PURCHASER all relevant court papers and other documents relating to matters set
forth in EXHIBIT P. SELLER is not in default with respect to any order, writ,
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injunction or decree of any federal, state, local or foreign court, department,
agency, or instrumentality to which it is subject or by which it is bound.
There are no such orders, writs, injunctions and decrees known to SELLER except
as described in EXHIBIT P.
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5.17 Governmental Consents. Except for those consents, authorizations
---------------------
or approvals required to be obtained by PURCHASER, and except as set out in
EXHIBIT Q, no consent, authorization or approval of, or filing with, any
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federal, state, local or other governmental department, commission, board,
agency or instrumentality is required to be made or obtained by SELLER in
connection with the sale of the Assets or assumption of the Liabilities.
5.18 Outstanding Debt. EXHIBIT R contains a complete and accurate list
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of all of SELLER's agreements for borrowed money which affect or relate to
SELLER'S Health Care Business. SELLER is not in default in the payment of the
principal of or interest or premium on any such indebtedness.
5.19 Insider Transaction. Except as set forth on the financial
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statements described in EXHIBIT V, SELLER has not loaned or advanced any amount
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to any "Insider" nor has SELLER sold, transferred or leased any of the Assets
to, or entered into any agreement or arrangement with, any of its officers,
directors or stockholders or any "affiliate" or "associate" of any of its
officers, directors or stockholders (as such terms are defined in the rules and
regulation of the Securities and Exchange Commission under the Securities Act of
1933, as amended).
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5.20 Material Misstatements or Omissions. No representation, warranty
-----------------------------------
or statement of SELLER in this Agreement or in any document, certificate or
exhibit furnished under this Agreement or in connection with the transactions
contemplated hereby, contains any untrue statement of a material fact, or omits
to state a material fact necessary to make the statements or facts contained
therein not misleading, as of the time when made.
5.21 Broker's Fees. The SELLER has not engaged or entered into any
--------------
agreement with any broker or finder in connection with any of the transactions
contemplated by this Agreement involving the payment of any fee or compensation.
5.22 Other Material Contracts. EXHIBIT W contains a complete list of
------------------------ ---------
all other material contracts and agreements relating to the Health Care Business
which have not been previously disclosed on other exhibits, and all of which are
legally assignable to PURCHASER, or if not, appropriate consents have been
obtained, except as noted in EXHIBIT E.
---------
5.23 Investment Matters. With respect to its acquisition of the Long-
------------------
Term Note, and any shares of common stock of InfoCure issuable thereunder
(collectively the "Securities"), the SELLER and each Shareholder (collectively,
the "Investors") further, jointly and severally, represents and warrants to the
PURCHASER and InfoCure as follows:
5.23.1 By reason of his knowledge and experience in financial and
business matters in general, and investments in particular, he is able to
evaluate the merits and risks of an investment in the Securities;
5.23.2 Their respective income and net worth are such that each is
not now required, and does not contemplate in the future being required, to
dispose of any portion of any investment in the Securities to satisfy any
existing or contemplated undertaking;
5.23.3 In evaluating the merits and risks of an investment in the
Securities, each has relied upon the advice of its legal counsel, tax advisors
and investment advisors;
5.23.4 Each is able to bear the economic risk of an investment in the
Securities, including, without limiting, the generality of the foregoing, the
risk of losing part or all of the investment in the Securities, and the
inability to sell or transfer the Securities for an indefinite period of time or
at a price which would enable each to recoup its investment in the Securities;
5.23.5 Except with respect to the anticipated distribution by SELLER
of the Securities to the Shareholders and any subsequent sale pursuant to the
Rights Agreement described in Paragraph 5.23.8 below, the purchase of the
Securities is solely for its own account, for investment, and not with an intent
to sell or offer for sale in connection with the distribution of the Securities,
and no other person has any interest in or right with respect to the Securities,
nor has there been any agreement to give any person any such interest or right
in the future;
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5.23.6 Each Shareholder is an "accredited investor" as that term is
defined in Section 501 of Regulation D of the Securities Act of 1933, as amended
(the "Act");
5.23.7 PURCHASER and InfoCure have afforded each and their respective
advisors full and complete access to all information with respect to PURCHASER
and InfoCure and their business and financial condition that each deem necessary
in order to evaluate the merits and risks of an investment in the Securities;
and
5.23.8 Each has been advised that the Securities are deemed
"restricted securities" as that term is defined in Rule 144 promulgated under
the Act; provided, however, the parties acknowledge that the SELLER and
Shareholders have been granted certain registration rights relating to the
Securities as provided in that certain Agreement to Register Stock in the form
of EXHIBIT Y attached hereto.
---------
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND INFOCURE.
--------------------------------------------------------
PURCHASER and InfoCure, jointly and severally, represent and warrant to SELLER
as follows:
6.1 Organization and Standing of PURCHASER. PURCHASER is a corporation
--------------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Florida.
6.2 Authority and Authorization of PURCHASER. PURCHASER has the
----------------------------------------
corporate power to execute this Agreement and perform its obligations and has
taken all necessary corporate action to enable it to fully perform its
obligations.
6.3 Broker's Fees. The PURCHASER has not engaged or entered into any
-------------
agreement with any broker or finder in connection with any of the transactions
contemplated by this Agreement involving the payment of any fee or compensation.
6.4 Financial Statements. InfoCure's filings with the Securities and
--------------------
Exchange Commission present fairly the financial position of InfoCure as of the
respective dates of such filings.
6.5 Authorized Stock. InfoCure currently has, and shall maintain at all
----------------
times until the Note is fully paid, authorized, but unissued common capital
stock in an amount sufficient for issuance to SELLER in the event of SELLER's
conversion of the Note into stock.
6.6 Commitments for Financing. Upon Closing, PURCHASER shall have
-------------------------
available, and shall maintain until payment is due, sufficient funds to pay the
Short-Term Note and all amounts payable at Closing.
ARTICLE 7. CONDUCT AND TRANSACTIONS PRIOR TO CLOSING.
-----------------------------------------
PURCHASER and SELLER agree that from the Effective Date until the Closing.
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7.1 PURCHASER's Access to Information. PURCHASER's counsel,
---------------------------------
representatives and agents shall have full access, during normal business hours,
to all properties, books and records of SELLER's Health Care Business.
PURCHASER's representatives shall be furnished all data concerning the Health
Care Business and the Assets. All information obtained from SELLER by
PURCHASER, its officers, employees, servants and representatives, pursuant to,
and in negotiating, this Agreement shall be held in strict confidence and not
used for PURCHASER's own benefit except to consummate this Agreement; and, if
the transactions contemplated in this Agreement shall not be consummated, such
confidence shall be maintained and all such documents and all copies thereof
shall immediately hereafter be returned to SELLER.
7.2 Board of Directors and Shareholders Approval. SELLER shall submit
--------------------------------------------
this Agreement to its Board of Directors and Shareholders for approval, as soon
as practicable, and PURCHASER shall submit the transactions contemplated by this
Agreement to its Board of Directors or Executive Committee for approval as soon
as practicable.
7.3 Conduct of Business in Normal Course. SELLER shall (i) carry on its
------------------------------------
business in substantially the same manner as planned and previously operated;
(ii) preserve its business organization and existing business relationships
intact and (iii) refrain from taking any of the actions described in Paragraph
5.6.
7.4 Governmental Authorizations. PURCHASER and SELLER shall cooperate
---------------------------
with each other in filing any necessary notifications, applications, reports or
other documents with any federal, state or local authorities having jurisdiction
with respect to the transactions described in this Agreement.
7.5 Changes in Compensation. All material changes, after the Effective
-----------------------
Date, in compensation payable to officers, directors and employees of SELLER
shall be subject to approval by PURCHASER, which approval shall not be
unreasonably withheld.
7.6 Further Assurances. Each party shall execute and deliver
------------------
instruments and take other actions as the other party may reasonably require in
order to carry out the intent of this Agreement.
ARTICLE 8. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO
--------------------------------------------------
PURCHASE THE ASSETS AND ASSUME THE LIABILITIES.
----------------------------------------------
The obligation of PURCHASER to purchase the Assets and assume the Liabilities is
subject to the satisfaction, at or before the Closing, of the conditions set out
below unless the requirement has been waived in writing by PURCHASER.
8.1 Accuracy of SELLER's and Shareholders' Representations and
----------------------------------------------------------
Warranties. The representations and warranties of SELLER set out in Article 5.
----------
shall be as true on the Closing Date as though made at that time, and PURCHASER
shall have received a certificate signed by the Chairman of the Board or the
President of SELLER to that effect.
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8.2 Performance by SELLER. SELLER shall have substantially performed
----------------------
all the conditions of this Agreement unless the requirement has been waived,
in writing, by PURCHASER.
8.3 Board of Directors and Shareholders Approval. The Board of
--------------------------------------------
Directors and Shareholders of SELLER shall have approved the transactions
described in this Agreement. The resolutions approving the transactions shall be
delivered at Closing.
8.4 No Material Adverse Change. During the period from the Effective
---------------------------
Date to the Closing, there shall not have been any material adverse change in
the financial condition or in the results of operations of SELLER's Health Care
Business, and SELLER shall not have sustained any material loss or damage to the
Assets, whether or not insured, that materially affects SELLER's ability to
conduct a material part of its Health Care Business.
8.5 Governmental Authorizations. SELLER shall have obtained any
----------------------------
consents,or authorizations and made any filings listed EXHIBIT Q as required
---------
to be made by SELLER.
8.6 Receipt of Other Necessary Consents. Except as described on
-----------------------------------
EXHIBIT E, all other necessary consents or approvals of third parties to any of
---------
the transactions contemplated hereby, the absence of which would affect
PURCHASER's rights hereunder, shall have been obtained and shown by written
evidence reasonably satisfactory to the PURCHASER.
8.7 Opinion of SELLER's Counsel. PURCHASER shall have received from
---------------------------
SELLER an opinion of counsel, dated the Closing Date, in form and substance
reasonably satisfactory to PURCHASER and its counsel, that (i) SELLER is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida; (ii) SELLER has the necessary corporate power to own
its property and conduct its business as now operated; (iii) this Agreement is
valid and binding on SELLER and its Shareholders, except as limited by
bankruptcy and insolvency laws and by other laws affecting the rights of
creditors generally; (iv) except as disclosed in the exhibits, to the best of
counsel's knowledge, SELLER is not a party to any agreement or arrangement
material to it which would be violated; (v) counsel does not know of any
litigation, proceeding or governmental investigation pending or threatened
against or relating to SELLER or its properties or business or the transactions
contemplated by this Agreement other than as set forth in the opinion or EXHIBIT
-------
P.
--
8.8 Absence of Litigation. Other than as set forth in EXHIBIT P, no
----------------------
action, suit or proceeding before any court or any governmental body or
authority pertaining to the acquisition of the Assets by PURCHASER or materially
affecting the Assets shall have been instituted or threatened on or before the
Closing.
8.9 Employment of Key Personnel of SELLER. The personnel of SELLER
-------------------------------------
deemed to be critical or desirable to the operations of SELLER's businesses as
set forth on EXHIBIT S shall have executed a Covenants Agreement in the form
---------
of EXHIBIT Z satisfactory to PURCHASER.[SECTION DELETED BY HAND]
---------
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8.10 Sublease and Facilities Sharing Agreement. SELLER shall have
------------------------------------------
executed and delivered the Sublease and Facilities Sharing Agreement in
the form of EXHIBIT X.
---------
8.11 Tradename Restriction Agreement. SELLER shall have executed and
--------------------------------
delivered the Tradename Restriction Agreement in the form of EXHIBIT U.
---------
8.12 SELLER's Operating Income Performance. SELLER shall be on schedule
--------------------------------------
to generate $200,000.00 or more operating income for the year ending January
31st, 1998, and no material or adverse changes in its operations for performance
shall have occurred for the period through June 30th, 1997.
8.13 Noncompete Agreements. SELLER and Shareholder shall have
----------------------
each executed those certain Noncompete Agreements in the form attached hereto
as EXHIBIT T.
----------
ARTICLE 9. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO SELL THE ASSETS.
---------------------------------------------------------------
The obligation of SELLER to sell the Assets is subject to the satisfaction, at
the time of Closing, of the conditions set out below.
9.1 Accuracy of PURCHASER's and InfoCure's Representations and Warranties.
---------------------------------------------------------------------
The representations and warranties of PURCHASER and InfoCure set out in
Article 6. shall be true on the Closing Date as though made at that time unless
the requirement has been waived in writing by SELLER.
9.2 Performance by PURCHASER. PURCHASER and InfoCure shall have
------------------------
complied with all conditions of this Agreement unless the requirement has been
waived in writing by SELLER.
9.3 Board of Directors Approval. The Board of Directors or the
---------------------------
Executive Committee of PURCHASER and InfoCure shall have approved the
transactions described in this Agreement. PURCHASER and InfoCure shall promptly
take all steps necessary to submit, and have approved, the transactions
described in this Agreement by its Board of Directors. The approvals shall be
delivered at Closing.
9.4 Governmental Authorizations. PURCHASER and InfoCure shall have
---------------------------
filed any information described in Paragraph 5.17, required by any governmental
authority and shall have received any necessary governmental consents or
authorizations required by the transactions described in this Agreement or the
continuation of the business of SELLER after the Closing. PURCHASER and
InfoCure shall promptly and in good faith make such filings and perform such
other acts, deeds, or things, which may be reasonably necessary to secure the
consents or authorizations.
9.5 Opinion of PURCHASER's and InfoCure's Counsel. SELLER shall have
---------------------------------------------
received from PURCHASER and InfoCure an opinion of PURCHASER's and InfoCure's
counsel, dated the Closing Date, in form and substance satisfactory to SELLER
and its counsel,
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that (i) PURCHASER is a corporation duly organized and validly existing and in
good standing under the laws of Florida; (ii) PURCHASER has the corporate power
to execute this Agreement and to perform its obligations; (iii) this Agreement
is valid and binding on PURCHASER and InfoCure and (iv) all government
authorizations have been obtained and performance of the Agreement will not
violate any law, judgment, decree, rule or regulation to which PURCHASER and
InfoCure are subject.
ARTICLE 10. THE CLOSING.
-----------
10.1 Time and Place. The transfer of the Assets and Liabilities to
--------------
PURCHASER by SELLER shall take place at 10:00 a.m. local time, on November 14,
1997 (the "Closing" or "Closing Date"), but shall be effective as of the close
of business on the Effective Date at the offices of Mishan, Sloto, Greenberg &
Hellinger, P.A., 200 South Biscayne Boulevard, Suite 2350, Miami, Florida, or at
such other time and place as SELLER and PURCHASER shall mutually agree upon.
10.2 Bill of Sale and Other Agreements. SELLER and Shareholders, as the
---------------------------------
case may be, shall at Closing supply the Bill of Sale and other documents as
provided in Article 2. or referenced in Article 8.
10.3 Payment to SELLER by PURCHASER. At the Closing, PURCHASER shall
------------------------------
deliver to SELLER the Short-Term Note and the Long-Term Note and any cash
required pursuant to this Agreement to be delivered at Closing.
ARTICLE 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except for the
------------------------------------------
representations and warranties set forth in Paragraphs 5.5 and 6.4, which shall
continue without expiration, all representations and warranties made in Article
5. shall be continuing and shall survive the Closing, but shall expire two (2)
years after the Closing Date, with the time for making a claim to expire
eighteen (18) months from the Closing Date.
ARTICLE 12. INDEMNIFICATION.
---------------
12.1 Indemnification. SELLER and Shareholders, jointly and severally,
---------------
on the one hand and PURCHASER, on the other, covenant and agree to indemnify the
other against any and all losses, damages, costs and expenses, including
reasonable attorney's fees which either may incur by reason of any loss suffered
by either in respect of a breach by the other of this Agreement (such loss,
damage, cost, expense or fees called a "Loss" or "Losses"). This indemnity
shall not require payment as a condition precedent to recovery.
12.2 Participation in Defense. If any proceeding in respect of which
-------------------------
indemnity may be sought by either party shall be brought against PURCHASER, on
the one hand, or SELLER or Shareholders, on the other, the party from whom
indemnity is requested shall be entitled to participate in the defense at its
own expense and to settle with the consent of the other party,
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which consent shall not be unreasonably withheld, any action provided that
PURCHASER, on the one hand, and SELLER or Shareholders, on the other, shall be
released from any liability by the settlement.
12.3 Indemnification of Directors, Officers, Shareholders and Employees.
------------------------------------------------------------------
PURCHASER, following the Closing, shall indemnify and hold harmless the SELLER
and its directors, officers, employees, shareholders and guarantors of SELLER,
from the obligations or Liabilities assumed by PURCHASER and from claims made
and/or suits instituted, including reasonable counsel fees, costs and expenses
incurred in defense. Provided, however, nothing shall be construed to obligate
PURCHASER to any tax, impost, assessment, fine and/or levy and/or penalties or
interest, imposed as an income tax against SELLER or its Shareholders on the
sale of the Assets.
ARTICLE 13. OBLIGATIONS AFTER THE CLOSING.
-----------------------------
31.1 Execution of Further Documents. From and after the Closing Date,
------------------------------
upon request of the PURCHASER, the SELLER and Shareholders shall, and the
Shareholders shall cause SELLER to execute, acknowledge and deliver all such
further acts, deeds, assignments, transfers, conveyance, powers of attorney and
assurances as may be required to convey and transfer to and vest in the
PURCHASER free and clear title to the Assets and as may be appropriate otherwise
to carry out the transactions contemplated by this Agreement.
13.2 PURCHASER shall assume and pay each and all of the following:
13.2.1 Any tax on sales of product made by SELLER to its customers,
between October 1, 1997, and including the Closing Date.
13.2.2 Documentary stamp taxes and intangible taxes, if any, on the
Short-Term Note and the Long-Term Note.
13.3 SELLER's Access to Information. SELLER shall have a right to have
------------------------------
access to and copy of all records of SELLER necessary for preparation of
employee tax returns, employee tax reports and customary accounting functions.
Additionally, PURCHASER agrees to make available to SELLER, at reasonable times
and upon reasonable advance notice, relevant records and personnel in connection
with the preparation of a defense or the participation in a defense, or a
negotiation or a settlement, relating to any pending, future, or threatened
litigation or government agency proceeding (including a tax audit) involving the
conduct of SELLER before the Closing.
13.4 Accounts Receivable. In the event that after the Closing Date
-------------------
PURCHASER shall receive a payment from any account debtor with respect to the
accounts receivables retained by SELLER, PURCHASER shall promptly endorse said
payment without recourse and promptly forward the remittance to SELLER. In the
event that after the Closing Date SELLER shall receive a payment from any
account debtor with respect to accounts receivables created on or
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after October 1, 1997, SELLER shall, and Shareholders shall cause SELLER to,
promptly endorse said payment without recourse and promptly forward the
remittance to PURCHASER.
13.5 Operation of Business. PURCHASER and InfoCure shall cause
---------------------
PURCHASER to continue to operate the Health Care Business in good faith through
at least March 31, 1998. The parties further agree that in calculating the
Earn-Out, full credit shall be given for sales during the six (6) month period
ending March 31, 1997, to (i) new customers of PURCHASER and (ii) existing
customers of SELLER as of the Closing Date, regardless of whether such sales are
booked by PURCHASER or any affiliate of PURCHASER or InfoCure.
ARTICLE 14. MISCELLANEOUS.
-------------
14.1 Publicity. All notices to third parties and all other publicity
---------
concerning the transactions and contemplated by this Agreement shall be jointly
planned and coordinated by PURCHASER and SELLER. Neither party shall act
unilaterally in this regard without the prior approval of the other, which
approval shall not be unreasonably withheld, except where required by federal
and state securities law.
14.2 Costs. SELLER and PURCHASER represent that they have dealt with no
-----
broker or finder in connection with any of the transactions contemplated by this
Agreement, and no broker or other person is entitled to any commission or
finder's fee in connection with any of these transactions. PURCHASER and SELLER
shall pay all costs and expenses incurred or to be incurred by each in
negotiating and preparing this Agreement and in closing and carrying out the
transactions contemplated by this Agreement. Costs and expenses incurred by
SELLER as provided herein, inclusive of SELLER's legal and accounting fees shall
be deemed incurred in the ordinary course of SELLER's business. Any legal and
accounting fees unpaid on the Closing Date shall not be assumed by PURCHASER.
14.3 Notices. Any notice, demand, request or other communication under
-------
this Agreement shall be in writing and shall be deemed to have been given on the
date of service if personally served or delivered by a nationally recognized
overnight courier service or on the fifth (5th) day after mailing if mailed by
certified mail, return receipt requested, addressed as follows:
To PURCHASER: CCI Acquisition, Inc.
c/o InfoCure Corporation
2970 Clairmont Road
Suite 950
Atlanta, Georgia 30329
Attention: James K. Price
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To SELLER: Commercial Computers, Inc.
7875 N.W. 12th Street
Suite 120
Miami, Florida 33126
Attn: Margie Willensky
14.4 Assignment and Successors. Neither PURCHASER nor SELLER may assign
--------------------------
any rights or delegate any duties hereunder, except that SELLER's Shareholders
shall succeed to SELLER's rights and obligations in the event of the liquidation
of SELLER; provided, however, no Shareholder of SELLER shall have any liability
to PURCHASER in excess of that sum received by the Shareholder in the
liquidation of SELLER.
14.5 Binding Effect. Subject to Paragraph 14.4, this Agreement shall be
---------------
binding upon and inure to the benefit of the successors of the parties.
14.6 Governing Law. This Agreement shall be construed in accordance
--------------
with, and governed by, the laws of the State of Florida.
14.7 Severability. Each provision of this Agreement is intended to be
-------------
severable.
14.8 Amendment of Exhibits. All exhibits may be amended by SELLER at
----------------------
any time prior to the Closing; provided, however, that PURCHASER shall have the
right to terminate this Agreement without obligation if any such amendment
results in a material adverse change to SELLER's representations and warranties.
14.9 Closing Delays. Any provision contained in this Agreement to the
--------------
contrary notwithstanding, either party, upon written notice to the other party,
may adjourn the Closing Date one (1) time only for a period not to exceed thirty
(30) days; provided, however, without the written consent of both parties, the
aggregate time of adjournments for both parties permitted pursuant to this
paragraph shall not exceed thirty (30) days and any number of adjourned days
noticed by SELLER pursuant to this paragraph shall not be subject to payment of
the pro rata increase sum provided for in Paragraph 10.4 of this Agreement.
14.10 Bulk Sales. The parties waive compliance with the Florida Bulk
----------
Sales Act or equivalent, if the Act be applicable. Nothing contained in this
paragraph shall be construed to be deemed a determination by either party that
the Act is applicable to the transactions contemplated by this Agreement.
[SIGNATURES BEGIN ON THE FOLLOWING PAGE]
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SELLER: PURCHASER:
Commercial Computers, Inc. CCI Acquisition, Inc.
By: /s/ Harvey Willensky By: /s/ Michael Warren
-------------------- ------------------
Its:President Its: Chief Financial Officer
--------- -----------------------
SHAREHOLDERS: INFOCURE:
InfoCure Corporation
/s/ Marjorie Willensky By: /s/ James K. Price
---------------------- ------------------
Marjorie Willensky Its: Executive Vice President
------------------------
/s/ Harvey Willensky
--------------------
Harvey Willensky
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