EXHIBIT 10.p
AGREEMENT CONCERNING EARN-OUT
THIS AGREEMENT (this "Agreement") is made and entered into as of the 11th
day of May, 1995 by and among First Financial Management Corporation, a Georgia
corporation ("FFMC"), C.I.S. Technologies, Inc., a Delaware Corporation ("CIS"),
John A. Booth (the "Shareholders' Agent"), a resident of the State of
California, and each of the parties listed on the signature lines below as
Shareholders (the "Named Shareholders").
BACKGROUND STATEMENT
FFMC and the Shareholders' Agent are parties to an Agreement and Plan of
Merger, dated October 26, 1993, as amended, by and among FFMC, MicroBilt
Corporation, a wholly-owned subsidiary of FFMC ("MicroBilt"), Hillary
Acquisition Corporation, a wholly owned subsidiary of MicroBilt, Hospital Cost
Consultants, Inc., a California corporation ("HCCI"), the Shareholders' Agent
and Robert J. Dendall (the "Merger Agreement"). Pursuant to the Merger
Agreement, Hillary Acquisition Corporation merged with and into HCCI and the
former shareholders of HCCI (the "Shareholders") received an initial cash
payment together with the right to receive contingent future cash payments (as
defined in the Merger Agreement, "Additional Merger Consideration"; referred to
herein as the "Earn-out") and HCCI thereby became a wholly-owned subsidiary of
MicroBilt (the "Merger"). The Merger was consummated on December 17, 1993.
FFMC and MicroBilt have currently proposed to enter into an agreement with CIS
providing for the acquisition of HCCI by CIS (the "Proposed Acquisition"). In
connection therewith, CIS will assume certain obligations of FFMC and MicroBilt
under the Merger Agreement with respect to the Earn-out, subject to such
modifications to the Earn-out as are acceptable to the Named Shareholders and to
the Shareholders' Agent pursuant to the Shareholders' Agent's authority, under
Section 13 of the Merger Agreement and the authorizations executed by the
Shareholders in connection with the consummation of the Merger, to act on behalf
of the Shareholders and to modify the Earn-out. The parties hereto desire to
provide in this Agreement for the settlement of the amount of the Earn-out with
respect to HCCI's 1994 fiscal year, which is presently in dispute, for the
release of FFMC and MicroBilt from certain obligations of the Earn-out, and for
the assumption of certain Earn-out obligations by CIS. In connection therewith,
those Named Shareholders identified on the signature lines below as
"Noteholders" have agreed to repay in full the amounts advanced to them by FFMC,
together with accrued interest, evidenced by promissory notes (the "Notes")
executed in connection with the consummation of the Merger. Capitalized terms
not otherwise defined herein shall have the meanings ascribed to them in the
Merger Agreement.
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STATEMENT OF AGREEMENT
In consideration of the mutual agreements set forth below (the mutuality,
adequacy and sufficiency of which are hereby acknowledged), and effective upon
consummation of the Proposed Acquisition, the parties hereby agree as follows:
1. Settlement of 1994 Additional Merger Consideration.
a. In complete settlement of its obligations under Section 2.2 of the
Merger Agreement in respect of the amount of the Earn-out payable for
HCCI's 1994 fiscal year (the "1994 Earn-out") and in recognition that the
Shareholders are being given credit in advance for receivables qualifying
for carryover as 1995 Eligible Revenue, in the amount of $2,700,753 (the
"1995 Carryover Receivables"), FFMC, on behalf of MicroBilt, shall,
promptly following the consummation of the Proposed Transaction, pay to the
Shareholders the amount of $1,130,000, constituting full and final payment
of the 1994 Earn-out and payment of all Earn-out attributable to the 1995
Carryover Receivables in the manner set forth herein, including Section 3,
below.
b. Owing to the credit given by FFMC and MicroBilt described in Section
1(a), above, the parties agree that, for purposes of computing the Earn-out
for HCCI's 1995 fiscal year and CIS's assumption of the obligations of FFMC
and MicroBilt in respect thereof, as set forth below, 1995 Eligible
Revenues shall exclude the 1995 Carryover Receivables which have been
credited to 1994 Eligible Revenues for purposes of determining the payment
in Section 1(a), above.
2. Releases
a. The Shareholders' Agent, on behalf of the Shareholders, John A.
Booth, individually, and each of the Named Shareholders, upon receipt
thereof, hereby accept the amount set forth in Section 1(a) as full and
final settlement of the 1994 Earn-out as well as all Earn-out payable in
respect of the 1995 Carryover Receivables and hereby unconditionally
release FFMC and its subsidiaries and affiliates, including MicroBilt, and
the officers and directors of each and CIS and the officers and directors
of CIS (collectively, "Releasees"), from (i) any and all liabilities and
obligations that Releasees, or any of them, may have to the Shareholders
(or any permitted successor thereof) in respect of the 1994 Earn-out as
well as all Earn-out payable in respect of the 1995 Carryover Receivables
and (ii) any and all rights, claims, actions or causes of action accrued or
to accrue by reason of any action taken or not taken by Releasees, or any
of them, from the beginning of the world to the date of closing of the
Proposed Transaction in respect of the Earn-out, including, without
limitation any claim premised upon management of HCCI by FFMC and/or any of
its affiliated companies.
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b. Upon the consummation of the Proposed Transaction and effectiveness
of the assumption of obligations set forth in Section 4 below, John A.
Booth, individually, and each of the Named Shareholders hereby
unconditionally releases FFMC and its subsidiaries and affiliates,
including MicroBilt, and the officers and directors of each, from any and
all liabilities and obligations that any of them may have to John A. Booth
or any of the Named Shareholders (or any permitted successor of John A.
Booth or any of the Named Shareholders) in respect of the obligations of
FFMC and MicroBilt under the Earn-out for HCCI's fiscal years 1995 through
1998 (the "1995-1998 Earn-out Obligations").
3. Repayment of Loans By Noteholders. Each of the Noteholders hereby
agrees that the proceeds payable to him or her in respect of the 1994 Earn-out
shall be used first to satisfy the outstanding amounts due from the Noteholder
to FFMC as of the date of consummation of the Proposed Acquisition, pursuant to
such Noteholder's Note, including accrued interest, and that any balance of the
1994 Earn-out due to each of such Noteholders after satisfaction of such Note
shall be paid in the same manner as is paid to the other Shareholders. Upon
full payment, FFMC hereby agrees to mark each such Note "cancelled" and to
return each such Note so marked to the respective Noteholder. If any balance
remains due to FFMC under any Note after application of the allocable 1994 Earn-
out payable to the respective Noteholder, FFMC shall reduce the amount otherwise
payable to John A. Booth hereunder by the amount of such remaining balance and
shall endorse such note to John A. Booth, whereupon such balance shall remain
due and payable to John A. Booth under the terms of such Note.
4. Assumption by CIS of Fiscal Years 1995 through 1998 Earn-out. Effective
upon the consummation of the Proposed Transaction, CIS does hereby assume from
FFMC and MicroBilt and agree in their place and stead to become liable for and
pay to the Shareholders for the entirety of the 1995-1998 Earn-out Obligations,
which shall be computed, as provided in Section 1(b), without reference to the
1995 Carryover Receivables, and shall be subject to the releases set forth in
Section 2(a)(i) and (ii) (the "Assumed Earn-out Obligations").
5. Indemnification by CIS. CIS hereby further agrees to indemnify FFMC
from and against any and all claims, losses, damages, liabilities, demands,
assessments, judgments, costs and expenses, including, without limitation
settlement costs and any legal or other expenses for investigating, bringing or
defending any actions or threatened actions incurred or suffered by FFMC or
MicroBilt in respect of the Assumed Earn-out Obligations.
6. Effect on Merger Agreement. Except for the settlement, release and
assumption provided herein, upon consummation of the Proposed Transaction, the
rights and obligations of the parties under the Merger Agreement shall remain in
full force and effect (with CIS assuming all obligations of FFMC and MicroBilt
in respect of the Assumed Earn-out Obligations, as aforesaid, subject to any
modification thereof agreed to by CIS and the Shareholders' Agent). CIS
confirms its intention to negotiate, in good faith and without delay,
appropriate modifications to certain of the Assumed Earn-out Obligations or the
substitution therefor of other rights or securities.
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7. Further Assurances. Upon the execution of this Agreement and
thereafter, each party to this Agreement agrees to do such things as may be
reasonably requested by any other party to this Agreement in order more
effectively to consummate or document the transactions contemplated by this
Agreement.
8. Representations and Warranties of Named Shareholders. Each of the Named
Shareholders (including John A. Booth individually) hereby represent, warrant
and acknowledge on behalf of himself or herself (but not on behalf of the other
Named Shareholders) the following (the truth and accuracy of each item of which
is a material inducement to FFMC and CIS to enter into this Agreement):
a. In determining to enter into this Agreement, the Named Shareholders
were advised by FFMC and CIS to seek the advice of legal counsel. Further,
the Named Shareholders have relied on the advice and counsel of John A.
Booth who has served as their representative and who has, as their
representative and with the advice of said legal counsel, negotiated
directly with representatives of FFMC and CIS the terms and provisions of
this Agreement.
b. Each of the Named Shareholders has been afforded an opportunity to
review CIS's (i) most recent Annual Report to Shareholders, (ii) 1994 Form
10-K Annual Report, (iii) 1994 Annual Meeting Proxy Statement and (iv) Form
10-Q Quarterly Report for the quarter ended March 31, 1995. In addition,
John A. Booth, as representative of the other Named Shareholders has
obtained, and each of the other Named Shareholders has had an opportunity
to obtain, any information from representatives of FFMC and CIS necessary
to evaluate the merits and risks of this agreement and has/have been given
the opportunity to meet with officials of FFMC and CIS and to have said
officials answer any questions regarding the terms and conditions of this
Agreement and all such questions have been answered to their full
satisfaction.
c. In agreeing to the release of FFMC and its subsidiaries and
affiliates from the 1995-1998 Earn-out Obligation pursuant to Section 2(b),
above, the Named Shareholders recognize that CIS's concurrent assumption of
the 1995-1998 Earn-out Obligation pursuant to Section 4, above, and the
resulting fact that the Named Shareholders may hereafter look only to CIS
for satisfaction of the 19985-1998 Earn-out Obligation, involves materially
different considerations and risks from those which applied before the
entering into of this Agreement. In particular, in determining to enter
into this Agreement, the Named Shareholders have considered the relative
size, profitability and credit-worthiness of CIS as compared with FFMC.
d. Each Named Shareholder represents and warrants that he or she is
entering into this Agreement for his or her own account.
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e. Each of the Named Shareholders acknowledges that he or she has
received no representations from FFMC, CIS or their affiliates, employees
or agents in connection with this Agreement other than as set forth herein
or as previously set forth in that certain Consent Solicitation Statement
dated December 13, 1993, pursuant to which the Named Shareholders were
solicited to approve, inter alia, a merger involving HCC by virtue of which
the Named Shareholders originally acquired the Earn-out.
f. Each named Shareholder has been advised to seek the advice of his or
her tax counsel respecting the tax counsel respecting the tax impact on him
or her of entering into and consummating this Agreement and is not relying
upon FFMC or CIS for any information respecting such tax impact.
9. Notices. Each notice under this Agreement shall be in writing and shall
be given either in person or by a nationally recognized next business day
delivery service or first class mail, postage and any other costs prepaid, to
the address of the party being given notice set forth below his or its signature
or to such other address as a party may furnish to the other as provided in this
sentence.
10. Binding Nature. This Agreement is binding upon the parties and their
respective legal representatives, heirs, devisees, legatees or other successors
and assigns and shall inure to the benefit of the parties and their respective
legal representatives, heirs, devisees, legatees or other successors and
assigns.
11. No Waiver. The failure of any party at any time or times to require
performance of any provision of this Agreement shall in no manner affect the
right to enforce the same; and no waiver by any party of any provision (or of a
breach of any provision) of this Agreement, whether by conduct or otherwise, in
any one or more instances shall be deemed or construed either as a further or
continuing waiver of any such provision or breach or as a waiver of any other
provision (or as a breach of any other provision) of this Agreement.
12. Governing Law. This Agreement shall be governed by, construed and
enforced according to the laws of the State of Georgia, without giving effect to
the conflict of law principles thereof.
13. Captions. Captions in this Agreement are inserted only as a matter of
convenience and for reference and in no way define, limit, extend or describe
the scope of this Agreement or the intent of any of its provisions.
14. Counterparts. This Agreement may be executed by each party upon a
separate copy, and in such case one counterpart of this Agreement consists of
enough of such copies to reflect the signature of all of the parties. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, and it is not necessary in making proof of this Agreement or
its terms to produce or account for more than one of such counterparts.
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Duly executed and delivered by the parties as of the day and year first
above written, effective as set forth above.
FIRST FINANCIAL MANAGEMENT
CORPORATION
Address for Notice: By: /s/ Stephen D. Kane
3 Corporate Square ---------------------------
Suite 700 Name: Stephen D. Kane
Atlanta, GA 30329 -------------------------
Attn: Legal Department Title: Vice Chairman
Fax: (404) 636-7632 ------------------------
C.I.S. TECHNOLOGIES, INC.
Address for Notice: By: /s/ Phillip D. Kurtz
Suite 1900 ---------------------------
6100 South Yale Name: Phillip D. Kurtz
Tulsa, OK 74136-1930 ---------------------
Fax: (918) 481-4205 Title: Chairman and CEO
--------------------
SHAREHOLDERS' AGENT
Address: /s/ John A. Booth
2303 Gloria Ct ---------------------------
Pleasanton, CA 94588 John A. Booth
NAMED SHAREHOLDERS:
Address: /s/ John Booth
2303 Gloria Ct ---------------------------
Pleasanton, CA 94588 John Booth
Address: /s/ Terry Brandt
----------------------------
Terry Brandt*
- ---------------------
- ---------------------
- ---------------------
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Address: /s/ Louise Bridges
11374 Bloomington Wy ----------------------------
Dublio, CA 94568 Louise Bridges*
Address: /s/ Walter Ellenberger
----------------------------
Walter Ellenberger*
- ---------------------
- ---------------------
- ---------------------
Address: /s/ Mark Emkjer
172 Victory Circle ----------------------------
San Ramon, CA 94583 Mark Emkjer*
Address: /s/ Tobyann Faingold
245 Stillcreek Rd ----------------------------
Danville, CA 94506 Tobyann Faingold*
Address: /s/ Greg King
- --------------------- ----------------------------
- --------------------- Greg King
- ---------------------
Address: /s/ John Murray
924 Lurline Dr. ----------------------------
Foster City, CA 94404 John Murray
Address: /s/ Robert J. Dendall
- --------------------- ----------------------------
- --------------------- Robert J. Dendall
- ---------------------
*/ Indicates Noteholder
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