SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: September 16, 1998 (Date of Earliest Event Reported: September
1, 1998)
RIGL CORPORATION
______________________________________________________________________________
(Exact name of registrant as specified in its charter)
Nevada 0-24217 85-0206668
______________________________________________________________________________
(State or other jurisdiction (Commission File. No.) (IRS Employer
of Incorporation) Identification No.)
7501 North 16th Street - Suite 200
Phoenix, Arizona 85020
______________________________________________________________________________
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (602) 906-1924
______________________________________________________________________________
(Former name or former address if changed since last report.)
<PAGE>
ITEM 2. Acquisition or Disposition of Assets
RIGL Corporation, formerly Renaissance International Group, Ltd. announced
that its wholly owned subsidiary RIGL Medical Systems, Inc. ("RMS") has
acquired 100% of the common stock of Medical Resource Systems, Inc. ("MRS")
for 100,000 shares of RIGL common stock. MRS is a medical billing company
formed in 1993, and provides billing and collection services to hospital
emergency rooms and physician practices in the Phoenix, Arizona area. Over
each of the past three (3) fiscal years, MRS has generated over $600,000 in
annual revenues. MRS will continue to be operated by its current management.
MRS has designed and implemented its own electronic billing and collection
system. This system provides an end to end solution for physician claims. The
system, which is integrated with a medical transcription company, and a
medical bill coding company, provides both electronic support documentation
and medical notes transcription that are required to fulfill electronic
billing. The use of this system reduces overhead and allows MRS to operate
with higher margins than other medical billing companies. The system designed
by MRS will be integrated into RIGL's own Medical AMIRE technology providing
the electronic billing module of the medical record management system
scheduled for initial beta release in 1999.
According to RIGL President and C.O.O., Kevin Jones, "Medical Resource
Systems, Inc. adds a key component to RIGL Medical Systems, Inc.'s physician
practice organization. MRS provides a valuable service to physicians, while
providing RMS with a vehicle to achieve greater economies of scale throughout
its physician network through the centralization of billing and collection
procedures. MRS also provides RMS with a stand alone service to offer
physicians, independent of physician management services. MRS will also
benefit from the additional marketing resources of RMS to promote its billing
and collection services."
RIGL specializes in advanced hardware and software development of Asset
Management and Information Retrieval Environments (AMIRE). The unique
architecture is currently being developed for the medical and the
multimedia/entertainment industries with numerous possibilities for future
expansion into other industries. Utilizing the proprietary AMIRE(TM)
information system and its Management Service Organization (MSO) network to
oversee medical facility operation, RIGL offers medical practitioners a
quality of life that relieves them from concerns over their business and
allows them to focus solely on providing medical care. RIGL's MSO network
offers practitioners technology and expertise in managing medical information
and business operations increasing the resources available and improving the
business environment in which they practice.
Except for the historical information contained herein, the matters set forth
in this document are forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are subject to risk and uncertainties
that may cause actual results to differ materially. These forward-looking
statements speak only as of the date hereof, and the company disclaims any
intent or obligation to update these forward-looking statements.
Item 7. Financial Statements of Business Acquired
It is impractical to provide required financial information at the time of
this filing. The required financial information will be filed on or before
November 15, 1998.
EXHIBIT INDEX
A. Business Combination Agreement
B. RIGL Warrants and Options
Signature:
By _____/s/___________
John A. Williams
As Chief fianancial Officer
<PAGE>
EXHIBIT A
BUSINESS COMBINATION AGREEMENT
This BUSINESS COMBINATION AGREEMENT (the "Agreement") is made and entered into
on September 1, 1998, by and between RIGL CORPORATION, a Nevada corporation
("RIGL"), RIGL MEDICAL SYSTEMS, INC., a Nevada corporation ("RMS"), MEDICAL
RESOURCE SYSTEMS, INC., an Arizona Corporation ("MRS"), and JOEL F. PATTERSON
and MARIA O. PATTERSON (collectively "Shareholder").
ARTICLE I
RECITALS
1.1. Present Structure of RIGL and RMS. The Common Stock of RIGL is
currently listed on the OTC Electronic Bulletin Board (the "OTC") which is
governed by the National Association of Securities Dealers ("NASD"). RMS's
headquarters are in Phoenix, Arizona. RMS is a wholly-owned subsidiary of
RIGL.
1.2 Present Structure of MRS. MRS's headquarters are in Mesa, Arizona.
Joel F. Patterson is the President, director of MRS. Shareholder owns a total
of 100 shares of MRS Common Stock and is sole shareholder of MRS.
1.3 Structure of Acquisition. The parties have determined that it is in
their respective best interests that RMS purchase all of the issued and
outstanding capital stock of MRS from Shareholder.
NOW, THEREFORE, the parties agree as follows:
ARTICLE II
PURCHASE TERMS
2.1 Stock Purchase. At the Closing (as defined in Section 2.3 below),
Shareholder shall sell, and RMS shall purchase, all of the issued and
outstanding capital stock of MRS (the "MRS Stock") for the consideration set
forth in Section 2.2 below.
2.2 Purchase Price. The purchase price for the MRS Stock (the "Purchase
Price") shall be 100,000 restricted shares of the common stock of RIGL
Corporation. At the Closing, Shareholder shall sign an investment letter in
form and substance as set forth in Exhibit "A" attached hereto. RIGL shall
have no obligation to either register Shareholder's shares of RIGL or provide
a public or private market for such shares or any shares acquired by virtue of
the exercise of any option granted to Shareholder.
2.3 Closing. RMS's purchase of the MRS Stock (the "Closing") shall take
place at 2:00 p.m. on September 2, 1998 (the "Closing Date") or at such other
time, date or place as shall be mutually agreed upon by the parties.
2.4 Delivery of Certificates. At the Closing, Shareholder shall deliver
to RMS certificates (duly endorsed for transfer to RMS) for the MRS Stock,
free and clear of any liens, security interests or other encumbrances.
2.5 Structure as of the Closing. Effective as of the Closing: (a) MRS
shall be a wholly-owned subsidiary of RMS; and (b) RMS shall be a wholly-owned
subsidiary of RIGL.
2.6 Other Assurances. If, at any time after the date hereof, RIGL or RMS
shall be advised that any further assignments or assurances or any other acts
or things are necessary or desirable to vest, perfect, confirm or record, in
or to RIGL or RMS the title to the MRS Stock, Shareholder shall execute and
deliver all such assignments, deeds, endorsements and assurances, and do such
other reasonable things as may be requested by the Board of Directors of RIGL
or RMS and are necessary or proper to vest, perfect or confirm title to the
MRS Stock, and otherwise carry out the purposes of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF RIGL AND RMS
RIGL and RMS hereby jointly and severally represent and warrant to
Shareholder as follows:
3.1 Organization and Qualification. Each of RIGL and RMS is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has the requisite corporate power to carry
on its business as now conducted and presently proposed to be conducted.
3.2 Authority Relative to This Agreement. Each of RIGL and RMS has the
requisite corporate power and authority to enter into this Agreement to carry
out its obligations hereunder. The execution and delivery of this Agreement
by RIGL and RMS and the consummation by RIGL and RMS of the transactions
contemplated hereby have been duly authorized by the respective Boards of
Directors of RIGL and RMS, and no other corporate proceedings on the part of
RIGL or RMS are necessary to authorize this Agreement and such transactions.
This Agreement has been duly executed and delivered by RIGL and RMS and
constitutes a valid and binding obligation of each, enforceable in accordance
with its terms.
3.3 Consents and Approvals; No Violation. The execution and delivery of
this Agreement do not, and the consummation of the transactions contemplated
hereby will not, violate, conflict with or result in a default under any
provision of :
a. RIGL's or RMS's Articles of Incorporation or Bylaws;
b. any agreement, arrangement or understanding;
c. any license, franchise or permit; or
d. any law, regulation, order, judgment or decree, which would be
violated or breached, or in respect of which a right of
termination or acceleration or any encumbrance on any of
RIGL's or RMS's assets would be created, other than any such
breaches or violations that will not, individually or in the
aggregate, have a material adverse effect on the business,
operations or financial condition of RIGL and its
subsidiaries, taken as a whole.
Other than in connection with or in compliance with
a. the corporation laws of the States of Nevada and Arizona, and
1. the rules and regulations of the NASD, or
2. U.S., securities laws or blue sky laws, no authorization,
consent or approval of, or filing with, any public body,
court or authority is necessary on the part of RIGL or RMS
for the consummation by RIGL and RMS of the transactions
contemplated by this Agreement, except for such
authorizations, consents, approvals and filings as to
which the failure to obtain or make will not, individually
or in the aggregate, have a material adverse effect on the
business, operations or financial condition of RIGL and
its subsidiaries, taken as a whole.
3.4 Capitalization of RIGL and RMS. The authorized equity capitalization
of RIGL consists of 50,000,000 shares of RIGL Common Stock, $.001 par value
per share. As of the Closing Date, 12,273,842 shares of RIGL Common Stock
will be issued and outstanding (all of which shares will be fully paid and
nonassessable), except for 400,000 shares taken into treasury by RIGL from
Harold Roberts, a director of RIGL, and no shares of RIGL Common Stock will
have been repurchased by RIGL. Except as set forth on Exhibit "B" hereto,
there are no options, warrants, conversion privileges or other rights,
agreements, arrangements or commitments obligating RIGL to issue or sell any
shares of capital stock of RIGL or securities or obligations of any kind
convertible or exchangeable for any shares of capital stock of RIGL, nor are
there any stock appreciation, phantom or similar rights outstanding based upon
the book value or any other attribute of RIGL.
3.5 NASD Filings. RIGL has previously delivered to Shareholder copies of
all reports filed by RIGL with the NASD since January 1, 1998, which
constitute all reports required to be filed by RIGL with the NASD since such
date. As of their respective dates, the documents and reports referred to
above did not contain any untrue statement of material fact or omit 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. The financial statements of RIGL included in such documents
and reports were prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto) and fairly present in all material
respects according to generally accepted accounting principles, the financial
position of RIGL as of the date thereof and the results of its operations and
its cash flows for the period then ended, in the case of the unaudited interim
financial statements subject to normal year-end audit adjustments and the
absence of complete footnote disclosures.
3.6 Absence of Undisclosed Liabilities. RIGL and RMS do not have any
obligations or liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise, whether due or to become due and regardless of when
asserted) arising out of transactions heretofore entered into, or any action
or inaction, or any state of facts existing, including taxes with respect to
or based upon transactions or events heretofore occurring, except
a. obligations under contracts or commitments (but not liabilities
for breaches thereof),
b. liabilities or reserves reflected on the consolidated balance
sheet dated July 31, 1998 (the "July 31, 1998 Balance Sheet"),
c. liabilities which have arisen after the date of the July 31,
1998 Balance Sheet in the ordinary course of business (none of
which is an uninsured liability for breach of contract, breach
of warranty, tort, infringement, claim or lawsuit),
d. liabilities otherwise specifically disclosed in the documents
and reports described in Section 3.5 hereof, and
e. liabilities incurred for financings related to this Agreement.
3.7 No Material Adverse Change. Since July 31, 1998, there has been no
material adverse change in the assets, financial condition, operating results,
customer, distributor, employee or supplier relations or business condition of
RIGL or RMS.
3.8 Compliance With Laws; Permits; Certain Operations. RIGL, RMS and
their respective officers, directors, agents and employees have complied in
all material respects with all applicable laws and regulations which affect
the businesses or any owned or leased properties of RIGL or RMS and to which
RIGL or RMS may be subject, and no claims have been filed against RIGL or RMS
alleging a violation of any such laws or regulations, except as described in
the documents and reports identified in Section 3.5 above. Neither RIGL nor
RMS has authorized, given or agreed to give any money, gift or similar benefit
(other than incidental gifts of nominal value) to any actual or potential
distributor, customer, supplier, governmental employee or any other person in
a position to assist or hinder RIGL or RMS in connection with any actual or
proposed transaction. RIGL and RMS hold all of the material permits,
licenses, certificates and other authorizations of foreign, federal, state and
local governmental agencies required for the conduct of its business or the
ownership or leasing of their respective properties. In particular, but
without limiting the generality of the foregoing, RIGL and RMS have not in any
material respect violated, or received a written notice or charge asserting
any violation of, any laws pertaining to occupational health or safety or the
environment (including rules and regulations thereunder).
3.9 Disclosure. Neither this Agreement nor any of the documents delivered
hereunder by RIGL or RMS contains any untrue statement of a material fact or
omits a material fact necessary to make the statements contained herein or
therein, in light of the circumstances in which they were made, not
misleading, and there is no fact which has not been disclosed to Shareholder
of which any officer or director of RIGL or RMS is aware which materially
affects adversely or could reasonably be anticipated to materially affect the
business, including operating results, assets, customer, distributor, supplier
or employee relations, or business condition, of RIGL or RMS .
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
Shareholder represents and warrants to RIGL and RMS that:
4.1 Organization and Qualification. MRS is a corporation duly organized,
validly existing and in good standing under the laws of the State of Arizona,
and has the requisite corporate power and authority to own and operate its
properties and to carry on its business as now conducted and presently
proposed to be conducted. The copies of MRS's Articles of Incorporation and
Bylaws which have been furnished by MRS to RIGL prior to the date of this
Agreement reflect all amendments made thereto and are correct and complete.
MRS is qualified to do business in every jurisdiction in which the nature of
its business or its ownership of property requires it to be qualified, other
than where the failure to so qualify will not, individually or in the
aggregate, have a material adverse effect on the business, operations or
financial condition of MRS.
4.2 Authority Relative to This Agreement. Shareholder has the full power
and authority to execute and deliver this Agreement and to carry out its
respective obligations hereunder. The execution and delivery of this
Agreement by Shareholder and the consummation of the transactions contemplated
hereby have been duly authorized by Shareholder, and no other proceedings are
necessary to authorize this Agreement and such transactions. This Agreement
has been duly executed and delivered by Shareholder and constitutes a valid
and binding obligation of Shareholder, enforceable against Shareholder in
accordance with its terms.
4.3 Consents and Approvals; No Violation. Except as disclosed under the
caption "Consents and Approvals" in the disclosure from MRS to RIGL of even
date herewith (the "Disclosure Letter"), the execution, and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
will not, violate, conflict with or result in a default under any provision of
a. MRS's Articles of Incorporation or Bylaws,
b. any agreement, arrangement or understanding,
c. any license, franchise or permit, or
d. any law, regulation, order, judgment or decree, which would be
breached or violated, or in respect of which a right of
termination or acceleration or any encumbrance on any of MRS's
assets would be created, other than any such breaches or
violations that will not, individually or in the aggregate,
have a material adverse effect on the business, operations or
financial condition of MRS. Other than in connection with or
in compliance with the corporation laws of the State of
Arizona, no authorization, consent or approval of, or filing
with, any public body, court or authority is necessary on the
part of MRS or Shareholder to allow Shareholder to consummate
the transactions contemplated by this Agreement, except for
such authorizations, consents, approvals and filings as to
which the failure to obtain or make will not, individually or
in the aggregate, have a material adverse effect on the
business, operations or financial condition of MRS.
4.4 Capitalization. The authorized equity capitalization of MRS consists
of 100,000 shares of MRS Common Stock. As of the date hereof, 100 shares of
MRS Common Stock are issued and outstanding, all of which shares are:
a. validly issued, fully paid and nonassessable, and
b. owned beneficially and of record by Shareholder.
Except as disclosed under the caption "Capitalization" in the Disclosure
Letter, there are no options, warrants, conversion privileges or other rights,
agreements, arrangements or commitments obligating MRS to issue or sell any
shares of capital stock of MRS or securities or obligations of any kind
convertible into or exchangeable for any shares of capital stock of MRS, nor
are there any stock appreciation, phantom or similar rights outstanding based
upon the book value or any other attribute of MRS (collectively, "MRS
Options"). Other than as set forth in this Agreement (including the Exhibits
hereto), Shareholder is not entitled to any preemptive, registration or other
similar rights. At or prior to the Closing, all MRS Options will be
repurchased, satisfied or otherwise canceled or terminated without payment of
any sum, or the incurrence of any liability for future payment of any sum, by
MRS. As of the Closing, RMS will own of record and beneficially the MRS
Stock, free and clear of all liens, security interests or other encumbrances,
Shareholder agreements or voting trusts, and there will not be outstanding any
subscriptions, warrants, options or rights to which any person is or may be
entitled to purchase or otherwise acquire any capital stock of MRS.
4.5 No Subsidiaries. MRS does not directly or indirectly have any
material investment in any other corporation, partnership, joint venture or
other business association or entity, and is not subject to any obligation or
requirement to provide for or to make any investment (by loan, capital
contribution or otherwise) in any entity.
4.6 Financial Statements. Shareholder has caused to be delivered to RIGL
the following financial statements of MRS:
a. unaudited balance sheets at May 31, 1998, 1997, and 1996; and
b. unaudited statements of income, retained earnings and cash
flows for the years ended May 31, 1998, 1997 and 1996. The
foregoing financial statements have been prepared in accordance
with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present in all
material respects the financial position of MRS as of the dates
thereof and the results of its operations and its cash flows
for the periods then ended. MRS's unaudited balance sheet as
of May 31, 1998 and MRS's unaudited statements of income,
retained earnings and cash flows for the year ended May 31,
1998 are hereinafter collectively referred to as the "May 31,
1998 Financial Statements."
4.7 Absence of Undisclosed Liabilities. MRS does not have any obligations
or liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise, whether due or to become due and regardless of when asserted)
arising out of transactions heretofore entered into, or any action or
inaction, or any state of facts existing, including taxes with respect to or
based upon transactions or events heretofore occurring, except
a. obligations under contracts or commitments described in the
Disclosure Letter under the caption "Contracts", or under
contracts or commitments which are not required to be disclosed
thereunder (but not liabilities for breaches thereof),
b. liabilities or reserves reflected on the balance sheet included
in the May 31, 1998 Financial Statements,
c. liabilities which have arisen after the date of the balance
sheet included in the May 31, 1998 Financial Statements in the
ordinary course of business (none of which is an uninsured
liability for breach of contract, breach of warranty, tort,
infringement, claim or lawsuit), and
d. liabilities otherwise specifically disclosed in this Agreement
or in the Disclosure Letter.
4.8 No Material Adverse Change. Since May 31, 1998, there has been no
material adverse change in the financial condition, properties, business,
operations, results of operations, or customer, distributor, sales
representative, employee or supplier relations, of MRS.
4.9 Absence of Certain Developments. Except as set forth under the
caption "Developments" in the Disclosure Letter, since May 31, 1998, MRS has
not:
a. Redeemed or purchased, directly or indirectly, any shares of
its capital stock, or declared or paid any dividends or
distributions with respect to any shares of its capital stock.
b. Other than upon the repurchase or other satisfaction of MRS
Options pursuant to Section 4.4, issued or sold any of its
equity securities, securities convertible into or exchangeable
for its equity securities, warrants, options or other rights to
acquire its equity securities, or any bonds or other
securities.
c. Borrowed any amount or incurred or become subject to any
material liability, except current liabilities incurred in the
ordinary course of business.
d. Discharged or satisfied any material lien or encumbrance or
paid any material liability, other than current liabilities
paid in the ordinary course of business.
e. Mortgaged, pledged or subjected to any lien, charge or other
encumbrance, any of its assets with a fair market value in
excess of $10,000 in the aggregate, except liens for current
property taxes not yet due and payable.
f. Sold, assigned or transferred (including without limitation
transfers to any employees, Shareholder or affiliates of MRS)
any tangible assets in excess of $10,000 in the aggregate,
except in the ordinary course of business, or canceled any
debts or claims in excess of $10,000 in the aggregate.
g. Sold, assigned or transferred (including without limitation
transfers to any employees, Shareholder or affiliates of MRS)
any patents, trademarks, trade names, copyrights, trade
secrets or other intangible assets, except in the ordinary
course of business, or disclosed any proprietary confidential
information to any person other than RIGL or RMS or employees
or agents of MRS.
h. Suffered any extraordinary loss or waived any rights of
material value, whether or not in the ordinary course of
business or consistent with past practice.
i. Taken any other action or entered into any other transaction
other than in the ordinary course of business and in
accordance with past custom and practice, or entered into any
transaction with any Insider (as defined in Section 4.21), in
each case involving in excess of $10,000 in the aggregate.
j. Suffered any material theft, damage, destruction or loss of or
to any property or properties owned or used by it, whether or
not covered by insurance.
k. Other than in the ordinary course of business and consistent
with past practice, made or granted any bonus or any wage,
salary or compensation increase to any director, officer,
employee who earns more than $25,000 per year, group of
employees or consultant, or made or granted any increase in
any employee benefit plan or arrangement, or amended or
terminated any existing employee benefit plan or arrangement
or adopted any new employee benefit plan or arrangement.
l. Paid, accrued or agreed to pay in the future any sum under
MRS's profit-sharing plan.
m. Made any capital expenditures or commitments therefor that in
the aggregate exceeded $50,000.
n. Made any loans or advances to, or guarantees for the benefit
of, any persons that in the aggregate exceeded $10,000.
o. Made charitable contributions or pledges which in the
aggregate exceeded $10,000.
4.10 Title to Properties. MRS owns good and marketable title to each of
the tangible properties and tangible assets reflected on the balance sheet
included in the May 31, 1998 Financial Statements or acquired since the date
thereof, free and clear of all liens and encumbrances, except for
a. liens for current taxes not yet due and payable,
b. liens set forth under the caption "Real Estate" in the
Disclosure Letter, and
C. the properties subject to the leases set forth under the
caption "Leases" in the Disclosure Letter.
4.11 Accounts Receivable. MRS's notes and accounts receivable recorded on
the balance sheet included in the May 31, 1998 Financial Statements and those
arising since the date thereof are valid receivables and are collectible in
accordance with their terms, net of the reserves recorded on such balance
sheet or thereafter, subject to no valid counterclaims or setoffs. All
reserves for notes and accounts receivable are established in accordance with
generally accepted accounting principles applied consistently with prior
periods.
4.12 Inventories. Except as set forth under the caption "Inventory" in
the Disclosure Letter, the inventories of MRS recorded on the balance sheet
included in the May 31, 1998 Financial Statements, and the inventory created
or purchased since the date thereof, consists of a quantity and quality usable
and salable in the ordinary course of business, net of the reserves recorded
on the balance sheet or thereafter, is not slow-moving as determined in
accordance with past practices, obsolete or damaged, and is not defective.
All reserves for inventory were established in accordance with generally
accepted accounting principles applied consistently with prior periods.
4.13 Tax Matters. Except as set forth under the caption "Tax Matters" in
the Disclosure Letter, MRS has filed all federal, foreign, state, county and
local income, excise, property, sales and other tax returns which are required
to be filed by it, and all such returns are true and correct in all material
respects; all taxes due and payable by MRS have been paid; the liability for
taxes on the balance sheet included in the May 31, 1998 Financial Statements
fully reflects MRS's obligations for taxes as of such date, and MRS's
provisions for taxes in such balance sheet are sufficient for all accrued and
unpaid taxes as of the date of such balance sheet; MRS has paid all taxes due
and payable or which it is obligated to withhold from amounts owing to any
employee, creditor, independent contractor, Shareholder or other third party;
MRS has not waived any statute of limitations in respect of taxes or agreed to
any extension of time with respect to a tax assessment or deficiency; the
assessment of any additional taxes for periods for which returns have been
filed is not expected; and there are no unresolved questions or claims
concerning the tax liability of MRS. MRS has not made an election under Section
341(f) of the Internal Revenue Code of 1986, as amended (the "Code"). No
claim has ever been made by an authority in a jurisdiction where MRS does not
file tax returns that it is or may be subject to taxation by that
jurisdiction. There are no security interests on any of the assets of MRS
that arose in connection with any failure (or alleged failure) to pay any tax.
MRS has disclosed on its federal income tax returns all positions taken
therein that could give rise to a substantial understatement of federal income
tax within the meaning of Code Section 6662.
4.14 Contracts and Commitments.
a. Except as set forth under the caption "Contracts" in the
Disclosure Letter, MRS is not a party to any (i) collective
bargaining agreement or contract with any labor union,
(ii)bonus, pension, profit sharing, retirement, or other form
of deferred compensation plan, (iii) hospitalization insurance
or similar plan or practice, whether formal or informal, (iv)
contract for the employment of any officer, individual
employee, or other person on a full-time or consulting basis or
relative to severance pay for any such person, (v) agreement or
indenture relating to the borrowing of money in excess of
$10,000 or to mortgaging, pledging or otherwise placing a lien
on any of the assets of MRS, (vi) guaranty of any obligation
for borrowed money or otherwise, other than endorsements made
for collection, (vii) lease or agreement under which it is
lessor of, or permits any third party to hold or operate, any
property, real or personal, with aggregate remaining rental
payments in excess of $10,000, (viii) contract or group of
related contracts with the same party for the purchase of
products or services, under which the undelivered balance of
such products and services has a purchase price in excess of
$25,000, (ix) contract or group of related contracts with the
same party for the sale of products or services under which the
undelivered balance of such products or services has a sales
price in excess of $25,000, (x) other contract or group of
related contracts with the same party continuing over a period
of more than six months from the date or dates thereof, other
than contracts terminable by it on thirty days' or less notice
without penalty or involving less than $25,000, (xi) contract
which prohibits MRS from freely engaging in business anywhere
in the world, (xii) sales representative or distribution
agreement, or any other contract relating to the sale or
distribution of MRS's products, (xiii) contract, agreement or
understanding with any Insider, (xiv) license agreement or
other agreement providing for the payment or receipt of
royalties or other compensation by or to MRS, or (xv) other
agreement material to MRS's business or not entered into in the
ordinary course of business.
b. Except as specifically disclosed under the caption "Contracts"
in the Disclosure Letter, (i) to the knowledge of Shareholder,
no contract or commitment required to be disclosed under such
caption has been breached or canceled by the other party , (ii)
since May 31, 1998, no customer or supplier has notified MRS
that it will stop or materially decrease the rate of business
done with MRS, except for changes in the ordinary course of
MRS's business, (iii) MRS has performed in all material
respects all obligations required to be performed by it in
connection with the contracts or commitments required to be
disclosed under such caption and is not in receipt of any
written claim of default under any contract or commitment
required to be disclosed under such caption, and (iv) MRS has
no present expectation or intention of not fully performing any
obligation pursuant to any contract or commitment set forth
under such caption.
c. Prior to the date of this Agreement, RIGL has been supplied
with a true and correct copy of each written contract or
commitment, and a written description of each oral contract or
commitment, referred to under the caption "Contracts" in the
Disclosure Letter, together with all amendments, waivers or
other changes thereto.
4.15 Proprietary Rights.
a. Except as set forth under the caption "Proprietary Rights" in
the Disclosure Letter, there are no patents, patent
applications, trademarks, service marks, trade names, corporate
names, copyrights, trade secrets or other proprietary rights
owned by MRS or necessary to the conduct of MRS's business as
now conducted. MRS owns and possesses all rights, titles and
interest, or a valid license, in and to the proprietary rights
set forth under such caption.
b. The Disclosure Letter describes under such caption all
proprietary rights which have been licensed to third parties
and those proprietary rights which are licensed from third
parties. MRS has taken all necessary action to protect the
proprietary rights set forth under such caption. MRS has not
received any written notice of, nor is Shareholder aware of any
facts which indicate a probable likelihood of, any
infringement, misappropriation, or conflict from any third
party with respect to MRS's proprietary rights; MRS has not
infringed, misappropriated or otherwise conflicted with any
proprietary rights of any third parties, nor is Shareholder
aware of any infringement, misappropriation or conflict which
will occur in the continued operation of MRS; and no written
claim by any third party contesting the validity of any
proprietary rights listed under such caption has been made, is
currently outstanding, or, to the knowledge of Shareholder, is
threatened.
4.16 Litigation. Except as set forth under the caption "Litigation" in
the Disclosure Letter, there are no actions, suits, proceedings, orders or
investigations pending or, to the knowledge of Shareholder, threatened against
MRS, at law or in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, and there is no material basis known to
Shareholder for any of the foregoing.
4.17 Brokerage. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated
by this Agreement based on any arrangement or agreement made by or on behalf
of MRS or Shareholder.
4.18 Employment Matters. MRS has complied in all material respects with
all laws relating to the employment of labor, including provisions thereof
relating to wages, hours, equal opportunity, collective bargaining and the
payment of social security and other taxes. MRS has no material labor
relations problems pending, its labor relations are satisfactory and no key
executive employee of MRS and no group of MRS's employees has notified MRS of
any plans to terminate his or its employment.
4.19 Employee Benefit Plans.
a. With respect to all employees and former employees of MRS,
except as set forth under the caption "Employee Benefits" in
the Disclosure Letter, MRS does not presently maintain,
contribute to or have any liability (including current or
potential multi-employer plan withdrawal liability) under any
(i) non-qualified deferred compensation or retirement plan or
arrangement which is an "employee pension benefit plan" as such
term is defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), (ii)
qualified defined contribution retirement plan or arrangement
which is an employee pension benefit plan, (iii) qualified
defined benefit pension plan or arrangement which is an
employee pension benefit plan, (iv) "multi-employer plan" as
such term is defined in Section 3(37) of ERISA, (v) unfunded or
funded medical, health or life insurance plan or arrangement
for present or future retirees or present or future terminated
employees which is an "employee welfare benefit plan" as such
term is defined in Section 3(1) of ERISA, (vi) profit-sharing
or other similar plan, or (vii) any other employee welfare
benefit plan.
b. With respect to each of the employee benefit plans listed in
the Disclosure Letter, Shareholder has furnished to RIGL true
and complete copies of (i) the plan documents and summary plan
description, (ii) the most recent determination letter received
from the Internal Revenue Service, (iii) the latest actuarial
valuation, (iv) the latest financial statement, (v) the last
Form 5500 Annual Report, and (vi) all related trust agreements,
insurance contracts or other funding agreements which implement
such employee benefit plan. Neither MRS nor any of its
directors, officers, employees or any other "fiduciary," as
such term is defined in Section 3(21) of ERISA, has any
liability for failure to comply with ERISA or the Code for any
action or failure to act in connection with the administration
or investment of such plans.
c. With respect to the insurance contracts or funding agreements
which implement any of the employee benefit plans listed in the
Disclosure Letter, such insurance contracts or funding
agreements are fully insured or the reserves under such
contracts are sufficient to pay claims incurred.
4.20 Insurance. The Disclosure Letter, under the caption "Insurance,"
lists and briefly describes each insurance policy maintained by MRS with
respect to its properties and assets and sets forth the date of expiration of
each such insurance policy. All of such insurance policies are in full force
and effect and MRS is not in default in any material respect with respect to
its obligations under any of such insurance policies. The insurance coverage
of MRS is customary for corporations of similar size engaged in similar lines
of businesses.
4.21 Affiliate Transactions. Except as set forth under the caption
"Affiliate Transactions" in the Disclosure Letter, no holder of 5% or more of
any class of stock of MRS, officer or director of MRS or, to Shareholder's
knowledge, any member of the immediate family of Shareholder, officer or
director, or, to Shareholder's knowledge, any entity in which any of such
persons owns any beneficial interest (other than a publicly-held corporation
whose stock is traded on a national securities exchange or in the
over-the-counter market and less than 5% of the stock of which is beneficially
owned by any of such persons) (collectively "Insiders"), has any agreement
with MRS (other than at-will employment arrangements) or any interest in any
property, real, personal or mixed, tangible or intangible, used in or
pertaining to the business of MRS. For purposes of the preceding sentence,
the members of the immediate family of Shareholder, officer or director
consist of the spouse, parents, children, siblings, mothers- and
fathers-in-law, sons- and daughters-in-law, and brothers- and sisters-in-law
of Shareholder, officer or director.
4.22 Customers and Suppliers. The Disclosure Letter, under the caption
"Customers and Suppliers," lists the 10 largest customers and 10 largest
suppliers of MRS for 1997, and sets forth opposite the name of each such
customer and supplier the approximate percentage of net sales or purchases, as
the case may be, attributable to such customer or supplier. The Disclosure
Letter also sets forth the forecast of the 10 largest customers and suppliers
for 1998.
4.23 Officers and Directors; Bank Accounts. The Disclosure Letter, under
the caption "Officers and Directors," lists all officers and directors of MRS,
all of MRS's bank accounts, and each authorized signer on such accounts.
4.24 Compliance with Laws; Permits; Certain Operations. MRS and its
officers, directors, agents and employees have complied in all material
respects with all applicable laws and regulations of foreign, federal, state
and local governments and all agencies thereof which affect the businesses or
any owned or leased properties of MRS and to which MRS may be subject, and no
claims have been filed against MRS alleging a violation of any such laws or
regulations, except as set forth in the Disclosure Letter under the caption
"Compliance." MRS has not authorized, given or agreed to give any money, gift
or similar benefit (other than incidental gifts of articles of nominal value)
to any actual or potential distributor, customer, supplier, governmental
employee or any other person in a position to assist or hinder MRS in
connection with any actual or proposed transaction. MRS holds all of the
material permits, licenses, certificates and other authorizations of foreign,
federal, state and local governmental agencies required for the conducts of
its business or the ownership or leasing of its property. In particular, but
without limiting the generality of the foregoing, MRS has not in any material
respect violated, or received a written notice or charge asserting any
violation of, any laws pertaining to occupational health or safety or the
environment (including rules and regulations thereunder).
4.25 Disclosure. Neither this Agreement, nor any other documents
delivered hereunder by Shareholder nor the Disclosure Letter contains any
untrue statement of a material fact or omits a material fact necessary to make
the statements contained herein or therein, in light of the circumstances in
which they were made, not misleading, and there is no fact which has not been
disclosed to RIGL of which Shareholder are aware which materially affects
adversely or could reasonably be anticipated to materially affect adversely
the business, including operating results, assets, customer, distributor,
supplier or employee relations, and business operations, of MRS.
ARTICLE V
CONDUCT OF BUSINESS PRIOR TO THE CLOSING
5.1 Conduct of Business Prior to the Closing. Prior to the Closing,
unless RIGL and RMS have otherwise consented (such consent shall not be
withheld unreasonably), or as otherwise provided herein, Shareholder shall
cause MRS to take the following actions:
a. MRS shall continue to conduct operations in the ordinary and
usual course of business, and maintain its facilities in their
current condition.
b. MRS shall refrain from: (A) issuing, selling, pledging,
disposing of or encumbering (i) any additional shares of, or
any options, warrants, conversion privileges or rights of any
kind to acquire any shares of, any of its capital stock, or
(ii) any of its assets, except in the ordinary course of
business; (B) amending or proposing to amend its Articles of
Incorporation or Bylaws; (C) splitting, combining or
reclassifying any outstanding shares of MRS's Common Stock, or
declaring or paying any dividend or other distribution payable
in cash, stock, property or otherwise with respect to shares of
MRS's Common Stock; (D) redeeming, purchasing or acquiring or
offering to acquire any shares of MRS's Common Stock; (E)
acquiring (by merger, exchange, consolidation, acquisition of
stock or assets or otherwise) any corporation, partnership,
joint venture or other business organization or division or
material assets thereof; (F) incurring any indebtedness for
borrowed money or issuing any debt securities except the
borrowing of working capital in the ordinary course of business
and consistent with past practice; (G) making any payment under
Promissory Notes to any employee of MRS, or (H) entering into
or proposing to enter into or modifying or proposing to modify
in any material respect any material agreement, arrangement or
understanding with respect to any of the matters set forth in
this Section 5.1(b).
c. Except in the ordinary course and consistent with past
practice, MRS shall refrain from entering into or modifying any
employment, severance or similar agreements or arrangements
with, or granting any bonuses, salary increases, severance or
termination pay to, any officers, directors, employees or
consultants.
d. Except as required by law, MRS shall refrain from adopting or
amending any bonus, profit sharing, compensation, stock option,
pension, retirement, deferred compensation, employment or other
employee benefit plan, trust, fund or group arrangement for the
benefit or welfare of any employees or any bonus, profit
sharing, compensation, stock option, pension, retirement,
deferred compensation, employment or other employee benefit
plan, agreement, trust, fund or arrangement for the benefit or
welfare of any director.
e. MRS will use its best efforts to cause its current insurance
(or reinsurance) policies not to be canceled or terminated or
any of the coverage thereunder to lapse, unless simultaneously
with such termination, cancellation or lapse, replacement
policies providing coverage substantially equal to the coverage
under the canceled, terminated or lapsed policies for
substantially similar premiums are in full force and effect.
f. MRS shall use its reasonable efforts to preserve intact its
business organization and goodwill, keep available the services
of its officers and employees as a group and maintain
satisfactory relationships with suppliers, distributors,
customers and others having business relationships with it;
confer on a regular and frequent basis with representatives of
RIGL and report operational matters and the general status of
ongoing operations to RIGL; refrain from taking any action
which would render, or which reasonably may be expected to
render, any representation or warranty made by it in this
Agreement untrue at, or at any time prior to, the Closing Date;
after discovery by MRS, notify RIGL of any emergency or other
change in the normal course of its business or in the operation
of its properties and of any governmental or third party
complaints, investigations or hearings known to MRS (or
communications indicating that the same may be contemplated) if
such emergency, change, complaint, investigation or hearing
would be material, individually or in the aggregate, to the
business, operations or financial condition of MRS or
Shareholder's ability to consummate the transactions
contemplated by this Agreement; and notify RIGL if any
Shareholder discovers that any representation or warranty made
by any of them in this Agreement was when made, or has
subsequently become, untrue in any material respect.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Additional Agreements. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement,
including using reasonable efforts to obtain all necessary waivers, consents
and approvals and to effect all necessary filings.
6.2 Notification of Certain Matters. Each party will give prompt written
notice to the others of (a) the occurrence or failure to occur of any event,
which occurrence or failure has caused, will cause or is likely to cause any
representation or warranty on its part contained in this Agreement to be
untrue or inaccurate in any material respect at, or at any time prior to, the
Closing Date, and (b) any material failure of such party, or any officer,
director, Shareholder, employee or agent thereof, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder.
6.3 Director and Officer Indemnification; Liability Insurance. RIGL
agrees that it will cause MRS to maintain in effect, for a period of at least
two years following the Closing Date, the rights to indemnification existing
as of the Closing Date under MRS's Bylaws in favor of its directors and
officers and, for a period of two years following the Closing Date, liability
insurance for MRS's officers and directors substantially equivalent to that
maintained by RIGL for its officers and directors. Any determination required
to be made with respect to whether an indemnified party's conduct complies
with the standards set forth under the Bylaws or applicable liability
insurance policies will be made by independent counsel selected by RIGL and
reasonably satisfactory to such indemnified party.
6.4 Access to Information; Confidentiality. At all times from the date
hereof to the Closing Date: (a) RIGL and RMS shall each afford the officers,
employees, accountants, counsel and other representatives of Shareholder
access to all of the properties, books, contracts, commitments and records of
RIGL and RMS; and (b) Shareholder shall cause MRS to afford the officers,
employees, accountants, counsel and other representatives of RIGL and RMS
access to all of the properties, books, contracts, commitments and records of
MRS. Further, at all times from the date hereof to the Closing Date, RIGL and
RMS on the one hand, and Shareholder and MRS on the other hand, shall
promptly furnish to the other (i) a copy of each report, schedule,
registration statement or other document filed or received by it during such
period pursuant to the requirements of applicable securities laws, and (ii)
all other information concerning its business, properties and personnel as
such other party may reasonably request. Unless otherwise required by law,
the parties will hold any such information which is nonpublic in confidence
until such time as such information otherwise becomes publicly available
through no wrongful act of either party and will not use such information
other than to evaluate the other party in conjunction with the transactions
contemplated by this Agreement. Additionally, in the event of termination of
this Agreement for any reason, each party (x) will promptly return all
nonpublic documents obtained from the other party, and (y) will refrain from
the use or disclosure of any such confidential information provided hereunder.
Subject to the limitations above, in the event of a termination of this
Agreement for any reason, nothing in this Section 6.4 will preclude a party
from developing or offering products or services competitive with those of the
other parties.
ARTICLE VII
CLOSING
7.1 Conditions of Each Party to Effect the Closing. The respective
obligations of each party to perform at the Closing shall be subject to the
fulfillment at or prior to the Closing of the following conditions:
a. Shareholder, RIGL and RMS shall have obtained all consents and
approvals necessary to the consummation of this Agreement and
the transactions contemplated hereby.
b. There shall be no action, proceeding or pending or actual
litigation to enjoin, restrain or prohibit the consummation of
the transactions contemplated by this Agreement.
c. No party hereto will have terminated this Agreement as
permitted herein.
7.2 Additional Conditions to Obligations of Shareholder. Shareholder's
respective obligation to perform at the Closing is also subject to
satisfaction of the following condition: The representations and warranties
of RIGL and RMS set forth in ARTICLE III will be true and correct in all
material respects as of the Closing Date as if made at and as of the Closing
Date, and each of RIGL and RMS will in all material respects have performed
each obligation and agreement and complied with each covenant to be performed
and complied with by it hereunder at or prior to the Closing.
7.3 Additional Conditions to Obligations of RIGL and RMS. RIGL's and
RMS's obligations to perform at the Closing are also subject to satisfactions
of each of the following conditions:
a. Each of the representations and warranties of Shareholder
contained in this Agreement will be true and correct as of the
Closing Date as if made at and as of the Closing Date, and
Shareholder will in all material respects have performed each
obligation and agreement and complied with each covenant to be
performed and complied with by them hereunder at or prior to
the Closing.
b. There will have been no material adverse change in the
financial condition, liabilities, operating results, business
prospects, assets, or employee, customer, licensor or supplier
relations of MRS, and there will have been no damage,
destruction or loss, individually or in the aggregate, which
materially and adversely affects the properties, assets or
business of MRS (whether or not covered by insurance).
ARTICLE VIII
MISCELLANEOUS
8.1 Publicity. All press releases and other public announcements
regarding this Agreement and the transactions contemplated hereby will be
approved by RIGL and MRS, unless otherwise required by law, in which event
each party will use best efforts to enable the other party to review, prior to
dissemination, the form and substance of such announcements.
8.2 Entire Agreement; Amendments; Further Assurances. This Agreement,
including any documents delivered hereunder or ancillary hereto, constitutes
the entire agreement of the parties pertaining to the subject matter hereof
and supersedes all prior agreements or understandings of the parties. This
Agreement may only be amended by a writing signed by all of the parties
hereto, but any party hereto can waive any right, condition or agreement of
which it is entitled to avail itself, but any such waiver will apply only to
the circumstances involved and only if it is in writing. Each party agrees to
execute and deliver any other documents and take any other actions necessary
to carry out the terms of this Agreement and to consummate the transactions
contemplated herein.
8.3 Successors. Neither this Agreement nor any right, remedy, obligation
or liability hereunder may be assigned by any party without the prior written
consent of the other parties, except that the rights and obligations of any
party who is an individual may pass to his estate upon his death. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective permitted successors and assigns.
8.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given upon receipt if delivered personally or if
delivered by facsimile (in the latter case, with a copy delivered by first
class mail as described below), the next business day if by express mail
(overnight delivery) or three days after being sent by registered or certified
mail, return receipt requested, postage prepaid, if to RIGL or RMS, at RMS's
principal executive offices at 4840 E. Jasmine Street, Suite 105, Mesa,
Arizona, 85205, Attention William D. O'Neal, Esq., facsimile: (602) 906-1914
(with a copy to Cairns, Dworkin & Chambers, P.C., 3900 E. Mexico Avenue, Suite
1300, Denver, Colorado 80210, Attention: Bradford J. Lam, Esq., facsimile:
(303) 584-0995), if to MRS, or Shareholder at Medical Resource Systems, 2222
S. Dobson Road, Suite 1100, Mesa, Arizona 85202, Attention: Joel Patterson,
facsimile (602) 839-4182, or at such other address for a party as shall be
specified by notice hereunder.
8.5 Governing Law; Severability. This Agreement shall be governed by and
construed in accordance with the laws of the State of Arizona, without regard
to conflict of law principles; provided, however, that all matters pertaining
exclusively to the corporate governance of a party will be governed by the
laws of the state or province of its incorporation. In the event that any
provision hereof is held to be invalid, void or illegal by any court of
competent jurisdiction, the same shall be deemed severable from the remainder
of this Agreement, the remaining provisions shall be construed to preserve the
intent and purposes of this Agreement and the parties will negotiate in good
faith to modify the provision, covenant, term or restriction held to be
invalid, void or illegal to preserve each party's anticipated benefits under
this Agreement.
8.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together shall constitute one and the same instrument.
8.7 Interpretation. This Agreement has been prepared and negotiations in
connection herewith have been carried on by the joint efforts of the parties
hereto and their respective counsel. This Agreement is to be construed fairly
and not strictly for or against any of the parties hereto. The Articles and
Section headings contained in this Agreement are for convenience of reference
only, and shall not effect the meaning or interpretation of any provision
hereof. As used in this Agreement, the masculine, feminine and neuter genders
will be deemed to include the others if the context requires.
8.8 Disclosure Generally. No action taken pursuant to this Agreement,
including any investigation by or on behalf of any party hereto, shall be
deemed to constitute a waiver by the party taking such action of compliance
with any representation, warranty, covenant, or agreement contained herein.
The inclusion of any information in any written disclosure provided hereunder
shall not be deemed to be an admission or acknowledgment by a party, in and of
itself, that such information is material to or outside of the ordinary course
of the business of such party. Any written information provided by RIGL
hereunder shall be divided into paragraphs corresponding to the sections of
this Agreement. RIGL's written information shall constitute disclosure for
purposes of all other paragraphs thereof.
8.9 Survival of Representations and Warranties. The representations and
warranties of the parties shall survive the Closing for a period of 12 months
from the Closing Date.
8.10 Fees and Expenses. The parties shall bear their own fees and
expenses in connection with this Agreement.
DATED on September 1, 1998.
RIGL CORPORATION, a Nevada corporation
By: _____/s/__________________________________
Kevin Jones
Its: President
RIGL MEDICAL SYSTEMS, INC., a Nevada corporation
By: _____/s/__________________________________
Kevin L. Jones
Its: President
MEDICAL RESOURCE SYSTEMS, INC., an Arizona corporation
By: _____/s/__________________________________
Joel F. Patterson
Its: President
SHAREHOLDER
By: _____/s/__________________________________
Joel F. Patterson
By: _____/s/__________________________________
Maria O. Patterson
EXHIBIT "B"
RIGL Warrants and Options
Effective October 22, 1997 warrants were issued to existing stockholders
to acquire 2,598,170 preferred shares at a price of $2.00 per share and
750,000 common shares at a price of $2.30 per share. The warrants expire on
October 30, 1999. The Company granted certain of its executive officers and
other individuals options to purchase shares of the Company's common stock.
At June 30, 1998 options to purchase 1,112,974 shares of common stock were
outstanding.
