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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
BETWEEN
PANORAMIC CARE SYSTEMS, INC.,
PANORAMIC ACQUISITION CORPORATION
AND
MANAGEMENT - DATA, INC.
DATED AS OF JUNE 12, 2000
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TABLE OF CONTENTS
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ARTICLE I THE MERGER...................................................................................1
1.1 The Merger...................................................................................1
1.2 The Closing..................................................................................2
1.3 Effective Time...............................................................................2
1.4 Subsequent Actions...........................................................................2
ARTICLE II ARTICLES OF INCORPORATION AND BYLAWS OF THE SURVIVING CORPORATION............................2
2.1 Articles of Incorporation....................................................................2
2.2 Bylaws.......................................................................................2
ARTICLE III DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION..........................................3
3.1 Directors of the Surviving Corporation.......................................................3
3.2 Officers.....................................................................................3
ARTICLE IV EFFECT OF THE MERGER ON SECURITIES OF MERGER SUB AND THE COMPANY............................3
4.1 Merger Sub Stock.............................................................................3
4.2 The Company Securities.......................................................................3
4.3 Exchange of Certificates Representing the Company Common Stock...............................4
4.4 Adjustment of Exchange Ratios................................................................6
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................7
5.1 Existence, Good Standing, Corporate Authority, Compliance With Law...........................7
5.2 Authorization, Validity, and Effect of Agreements............................................7
5.3 Capitalization...............................................................................8
5.4 Other Interests..............................................................................9
5.5 No Violation.................................................................................9
5.6 Financial Statements.........................................................................9
5.7 Absence of Undisclosed Liabilities...........................................................9
5.8 Absence of Certain Changes or Events........................................................10
5.9 Contracts, Etc..............................................................................12
5.10 Properties..................................................................................14
5.11 Title to Assets.............................................................................15
5.12 Adequacy of Assets..........................................................................15
5.13 Accounts Receivable and Accounts Payable....................................................16
5.14 Litigation..................................................................................16
5.15 Taxes.......................................................................................16
5.16 Proprietary Rights..........................................................................17
5.17 Royalties...................................................................................20
5.18 Year 2000 Compliance........................................................................20
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5.19 Labor Relations.............................................................................20
5.20 Certain Employee Matters....................................................................21
5.21 Transactions With Affiliates................................................................21
5.22 Permits; Compliance With Laws...............................................................21
5.23 Environmental Matters.......................................................................22
5.24 Fees........................................................................................22
5.25 ERISA.......................................................................................22
5.26 Pooling of Interests Treatment..............................................................24
5.27 Insurance...................................................................................24
5.28 Property, Plant and Equipment...............................................................24
5.29 Disclosure..................................................................................24
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.....................................25
6.1 Existence; Good Standing; Corporate Authority; Compliance with Law..........................25
6.2 Authorization, Validity, and Effect of Agreements...........................................26
6.3 Capitalization..............................................................................26
6.4 No Violation................................................................................26
6.5 SEC and British Columbia Securities Commission Documents....................................27
6.6 No Consent or Approval Required.............................................................27
6.7 Absence of Change...........................................................................28
6.8 Brokerage...................................................................................28
6.9 Accounts Receivable and Accounts Payable....................................................28
6.10 Litigation..................................................................................28
6.11 Proprietary Rights..........................................................................29
6.12 Royalties...................................................................................29
6.13 Year 2000 Compliance........................................................................29
6.14 Labor Relations.............................................................................29
6.15 Certain Employee Matters....................................................................30
6.16 Environmental Matters.......................................................................30
6.17 ERISA.......................................................................................31
6.18 Pooling of Interests Treatment..............................................................31
6.19 Disclosure..................................................................................32
ARTICLE VII COVENANTS...................................................................................32
7.1 Interim Operations..........................................................................32
7.2 Registration Statement/Proxy Statement......................................................33
7.3 Filings; Other Action.......................................................................33
7.4 Publicity...................................................................................33
7.5 CDNX Application............................................................................33
7.6 Further Action..............................................................................34
7.7 Expenses....................................................................................34
7.8 Pooling.....................................................................................34
7.9 Publication of Financials...................................................................34
7.10 Tax Matters.................................................................................34
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7.11 Employment Agreements and Non-Competition Agreements........................................35
7.12 Financial Statements........................................................................35
7.13 Directors and Officer of Parent.............................................................35
7.14 Release of Stock............................................................................35
ARTICLE VIII CONDITIONS..................................................................................35
8.1 Conditions to Each Party's Obligation to Effect the Merger..................................35
8.2 Conditions to Obligation of the Company to Effect the Merger................................36
8.3 Conditions to Obligation of Parent and Merger Sub to Effect the Merger......................37
ARTICLE IX ESCROW; LIMITS ON LIABILITY.................................................................39
9.1 Delivery of Parent Common Stock to the Escrow Agent.........................................39
9.2 Dividends Declared After the Effective Time.................................................39
9.3 Survival of Representations.................................................................39
9.4 Indemnity...................................................................................39
9.5 Application by Parent to Escrow Agent for Payment of Claims.................................40
9.6 Distribution of Deferred Merger Consideration to the Company's Stockholders.................40
9.7 Unclaimed Funds.............................................................................40
9.8 Limits on Liability.........................................................................40
ARTICLE X TERMINATION.................................................................................40
10.1 Termination by Mutual Consent...............................................................40
10.2 Termination by Either Parent or the Company.................................................41
10.3 Termination by the Company..................................................................41
10.4 Termination by Parent.......................................................................41
10.5 Effect of Termination and Abandonment.......................................................41
10.6 Extension; Waiver...........................................................................42
ARTICLE XI GENERAL PROVISIONS..........................................................................42
11.1 Confidentiality.............................................................................42
11.2 Notices.....................................................................................42
11.3 Assignment, Binding Effect..................................................................43
11.4 Entire Agreement............................................................................43
11.5 Amendment...................................................................................43
11.6 Governing Law...............................................................................43
11.7 Counterparts................................................................................44
11.8 Headings....................................................................................44
11.9 Interpretation..............................................................................44
11.10 Waivers.....................................................................................44
11.11 Incorporation of Exhibits...................................................................44
11.12 Severability................................................................................44
11.13 Enforcement of Agreement....................................................................44
11.14 Subsidiaries................................................................................44
11.15 Consent.....................................................................................45
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EXHIBIT A
A-1 Todd Spence Employment Agreement
A-2 Di Anne Kerrigan Employment Agreement
A-3 Tom Kerrigan Employment Agreement
EXHIBIT B Escrow Agreement
EXHIBIT C Opinion of Parent Counsel
EXHIBIT D Opinion of Company Counsel
EXHIBIT E Stockholders Agreement
EXHIBIT F Release and Consent to Termination of Stock Restriction Agreement
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INDEX OF DEFINITIONS
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Agreement.........................................................................................................1
Audited Financial Statements.....................................................................................34
B.C. Act.........................................................................................................25
B.C. Commission..................................................................................................27
B.C. Reports.....................................................................................................27
Breakup Fee......................................................................................................41
CDNX Policy......................................................................................................33
CERCLA...........................................................................................................22
Certificate.......................................................................................................4
Closing...........................................................................................................2
Closing Date......................................................................................................2
Code..............................................................................................................1
Commission.......................................................................................................27
Company...........................................................................................................1
Company Balance Sheet.............................................................................................9
Company Common Stock..............................................................................................3
Company Material Adverse Effect..................................................................................10
Deferred Merger Consideration.....................................................................................4
Deferred Merger Consideration Fund...............................................................................39
Dissenting Share..................................................................................................3
Documentation....................................................................................................12
Effective Time....................................................................................................2
Environmental Requirement....................................................................................22, 30
ERISA............................................................................................................23
ERISA Affiliate..................................................................................................23
Escrow Agent......................................................................................................4
Escrow Agreement.................................................................................................36
Exchange Act.....................................................................................................27
Exchange Agent....................................................................................................4
Exchange Fund.....................................................................................................4
Hazardous Material...........................................................................................22, 30
hazardous waste..................................................................................................22
Initial Merger Consideration......................................................................................4
knowledge.........................................................................................................8
Material Contracts...............................................................................................13
Merger............................................................................................................1
Merger Sub........................................................................................................1
MGCL..............................................................................................................2
multiemployer plan...............................................................................................23
Multiemployer Plan...............................................................................................23
Multiple Employer Plan...........................................................................................23
Outside Closing Date.............................................................................................40
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parachute payments...............................................................................................17
Parent............................................................................................................1
Parent Common Stock...............................................................................................3
Parent Disclosure Schedule.......................................................................................25
Parent Material Adverse Effect...................................................................................27
Parent Reports...................................................................................................27
Pension Plan.....................................................................................................24
Plan.............................................................................................................23
Pooling of Interests.............................................................................................24
Proprietary Rights...............................................................................................11
RCRA.........................................................................................................22, 30
Real Property....................................................................................................14
Registration Statement...........................................................................................32
Regulatory Filings................................................................................................9
Securities Act...................................................................................................27
Share Exchange Ratio..............................................................................................3
Share Value.......................................................................................................3
Software.........................................................................................................12
Stockholders Agreement...........................................................................................39
Subsidiary.......................................................................................................44
Surviving Corporation.............................................................................................1
Taxes............................................................................................................17
tools............................................................................................................13
Unfunded Pension Liability.......................................................................................24
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of June 12,
2000 between Panoramic Care Systems, Inc., a Delaware corporation ("Parent"),
Panoramic Acquisition Corporation, a Missouri corporation and a wholly owned
subsidiary of Parent ("Merger Sub"), and Management - Data, Inc., a Missouri
corporation (the "Company").
RECITALS
A. The boards of directors of Parent and the Company each have
determined that a business combination between Parent and the Company is fair to
and in the best interests of their respective companies and stockholders and
accordingly, have agreed, subject to Canadian Venture Exchange ("CDNX")
approval, to effect the merger provided for herein upon the terms and subject to
the conditions set forth herein.
B. In connection with the merger provided for herein, 3,500,000 shares
of Parent common stock will be issued in exchange for all of the issued and
outstanding shares of the Company's common stock.
C. This merger is intended for financial accounting purposes to
qualify as a pooling of interests and for tax purposes to qualify as a
non-taxable reorganization under Section 368(a)(2)(E) of the Internal Revenue
Code of 1986, as amended (the "Code").
D. Parent, Merger Sub, and the Company desire to make certain
representations, warranties, and agreements in connection with the merger.
E. In consideration for the agreement of Parent and Merger Sub to
effect the merger provided for herein, certain officers and key employees of the
Company have agreed to execute employment agreements and non-competition
agreements as set forth herein.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants, and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
1.1. THE MERGER. Subject to the terms and conditions of this Agreement,
including CDNX approval of the transaction, at the Effective Time (as
hereinafter defined), Merger Sub shall be merged with and into the Company in
accordance with this Agreement, and the separate corporate existence of Merger
Sub shall thereupon cease (the "Merger"). The Company shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation"), and as of the Effective Time, shall be a wholly owned subsidiary
of Parent. The Merger shall have the
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effects specified in R.S. Mo. Sections 351.410 through 351.461 of the General
and Business Corporation Law of Missouri (the "MGCL").
1.2. THE CLOSING. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place at the
offices of Davis, Graham & Stubbs LLP at 370 17th Street, Suite 4700, Denver,
Colorado 80202 at 10:00 a.m., local time, on July 26, 2000 or at such other
time, date, or place as Parent and the Company may agree. The date on which the
Closing occurs is hereinafter referred to as the "Closing Date."
1.3. EFFECTIVE TIME. If all the conditions to the Merger set forth in
Article VIII shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article X, on the
Closing Date, the parties hereto shall execute and file Articles of Merger
meeting the requirements of R.S. Mo. Section 351.435 of the MGCL. The Merger
shall become effective at the time of filing of the Articles of Merger with the
Secretary of State of the State of Missouri in accordance with the MGCL, or at
such later time which the parties hereto shall have agreed upon and designated
in such filing as the effective time of the Merger (the "Effective Time").
1.4. SUBSEQUENT ACTIONS. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to continue in, vest, perfect or confirm of record or otherwise in the
Surviving Corporation's right, title or interest, in, to or under any of the
rights, properties, privileges, franchises or assets of either of its
constituent corporations acquired or to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger, or otherwise to carry out the
intent of this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of either of the constituent corporations of the Merger, all such deeds,
bills of sale, assignments and assurances and to take and do, in the name and on
behalf of each of such corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties, privileges,
franchises or assets in the Surviving Corporation or otherwise carry out the
intent of this Agreement.
ARTICLE II
ARTICLES OF INCORPORATION AND BYLAWS OF
THE SURVIVING CORPORATION
2.1. ARTICLES OF INCORPORATION. The Articles of Incorporation of Merger
Sub in effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation, until duly amended in accordance
with applicable law.
2.2. BYLAWS. At the Effective Time, the Surviving Corporation shall
take such action as is necessary to amend and restate the Bylaws of the
Surviving Corporation to be the same as the Bylaws of Merger Sub hereto, until
duly amended in accordance with applicable law.
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ARTICLE III
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
3.1. DIRECTORS OF THE SURVIVING CORPORATION. The Surviving Corporation
shall take such action as is necessary to elect as directors of the Surviving
Corporation immediately following the Effective Time: Todd Spence and Don Muir,
until their successors are duly appointed or elected in accordance with
applicable law.
3.2. OFFICERS. The Surviving Corporation shall take such action as is
necessary to elect as the officers of the Surviving Corporation immediately
following the Effective Time: Todd Spence, President and Don Muir, Secretary and
Treasurer, until their successors are duly appointed or elected in accordance
with applicable law.
ARTICLE IV
EFFECT OF THE MERGER ON SECURITIES OF MERGER SUB
AND THE COMPANY
4.1. MERGER SUB STOCK. At the Effective Time, each share of common
stock, $.001 par value, of Merger Sub outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of Parent, be converted into and exchanged for one validly issued, fully paid
and non-assessable share of common stock, no par value, of the Surviving
Corporation.
4.2. THE COMPANY SECURITIES.
(a) Subject to the provisions of Article IX hereof, at the
Effective Time, each share of common stock of the Company ("Company Common
Stock") issued and outstanding immediately prior to the Effective Time (other
than any share of Company Common Stock as to which any stockholder has exercised
its dissenters rights under the MGCL (a "Dissenting Share")) shall, by virtue of
the Merger and without any action on the part of the holder thereof, be
converted into the right to receive such number of validly issued, fully paid
and non-assessable shares of common stock of Parent, $.001 par value ("Parent
Common Stock") arrived at by multiplying each share of Company Common Stock by a
fraction, the numerator of which is 3,500,000 and the denominator of which is
the total number of issued and outstanding shares of Company Common Stock as of
the date hereof (the "Share Exchange Ratio").
(b) Each Dissenting Share shall not be converted as set forth
in Section 4.2(a) above, but shall be converted into the right to receive such
consideration from Parent as may be determined to be due with respect to such
Dissenting Share pursuant to the MGCL; provided, however, that each Dissenting
Share in respect of which a claim for appraisal is irrevocably withdrawn after
the Effective Time shall be deemed to be converted, as of the Effective Time,
into the right to receive shares of Parent Common Stock by application of the
Share Exchange Ratio subject to the provisions of Article IX hereof.
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(c) As a result of the Merger and without any action on the
part of the holder thereof, at the Effective Time all shares of the Company
Common Stock shall cease to be outstanding and shall be canceled and retired,
and each holder of shares of the Company Common Stock shall thereafter cease to
have any rights with respect to such shares of the Company Common Stock, except
the right to receive, without interest, the Parent Common Stock in accordance
with Sections 4.3 and Article IX hereof (and cash in lieu of any fractional
shares pursuant to Section 4.3(c) hereof) upon the surrender of a certificate (a
"Certificate") representing such shares of the Company Common Stock or, with
respect to a Dissenting Share, the right to receive such consideration per
Dissenting Share as such holders of Dissenting Shares may be determined to be
entitled pursuant to the MGCL.
(d) Each share of the Company Common Stock issued and held in
the Company's treasury at the Effective Time shall, by virtue of the Merger,
cease to be outstanding and shall be canceled and retired without payment of any
consideration therefor.
4.3. EXCHANGE OF CERTIFICATES REPRESENTING THE COMPANY COMMON STOCK.
(a) Within three business days after the Effective Time,
Parent shall deposit, or shall cause to be deposited, with an exchange agent
selected by Parent, which shall be Parent's Transfer Agent or such other party
reasonably satisfactory to the Company (the "Exchange Agent"), for the benefit
of the holders of shares of Company Common Stock (other than Dissenting Shares),
for exchange in accordance with this Article IV, certificates representing 90%
of the shares of Parent Common Stock (the "Exchange Fund") to be issued pursuant
to Section 4.2 and paid in exchange for outstanding shares of Company Common
Stock other than Dissenting Shares (the "Initial Merger Consideration").
(b) Within three business days after the Effective Time,
Parent shall deposit, or shall cause to be deposited, with an escrow agent
selected by Parent, which escrow agent shall be reasonably satisfactory to the
Company (the "Escrow Agent"), for the benefit of the holders of shares of
Company Common Stock, for distribution in accordance with Article IX,
certificates representing ten percent (10%) of the shares of Parent Common Stock
to be issued pursuant to Section 4.2 and paid in exchange for outstanding shares
of Company Common Stock (the "Deferred Merger Consideration"). Any dividends or
distributions with respect to the Deferred Merger Consideration relating to
record dates for such dividends or distributions after the Effective Time shall
be deposited with the Escrow Agent and shall constitute part of the Deferred
Merger Consideration.
(c) Within 10 days after the Effective Time, Parent shall
cause the Exchange Agent to mail to each holder of record of shares of Company
Common Stock other than Dissenting Shares (i) a letter of transmittal that shall
specify that delivery shall be effected, and risk of loss and title to such
shares of the Company Common Stock shall pass, only upon delivery of the
Certificates representing such shares to the Exchange Agent and which shall be
in such form and have such other provisions as Parent may reasonably specify,
and (ii) instructions for use in effecting the surrender of such Certificates in
exchange for certificates representing shares of Parent Common Stock. Upon
surrender of a Certificate for cancellation to the Exchange Agent together with
such letter of transmittal, duly executed and completed, in accordance with the
instructions thereto, the holder of
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the shares represented by such Certificate shall be entitled to receive in
exchange therefor (w) a certificate representing that number of whole shares of
Parent Common Stock equal to the product of the Share Exchange Ratio times the
number of shares so surrendered (rounded down to the nearest whole number), (x)
cash in lieu of any fractional share that is equal to the product of such
fractional interest times the last sales price of Parent Common Stock on the
Closing Date as reported on the Canadian Venture Exchange, (y) unpaid dividends
and distributions, if any, that such holder has the right to receive in respect
of the Initial Merger Consideration or the Deferred Merger Consideration, after
giving effect to any required withholding tax, and (z) the right to receive a
fractional interest in any Deferred Merger Consideration payable to stockholders
of the Company, all in accordance with Article IX hereof, the numerator of which
fractional interest is the number of shares represented by the Certificate so
surrendered and the denominator which is the number of shares of Company Common
Stock outstanding at the Effective Time. The shares represented by the
Certificate so surrendered shall forthwith be canceled. No interest will be paid
or accrued on the cash for unpaid dividends and distributions, if any, payable
to holders of shares of Company Common Stock. In the event of a transfer of
ownership of Company Common Stock that is not registered in the transfer records
of the Company, a certificate representing the proper number of shares of Parent
Common Stock may be issued to such a transferee if the Certificate representing
such Company Common Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid.
(d) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions declared after the Effective Time on Parent
Common Stock shall be paid with respect to any shares of Company Common Stock
represented by a Certificate until such Certificate is surrendered for exchange
as provided herein. Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to the holder of the
certificates representing whole shares of Parent Common Stock issued in exchange
therefor, without interest; (i) at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
theretofore payable with respect to such whole shares of Parent Common Stock and
not paid, less the amount of any withholding taxes that may be required thereon:
and (ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to surrender
and a payment date subsequent to surrender payable with respect to such whole
shares of Parent Common Stock, less the amount of any withholding taxes which
may be required thereon. Notwithstanding the foregoing, any dividends or other
distributions with respect to the Parent Common Stock comprising the Deferred
Merger Consideration that are declared after the Effective Time but prior to the
date any Deferred Merger Consideration is distributed to the Company's
stockholders in accordance with Article IX hereof, shall be paid by Parent to
the Escrow Agent and shall be distributed by the Escrow Agent in accordance with
Article IX.
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(e) At or after the Effective Time, there shall be no
transfers on the stock transfer books of the Company of the shares of Company
Common Stock that were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation, they shall be canceled and exchanged for certificates of shares of
Parent Common Stock deliverable in respect thereof pursuant to this Agreement,
together with a cash payment (net of any applicable tax withholdings) in lieu of
fractional shares, if any, in accordance with Section 4.3(c), and a cash payment
in accordance with Section 4.3(d) of dividends or distributions, if any, only if
the Certificate or Certificates that immediately prior to the Effective Time
represented such Company Common Stock are surrendered as provided in this
Article IV.
(f) Any portion of the Exchange Fund (including the proceeds
of any investments thereof and any shares of Parent Common Stock) that remains
unclaimed by the former stockholders of the Company one year after the Effective
Time shall be delivered to Parent. Any former stockholders of the Company who
have not theretofore complied with this Article IV shall thereafter look only to
Parent for payment of their shares of Parent Common Stock, and any unpaid
dividends and distributions on the Parent Common Stock deliverable in respect of
each share of the Company Common Stock such stockholder holds as determined
pursuant to this Agreement, in each case, without any interest thereon.
(g) None of Parent, Merger Sub, the Company, the Surviving
Corporation, the Exchange Agent, the Escrow Agent, or any other person shall be
liable to any former holder of shares of Company Common Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(h) In the event any Certificate shall have been lost, stolen,
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen, or destroyed and, if required by
the Exchange Agent, the posting by such person of a bond in such reasonable
amount as the Exchange Agent may require as indemnity against any claim that may
be made against the Company, the Exchange Agent, Parent, or the Surviving
Corporation with respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen, or destroyed Certificate the shares of Parent
Common Stock (and cash in lieu of fractional shares, if any) and unpaid
dividends and distributions on shares of Parent Common Stock deliverable in
respect thereof pursuant to this Agreement.
4.4. ADJUSTMENT OF EXCHANGE RATIOS. If subsequent to the date of this
Agreement, but prior to the Effective Time, the outstanding shares of Parent
Common Stock or Company Common Stock, respectively, shall have been changed into
a different number of shares or a different class as a result of a stock split,
reverse stock split, stock dividend, subdivision, reclassification, combination,
exchange, recapitalization, or other similar transaction, and the Share Exchange
Ratio shall be appropriately adjusted to provide the holders of Company Common
Stock the same economic effect as contemplated by this Agreement prior to such
event.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent as of the date of this
Agreement as follows:
5.1. EXISTENCE, GOOD STANDING, CORPORATE AUTHORITY, COMPLIANCE WITH
LAW.
(a) The Company is a corporation duly incorporated, validly
existing, and in good standing (including tax good standing) under the laws of
the State of Missouri. The Company is duly licensed or qualified to do business
as a foreign corporation and is in good standing (including tax good standing)
under the laws of the jurisdictions listed in Schedule 5.1 of the Company
Disclosure Schedule, which list contains all jurisdictions in which the
character of the properties owned or leased by it or in which the transaction of
its business makes such qualification necessary, in each case except as would
not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect (as defined in Section 5.8(a)).
(b) The Company has all requisite corporate power and
authority to own, operate, and lease its properties and carry on its business as
presently conducted.
(c) The Company is not in violation of any law, ordinance,
governmental rule or regulation to which it or any of its properties or assets
is subject, except as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect, nor is the Company in
violation of any material order, judgment, or decree of any court, governmental
authority, or arbitration board or tribunal.
(d) The copies of the Company's Articles of Incorporation and
Bylaws, which have been delivered to Parent, include any and all amendments made
thereto at any time prior to the date of this Agreement and are true, correct,
and complete.
(e) The Company's corporate minute books are accurate as to
their content. The meetings of the directors or stockholders referred to in the
corporate minute books were duly called and held. The signatures appearing on
all documents contained in the corporate minute books are the true signatures of
the persons purporting to have executed the same and no minutes of meetings or
written consents of the directors or stockholders of the Company are omitted
from such minute books that would contain any resolutions or other actions that
would be inconsistent with any of the representations and warranties contained
in Article V hereof or prevent or limit any of the transactions contemplated by
this Agreement. Schedule 5.1 of the Company Disclosure Schedule sets forth a
true and complete list of the names of all directors of the Company and the
names and offices held of all officers of the Company as of the date hereof.
5.2. AUTHORIZATION, VALIDITY, AND EFFECT OF AGREEMENTS. The Company has
the requisite corporate power and authority to execute and deliver this
Agreement and all agreements and documents contemplated hereby. Subject only to
the approval of this Agreement and the transactions contemplated hereby by the
stockholders of the Company as required by the [MGCL], the consummation by the
Company of the transactions contemplated hereby has been duly
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authorized by all requisite corporate action of the Company. This Agreement has
been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Merger Sub, constitutes, and
all agreements and documents contemplated hereby (when executed and delivered
pursuant hereto for value received) will constitute valid and legally binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except to the extent that enforceability may be limited
by applicable bankruptcy, insolvency, moratorium, or other similar laws relating
to creditors' rights and general principles of equity.
5.3. CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
30,000 shares of Company Common Stock, no par value. There are 261 shares of the
Company Common Stock issued and outstanding. Schedule 5.3 of the Company
Disclosure Schedule correctly sets forth the name of each person who holds of
record shares of Company Common Stock, the number of shares of Company Common
Stock so held, and the number of whole shares of Parent Common Stock to be
issued in exchange for such shares of Company Common Stock in connection with
the Merger. The Company has no outstanding bonds, debentures, notes, or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the stockholders of the Company on any matter. All issued and outstanding shares
of the Company Common Stock are duly authorized, validly issued, fully paid,
nonassessable, free of preemptive or rescission rights, and were issued in
compliance with all applicable federal and state securities laws.
(b) There are not, at the date of this Agreement, any
authorized, issued, or outstanding options, warrants, calls, subscriptions,
convertible securities, conversion privileges, preemptive rights, or other
rights, agreements, or commitments (whether or not presently exercisable) that
obligate the Company to issue, transfer, or sell any shares of capital stock or
other securities convertible into or evidencing the right to purchase or
otherwise acquire any capital stock of the Company. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation, or similar
plans, contracts, or rights with respect to the Company that are effective as of
the date hereof or that have been executed or agreed to as of the date hereof
with an effective date after the date hereof. There are no stockholders'
agreements, voting trusts, proxies, or other agreements or understandings with
respect to the voting of the capital stock of the Company to which the Company
is a party that are presently effective or have been executed or agreed to as of
the date hereof or, to the best knowledge of the Company, to which any officer
or director of the Company or any stockholder owned or controlled by such
officer or director is or will be a party, except in accordance with the terms
hereof.
(c) There are no restrictions upon the sale, voting, or
transfer of any shares of Company Common Stock pursuant to the Company's
Articles of Incorporation, Bylaws, or other governing instruments (other than
restrictions typically applicable to unregistered stock under the Securities
Act). After the Effective Time, the Surviving Corporation will have no
obligation to issue, transfer, or sell any shares of capital stock of the
Company or the Surviving Corporation pursuant to any Plan (as defined in Section
5.27). As used in this Agreement, except as otherwise
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provided, the "knowledge" of a person shall mean the actual knowledge of an
officer or senior manager of such person after reasonable investigation.
5.4. OTHER INTERESTS. The Company does not own, directly or indirectly,
any interest or investment (whether equity or debt) in any corporation,
partnership, joint venture, business, trust, or entity other than investments in
short term investment securities.
5.5. NO VIOLATION. Neither the execution and delivery by the Company of
this Agreement and all agreements and documents contemplated hereby or thereby
nor the consummation by the Company of the transactions contemplated hereby or
thereby will: (i) conflict with or result in a breach of any provisions of the
Articles of Incorporation or Bylaws of the Company; (ii) except as set forth in
Schedule 5.5 of the Company Disclosure Schedule, violate, conflict with, result
in a breach of any provision of, constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, result in
the termination or in a right of termination or cancellation of, accelerate the
performance required by, result in the triggering of any payment or other
obligations pursuant to, result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties of the Company under, or result
in being declared void, voidable, or without further binding effect, any of the
terms, conditions, or provisions of any note, bond, mortgage, indenture, loan
agreement, deed of trust, or any license, franchise, permit, lease, contract,
agreement or other instrument, commitment, or obligation to which the Company is
a party, or by which the Company or any of its properties is bound or affected;
(iii) violate any law, statute, rule, regulation, judgment, or decree applicable
to the Company; or (iv) other than the filings provided for in Article I,
filings required under the Securities Act, or applicable state securities and
"Blue Sky" laws or filings in connection with the maintenance of qualification
to do business in other jurisdictions (collectively, the "Regulatory Filings"),
require any consent, approval, or authorization of, or declaration, filing, or
registration with, any governmental or regulatory authority.
5.6. FINANCIAL STATEMENTS. The internally prepared balance sheets of
the Company, dated as of December 31, 1999, 1998 and 1997 and the internally
prepared statements of earnings and statements of cash flow for the 12-month
periods ended December 31, 1999, 1998, and 1997 which are attached to Schedule
5.6 of the Company Disclosure Schedule, have been prepared from the books and
records of the Company (which are themselves complete and accurate) consistent
with amounts reported by the Company on federal income tax filings for 1997,
1998, and 1999, tax returns and/or workpapers from 1997, 1998, and 1999, and
present fairly the financial condition of the Company as of such date and the
results of operations of the Company for the periods covered thereby. The
financial books, records, and work papers of the Company are complete and
correct in all material respects, have been maintained in accordance with good
business practice and accurately reflect the bases for the consolidated
financial condition and results of operations of the Company set forth in the
Company Financial Statements referred to in this Section 5.6. The balance sheet
of the Company dated as of March 31, 2000 is referred to in this Agreement as
the "Company Balance Sheet."
5.7. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
Schedule 5.7 of the Company Disclosure Schedule, the Company does not have any
material obligation or liability of any kind (whether accrued, absolute,
contingent, unliquidated, civil, criminal, or otherwise and
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<PAGE> 17
whether due or to become due), including accrued payroll, commissions, bonuses,
retirement benefits or other employee benefit costs and vacation accruals,
whether or not any such liability or obligation would have been required to be
disclosed on a balance sheet prepared in accordance with GAAP, except as and to
the extent reflected or reserved against in the Company Balance Sheet, or
incurred in the ordinary course of business since December 31, 1999.
5.8. ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Since March 31, 2000, except as set forth in Schedule
5.8(a) of the Company Disclosure Schedule, no event or events have occurred,
which individually or in the aggregate have had a Company Material Adverse
Effect, as hereafter defined, and there exists no condition or contingency that
could reasonably be expected to result in a Company Material Adverse Effect. A
"Company Material Adverse Effect" means a material adverse change in the
business, properties, financial condition, results of operations, or prospects
of the Company, taken as a whole.
(b) Since the date of the Company Balance Sheet and except as
set forth in Schedule 5.8(b) of the Company Disclosure Schedule, the Company has
not:
(i) declared, set aside, paid, or made any dividend
or other distribution on or in respect of any shares of its capital
stock or directly or indirectly redeemed, retired, purchased, or
otherwise acquired any such shares or any option, warrant, conversion
privilege, preemptive right, or other right or agreement to acquire the
same or any other securities convertible into or evidencing the right
to purchase or otherwise acquire the same;
(ii) made any amendments to its Articles of
Incorporation or Bylaws:
(iii) made any change in the number of shares of its
capital stock authorized, issued, or outstanding or authorized, issued,
granted, or made any option, warrant, conversion privilege, preemptive
right, or other right or agreement to acquire the same or any other
securities convertible into or evidencing the right to acquire the
same;
(iv) incurred any indebtedness for borrowed money;
(v) incurred any obligation or liability (contingent
or otherwise) except (i) normal trade or business obligations incurred
in the ordinary course of business, the performance of which will not,
individually or in the aggregate, have a Company Material Adverse
Effect and (ii) obligations under the contracts, agreements and leases
described in Schedule 5.9 or Schedule 5.10 of the Company Disclosure
Schedule, the performance of which will not, individually or in the
aggregate, have a Company Material Adverse Effect;
(vi) discharged or satisfied any lien or encumbrance
or paid any obligations or liability (fixed or contingent) other than
current liabilities paid to unrelated parties, wages paid to officers
and employees and director's fees paid to directors, each in the
ordinary course of business;
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(vii) mortgaged, pledged, or subjected to any lien,
charge, or other encumbrance any of its respective properties or assets
(tangible or intangible) except liens for current property taxes not
yet due and payable.
(viii) sold, assigned, leased, transferred or
otherwise disposed of, or agreed to sell, assign, lease, transfer or
otherwise dispose of, any of its tangible assets other than sales of
inventory in the ordinary course of business;
(ix) except in the ordinary course of business
consistent with past practice sold, assigned, licensed, transferred, or
otherwise disposed of, or agreed to sell, assign, license, transfer or
otherwise dispose of, any of its patents, inventions, shop rights,
know-how, trade secrets, confidentiality agreements and confidential
information, registered and unregistered trademarks, service marks,
logos, corporate names, trade names, and other trademark rights, trade
dress, or other designations or combinations of such designations that
are distinctive of goods or services and that are used in a manner that
identifies those goods or services and distinguishes them from the
goods or services of others, works of authorship and any registered or
unregistered copyright therein, Software or Documentation (as defined
in Section 5.9(b)), or other intangible assets, and all registrations
for, and applications for registration of, any of the foregoing
(collectively, "Proprietary Rights") or disclosed any of its
confidential Proprietary Rights to any person (other than Parent);
(x) entered into any transaction, contract, or
commitment other than in the ordinary course of business;
(xi) made any capital expenditures or any commitment
therefor in excess of $15,000 in the aggregate except as consented to
by Parent;
(xii) adopted or made any change in any executive
compensation plan, bonus plan, incentive compensation plan, deferred
compensation agreement, or other employee benefit plan or arrangement;
(xiii) entered into any employment or consulting
agreement or arrangement, or, except for normal bonuses pursuant to and
consistent with existing plans or programs, or wages or salary
increases consistent with past practices, granted or paid any bonus, or
made or granted any general wage or salary increase or any specific
increase in the wages or salary of any employee;
(xiv) suffered any casualty loss or damage, whether
or not such loss or damage shall have been covered by insurance;
(xv) canceled or compromised any debt or claim except
for adjustments made in the ordinary course of business that, in the
aggregate, are not material, or waived or released any rights that are
material;
(xvi) terminated, amended, or modified any agreement
or instrument described in Schedule 5.9 of the Company Disclosure
Schedule;
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(xvii) entered into any transaction with any
stockholder, officer, director, or key employee of the Company or any
affiliate of any such person other than the payment of wages and
salaries and other benefits under employee benefit plans in existence
prior to December 31, 1999;
(xviii) made any loans or advances to, guaranties for
the benefit of, or investments in, any person (other than customary
travel advances in accordance with past practices);
(xix) made cash charitable contributions in excess of
$5,000 in the aggregate or any political contributions;
(xx) lost any supplier or suppliers which loss or
losses, individually or in the aggregate, has had, or could reasonably
be expected to have, a Company Material Adverse Effect;
(xxi) lost any customer or customers which loss or
losses, individually or in the aggregate, has had, or could reasonable
be expected to have a Company Material Adverse Effect;
(xxii) merged or consolidated with, or acquired all
or substantially all of the assets, capital stock, or business of any
other person;
(xxiii) introduced any material change with respect
to the operation of its business, including its method of accounting;
(xxiv) agreed or committed to do any of the things
described in this Section 5.8.
5.9. CONTRACTS, ETC. Schedule 5.9 of the Company Disclosure Schedule
sets forth a true and complete list of the following:
(a) all Proprietary Rights, if any, used in the business or
operations of the Company; identifying the owner thereof and in the case of any
license, the parties thereto, the method of compensating the licensor thereunder
and the termination date;
(b) all Software and Documentation owned by the Company or
used in and material to the business or operations of the Company, identifying
the owner thereof. As used herein: (i) "Software" means all computer programs,
in machine-readable object code and any and all corresponding source code, and
includes, without limitation: any and all printed listings, file formats,
interface or operating system designs, application programs, structure,
architecture, libraries, tools, functions, subroutines, and all components,
portions or modules thereof, and (ii) "Documentation" means all user manuals,
handbooks, on-line materials, development tools, specifications and any other
written or machine readable materials relating in any way to the Software, and
includes, without limitation: any and all Software specifications; programmer's
or developer's notes, and engineering or system design notes; instructions for
compiling or
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decompiling; and all pseudo-code, algorithms, diagrams or flow charts whether or
not directly incorporated in the Software. The Software and Documentation owned
by the Company, listed on Schedule 5.9 of the Company Disclosure Schedule,
includes the copyright registration number of all registered copyrights therein.
The list on Schedule 5.9 of the Company Disclosure Schedule describes the extent
to which the listed Software owned by the Company is proprietary to the Company;
if any such Software requires the use of development tools, routines, libraries
or the like ("tools") that are not proprietary to the Company, such tools are
identified in Schedule 5.9 of the Company Disclosure Schedule; and if any such
Software, or any portion thereof, is required by law or any agreement to be
dedicated to the public, owned or co-owned, or licensed or otherwise authorized
for use by the public or any other person, such requirements are described in
Schedule 5.9 of the Company Disclosure Schedule;
(c) all employment and consulting agreements covering any
employee of, or consultant to, the Company;
(d) all deferred compensation agreements, employee stock
option plans, group life, hospitalization or disability insurance, severance
policies and other plans and arrangements providing benefits for employees of
the Company;
(e) all standard and non-standard product warranty terms and
conditions applicable to goods and services sold by the Company;
(f) the names and ages of all retired employees and all
employees on long-term disability of the Company who are entitled to receive
health benefits;
(g) all bank accounts and safe deposit boxes of the Company,
indicating the names of the persons authorized to draw thereon;
(h) all agreements of the Company with sales representatives,
distributors, authorized service centers or other customers;
(i) all loan agreements, credit agreements, indentures, and
other documents or instruments relating to the borrowing of money by the Company
and all promissory notes and other evidences of indebtedness of the Company,
including without limitation, all such documents and instruments relating to or
evidencing any stockholder loans to the Company;
(j) all guaranties of obligations of the Company under all
loan agreements, leases, and other documents and instruments to which the
Company is a party or by which it is bound, by any officer or director of the
Company or any affiliate of any of the foregoing; and
(k) all other contracts, agreements or commitments of the
Company including, but not limited to, any royalty arrangements, that (i)
provide for future annual payments by the Company in excess of $5,000 or (i)
were entered into other than in the ordinary course of business.
True and correct copies of all documents, including all amendments
thereto, referred to above have been delivered or made available to Parent
(collectively, the "Material Contracts").
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Each Material Contract is a valid obligation of and enforceable against the
Company and, to the Company's knowledge, the other parties thereto, in
accordance with its terms for the period stated therein. There is no existing
material breach, default, or event of default by the Company or, to the
knowledge of the Company, by any other party, under any Material Contract. There
is no event that with notice or lapse of time would constitute a default by the
Company under any Material Contract, nor has any party thereto given notice of
any breach or default to Todd Spence or Di Anne Kerrigan or made a claim with
respect to any breach or default. There are no material deficiencies in the
Company's performance under any Material Contract. There are no existing laws,
regulations, or decrees, that materially and adversely affect, or may materially
and adversely affect any of the Material Contracts or that would have a Company
Material Adverse Effect. Except as set forth in Schedule 5.9 of the Company
Disclosure Schedule, no third party consents to the execution, delivery, and
consummation of this Agreement, the documents contemplated hereby or the
transactions contemplated herein are required pursuant to the terms of any
Material Contract. Except as set forth in Schedule 5.9 of the Company Disclosure
Schedule, each employment agreement to which the Company is a party is in full
force and effect, and neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby shall cause or result
in any default, termination, or acceleration of any provision in any such
employment agreement or give rise to the obligation of the Company to make any
severance or change of control payment.
5.10. PROPERTIES.
(a) Attached hereto as Schedule 5.10 of the Company Disclosure
Schedule is a description of all of the Company's interests in real property
(including, without limitation, leasehold interests) used or occupied by it (the
"Real Property"). Except as expressly set forth on Schedule 5.10 of the Company
Disclosure Schedule, such Real Property is, and with respect to leased Real
Property to the best knowledge of the Company such leased Real Property is, free
and clear of liens, security interests, claims, rights of another, and
encumbrances and is not subject to any rights of way, building use restrictions,
exceptions, variances or limitations which interfere with the use of such
property in the conduct of the Company's business. All real property leases used
in the conduct of the Company's business are described in Schedule 5.10 of the
Company Disclosure Schedule, are in full force and effect, and the Company holds
a valid and existing leasehold interest under each of the leases for the terms
set forth on such schedule. The Company has delivered to Buyer complete and
accurate copies of all materials the Company has concerning such leases. The
Company has not received written notice of any default under the leases and the
Company is not in default under any of the leases. No person has the right to
terminate or accelerate performance under or otherwise modify (including upon
the giving notice or the passage of time) any of such leases, except in
accordance with the provisions thereof. The Real Property of the business,
including the real properties leased by the Company for use in the operation of
the business, is in good operating condition and repair, normal wear and tear
excepted, and is free from any defects of a material nature. To the knowledge of
the Company, there are no existing structural defects in any of the properties.
The plumbing, mechanical, heating, ventilation, air conditioning, electric
wiring and water and sewage systems are in good working order. Except as
otherwise set forth on Schedule 5.10 of the Company Disclosure Schedule, the
Company has full and unrestricted legal and equitable title to all such
properties and assets. The operation of the Real Property in the manner in
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<PAGE> 22
which they are now and have been operated does not violate any zoning
ordinances, municipal regulations, or other rules, regulations, or laws. Except
as set forth Schedule 5.10 of the Company Disclosure Schedule, no covenants,
easements, rights-of-way, or regulations of record impair the uses of the
respective properties of the Company for the purposes for which they are now
operated in the operation of the business of the Company. The Company has not
received any notices, demands, or other directives from any governmental bodies
with jurisdiction over the Real Property asserting that any current or past use
of or condition on or about the Real Property, or any part thereof, may violate,
or otherwise give rise to liability or costs under, any federal, state, or local
laws, rules, or regulations (including without limitation, Environmental
Regulations, as defined in Section 5.24) or any notice stating that any part of
the Real Property may be subject to condemnation or similar proceedings. The
Company is not a "foreign person" as that term is defined in Section 1455 of the
Internal Revenue Code of 1954, as amended, and applicable regulations.
(b) Set forth in Schedule 5.10 of the Company Disclosure
Schedule is a complete list of (a) each vehicle owned or leased by the Company
and (b) each asset of the Company with a book value or fair market value greater
than $5,000. The Company has good and marketable title to, or a valid leasehold
interest in, all of its assets, including without limitation, the assets listed
in Schedule 5.10 of the Company Disclosure Schedule, and all assets used by the
Company in the conduct of its business, subject to no security interests, except
for (a) tax liens for current taxes not yet due; (b) minor imperfections of
title and encumbrances that do not materially detract from or materially
interfere with the present use or value of such assets; and (c) security
interests disclosed in Schedule 5.11 of the Company Disclosure Schedule. All
facilities, machinery, equipment, fixtures, vehicles and other tangible personal
property owned, leased or used by the Company are in good operating condition
and repair, normal wear and tear excepted, are reasonably fit and usable for the
purposes for which they are being used, will not likely require major overhaul
or repair in the foreseeable future, are adequate and sufficient for the
Company's business, as presently conducted, and substantially conform with all
applicable laws, rules and regulations.
5.11. TITLE TO ASSETS. Except as set forth in Schedule 5.11 of the
Company Disclosure Schedule, the Company has good title, free and clear of all
liens, charges, and encumbrances (except for (a) liens for non-delinquent taxes
and assessments, and (b) liens of landlords and other lessors arising under
statute to, or a valid leasehold interest in, all of the personal property (i)
reflected on the Company Balance Sheet or acquired by the Company subsequent to
the date thereof (other than assets that have been sold or otherwise disposed of
in the ordinary course of business since the date of the Company Balance Sheet)
or (ii) used in the business or operations of the Company. Neither the Company
nor any predecessor to the Company has owned, leased, or operated any real
property other than the Real Property.
5.12. ADEQUACY OF ASSETS. The Company owns or has a valid leasehold
interest in all assets, real and personal properties, contract rights and
licenses necessary for the continued operation of the Company in substantially
the same manner in which it has been and is now operating. Except as set forth
on Schedule 5.11: (a) the Company owns or has the right to use pursuant to
license, sublicense, agreement, or permission all Proprietary Rights necessary
for the operation of the business of the Company as presently conducted, (b)
each Proprietary Right owned or used by Company immediately prior to the
Effective Time hereunder will be owned or available for use by
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Company on identical terms and conditions immediately subsequent to the
Effective Time hereunder, and (c) Company has taken all reasonably necessary
action to maintain and protect each Proprietary Right that it owns or uses.
5.13. ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE. All of the accounts,
notes, and loans receivable that have been recorded on the books of the Company
are bona fide and represent amounts validly due for goods sold or services
rendered. Except as disclosed on Schedule 5.13 of the Company Disclosure
Schedule: (a) all of such accounts, notes, and loans receivable are owned by the
Company free and clear of any security interest; (b) none of such accounts,
notes, or loans receivable is subject to any offsets or claims of offset; and
(c) none of the obligors of such accounts, notes, or loans receivable has given
notice that it will or may refuse to pay the full amount or any portion thereof.
5.14. LITIGATION. Except as set forth in Schedule 5.14 of the Company
Disclosure Schedule, there are no claims, actions, suits, investigations, or
proceedings (public or private) pending against or affecting the Company or any
of its properties or assets, at law or in equity, before or by any federal,
state, municipal, or other governmental or non-governmental department,
commission, board, bureau, agency, court, or other instrumentality, or
arbitrator or by any private person or entity. Except as set forth in Schedule
5.14 of the Company Disclosure Schedule, to the knowledge of the Company, there
are no claims, actions, suits, investigations, or proceedings (public or
private) threatened against or affecting the Company or any of its properties or
assets, at law or in equity, before or by any federal, state, municipal, or
other governmental or non-governmental department, commission, board, bureau,
agency, court, or other instrumentality, or arbitrator or by any private person
or entity, except for any of the foregoing which would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect.
Except as set forth in Schedule 5.14 of the Company Disclosure Schedule, there
are no existing orders, judgments, settlements, injunctions, or decrees of any
court or governmental agency that apply to the Company or any of its assets,
properties, business, or operations. Except as set forth in Schedule 5.14 of the
Company Disclosure Schedule, since January 1, 1996, no product liability,
warranty, or similar claims have been made against the Company except routine
claims in the ordinary course of business (i.e., claims relating to defective
products that have been satisfied by the Company solely by replacement of
products or adjustment or refunding of purchase price or substantially
equivalent credit on future orders) that, in the aggregate, would not have a
Company Material Adverse Effect. Except as set forth in Schedule 5.14 of the
Company Disclosure Schedule, since January 1, 1996 the Company has not entered
into any settlement agreements relating to the compromise or dismissal of any
litigation involving the Company or any of its properties or assets. Nothing
contained in any settlement agreement to which the Company is a party prevents
the Company in any way from carrying out its business as now conducted or as
presently contemplated to be conducted, in any market, geographical area, or
application, or interferes with the Company's utilization of its Proprietary
Rights.
5.15. TAXES. Except as set forth in Schedule 5.15 of the Company
Disclosure Schedule, all returns and reports of all Taxes (as hereinafter
defined) required to be filed by the Company have been timely filed and are
true, correct, and complete in all material respects, and all Taxes payable
pursuant thereto have been timely paid. No deficiency or adjustment in respect
of any Taxes that
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was assessed against the Company remains unpaid and no such claim or assessment
is pending or, to the knowledge of the Company, threatened. The Company has made
all withholding of Taxes required to be made under all applicable federal,
state, and local tax regulations and such withholdings have either been paid on
a timely basis to the respective governmental agencies or set side in accounts
for such purpose or accrued, reserved against and entered upon the books of the
Company. There are no outstanding agreements or waivers extending the statutory
period of limitations applicable to any tax return or tax liability of the
Company, and to the knowledge of the Company, there is no proposed liability for
any Taxes for which there is not an adequate reserve reflected on the Company
Balance Sheet. The Company has not filed any consent with the Internal Revenue
Service described in Section 341(f) of the Code. The unpaid Taxes of the Company
(i) did not, as of the end of the most recent period for which financial
statements have been prepared, exceed the reserve for Tax liability (rather than
any reserve for deferred Taxes established to reflect timing differences between
book and Tax income), and (ii) do not exceed that reserve as adjusted for the
passage of time through the Effective Time in accordance with the past custom
and practice of the Company in filing its Tax returns. The Company does not
reasonably expect any authority to assess any additional Taxes for any period
for which Tax returns have been filed. There is no dispute or claim concerning
any Tax liability of the Company either (i) claimed or raised by any authority
in writing, or (ii) as to which the Company has knowledge. The Company has
delivered to Parent correct and complete copies of all federal and state income
Tax returns of the Company, examination reports and statements of deficiencies
assessed against or agreed to by the Company for all years beginning in or after
1992. The Company is not a party to any Tax allocation or sharing agreement. The
Company has not been a member of an affiliated group filing federal income Tax
Returns, and does not have any liability for the Taxes of any person (other than
the Company) under Treas. Reg. " 1.1502-6 or any similar provision of state,
local or foreign law, as a transferee or successor, by contract or otherwise. No
item of income attributable to transactions occurring on or before the Effective
Time will be required to be included in taxable income by the Company in a
subsequent taxable year by reason of the Company reporting income on the
installment sales method of accounting, the cash method of accounting, the
completed contract method of accounting or the percentage of
complete-capitalized cost method of accounting. The Company has not made, and is
under no obligation to make, payments that are or, if made, would be, "parachute
payments" under Section 280G of the Code, and no such obligation will arise as a
result of this Agreement or other agreements entered into in connection with
this Agreement. "Taxes" shall mean all federal, state, county, local, foreign
and other taxes and governmental assessments, including but not limited to,
income taxes, estimated taxes, withholding taxes, transfer taxes, excise taxes,
sales taxes, real and personal property taxes, ad valorem taxes, payroll-related
taxes, employment taxes, franchise taxes and import duties, together with any
related liabilities penalties, fines or additions to tax and interest.
5.16. PROPRIETARY RIGHTS.
(a) Except as set forth on Schedule 5.16(a) of the Company
Disclosure Schedule: (i) the Company has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Proprietary Rights of
third parties, (ii) the Company (and its employees with responsibility for
Proprietary Rights matters) has not received any written charge, complaint,
claims, demand, or notice alleging any such interference, infringement,
misappropriation, or violation
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(including any claim that the Company must license or refrain from using any
Proprietary Rights of any third party), (iii) to the knowledge of the Company
(and employees with responsibility for Proprietary Rights matters), there is no
basis for any as-yet unasserted charge, complaint, claim, demand, or notice
alleging any such interference, infringement, misappropriation, or violation
(including any claim that the Company must license or refrain from using any
Proprietary Rights of any third party), or (iv) to the knowledge of the Company
(and employees with responsibility for Proprietary Rights matters), no third
party has interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any Proprietary Rights of the Company.
(b) Schedule 5.16(b) of the Company Disclosure Schedule
identifies each Proprietary Right that the Company owns. Schedule 5.16(b) of the
Company Disclosure Schedule identifies each registration that has been issued to
Company with respect to any of its Proprietary Rights, identifies each pending
application for registration that the Company has made with respect to any of
its Proprietary Rights, identifies each item of copyrightable Proprietary Rights
(whether or not registration has been sought), and identifies each license,
agreement, or other permission which Company has granted to any third party with
respect to any of its Proprietary Rights and all agreements relating to any of
the Software owned by the Company, including any service, nondisclosure or
escrow agreements (together with any exceptions). The Company has delivered to
Parent correct and complete copies of all such patents, registrations,
applications, licenses, agreements, and permissions (as amended to date).
Schedule 5.16(b) of the Company Disclosure Schedule also identifies each trade
name or unregistered trademark used by Company in connection with its business.
Except as set forth in Schedule 5.16(b) of the Company Disclosure Schedule, with
respect to each Proprietary Right required to be identified in Schedule 5.16(b)
of the Company Disclosure Schedule and with respect to each item of
copyrightable Proprietary Rights (whether or not identified in Schedule 5.16(b)
of the Company Disclosure Schedule):
(i) the Company possesses all right, title, and
interest in and to the Proprietary Right, free and clear of any lien,
license, or other restriction;
(ii) the Proprietary Right is not subject to any
outstanding injunction, judgment, order, decree, ruling, or charge;
(iii) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or, to
the knowledge of Company, threatened, that challenges the legality,
validity, enforceability, manufacture, use or the ability to authorize
the use (including use by way of reproduction of copies, distribution
of copies, preparation of derivative works, public performance or
display, or any other use of any kind or nature), sale or ownership of
the Proprietary Right; and
(iv) the Company has never agreed to indemnify any
person for or against any interference, infringement, misappropriation,
or other conflict with respect to the Proprietary Right.
(c) Schedule 5.16(c) of the Company Disclosure Schedule
identifies each Proprietary Right that any third party owns and that Company
uses pursuant to license, sublicense,
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agreement, or permission. The Company has delivered to Parent correct and
complete copies of all such licenses, sublicenses, agreements, and permissions
(as amended to date). Except as set forth on Schedule 5.16(c) of the Company
Disclosure Schedule, with respect to each Proprietary Right required to be
identified in Schedule 5.16(c) of the Company Disclosure Schedule:
(i) the license, sublicense, agreement, or permission
covering the Proprietary Right is legal, valid, binding, enforceable
against the Company and against the other parties thereto, and in full
force and effect;
(ii) the license, sublicense, agreement, or
permission will continue to be legal, valid, binding, enforceable
against the Company and against the other parties thereto, and in full
force and effect on identical terms following the Effective Time;
(iii) to the Company's knowledge, no party to the
license, sublicense, agreement, or permission is in breach or default,
and no event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination, modification, or
acceleration thereunder;
(iv) no party to the license, sublicense, agreement,
or permission has repudiated in writing any provision thereof;
(v) with respect to each sublicense, the
representations and warranties set forth in subsections (i) through
(iv) above are true and correct with respect to the underlying license;
(vi) the underlying Proprietary Right is not subject
to any outstanding injunction, judgment, order, decree, ruling, or
charge;
(vii) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or
threatened that challenges the legality, validity, or enforceability of
the underlying Proprietary Right;
(viii) the Company has not granted any sublicense or
similar right with respect to the license, sublicense, agreement, or
permission; and
(ix) no such licenses, agreements or permissions
commit the Company to continued maintenance, support, improvement,
upgrade or similar obligation with respect to any of the Proprietary
Rights, which obligation cannot be terminated by the Company upon
notice of ninety (90) days or less.
(d) Schedules 5.16(b) and 5.16(c) of the Company Disclosure
Schedule identify every Proprietary Right used by the Company in the conduct of
its business. Except as set forth in Schedule 5.16(b) of the Company Disclosure
Schedule, all Software owned by the Company performs substantially as described
in all Documentation for such Software insofar as such Documentation has to do
with the performance, specifications or design of such Software; and in
addition, all Software owned by the Company and which has been licensed to any
third party
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performs substantially in accordance with the warranties, if any, given by the
Company in respect of such Software. Except as set forth in Schedule 5.16(c) of
the Company Disclosure Schedule, all Software owned by any third party and used
by the Company pursuant to license, sublicense, agreement or permission performs
substantially in accordance with the warranties, if any, given by such third
party to the Company, and to the knowledge of the Company (and its employees
with responsibility for use and maintenance or service thereof) such Software
performs as required for the conduct of the Company's business. It is understood
and agreed that "Software owned by the Company" shall include all Software owned
by the Company, whether developed in house by the Company or purchased by the
Company from any third party.
5.17. ROYALTIES. All royalties, license fees, and other fees relating
to the Company's use of Proprietary Rights have been or will be paid in full as
and when due. Except as set forth in Schedule 5.17 of the Company Disclosure
Schedule, the method used by the Company to calculate all royalties, license
fees, and other fees relating to the Company's use of Proprietary Rights is
correct and accurate and in accordance with the terms of any agreements the
Company has with any third party relating to the use of such party's Proprietary
Rights.
5.18. YEAR 2000 COMPLIANCE. Except as set forth on Schedule 5.18 of the
Company Disclosure Schedule, each system, comprised of software, hardware,
databases, or embedded control systems (microprocessor controlled, robotic or
other device), that constitutes any part of, or is used in connection with the
use, operation or enjoyment of any material tangible or intangible asset or real
property of the Company and each product licensed, sold or otherwise distributed
by the Company, including software, hardware, databases, or embedded control
systems (a) is designed (or has been modified) to be used prior to and after
January 1, 2000, (b) will operate without error arising from the creation,
recognition, acceptance, calculation, display, reporting, storage, retrieval,
accessing, comparison, sorting, manipulation, processing or other use of dates,
or date-based, date-dependent or date-related data, including but not limited to
century recognition, day-of-the-week recognition, leap years, date values and
interfaces of date functionalities, and (c) will not be adversely affected by
the advent of the year 2000 or subsequent years, the advent of the twenty-first
century or the transition from the twentieth century through the year 2000 and
into the twenty-first century.
5.19. LABOR RELATIONS. There are no material controversies pending or
threatened between the Company and any of its respective employees, former
employees, or applicants for employment. The Company has complied in all
respects with all laws relating to the employment of labor, including any
provisions thereof relating to wages, hours, equal employment opportunity,
collective bargaining, federal immigration law, and the payment of social
security and similar taxes, except as would not be reasonably expected to have a
Company Material Adverse Effect. The Company is not liable for any arrears of
wages or any taxes or penalties for failure to comply with any of the foregoing.
None of the employees of the Company are covered by any collective bargaining
agreement and, to the knowledge of the Company, there are no organizational
efforts currently being made or threatened involving any employees of the
Company. All employee severance or change of control policies covering any
employee of the Company are described in Schedule 5.19 of the Company Disclosure
Schedule and no such employee is entitled to any severance or change of control
benefits not described therein.
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5.20. CERTAIN EMPLOYEE MATTERS.
(a) Except as set forth on Schedule 5.20(a) of the Company
Disclosure Schedule, all current and former members of management, key
(including sales and recruiting) personnel and consultants (whether employees or
independent contractors) of the Company have executed and delivered to the
Company a non-disclosure agreement restricting such person's right to disclose
confidential information of the Company. Except as set forth on Schedule 5.20(a)
of the Company Disclosure Schedule, all such members of management, key
personnel and consultants of the Company have been party to a "work-for-hire"
arrangement or proprietary rights agreement with the Company pursuant to which
either (i) in accordance with applicable federal and state law, the Company has
been accorded full, effective, exclusive and original ownership of all tangible
and intangible property thereby arising or (ii) there has been conveyed to the
Company by appropriately executed instruments of assignment full, effective and
exclusive ownership of all tangible and intangible property thereby arising. No
employee, agent, consultant or contractor of the Company who has contributed to
or participated in the conception and development of proprietary rights of the
Company has asserted in writing or, to the Company's knowledge, threatened any
claim against the Company in connection with such person's involvement in the
conception and development of the proprietary rights of the Company and, to the
knowledge of the Company, no such person has a reasonable basis for any such
claim.
(b) Schedule 5.20(b) of the Company Disclosure Schedule
identifies all employees, independent contractors and other personnel of the
Company, their respective rates of pay at the date hereof, and, with respect to
all bill consultants (employees or independent contractors), the billing rate of
each such consultant. Unless otherwise noted on Schedule 5.20(b) of the Company
Disclosure Schedule, each of the Company's personnel identified on Schedule
5.20(b) of the Company Disclosure Schedule is working full time and none of such
personnel has expressly stated to Todd Spence that he or she intends to resign
or cease working with the Company after Closing. Other than increases granted in
the ordinary course of business, the Company has not committed to increase in
any manner the compensation of any of its personnel beyond the amount identified
on Schedule 5.20(b) of the Company Disclosure Schedule.
5.21. TRANSACTIONS WITH AFFILIATES. Except as set forth in Schedule
5.21 of the Company Disclosure Schedule, the Company is not a party to any
contract, lease, agreement, or other commitment with any officer, director, or
stockholder of the Company or any affiliate of any such person, and there are no
loans outstanding from the Company to, or to the Company from, any such person
or any affiliate of any such person.
5.22. PERMITS; COMPLIANCE WITH LAWS. Schedule 5.22 of the Company
Disclosure Schedule contains a true, correct, and complete list of all permits,
licenses, consents, and authorizations of any government or governmental
authority held by the Company. Except as set forth in Schedule 5.22 of the
Company Disclosure Schedule, the Company holds all permits, licenses, consents,
and authorizations issued by any government or governmental authority that are
necessary for the conduct of its business , except for any failure to hold that
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect. The Company has not received any written notice
of any violation of any law, ordinance, regulation, or
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order applicable to the Company or the business conducted by it. The conduct of
the business of the Company, as presently conducted, complies with all
applicable laws, ordinances, regulations, and orders, including, but not limited
to, all laws, ordinances, regulations or orders relating to the exportation or
importation of Products, except for any noncompliance that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
5.23. ENVIRONMENTAL MATTERS. During the period in which the Company has
owned and/or occupied the Real Property, there has been no "release or
threatened release of a hazardous substance" (as defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA")) or any other release, emission, disposal, or discharge into the
environment or any use, storage, transport or handling of Hazardous Material (as
defined below) on, under, about, or from the Real Property other than as
expressly authorized by applicable law, ordinance, permit, order or other
authorization. All "hazardous waste" (as defined in the Resource Conservation
and Recovery Act of 1976, as amended ("RCRA") and the regulations thereunder)
generated at the Company's properties have been disposed of at sites that
maintain valid permits under RCRA and are in full compliance with such permits
and any other applicable Environmental Requirement (as defined below). There are
no underground tanks, PCBs, or asbestos containing materials on the Real
Property. Except as set forth in Schedule 5.23 of the Company Disclosure
Schedule, the Company has not received any written notice that the Company or
any predecessor business or owner or operator of the Real Property may be a
responsible or potentially responsible party in connection with any violation or
obligation claims arising under any Environmental Requirement at any site or
facility (including the Real Property itself). "Hazardous Material" shall mean
any substance (i) the presence of which requires reporting, investigation or
remediation under any applicable statute, regulation, ordinance or order; or
(ii) which is defined as a "hazardous waste," "hazardous substance," pollutant
or contaminant under any statute, regulation, rule, or ordinance of any
governmental authority having jurisdiction; or (iii) which is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or
otherwise hazardous and is regulated by any governmental authority having
jurisdiction. "Environmental Requirement" shall mean all applicable statutes,
laws, regulations, rules, ordinances, codes, licenses, permits, orders,
standards, guidelines, policies, and similar items of any governmental authority
having jurisdiction and all applicable judicial, administrative, and regulatory
decrees, judgments, and orders and common law relating to the protection of
human health or the environment including, without limitation, all requirements
pertaining to the reporting, licensing, permitting, use, handling, generation,
storage, treatment, transportation, disposal, release, discharge, investigation,
and remediation of Hazardous Material.
5.24. FEES. Except as set forth in Schedule 5.24 of the Company
Disclosure Schedule, there are no claims for legal, accounting, financial
advisory, or investment bankers' fees, 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 the
Company.
5.25. ERISA. Neither the Company nor any trade or business (whether or
not incorporated) under common control with such Person within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to
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Section 412 of the Code) (an "ERISA Affiliate") of the Company maintains or
contributes to or is obligated to contribute to, and has ever maintained or
contributed to or been obligated to contribute to, (i) any "multiemployer plan",
within the meaning of Section 4001 (a)(3) of the Employee Retirement Income
Security Act of 1974, as amended, and the regulations promulgated and rulings
issued thereunder ("ERISA"), to which any person or any ERISA Affiliate of such
person makes, is making, or is obligated to make contributions or, during the
preceding three calendar years, has made, or been obligated to make,
contributions (a "Multiemployer Plan"), (ii) any single employer plan, as
defined in Section 4001 (a)(15) of ERISA, that (a) is maintained for employees
of a person or any ERISA Affiliate of such person and at least one person other
than such person and any ERISA Affiliate of such person or (b) was so maintained
and in respect of which such person or an ERISA Affiliate of such person could
have liability under Section 4064 of ERISA in the event such plan has been or
were to be terminated (a "Multiple Employer Plan") or (iii) except as set forth
in Schedule 5.25 of the Company Disclosure Schedule, any employee benefit plan
(as defined in Section 3(3) of ERISA) sponsored or maintained by the Company or
to which the Company makes, is making, or is obligated to make contributions (a
"Plan"), including but not limited to a Pension Plan (as defined below). With
respect to the Plan(s) disclosed in Schedule 5.25 of the Company Disclosure
Schedule:
(i) Each such Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code, and other
federal or state law. Any such Plan which is intended to qualify under
Section 401(a) of the Code has received a favorable determination
letter from the IRS and to the knowledge of the Company, nothing has
occurred that would cause the loss of such qualification. The Company
and each ERISA Affiliate of the Company has made all required
contributions to any such Plan subject to Section 412 of the Code, and
no application for a funding waiver or an extension of any amortization
period pursuant to Section 412 of the Code has been made with respect
to any such Plan.
(ii) There are no pending claims (other than routine
claims for benefits) or, to the knowledge of the Company, threatened
claims, actions, or lawsuits, or action by any governmental authority,
with respect to any such Plan, and there has been no prohibited
transaction or violation of the fiduciary responsibility rules with
respect to any such Plan.
(iii) (1) the execution of, and the performance of
the transactions contemplated in, this Agreement will not (either alone
or upon the occurrence of any additional or subsequent events)
constitute an event under any Plan that will or is reasonably expected
to result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any
employee; (2) no such Plan which constitutes a Pension Plan (as defined
below) has any Unfunded Pension Liability (as defined below); (3)
neither the Company nor any ERISA Affiliate of the Company has
incurred, or reasonably expects to incur, any material liability under
Title IV of ERISA with respect to any such Plan which constitutes a
Pension Plan (other than premiums due and not delinquent under Section
4007 of ERISA); (4) neither the Company nor any ERISA Affiliate of the
Company has incurred, or reasonably expects to incur, any liability
(and no event has occurred which, with the
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giving of notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (5) neither the Company nor any ERISA Affiliate
of the Company has engaged in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA. "Pension Plan" shall mean a pension
plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA
that a person sponsors, maintains, or to which it makes, is making, or
is obligated to make contributions, or in the case of a Multiple
Employer Plan has made contributions at any time during the immediately
preceding five (5) plan years. "Unfunded Pension Liability" shall mean
the excess of a Plan's benefit liabilities under Section 4001(a)(16) of
ERISA, over the current value of that Plan's assets, determined in
accordance with the assumptions used for funding the Pension Plan
pursuant to Section 412 of the Code for the applicable plan year.
5.26. POOLING OF INTERESTS TREATMENT. To the Company's knowledge,
neither the Company nor any of its affiliates has taken or agreed to take any
action or is aware of any condition which would prevent Parent from accounting
for the transactions provided for herein as a pooling-of-interests under APB
Opinion No. 16 (a "Pooling of Interests").
5.27. INSURANCE. Attached hereto as Schedule 5.27 of the Company
Disclosure Schedule is a list of all policies of fire, casualty, liability,
property or other forms of insurance and all fidelity bonds held by or
applicable to the Company, which Schedule sets forth in respect of each such
policy the policy name, policy number, carrier, term, type of coverage,
deductible amount of self-insured retention amount, limits of coverage and
annual premium. No event relating to the Company has occurred that will result
in a retroactive upward adjustment of premiums under any such insurance
policies, or which is likely to result in any prospective upward adjustment in
such premiums. All of such insurance policies will remain in full force and
effect following the consummation of the transactions contemplated by this
Agreement. The Company does not have any liability for which any claim may be
made against the Company's property, casualty or liability insurance and no
event or circumstance has occurred or arisen that is likely to result in such a
claim.
5.28. PROPERTY AND EQUIPMENT. All property and equipment used by the
Company in the conduct of its business has been maintained in accordance with
standard industry practices and is in good operating condition and repair,
ordinary wear and tear excepted, and there are no material defects in such
property or equipment.
5.29. DISCLOSURE. No representation or warranty by the Company in this
Agreement and no statement contained in any document, certificate, or other
writing prepared by the Company or its representatives and furnished by the
Company to Parent pursuant to the provisions hereof, affirmatively misstates a
material fact or omits a material fact necessary for such document, certificate,
or writing to be, in good faith, accurately and completely responsive in all
material respects to the purpose identified by Parent to the Company for which
such information was furnished by the Company to Parent.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as of the
date of this Agreement as follows:
6.1. EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY; COMPLIANCE WITH
LAW.
(a) Each of Parent and Merger Sub is a corporation duly
incorporated, validly existing, and in good standing (including tax good
standing) under the laws of its jurisdiction of incorporation. Parent is duly
licensed or qualified to do business as a foreign corporation and is in good
standing under the laws of the jurisdictions listed in Schedule 6.1 of the
disclosure letter delivered by Parent to the Company at or prior to the
execution hereof (the "Parent Disclosure Schedule"), which list contains all
jurisdictions in which the character of the properties owned or leased by it or
in which the transaction of its business makes such qualification necessary, in
each case except as would not, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect (as defined in Section 6.7 of
this Agreement).
(b) Parent is a reporting issuer in British Columbia and is
not in default of any requirement of filing financial statements required by the
Securities Act (British Columbia) (the "B.C. Act") or of paying fees and charges
prescribed by the regulations and rules to the B.C. Act relating to those
filings.
(c) Each of Parent and Merger Sub have all requisite corporate
power and authority to own, operate, and lease its properties and carry on its
business as presently conducted and as proposed to be conducted.
(d) Each of Parent and Merger Sub is not in violation of any law, ordinance,
governmental rule or regulation to which it or any of its properties or assets
is subject, except as would not, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect, nor is Parent or Merger Sub
in violation of any order, judgment, or decree of any court, governmental
authority, or arbitration board or tribunal.
(e) The copies of Parent's and Merger Sub's Articles of
Incorporation and Bylaws, which have been delivered to the Company, include any
and all amendments made thereto at any time prior to the date of this Agreement
and are true, correct, and complete.
(f) Parent's and Merger Sub's corporate minute books are
accurate as to their content. The meetings of the directors or stockholders
referred to in the corporate minute books were duly called and held. The
signatures appearing on all documents contained in the corporate minute books
are the true signatures of the persons purporting to have executed the same and
no minutes of meetings or written consents of the directors or stockholders of
Parent and Merger Sub are omitted from such minute books that would contain any
resolutions or other actions that would be inconsistent with any of the
representations and warranties contained in Article VI hereof or prevent or
limit any of the transactions contemplated by this Agreement. Schedule 6.1 of
the Parent
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Disclosure Schedule sets forth a true and complete list of the names of all
directors of Parent and Merger Sub and the names and offices held of all
officers of the Parent and Merger Sub as the date hereof.
6.2. AUTHORIZATION, VALIDITY, AND EFFECT OF AGREEMENTS. Each of Parent
and Merger Sub has the requisite corporate power and authority to execute and
deliver this Agreement and all agreements and documents contemplated hereby and
thereby. Subject only to the approval of this Agreement and the transactions
contemplated hereby by the stockholders of Parent, the consummation by Parent
and Merger Sub of the transactions contemplated hereby has been duly authorized
by all requisite corporate action of Parent. This Agreement has been duly
executed and delivered by Parent and Merger Sub and, assuming the due
authorization, execution and delivery by the Company, constitutes, and all
agreements and documents contemplated hereby (when executed and delivered
pursuant hereto for value received) will constitute, the valid and legally
binding obligations of Parent and Merger Sub enforceable in accordance with
their respective terms, except to the extent that enforceability may be limited
by applicable bankruptcy, insolvency, moratorium, or other similar laws relating
to creditors' rights and general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law),
including, without limitation, possible unavailability of specific performance,
other injunctive relief or other equitable remedies and an implied covenant of
good faith and fair dealing.
6.3. CAPITALIZATION. The authorized capital stock of Parent consists of
50,000,000 shares of Parent Common Stock. As of June 1, 2000, there were: (a)
4,000,880 shares of Parent Common Stock issued and outstanding; (b) 650,000
shares of Parent Common Stock issuable upon exercise of outstanding options to
purchase Parent Common Stock; (c) 1,326,057 shares of Parent Common Stock
issuable upon exercise of outstanding warrants; and (d) 1,624,999 shares of
Parent Common Stock issuable upon exercise of outstanding special warrants. The
Parent Common Stock issuable in exchange for Company Common Stock when issued
and delivered in accordance with the terms of this Agreement and the terms of
the agreements governing such options, will constitute duly authorized, validly
issued and outstanding, fully paid and nonassessable shares of Parent Common
Stock.
6.4. NO VIOLATION. Neither the execution and delivery by Parent and
Merger Sub of this Agreement and all agreements and documents contemplated
hereby, nor the consummation by Parent and Merger Sub of the transactions
contemplated hereby or thereby in accordance with the terms hereof, will: (i)
conflict with or result in a breach of any provisions of the Certificate of
Incorporation, as amended, or Bylaws of Parent or the Articles of Incorporation
or Bylaws of Merger Sub; (ii) violate any law, statute, rule, regulation,
judgment, or decree applicable to Parent (iii) except as set forth in Schedule
6.4 of the Parent Disclosure Schedule, violate, conflict with, result in a
breach of any provision of, constitute a default (or an event which, with notice
or lapse of time or both, would constitute a default) under, result in the
termination or in a right of termination or cancellation of, accelerate the
performance required by, result in the triggering of any payment or other
obligations pursuant to, result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties of Parent under, or result in
being declared void, voidable, or without further binding effect, any of the
terms, conditions, or provisions of any note, bond, mortgage, indenture, loan
agreement, deed of trust, or any license, franchise, permit, lease,
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contract, agreement or other instrument, commitment, or obligation to which
Parent is a party, or by which Parent or any of its properties is bound or
affected; (iii) violate any law, statute, rule, regulation, judgment, or decree
applicable to Parent; or (iv) other than the Regulatory Filings, require any
consent, approval, or authorization of, or declaration, filing, or registration
with, any governmental or regulatory authority.
6.5. SEC AND BRITISH COLUMBIA SECURITIES COMMISSION DOCUMENTS.
(a) Since the date on which a registration statement with
respect to Parent Common Stock became effective with the Securities and Exchange
Commission (the "Commission"), Parent has filed all forms, reports, and other
documents (including all exhibits, schedules and annexes thereto) required to be
filed by Parent with the Commission (collectively, the "Parent Reports"). Except
to the extent that information contained in any Parent Report has been revised
or superseded by a later Parent Report filed and publicly available prior to the
date of this Agreement, as of their respective dates, the Parent Reports (a)
were in all material respects in accordance with the requirements of the
Securities Act of 1933, as amended (the "Securities Act") or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as the case may be, and
the rules and regulations promulgated thereunder; and (b) as of their respective
filing dates did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. The financial statements of Parent included in such
reports (or incorporated therein by reference) were prepared in accordance with
GAAP applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto and subject to normal year-end adjustments) and
fairly present in all material respects the financial position of Parent and its
consolidated subsidiaries as of the dates thereof and the periods then ended.
(b) Since the date on which a prospectus relating to Parent
Common Stock was filed with and receipted by the British Columbia Securities
Commission (the "B.C. Commission"), Parent has filed all forms, reports and
other documents (including all exhibits, schedules and annexes thereto) required
to be filed by Parent with the B.C. Commission (the "B.C. Reports"). Except to
the extent that information contained in any B.C. Report has been revised or
superseded by a later B.C. Report filed and publicly available prior to the date
of this Agreement, as of their respective dates, the B.C. Reports (a) were in
all material respects in accordance with the requirements of the B.C. Act and
the rules and regulations promulgated thereunder; and (b) as of their respective
filing dates did not contain any untrue statement of a 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.
6.6. NO CONSENT OR APPROVAL REQUIRED. Except as contemplated in Section
1.3 and for compliance with any applicable Blue Sky Laws, federal securities
regulations, and securities regulation under the B.C. Act and provided CDNX has
approved the transactions provided for herein, no consent, approval, or
authorization of, or declaration to or filing with, any governmental or
regulatory authority is required for the valid execution and delivery by Parent
of this Agreement or any other agreement or instrument to be executed and
delivered by Parent hereunder, the
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consummation of the transactions provided for herein or therein or the issuance
and delivery of the Parent Common Stock.
6.7. ABSENCE OF CHANGE. Since March 31, 2000, no event or events have
occurred, which individually or in the aggregate have had a Parent Material
Adverse Effect, as hereafter defined, and there exists no condition or
contingency that could reasonably be expected to result in a Parent Material
Adverse Effect. A "Parent Material Adverse Effect" means a material adverse
change in the business, properties, financial condition, results of operations,
or prospects of the Parent, taken as a whole.
6.8. BROKERAGE. Except as set forth on Schedule 6.8 of the Parent
Disclosure Schedule, there are no claims for financial advisory or investment
bankers' fees, 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 Parent.
6.9. ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE. The accounts receivable
reflected on the balance sheet contained in the latest Parent Report filed with
the Commission pursuant to the Exchange Act and all accounts receivable of
Parent that arose thereafter are valid and arose out of bona fide transactions
in the ordinary course of business. Schedule 6.9 of the Parent Disclosure
Schedule sets forth a list of any such accounts receivable that Parent considers
to be doubtful accounts.
6.10. LITIGATION. Except as set forth in Schedule 6.10 of the Parent
Disclosure Schedule, there are no claims, actions, suits, investigations, or
proceedings (public or private) pending against or affecting Parent or any of
its properties or assets, at law or in equity, before or by any federal, state,
municipal, or other governmental or non-governmental department, commission,
board, bureau, agency, court, or other instrumentality, or arbitrator or by any
private person or entity. Except as set forth in Schedule 6.10 of the Parent
Disclosure Schedule, to the knowledge of Parent, there are no claims, actions,
suits, investigations, or proceedings (public or private) threatened against or
affecting Parent or any of its properties or assets, at law or in equity, before
or by any federal, state, municipal, or other governmental or non-governmental
department, commission, board, bureau, agency, court, or other instrumentality,
or arbitrator or by any private person or entity, except for any of the
foregoing which would not, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect. Except as set forth in
Schedule 6.10 of the Parent Disclosure Schedule, there are no existing orders,
judgments, settlements, injunctions, or decrees of any court or governmental
agency that apply to Parent or any of its assets, properties, business, or
operations. Except as set forth in Schedule 6.10 of the Parent Disclosure
Schedule, since January 1, 1996, no product liability, warranty, or similar
claims have been made against Parent except routine claims in the ordinary
course of business (i.e., claims relating to defective products that have been
satisfied by Parent solely by replacement of products or adjustment or refunding
of purchase price or substantially equivalent credit on future orders) that, in
the aggregate, would not have a Parent Material Adverse Effect. Except as set
forth in Schedule 6.10 of the Parent Disclosure Schedule, since January 1, 1996
the Company has not entered into any settlement agreements relating to the
compromise or dismissal of any litigation involving Parent or any of its
properties or assets. Nothing contained in any settlement agreement to which
Parent is a party prevents Parent in any way from
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carrying out its business as now conducted or as presently contemplated to be
conducted, in any market, geographical area, or application, or interferes with
Parent's utilization of its Proprietary Rights.
6.11. PROPRIETARY RIGHTS. Except as set forth on Schedule 6.11 of the
Parent Disclosure Schedule: (i) Parent has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Proprietary Rights of
third parties; (ii) Parent (and its employees with responsibility for
Proprietary Rights matters) has not received any written charge, complaint,
claims, demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that Parent must license or
refrain from using any Proprietary Rights of any third party), (iii) to the
knowledge of Parent (and employees with responsibility for Proprietary Rights
matters), there is no basis for any as-yet unasserted charge, complaint, claim,
demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that Parent must license or
refrain from using any Proprietary Rights of any third party), or (iv) to the
knowledge of Parent (and employees with responsibility for Proprietary Rights
matters), no third party has interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any Proprietary Rights of Parent.
6.12. ROYALTIES. All royalties, license fees, and other fees relating
to Parent's use of Proprietary Rights have been or will be paid in full as and
when due. Except as set forth in Schedule 6.12 of the Parent Disclosure
Schedule, the method used by Parent to calculate all royalties, license fees,
and other fees relating to Parent's use of Proprietary Rights is correct and
accurate and in accordance with the terms of any agreements Parent has with any
third party relating to the use of such party's Proprietary Rights.
6.13. YEAR 2000 COMPLIANCE. The disclosure contained in the latest
Parent Report filed with the Commission pursuant to the Exchange Act concerning
the Year 2000 Compliance of the Systems and Products utilized and distributed by
Parent is true and correct, except for such misstatements or omissions that
would not, individually or in the aggregate, reasonably be likely to have a
Parent Material Adverse Effect.
6.14. LABOR RELATIONS. There are no material controversies pending or,
to the knowledge of Parent, threatened, between Parent and any of its respective
employees, former employees, or applicants for employment. Parent has complied
in all respects with all laws relating to the employment of labor, including any
provisions thereof relating to wages, hours, equal employment opportunity,
collective bargaining, federal immigration law, and the payment of social
security and similar taxes, except as would not be reasonably expected to have a
Parent Material Adverse Effect. Parent is not liable for any arrears of wages or
any taxes or penalties for failure to comply with any of the foregoing. None of
the employees of Parent are covered by any collective bargaining agreement and,
to the knowledge of Parent, there are no organizational efforts currently being
made or threatened involving any employees of Parent. All employee severance or
change of control policies covering any employee of the Company are described in
or filed as exhibits to the Parent Reports and no such employee is entitled to
any severance or change of control benefits not described therein.
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6.15. CERTAIN EMPLOYEE MATTERS. Except as set forth on Schedule 6.15 of
the Parent Disclosure Schedule, all current and former members of management,
key (including sales and recruiting) personnel and consultants (whether
employees or independent contractors) of Parent have executed and delivered to
Parent a confidential information agreement restricting such person's right to
disclose confidential information of Parent. Except as set forth on Schedule
6.15 of the Parent Disclosure Schedule, all such members of management, key
personnel and consultants of Parent have been party to a "work-for-hire"
arrangement or proprietary rights agreement with Parent pursuant to which either
(i) in accordance with applicable federal and state law, Parent has been
accorded full, effective, exclusive and original ownership of all tangible and
intangible property thereby arising or (ii) there has been conveyed to Parent by
appropriately executed instruments of assignment full, effective and exclusive
ownership of all tangible and intangible property thereby arising. No employee,
agent, consultant or contractor of Parent who has contributed to or participated
in the conception and development of proprietary rights of Parent has asserted
in writing or, to Parent's knowledge, threatened any claim against Parent in
connection with such person's involvement in the conception and development of
the proprietary rights of Parent and, to the knowledge of Parent, no such person
has a reasonable basis for any such claim.
6.16. ENVIRONMENTAL MATTERS. During the period in which the Company has
owned and/or occupied the Real Property, there has been no "release or
threatened release of a hazardous substance" (as defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA")) or any other release, emission, disposal, or discharge into the
environment or any use, storage, transport or handling of Hazardous Material (as
defined below) on, under, about, or from the Real Property other than as
expressly authorized by applicable law, ordinance, permit, order or other
authorization. All "hazardous waste" (as defined in the Resource Conservation
and Recovery Act of 1976, as amended ("RCRA") and the regulations thereunder)
generated at the Company's properties have been disposed of at sites that
maintain valid permits under RCRA and are in full compliance with such permits
and any other applicable Environmental Requirement (as defined below). There are
no underground tanks, PCBs, or asbestos containing materials on the Real
Property. Except as set forth in Schedule 6.16 of the Company Disclosure
Schedule, the Company has not received any written notice, and is not aware of
any threat of any formal or informal assertion by any governmental agency or
other person that the Company or any predecessor business or owner or operator
of the Real Property may be a responsible or potentially responsible party in
connection with any violation or obligation claims arising under any
Environmental Requirement at any site or facility (including the Real Property
itself). "Hazardous Material" shall mean any substance (i) the presence of which
requires reporting, investigation or remediation under any applicable statute,
regulation, ordinance or order; or (ii) which is defined as a "hazardous waste,"
"hazardous substance," pollutant or contaminant under any statute, regulation,
rule, or ordinance of any governmental authority having jurisdiction; or (iii)
which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic, or otherwise hazardous and is regulated by any
governmental authority having jurisdiction. "Environmental Requirement" shall
mean all applicable statutes, laws, regulations, rules, ordinances, codes,
licenses, permits, orders, standards, guidelines, policies, and similar items of
any governmental authority having jurisdiction and all applicable judicial,
administrative, and regulatory decrees, judgments, and orders and common law
relating to the protection of human health or the environment including,
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without limitation, all requirements pertaining to the reporting, licensing,
permitting, use, handling, generation, storage, treatment, transportation,
disposal, release, discharge, investigation, and remediation of Hazardous
Material.
6.17. ERISA. Neither Parent nor any ERISA Affiliate of Parent maintains
or contributes to or is obligated to contribute to, and has ever maintained or
contributed to or been obligated to contribute to, (i) any Multiemployer Plan,
(ii) any a Multiple Employer Plan or (iii) except as set forth in Schedule 6.17
of the Parent Disclosure Schedule, any Plan, including but not limited to a
Pension Plan. With respect to the Plan(s) disclosed in Schedule 6.17 of the
Parent Disclosure Schedule:
(i) Each such Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code, and other
federal or state law. Any such Plan which is intended to qualify under
Section 401(a) of the Code has received a favorable determination
letter from the IRS and to the knowledge of Parent, nothing has
occurred that would cause the loss of such qualification. Parent and
each ERISA Affiliate of Parent has made all required contributions to
any such Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any
such Plan.
(ii) There are no pending claims (other than routine
claims for benefits) or, to the knowledge of Parent, threatened claims,
actions, or lawsuits, or action by any governmental authority, with
respect to any such Plan, and there has been no prohibited transaction
or violation of the fiduciary responsibility rules with respect to any
such Plan.
(iii) (1) the execution of, and the performance of
the transactions contemplated in, this Agreement will not (either alone
or upon the occurrence of any additional or subsequent events)
constitute an event under any Plan that will or is reasonably expected
to result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to fund benefits with respect to any
employee; (2) no such Plan which constitutes a Pension Plan (as defined
below) has any Unfunded Pension Liability; (3) neither Parent nor any
ERISA Affiliate of Parent has incurred, or reasonably expects to incur,
any material liability under Title IV of ERISA with respect to any such
Plan which constitutes a Pension Plan (other than premiums due and not
delinquent under Section 4007 of ERISA); (4) neither Parent nor any
ERISA Affiliate of Parent has incurred, or reasonably expects to incur,
any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability)
under Section 4201 or 4243 of ERISA with respect to a Multiemployer
Plan; and (5) neither Parent nor any ERISA Affiliate of Parent has
engaged in a transaction that could be subject to Section 4069 or
4212(c) of ERISA.
6.18. POOLING OF INTERESTS TREATMENT. To Parent's knowledge, neither
Parent nor any of its affiliates has taken or agreed to take any action or is
aware of any condition which would prevent Parent from accounting for the
transactions provided for herein as a Pooling-of-Interests as defined in Section
5.26.
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6.19. DISCLOSURE. No representation or warranty by the Parent or Merger
Sub in this Agreement and no statement contained in any document, certificate,
or other writing prepared by the Parent or Merger Sub or its representatives and
furnished by the Parent or Merger Sub to the Company pursuant to the provisions
hereof, affirmatively misstates a material fact or omits a material fact
necessary for such document, certificate, or writing to be, in good faith,
accurately and completely responsive in all material respects to the purpose
identified by the Company to the Parent or Merger Sub for which such information
was furnished by the Parent or Merger Sub to the Company.
ARTICLE VII
COVENANTS
7.1. INTERIM OPERATIONS. Prior to the Effective Time, except as
authorized by any other provision of this Agreement, unless Parent has consented
in writing thereto, the Company will not do any of the things enumerated in
Section 5.8(b). Further, the Company:
(a) shall conduct its operations according to its usual,
regular, and ordinary course in substantially the same manner as heretofore
conducted;
(b) shall use its best efforts to preserve intact its business
organization and goodwill, keep available the services of its officers,
employees, and partners and maintain satisfactory relationships with those
persons having business relationships with them;
(c) shall promptly deliver to Parent copies of monthly trial
balances taken from the books of account of the Company and prepared in the
ordinary course of business;
(d) will maintain the existence of and protect its Proprietary
Rights;
(e) will comply in all material respects with applicable
contractual obligations;
(f) will operate the Company businesses in compliance with all
applicable municipal, county, state, federal, and foreign laws, regulations,
ordinances, standards, and orders as now in effect (including, without
limitation, the building, zoning, and life safety codes as currently applied
with respect thereto) where the failure to comply therewith would have a Company
Material Adverse Effect.
(g) will pay as and when due the accounts payable that arise
in the ordinary course of its business except to the extent that the amount
owing is being duly contested by the Company and such contest does not have a
Company Material Adverse Effect and adequate reserves therefore are reflected on
the Company Balance Sheet in accordance with the representations and warranties
contained in this Agreement;
(h) will provide to Parent copies of all material documents
that relate to, and, upon request, with verbal or written updates concerning the
status of any litigation filed as of the date hereof or filed from and after the
date hereof by or against the Company after the date of this
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Agreement but prior to the Closing Date where the amount claimed or assessed by
management of the Company is likely to be claimed exceeds $3,000;
(i) will permit Parent and its employees, agents, consultants,
accounting, and legal representatives to have reasonable access to all books,
records, contracts, leases, key personnel, property, plant, and equipment of the
Company during normal business hours and furnish to Parent such information
concerning the operations of the Company as Parent or its representatives may
reasonably request.
7.2. REGISTRATION STATEMENT. Within 90 days of the Closing Date, Parent
shall prepare and file with the Commission a Registration Statement (the
"Registration Statement") on Form S-3 under the Securities Act, as amended, with
respect to the Parent Common Stock issuable in the Merger. Parent will cause the
Registration Statement to comply as to form in all material respects with the
applicable provisions of the Securities Act, the Exchange Act and the rules and
regulations thereunder. Parent shall use all reasonable efforts to have the
Registration Statement declared effective by the Commission as promptly as
practicable. Parent shall use all reasonable efforts to obtain, prior to the
effective date of the Registration Statement, all necessary state securities law
or "Blue Sky" permits or approvals required to carry out the transactions
contemplated by this Agreement, and Parent will pay all expenses incident
thereto. Parent will advise the Company, promptly after it receives notice, of
the issuance of any stop order, the suspension of the qualification of the
Parent Common Stock issuable in connection with the Merger for offering or sale
in any jurisdiction, any request by any state securities regulating authority
for amendment of the Registration Statement, or requests by any state securities
regulatory authority for additional information.
7.3. FILINGS; OTHER ACTION. Subject to the terms and conditions herein
provided, the Company and Parent shall and shall cause any appropriate other
party to: (a) use all reasonable efforts to cooperate with one another in (i)
determining which filings are required to be made prior to the Effective Time
with, and which consents, approvals, permits, or authorizations are required to
be obtained prior to the Effective Time from governmental or regulatory
authorities of the United States, the several states and foreign jurisdictions
in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby including the consent of
the CDNX to the transactions provided for herein, and (ii) timely making all
such filings and timely seeking all such consents, approvals, permits, or
authorizations; and (b) use all reasonable efforts to take, or cause to be
taken, all other action and do, or cause to be done, all other things necessary,
proper, or appropriate to consummate and make effective the transactions
contemplated by this Agreement.
7.4. PUBLICITY. Each of Parent and the Company shall, subject to
Parent's legal obligations (including requirements of stock exchanges and other
similar regulatory bodies), consult with each other before issuing any press
release or otherwise making public statements with respect to the transactions
contemplated hereby.
7.5. CDNX APPLICATION. Parent shall promptly prepare and submit to the
CDNX an application for CDNX approval of the transactions provided for herein,
including the issuance of the
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Parent Common Stock issuable in the Merger. The application shall be made in
accordance with the requirements of Policy 5.3 (the "CDNX Policy") of the CDNX
Corporate Finance Manual, and Parent shall file the documentation required by
the CDNX Policy and shall use its best efforts to obtain, prior to the Effective
Time, the requisite CDNX approvals.
7.6. FURTHER ACTION. Each party hereto shall, subject to the
fulfillment at or before the Effective Time of each of the conditions set forth
herein or the waiver thereof, directly or by or through its officers or
directors, perform such further acts and execute such documents whether before
or after the Effective Time as may be reasonably required to effect the Merger
including, without limitation, the execution of any documents or submission of
any filing required to be executed or filed to comply with the terms of any
escrow conditions imposed by the CDNX. In addition, subject to the limitations
set forth in this Agreement, and unless specifically prohibited by applicable
law, each party will use its best efforts to cause all of the conditions to
Closing set forth in this Agreement that are within its control to be satisfied
prior to the Closing Date and will not take any action inconsistent with its
obligations under this Agreement or which could hinder or delay the consummation
of the transactions contemplated by this Agreement or that would cause any
representation, warranty, or covenant made by it in this Agreement or in any
certificate, list, exhibit, or other instrument furnished or to be furnished
pursuant hereto, or in connection with the transaction contemplated hereby, to
be untrue in any material respect as of the Effective Time.
7.7. EXPENSES. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses except as
expressly provided herein.
7.8. POOLING. From and after the date hereof and until the expiration
of the Restricted Period (as defined below), neither Parent nor the Company
shall or shall permit any of its subsidiaries or controlled affiliates to take,
and Parent and the Company shall use their respective best efforts to cause
their other affiliates not to take, any action, or fail to take any action, that
would jeopardize the treatment of the Merger as a Pooling of Interests. For
purposes hereof, the Restricted Period shall mean the period commencing on the
date hereof and terminating on the date on which thirty days of combined
operations are publicly announced by Parent in accordance with the provisions of
Section 7.9 hereof.
7.9. PUBLICATION OF FINANCIALS. As promptly as reasonably practicable
after the end of the first fiscal quarter after the Effective Time that includes
at least 30 days of combined operations of the Company and Parent, Parent will
cause to be publicly reported in a Quarterly Report on Form 10-QSB financial
statements of Parent that include such combined operations.
7.10. TAX MATTERS. Parent and Merger Sub covenant and agree that: (i)
they will treat and cause the Surviving Corporation to treat the Merger as a
reorganization qualifying under Section 368(a)(2)(E) of the Code and will file
and cause the Surviving Corporation to file all returns and reports (including
without limitation those required under Treasury Regulation Section 1.368-3) as
required and in a manner consistent with such treatment and (ii) they will take
no action that will prevent or be inconsistent with treating the Merger as a
reorganization qualifying under Section 368(a)(2)(E) of the Code.
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7.11. EMPLOYMENT AGREEMENTS AND NON-COMPETITION AGREEMENTS.
Concurrently with the Closing, each of Todd Spence, Di Anne Kerrigan, and Tom
Kerrigan shall enter into the employment agreements set forth as Exhibit A-1,
A-2 and A-3, respectively, to become effective after the Effective Time.
7.12. FINANCIAL STATEMENTS. At or prior to the Closing, the Company
shall deliver to Parent the internally prepared balance sheet dated as of April
30, 2000, and the audited balance sheets dated as of December 31, 1999, 1998,
and 1997 and the internally prepared statement of earnings and cash flow for the
4 month period ended April 30, 2000, and the audited statements of earnings and
cash flow for the 12 month periods ended December 31, 1999, 1998 and 1997,
prepared in accordance with GAAP consistently applied (the "Audited Financial
Statements").
7.13. DIRECTORS AND OFFICER OF PARENT. Concurrently with the Closing,
all of the directors of the Parent except Don Muir, Byron Flateland and Ahmad
Akrami shall resign as directors, and promptly thereafter, the two remaining
directors shall (i) nominate Todd Spence as a director (Chairman of the Board)
and Chief Executive Officer of Parent, (ii) nominate Di Anne Kerrigan to serve
as a director of Parent, and (iii) take all action necessary in accordance with
applicable law and its Certificate of Incorporation and Bylaws to cause its
stockholders to consider and vote upon the election of such persons as directors
of Parent.
7.14. RELEASE OF STOCK. Notwithstanding any other provision of this
Agreement, the Escrow Agreement, or the Shareholders Agreement, if either (i)
the Registration Statement is not filed within 90 days of the Closing Date or
(ii) either Todd Spence or Di Anne Kerrigan is not elected to serve on the board
of directors of Parent within 3 days following Closing then 50% of the Deferred
Merger Consideration shall be released upon the failure to occur of either such
event. The remaining 50% of the Deferred Merger Consideration shall be released
upon the first publication of audited combined consolidated financial statements
of Parent that includes at least 30 days of combined operations of the Company
and Parent.
ARTICLE VIII
CONDITIONS
8.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) This Agreement and the transactions contemplated hereby
shall have been approved, in the manner required by applicable law, by the
holders of the issued and outstanding shares of capital stock of the Company and
by the holders of the issued and outstanding shares of capital stock of Parent.
(b) Neither of the parties hereto shall be subject to any
order or injunction of a court of competent jurisdiction that prohibits the
consummation of the transactions contemplated by this Agreement. In the event
any such order or injunction shall have been issued, each party agrees to use
its reasonable efforts to have any such injunction lifted or order reversed.
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(c) No action, suit, proceeding, or investigation to suspend
the offering of Parent Common Stock in connection with the Merger shall have
been initiated and be continuing, and all necessary approvals under state
securities laws, the B.C. Act and the CDNX Policy relating to the issuance or
trading of the Parent Common Stock to be issued to the Company stockholders in
connection with the Merger shall have been received.
(d) All consents, authorizations, orders, and approvals of (or
filings or registrations with) any governmental commission, board, or other
regulatory body, including CDNX and B.C. Commission approval of the transactions
provided for herein and including, approval of the execution, delivery, and
performance of this Agreement shall have been obtained or made, except for
filings in connection with the Merger and any other documents required to be
filed after the Effective Time.
(e) The Parent Common Stock to be issued to the Company
stockholders in connection with the Merger shall have been approved for issuance
by the CDNX and, if required, by the B.C. Commission.
(f) No action, suit, or proceeding shall be pending or
threatened by or before any court or governmental body in which an unfavorable
judgment, order, or decree would prevent any of the transactions contemplated
hereby or cause any such transaction to be declared unlawful or rescinded or
that could reasonably be expected to cause a Company Material Adverse Effect or
a Parent Material Adverse Effect.
(g) Parent, Merger Sub, the Company, and the Escrow Agent
shall have entered into the escrow agreement set forth as Exhibit B hereto (the
"Escrow Agreement").
(h) All documents and instruments to be delivered by the
parties in connection with the transactions contemplated hereby shall be in form
and substance reasonably satisfactory to the parties and their respective
counsel, and the parties shall have received such other documents and
instruments as they may reasonably request in connection therewith.
8.2. CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE MERGER. The
obligation of the Company to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) Parent shall have performed in all respects its agreements
contained in this Agreement required to be performed on or prior to the Closing
Date, the representations and warranties of Parent and Merger Sub contained in
this Agreement and in any document delivered in connection herewith shall be
true and correct as of the Closing Date, and Company shall have received a
certificate of the President or a Vice President of Parent, dated the Closing
Date, certifying to such effect; provided, however, that notwithstanding
anything herein to the contrary, this Section 8.2(a) shall be deemed to have
been satisfied even if such performance has not occurred or such representations
or warranties are not true and correct, unless the failure to perform or the
failure of any of the representations or warranties to be so true and correct
would have or would be reasonably likely to have a Parent Material Adverse
Effect.
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(b) There shall have been delivered to the Company
certificates, dated within five days of the Closing Date, of the Secretary of
State of the State of Delaware, with respect to the incorporation, subsistence,
and good legal standing of Parent and Merger Sub, and of the B.C. Commission
with respect to the reporting issuer status of Parent.
(c) All consents and approvals of any third parties required
in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby shall have been obtained
and delivered to the Company.
(d) There shall have been delivered to the Company
certificates, dated the Closing Date, of the Secretary of Parent and Merger Sub
(i) to the effect that the Certificate of Incorporation of Parent and Articles
of Incorporation of Merger Sub have not been amended since the date of the
Certificates referred to in Section 8.2(b) above, (ii) attaching a true and
complete copy of the Bylaws of Parent and Merger Sub as in effect on the Closing
Date, and (iii) attaching a true and complete copy of the resolutions of the
Board of Directors of Parent and Merger Sub approving the execution and delivery
of this Agreement and authorizing the consummation of the transactions
contemplated hereby.
(e) Parent shall have delivered to the Company an opinion of
its counsel in the form attached hereto as Exhibit C.
8.3. CONDITIONS TO OBLIGATION OF PARENT AND MERGER SUB TO EFFECT THE
MERGER. The obligations of Parent and Merger Sub to effect the Merger shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) The Company shall have performed in all respects its
agreements contained in this Agreement required to be performed on or prior to
the Closing Date, the representations and warranties of the Company contained in
this Agreement and in any document delivered in connection herewith shall be
true and correct as of the Closing Date as if made on the Closing Date, and
Parent shall have received a certificate of the President or a Vice President of
the Company, dated the Closing Date, certifying to such effect; provided,
however, that notwithstanding anything herein to the contrary, this Section
8.3(a) shall be deemed to have been satisfied even if such performance has not
occurred or such representations or warranties are not true and correct, unless
the failure to perform or the failure of any of the representations or
warranties to be so true and correct would have or would be reasonably likely to
have a Parent Material Adverse Effect.
(b) The status of any litigation of the Company as described
in Schedule 5.14 of the Company Disclosure Schedule and/or the terms of any
agreements relating to the compromise or dismissal of any action, suit or
proceeding described in Schedule 5.14 of the Company Disclosure Schedule
(subject to any restrictions on the disclosure of such terms) shall be
satisfactory to Parent.
(c) Other than with respect to a default identified in the
Company Disclosure Schedule as of the date of this Agreement, the Company shall
not be in default of any obligation, where said default cannot be cured by the
Closing Date, under any of the Material Contracts, unless any such defaults,
individually or in the aggregate, would not reasonably be expected to have a
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Company Material Adverse Effect, and Parent shall have received a certificate of
the President or a Vice President of the Company, dated the Closing Date,
certifying to such effect.
(d) All consents and approvals of any third parties required
in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby shall have been obtained
and delivered to Parent.
(e) The number of Dissenting Shares shall not consist of more
than five percent (5%) of the issued and outstanding Company Common Stock.
(f) The holders of at least ninety-five percent (95%) of the
issued and outstanding Company Common Stock shall have executed and delivered to
the Company the Stockholders Agreement (as defined in Section 9.4).
(g) There shall have been delivered to Parent a certificate,
dated within five days of the Closing Date, of the Secretary of State of the
State of Missouri, listing all charter documents of the Company on file in the
office of said Secretary of State and copies of the Articles of Incorporation of
the Company and all amendments thereto, certified as true and correct by said
Secretary of State within five days of the Closing Date.
(h) There shall have been delivered to Parent a certificate,
dated within five days of the Closing Date, of the Secretary of State of the
State of Missouri, with respect to the incorporation, subsistence, and good
legal standing of the Company.
(i) There shall have been delivered to Parent a certificate,
dated within five days of the Closing Date, of the Secretary of State of the
State of Missouri or such other jurisdictions, with respect to the authorization
by such jurisdiction of the Company to transact business in the jurisdictions
identified in Schedule 5.1 of the Company Disclosure Schedule.
(j) There shall have been delivered to Parent a certificate,
dated the Closing Date, of the Secretary of the Company (i) to the effect that
the Company's Articles of Incorporation have not been amended since the date of
the Certificate referred to in Section 8.3(g) above, (ii) attaching a true and
complete copy of the Company's Bylaws as in effect on the Closing Date, and
(iii) attaching a true and complete copy of the resolutions of the Company's
Board of Directors approving the execution and delivery of this Agreement and
authorizing the consummation of the transactions contemplated hereby.
(k) The Audited Financial Statements shall reflect no material
change in the financial condition or results of operations of the Company from
that reflected in the Company Balance Sheet so as to result in a Company
Material Adverse Effect.
(l) The Company shall have delivered to Parent an opinion of
its counsel in the form attached hereto as Exhibit D.
(m) On the Closing Date, the Company's total owner's equity as
reflected on the Audited Financial Statements shall be equal to or in excess of
$325,000.
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(n) Each of Todd Spence, Di Anne Kerrigan and Tom Kerrigan
shall have executed and delivered the employment agreements and non-competition
agreements described in Section 7.14.
(o) Each of the parties to that certain Stock Restriction
Agreement dated ________ shall have executed and delivered a Release and Consent
to Termination of Stock Restriction Agreement in substantially the for attached
hereto as Exhibit F.
ARTICLE IX
ESCROW; LIMITS ON LIABILITY
9.1. DELIVERY OF PARENT COMMON STOCK TO THE ESCROW AGENT. Within three
business days after the Effective Time, Parent shall deposit, or shall cause to
be deposited, with the Escrow Agent, for the benefit of the holders of shares of
the Company Common Stock (other than Dissenting Shares), for distribution in
accordance with this Article IX, the Deferred Merger Consideration (the
"Deferred Merger Consideration Fund"). For tax purposes, the Parent Common Stock
held by the Escrow Agent shall be treated as owned by the beneficial holders of
the Parent Common Stock (rather than by the Parent or any affiliate of the
Parent). The beneficial holders of the Parent Common Stock shall be entitled to
direct the manner in which the Escrow Agent shall vote the shares of Parent
Company Common Stock held in the Deferred Merger Consideration Fund.
9.2. DIVIDENDS DECLARED AFTER THE EFFECTIVE TIME. Any dividends or
other distributions with respect to the Parent Common Stock comprising the
Deferred Merger Consideration that are declared after the Effective Time but
prior to the date any Deferred Merger Consideration is paid by the Escrow Agent
to the Company's stockholders shall be paid to the Escrow Agent, deposited by
the Escrow Agent into the Deferred Merger Consideration Fund, and distributed by
the Escrow Agent in accordance with this Article IX. Any dividends or
distributions with respect to the Deferred Merger Consideration relating to
record dates for such dividends or distributions after the Effective Time shall
be deposited with the Escrow Agent and shall constitute part of the Deferred
Merger Consideration.
9.3. SURVIVAL OF REPRESENTATIONS. Notwithstanding any examination made
by or on behalf of Parent or Merger Sub, the knowledge of Parent or Merger Sub
or any of the respective officers, directors, stockholders, employees, or agents
of Parent or Merger Sub, or the acceptance by any party of any certificate or
opinion, the representations, warranties, covenants, and agreements set forth in
this Agreement, or in any writing delivered by the Company in connection with
this Agreement, shall survive the consummation of the transactions contemplated
hereby and shall expire on the Survival Date.
9.4. INDEMNITY. On or prior to the Closing Date, the holders of at
least ninety-five percent (95%) of the issued and outstanding Company Common
Stock shall have executed and delivered to the Company an agreement with respect
to the indemnification of Parent and Merger Sub with respect to breaches of the
terms and conditions of this Agreement (the "Stockholders Agreement"), which
Stockholders Agreement shall be substantially in the form of Exhibit F attached
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hereto. Except for the rights granted to Parent pursuant to Section 9.5 hereof,
the Escrow Agreement and the Stockholders Agreement shall govern Parent's rights
in the event of a breach of any representation, warranty, covenant, or agreement
contained in this Agreement or any document contemplated hereby.
9.5. APPLICATION BY PARENT TO ESCROW AGENT FOR PAYMENT OF CLAIMS. On or
prior to the Closing Date, the Company, Parent, Merger Sub, and a designated
representative of the holders of the Company Common Stock shall execute and
deliver the Escrow Agreement, which Escrow Agreement shall provide for Parent's
right to seek payment for a breach of any representation, warranty, covenant, or
agreement contained in this Agreement or any document contemplated hereby from
the Deferred Merger Consideration Fund. Parent's right to seek payment of any
such claim from the Deferred Merger Consideration Fund shall be governed by the
Escrow Agreement.
9.6. DISTRIBUTION OF DEFERRED MERGER CONSIDERATION TO THE COMPANY'S
STOCKHOLDERS. The Escrow Agent shall, in accordance with and the times provided
in the Escrow Agreement, deliver to the Company's stockholders (other than
holders of Dissenting Shares) each stockholder's pro rata share of any cash and
securities constituting Deferred Merger Consideration remaining after the
payment of any claims by Parent for breaches of any representation, warranty,
covenant, or agreement contained in this Agreement or any document contemplated
hereby.
9.7. UNCLAIMED FUNDS. Any portion of the Deferred Merger Consideration
Fund (including the proceeds of any investments thereof and any shares of Parent
Common Stock) that remains unclaimed by the former stockholders of the Company
two years after the Effective Time shall be delivered to the Surviving
Corporation. Any former stockholders of the Company who have not theretofore
complied with this Article IX and the Escrow Agreement shall thereafter look
only to the Surviving Corporation for payment of their shares of Parent Common
Stock, and any unpaid dividends and distributions on the Parent Common Stock
deliverable in respect of each share of the Company Common Stock such
stockholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon.
9.8. LIMITS ON LIABILITY. The limitations on the liability of the
former stockholders of the Company shall be set forth in the Stockholders'
Agreement. Notwithstanding anything to the contrary in this Agreement or any
agreement or document contemplated hereby, Parent's aggregate liability for
breaches of the representations, warranties or covenants made in this Agreement,
or in any agreement or document contemplated hereby, shall not exceed $500,000.
ARTICLE X
TERMINATION
10.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, before
or after the approval of this Agreement by the stockholders of the Company and
the Parent, by the mutual consent of Parent and the Company.
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10.2. TERMINATION BY EITHER PARENT OR THE COMPANY. This Agreement may
be terminated and the Merger may be abandoned by action of the Board of
Directors of either Parent or the Company if (a) the Merger shall not have been
consummated by August 31, 2000 (the "Outside Closing Date"), or (b) all
conditions to Closing set forth in Section 8.1 shall not have been waived or
satisfied by the Outside Closing Date; provided, that the party seeking to
terminate this Agreement as a result of the failure of the conditions set forth
in Sections 8.1(c) or (f) hereof shall have used all reasonable efforts to
remove such injunction, order, or decree; and provided, further, in the case of
a termination under either Section 10.2(a) or Section 10.2(b) hereof, the
terminating party shall not have breached in any material respect its
obligations under this Agreement in any manner that shall have proximately
contributed to the failure to consummate the Merger.
10.3. TERMINATION BY THE COMPANY. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after the adoption and approval by the stockholders of the Company referred to
in Section 8.1(a) hereof, by action of the board of directors of the Company, if
all conditions to Closing set forth in Section 8.2 of this Agreement shall not
have been waived or satisfied by the Outside Closing Date.
10.4. TERMINATION BY PARENT. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, by action of
the board of directors of Parent, if the board of directors of the Company shall
have withdrawn or modified its approval or recommendation of this Agreement or
the Merger or if all conditions to Closing set forth in Section 8.3 hereof shall
not have been waived or satisfied by the Outside Closing Date.
10.5. EFFECT OF TERMINATION AND ABANDONMENT. In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article X, all obligations of the parties hereto shall terminate, except the
obligations of the parties pursuant to this Section 10.5 and Section 7.7 and
except for the provisions of Sections 11.2, 11.3, 11.5, 11.6, 11.7, 11.11,
11.12, and 11.13 and pursuant to any confidentiality agreement signed by the
parties hereto. Notwithstanding the foregoing, in the event of termination of
this Agreement pursuant to Section 10.3 or 10.4, other than as a result of a
failure of the CDNX or B.C. Commission to approve the transactions contemplated
herein, nothing herein shall prejudice the ability of the non-terminating party
from seeking damages from any other party for any termination of this Agreement,
including without limitation, attorneys' fees and the right to pursue any remedy
at law for damages or in equity. Notwithstanding anything to the contrary in
this Agreement, (i) if Parent terminates this Agreement pursuant to Section
10.4, other than as a result of a failure of the CDNX or B.C. Commission to
approve the transactions contemplated herein, Parent shall be entitled to a fee
equal to $500,000 (the "Breakup Fee") or (ii) if the Company terminates this
Agreement pursuant to Section 10.3, other than as a result of a failure of the
CDNX or B.C. Commission to approve the transactions contemplated herein, the
Company shall be entitled to a fee equal to $500,000 (the "Company Breakup
Fee"). The Breakup Fee or the Company Breakup Fee, as applicable, shall be
payable by the Company or Parent, as applicable, in cash by wire transfer of
immediately available funds within twenty (20) business days following the
termination of this Agreement pursuant to Section 10.4 or 10.3 hereof.
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10.6. EXTENSION; WAIVER. At any time prior to the Effective Time, any
party hereto, by action taken by its Board of Directors, may, to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto, and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE XI
GENERAL PROVISIONS
11.1. CONFIDENTIALITY. The Company agrees that it shall, and it shall
direct and use its best efforts to cause its officers, directors, stockholders,
employees, agents, and representatives to, keep the existence of this Agreement
and the terms of the transactions contemplated hereby strictly confidential and
to not disclose such matters to any third party without Parent's prior written
consent. The Company acknowledges that Parent has certain reporting obligations
as a public company, and agrees that Parent may make public disclosure of the
existence of this Agreement and the terms of the transactions contemplated
hereby at such time as it believes it to be prudent to do so, based upon the
advice of counsel and with notice to and consultation with the Company.
11.2. NOTICES. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission and by same day or
overnight courier service (with proof of service), hand delivery or certified or
registered mail (return receipt requested and first-class postage prepaid),
addressed as follows:
If to Parent or Merger Sub: If to the Company:
Panoramic Care Systems, Inc. Management - Data, Inc.
5181 Ward Road 11432 Tesson Ferry Rd.
Wheat Ridge, Colorado 80033 St. Louis, Missouri 63123
Attn: President Attn: President
Telephone: (303) 422-3886 Telephone: (314) 849-2700
Facsimile: (303) 422-4674 Facsimile: (314) 849-8878
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With copies to (which copies shall not With copies to (which copies shall
constitute notice): not constitute notice):
Davis, Graham & Stubbs LLP Benson & Guest LLP
370 17th Street, Suite 4700 635 Maryville Center Drive,
Denver, Colorado 80202 Suite 221
Attn: Lester R. Woodward St. Louis, Missouri 63141
Telephone: (303) 892-7392 Attn: Edward J. Miller, Jr.
Facsimile: (303) 893-1379 Telephone: (314) 576-2800
Facsimile: (314) 469-7806
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered, or delivered by courier or on the third
day after the mailing thereof.
11.3. ASSIGNMENT, BINDING EFFECT. Neither this Agreement nor any of the
rights, interests, or obligations, hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto and certain stockholders of the Company (as to Article IX of this
Agreement) and other named beneficiaries of covenants or agreements in the
Agreement, or their respective heirs, successors, executors, administrators, and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement.
11.4. ENTIRE AGREEMENT. This Agreement, the Exhibits, the Company
Disclosure Schedule, the Parent Disclosure Schedule, the confidentiality
agreements between the parties hereto and any schedules or agreements delivered
in connection with this Agreement constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings among the parties with respect thereto. No
information previously provided, addition to or modification of any provision of
this Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
11.5. AMENDMENT. This Agreement may be amended by the parties hereto,
by action taken by their respective Boards of Directors, at any time before or
after approval of matters presented in connection with the Merger by the
stockholders of the Company, Parent and Merger Sub, but after any such
stockholder approval, no amendment shall be made which by law requires the
further approval of stockholders without obtaining such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
11.6. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without regard to its rules
of conflict of laws.
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11.7. COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto. Executed counterparts transmitted by fax shall be effective as
originals.
11.8. HEADINGS. Headings of the Articles and Sections of this Agreement
are for the convenience of the parties only, and shall be given no substantive
or interpretive effect whatsoever.
11.9. INTERPRETATION. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa.
11.10. WAIVERS. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
11.11. INCORPORATION OF EXHIBITS. The Company Disclosure Schedule, the
Parent Disclosure Schedule and all Exhibits and schedules attached hereto and
referred to herein are hereby incorporated herein and made a part hereof for all
purposes as if fully set forth herein.
11.12. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction unless the same is
material to the terms of this Agreement, in the judgment of either party to this
Agreement, in which case the parties shall negotiate in good faith to revise the
same so as to be valid or enforceable. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.
11.13. ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which they are entitled at law or in equity.
11.14. SUBSIDIARIES. As used in this Agreement, the word "Subsidiary"
when used with respect to any Party means any corporation, partnership, or other
organization, whether incorporated or unincorporated, of which such party
directly or indirectly owns or controls at least a majority of
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the securities or other interests having by their terms ordinary voting power to
elect a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization, or any
organization of which such party is a general partner; provided, however, that
in the case of Parent, a Subsidiary shall not include any corporation to be
acquired by it concurrently with or subsequent to the acquisition of the
Company.
11.15. CONSENT. Whenever the consent or approval of a party is required
by the terms of this Agreement, unless otherwise provided, the same shall not be
unreasonably withheld or delayed.
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.
"PARENT"
PANORAMIC CARE SYSTEMS, INC.
By: /s/ Don Muir
--------------------------------
Name: Don Muir
Title: President
"MERGER SUB"
PANORAMIC ACQUISITION CORPORATION
By: /s/ Tom Tennessen
--------------------------------
Name: Tom Tennessen
Title: President
"THE COMPANY"
MANAGEMENT-DATA, INC..
By: /s/Todd A. Spence
--------------------------------
Name: Todd A. Spence
Title: President
46
