<PAGE>
As filed with the Securities and Exchange Commission on December 21, 1995
Registration No. 33-_________
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
BUSINESS RECORDS CORPORATION HOLDING COMPANY
(Exact name of registrant as specified in charter)
Delaware 75-1533071
(State of incorporation) (I.R.S. Employer Identification No.)
1111 W. Mockingbird Lane, Suite 1400
Dallas, Texas 75247
(Address of principal executive offices) (Zip Code)
CLINICAL RESOURCE SYSTEMS, INC. STOCK OPTION PLAN
CLINICAL RESOURCE SYSTEMS, INC. COMMON STOCK PURCHASE WARRANT
EXPIRING AUGUST 9, 1996
(Full title of the plans)
(With Copy To)
Thomas E. Kiraly Jeffrey M. Sone, Esq.
1111 W. Mockingbird Lane, Suite 1400 Arter, Hadden, Johnson & Bromberg
Dallas, TX 75247 1717 Main Street, Suite 4100
(Name and address of agent for service) Dallas, TX 75201-4605
Telephone number, including area code, of agent for service: (214) 688-1800
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================
Proposed Proposed
maximum maximum
Amount offering aggregate Amount of
Title of securities to be price offering registration
to be registered registered per share price(2)(3) fee(3)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.10 par value 14,381(1) (2)(3) $508,742 $175.43
===============================================================================================
</TABLE>
(1) The securities to be registered represent (i) 13,933 shares of Common Stock
issuable under the CRS Stock Option Plan and (ii) 448 shares of Common
Stock issuable upon the exercise of that Clinical Resource Systems, Inc.
Common Stock Purchase Warrant Expiring August 9, 1996.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Calculated pursuant to Rule 457(h) under the Securities Act of 1933, as
amended: the maximum proposed offering price at which outstanding options
under the Clinical Resource Systems, Inc. Stock Option Plan and Clinical
Resource Systems, Inc. Common Stock Purchase Warrant Expiring August 9,
1996 may be exercised is $508,742 (14,381 shares of Common Stock).
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION
Under the Clinical Resource Systems, Inc. Stock Option Plan, effective
March 31, 1989 (the "CRS Option Plan"), Clinical Resource Systems, Inc., a Texas
corporation ("CRS"), was authorized to issue options to purchase an aggregate of
up to 600,000 shares of CRS Common Stock, $0.002 par value per share (the "CRS
Common Stock"), to officers and employees of CRS. Pursuant to the terms of the
CRS Option Plan, in the event that CRS should be the surviving corporation in
any merger or consolidation, each outstanding stock option under the CRS Option
Plan was deemed to pertain and apply to the securities to which a holder of the
number of shares of CRS Common Stock subject to such stock option would have
been entitled as a result of such transaction. Pursuant to the terms of that
certain Clinical Resource Systems, Inc. Common Stock Purchase Warrant expiring
August 9, 1996 (the "Warrant"), Dr. Robert G. McConnell, a director of CRS, was
entitled to purchase up to 66,670 shares of the CRS Common Stock upon the
exercise thereof. Pursuant to the provisions of the Warrant, after a merger of
one or more corporations into CRS, the holder of the Warrant is entitled to
receive, in lieu of the shares of the CRS Common Stock, that number of shares of
stock or other securities or property to which such holder would have been
entitled pursuant to the terms of the agreement of merger or consolidation if,
immediately prior to such merger or consolidation, such holder had been the
holder of record of a number of shares of CRS Common Stock, equal to the number
and class of shares as to which the Warrant was then so exercisable.
Pursuant to the terms of an Agreement and Plan of Merger, dated July
25, 1995, among the Registrant, BRC Merger Corp., CRS and certain individuals
(the "Merger Agreement"), BRC Merger Corp. was merged with and into CRS, CRS
became a wholly owned subsidiary of the Registrant and each issued and
outstanding share of the CRS Common Stock, was converted into the right to
receive .03366091 shares of the Common Stock, $0.10 par value per share, of the
Registrant. Immediately prior to such merger, options to purchase 414,000
shares of the CRS Common Stock were outstanding under the CRS Option Plan and
the Warrant was exercisable as to 13,334 shares of the CRS Common Stock.
Pursuant to the terms of the CRS Option Plan and the Warrant, as a result of the
merger of BRC Merger Corp. with and into CRS, each of the individual holders of
options or the Warrant, as the case may be, set forth below became entitled to
receive, upon exercise of their respective options or Warrant, the number of
shares of the Common Stock, $0.10 par value per share, of the Registrant (the
"Company Common Stock") described opposite their name, in lieu of receiving the
number of shares of the CRS Common Stock also set forth opposite their name.
<TABLE>
<CAPTION>
NUMBER OF BUSINESS RECORDS
NUMBER OF CLINICAL RESOURCE CORPORATION HOLDING
NAME OF INDIVIDUAL SYSTEMS, INC. SHARES COMPANY SHARES
- ----------------------- --------------------------- --------------------------
<S> <C> <C>
Andrew Galewsky 200,000 6,732
Daniel Galewsky 100,000 3,365
Phyllis Guillory 2,000 67
</TABLE>
-2-
<PAGE>
<TABLE>
<S> <C> <C>
Margot Clarke 2,000 67
Clyde Middleton, Jr. 10,000 336
Samuel E. Culotta 100,000 3,366
Robert G. McConnell 13,334 448
</TABLE>
Accordingly, the securities registered hereby represent (i) 13,933
shares of Company Common Stock issuable by the Registrant under the CRS Option
Plan and (ii) 448 shares of Company Common Stock issuable by the Registrant upon
the exercise of the Warrant.
The remainder of the information required by Part I to be contained in
the Section 10(a) prospectus is omitted from the Registration Statement in
accordance with Rule 428 under the Securities Act of 1933, as amended, and the
Note to Part I of Form S-8.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-3-
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The following documents filed by Business Records Corporation Holding
Company (the "Registrant" or the "Company") with the Securities and Exchange
Commission are incorporated by reference in this registration statement:
(1) Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 (the "1994 Form 10-K").
(2) The Registrant's reports on Form 10-Q for the fiscal quarters
ended March 31, 1995, June 30, 1995 and September 30, 1995 as filed pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") since the most recent fiscal year covered by the 1994 Form 10-K
described in (1) above.
(3) The description of the Company's Common Stock contained in a
Registration Statement on Form 8-A, filed under the Exchange Act on February 16,
1988, Registration No. 0-8615, including any amendment or report filed for the
purpose of updating such description.
In addition, all documents subsequently filed by the Company pursuant
to Section 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing
of a post-effective amendment which indicates that all securities offered have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this registration statement and to be
a part hereof from the date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this registration statement to the extent that the
statement contained herein or in any subsequently filed document which is deemed
to be incorporated by reference herein, or in any document forming any part of
the Section 10(a) Prospectus to be delivered to participants in connection with,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this registration statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not Applicable.
II-1
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law empowers a
Delaware corporation, including the Company, to indemnify its directors,
officers, employees and agents under certain circumstances. The Company's
Restated Bylaws ("Bylaws") provide that the Registrant shall indemnify such
persons to the full extent authorized or permitted by law. The Bylaws further
provide that the Registrant may purchase and maintain liability insurance on
behalf of directors, officers, employees or agents of registrant, whether or not
registrant would have the power to indemnify them against such liability under
the provisions of law. Moreover, the Company's Certificate of Incorporation, as
amended (the "Certificate"), provides that no director of registrant shall be
personally liable to registrant or its stockholders for breach of fiduciary duty
as a director to the fullest extent permitted by the Delaware General
Corporation Law. The Delaware General Corporation Law prohibits such limitation
of liability for: (i) any breach of the duty of loyalty to registrant or its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) liability under
Section 174 of the Delaware General Corporation Law (involving certain unlawful
dividends or stock repurchases), or (iv) any transaction from which the director
derived an improper personal benefit.
The Registrant maintains an officers' and directors' liability
insurance policy insuring registrant's officers and directors against certain
liabilities and expenses incurred by them in their capacities as such, and
insuring registrant, under certain circumstances, in the event that
indemnification payments are made by registrant to such officers and directors.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
ITEM 8. EXHIBITS.
See the Index to Exhibits following Part II this Registration
Statement.
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement;
II-2
<PAGE>
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement;
provided, however, that the undertaking set forth in paragraph (1)(i) and
(1)(ii) above do not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby further undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of the
annual report of the CRS Option Plan pursuant to Section 15(d) of the Securities
Exchange Act of 1934, if any) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issues.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Dallas and State of Texas on the 18 day of December,
1995.
BUSINESS RECORDS CORPORATION HOLDING COMPANY
(Registrant)
By: /s/ Thomas E. Kiraly
-------------------------------------------------
Thomas E. Kiraly
Chief Financial Officer
POWER OF ATTORNEY
Each of the undersigned hereby appoints Thomas E. Kiraly as attorney and
agent for the undersigned with full power of substitution, for and in the name,
place and stead of the undersigned, to sign and file with the Securities and
Exchange Commission under the Securities Act of 1933 any and all amendments and
exhibits to this Registration Statement and any and all applications,
instruments and other documents to be filed with the Securities and Exchange
Commission pertaining to the registration of the securities covered hereby, with
full power and authority to do and perform any and all acts and things
whatsoever requisite or desirable.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons and in the
capacities indicated on December 18, 1995.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ P. E. Esping Chairman, Chief Executive Officer and
- ------------------------------------ Director (Principal Executive Officer)
P. E. Esping
/s/ Thomas E. Kiraly Chief Financial Officer (Principal Financial Officer
- ------------------------------------ and Principal Accounting Officer)
Thomas E. Kiraly
/s/ L.D. Brinkman Director
- ------------------------------------
L.D. Brinkman
/s/ Robert E. Masterson Director
- ------------------------------------
Robert E. Masterson
/s/ David H. Monnich Director
- ------------------------------------
David H. Monnich
/s/ Paul T. Stoffel Director
- ------------------------------------
Paul T. Stoffel
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
- ------ -----------------------
<C> <S>
4.1 Clinical Resource Systems, Inc. Stock Option Plan (filed herewith)
4.2 Form of Clinical Resource Systems, Inc. Stock Option Agreement (filed
herewith)
4.3 Clinical Resource Systems, Inc. Common Stock Purchase Warrant
Expiring August 9, 1996 (filed herewith)
4.4 Agreement and Plan of Merger, dated as of July 25, 1995, among
Business Records Corporation Holding Company, BRC Merger Corp.,
Clinical Resource Systems, Inc. and certain individuals (filed
herewith)
5.1 Opinion of Arter, Hadden, Johnson & Bromberg (including their
consent listed as Exhibit 24.1 to this Registration Statement) (filed
herewith)
23.1 Consent of Arter, Hadden, Johnson & Bromberg (included in their
opinion filed as Exhibit 5.1 to this Registration Statement)
23.2 Consent of Price Waterhouse LLP, independent accountants (filed
herewith)
24.1 Power of Attorney (filed on the signature page, Page II-4 to this
Registration Statement)
</TABLE>
II-5
<PAGE>
EXHIBIT 4.1
CLINICAL RESOURCE SYSTEMS, INC.
STOCK OPTION PLAN
ARTICLE I
---------
PURPOSE
Clinical Resource Systems, Inc. (the "Company") is largely dependent for
the successful conduct of its business on the initiative, effort and judgment of
its officers and employees and the officers and employees of its subsidiaries.
This Stock Option Plan (the "Plan") is intended to provide the key employees of
the Company and its subsidiaries an incentive through stock ownership in the
Company and encourage them to remain in the Company's employ. Moreover, since
the incentive stock options and non-qualified stock options provided for in the
Plan are subject to various alternative provisions of the Internal Revenue Code
of 1986, as amended (the "Code"), the Board of Directors of the Company (the
"Board") will have considerable latitude in shaping stock options granted under
the Plan to the particular circumstances of the optionee, thus recognizing the
full value of the stock option.
ARTICLE II
----------
ADMINISTRATION
The Plan shall be administered by the Stock Option Committee (the
"Committee"), the initial members of which shall be Charles B. Owen, M.D.,
Robert McConnell, M.D. and Don Pippin, Jr. The Committee shall at all times
consist of not less than two members of the Board, and shall not include any
persons that are not members of the Board. All members of the Committee shall
be selected by (and serve at the pleasure of) the Board. All members of the
Committee shall be "disinterested persons" within the meaning of Rule 16b-3 of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended (the "1934 Act"). Subject to the express provisions of the Plan, the
Committee shall have plenary authority, in its discretion, to recommend to the
Board the individuals within the class set forth in Article IV to whom, and the
----------
time and price per share at which, stock options shall be granted, and the
number of shares to be subject to each stock option. In making such
recommendations and determinations, the Committee may take into account the
nature of the services rendered by the respective employees, their present and
potential contributions to the Company's success and such other factors as the
Committee in its discretion shall deem relevant. Subject to the express
provisions of the Plan, the Committee shall also have plenary authority to
interpret the Plan, to prescribe, amend and rescind rules and regulations
regulating it, to recommend to the Board the terms and provisions of the
respective stock options (which need not be identical) and to make all other
determinations necessary for advisable for the administration of the Plan. The
Committee's determinations on the matters referred to in this Article II shall
----------
be final, conclusive and binding upon all optionees.
<PAGE>
ARTICLE III
-----------
SHARES SUBJECT TO PLAN AND DURATION OF PLAN
Under the Plan, a majority of the members of the Board who are
disinterested persons may, upon recommendation of the Committee, at any time on
or before ten (10) years after the date of adoption of the Plan or approval of
the Plan by the shareholders of the Company, whichever is earlier, but not
thereafter, grant to eligible persons stock options to purchase up to but not
exceeding an aggregate of 600,000 shares of the Company's $0.002 par value
Common Stock (subject to adjustment as provided in Article VIII). Shares
------------
subject to stock options under the Plan may be either authorized and unissued
shares or issued shares which have been acquired by the Company and are being
held in its treasury, in its sole discretion of the Board. When stock options
have been granted under the Plan and have lapsed unexercised or partially
unexercised or have been surrendered for cancellation by the optionee thereof,
the shares which were subject thereto may be reoptioned under the Plan.
ARTICLE IV
----------
ELIGIBILITY AND PARTICIPATION
All officers and employees of the Company and its 50% or more owned
subsidiaries (including 50% or more owned subsidiaries which become such after
adoption of the Plan) shall be eligible to receive stock options under the Plan,
and employment by any of such subsidiaries shall constitute employment by the
Company for purposes of this Plan; provided, however, that no member of the
Committee shall be entitled to receive a stock option under this Plan while
serving as a member of the Committee and for a period of one year thereafter.
ARTICLE V
---------
TERMS AND CONDITIONS OF STOCK OPTIONS
Each stock option granted under the Plan shall be evidenced by a stock
option agreement (the "Agreement"), the form of which shall have been approved
by the Committee and counsel to the Company. The Agreement shall be executed by
the Company and the optionee and shall set forth the terms and conditions of the
option, which terms and conditions shall include, but not be limited to, the
following:
(a) Stock Option Price. The stock option price shall be
------------------
determined by the Committee, but shall not in any event be less
than the par value of the Company's Common Stock.
(b) Term of Stock Option. The term of the stock option shall be
--------------------
selected by the Committee, but in no event shall such term exceed
ten (10) years from the date such stock option is granted.
-2-
<PAGE>
(c) Transferability. The stock options granted hereunder shall not be
---------------
transferable otherwise than by will or operation of the laws of descent
and distribution or pursuant to a qualified domestic relations order as
defined in the Code or Title I of the Employee Retirement Income Security
Act, as amended, or the rules thereunder. During the lifetime of the
optionee, stock options granted hereunder shall be exercisable only by
the optionee or the optionee's guardian or legal representation.
(d) Exercise. Notwithstanding any other provision of this Plan, no
--------
option shall be exercised more than ten (10) years from the date upon
which it is granted.
(e) Other Conditions. As its sole discretion, the Committee may impose
----------------
other conditions upon the options granted hereunder, including, but not
limited to, percentage limitations upon the exercisability of stock
options granted hereunder and termination of non-qualified stock options
on termination of employment.
ARTICLE VI
----------
INCENTIVE STOCK OPTIONS
The Committee and the Board, in recommending and granting stock options
hereunder, shall have the discretion to determine that certain stock options
shall be incentive stock options, as defined in Section 422 of the Code, while
other options shall be non-qualified stock options. Neither the members of the
Committee, the members of the Board nor the Company shall be under any
obligation or incur any liability to any person by reason of the determination
by the Committee or the Board whether a stock option granted under the Plan
shall be an incentive stock option or a non-qualified stock option. The
provisions of this Article VI shall be applicable to all incentive stock options
----------
at any time granted or outstanding under the Plan.
All incentive stock options granted or outstanding under the Plan shall be
granted and held subject to and in compliance with the terms and conditions
specifically set forth in Articles II, III, IV and V hereof and, in addition,
--------------------------
subject to and in compliance with the following further terms and conditions:
(a) the option price of all incentive stock options shall not be less
than one hundred percent (100%) of the fair market value of the Company's
Common Stock at the time the stock option is granted (notwithstanding any
provision of Article V hereof to the contrary);
---------
(b) no incentive stock option shall be granted to any person who, at the
time of the grant, owns stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or any
parent or subsidiary of the Company, provided, however, that this
ownership limitation will be waived if, at the time the stock option is
granted, the stock option price is at least one hundred ten percent (110%)
of the fair market value of the Company's Common Stock and such stock
option by its terms is not exercisable more than five (5) years from the
date it is granted;
-3-
<PAGE>
(c) the aggregate fair market value of all shares of Common Stock
(determined at the time of the grant of the stock option) with respect to
which incentive stock options are exercisable for the first time by any
optionee during any one calendar year shall not exceed $100,000; and
(d) in the event of an optionee's termination of employment with the
Company for any reason other than death, all incentive stock options
granted hereunder shall thereupon terminate; provided, however, the
Committee may, in its discretion, direct that certain Agreements contain
provisions permitting exercise of stock options after an optionee's
retirement. Upon the termination of an optionee's employment by reason of
his death, his incentive stock option shall terminate to the extent it was
not exercisable at the date of his death, but to the extent it was then
exercisable by the optionee, his estate or the beneficiaries thereof shall
be entitled to exercise it for a period of one (1) year from the date of
his death but not thereafter.
ARTICLE VII
-----------
EXERCISE OF STOCK OPTIONS
Stock options granted hereunder may be exercised only by tendering to the
Company written notice of exercise accompanied by the aggregate purchase price
for the shares with respect to which the stock option is being exercised. No
stock option shall be exercisable unless the shares issuable on the exercise
thereof have been registered under the Securities Act of 1933, as amended (the
"1933 Act"), or the Company shall have first received the opinion of its counsel
that registration under the 1933 Act is not required in connection with such
issuance. At the time of exercise, if the shares with respect to which the stock
option is being exercised have not been registered under the 1933 Act, the
Company may require the optionee to give the Company whatever written assurance
counsel for the Company may require that the shares are being acquired for
investment and not with a view to the distribution thereof, and that the shares
will not be disposed of without the written opinion of such counsel that
registration under the 1933 Act is not required. Share certificates issued to
the optionee upon exercise of the stock option shall bear a legend to the
foregoing effect to the extent counsel for the Company deems it advisable. The
purchase price of shares of Common Stock of the Company acquired upon the
exercise of any non-qualified stock option or incentive stock option granted
under the Plan shall be paid in full by the optionee in cash or by certified or
cashier's check payable to the order of the Company, or by delivery to the
Company of shares of the Company's Common Stock theretofore owned by the
optionee having a fair market value equal to such stock option price, or by any
combination thereof. For purposes of the Plan, (i) if the shares of Common Stock
are traded on a stock exchange, shares of Common Stock shall be deemed to have a
fair market value equal to the average of the closing bid and asked price for a
share on such exchange for the trading day on which such value is being
determined, or (ii) if the shares of Common Stock are not traded on an exchange,
the shares shall be deemed to have a fair market value as is determined by the
Committee, which such determination of value shall be conclusive for the
purposes hereof if made in good faith by the Committee.
-4-
<PAGE>
ARTICLE VIII
------------
ADJUSTMENTS
Subject to any required action by the Company's directors and shareholders,
the number of shares provided for in each outstanding stock option and the price
per share thereof, and the number of shares provided for in the Plan, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of the Company's Common Stock resulting from a subdivision or
consolidation of shares or the payment of a stock dividend (but only on the
Common Stock) or any other increase or decrease in the number of such shares
effected without receipt of consideration by the Company. Subject to any
required action by the Company's directors and shareholders, if the Company
shall be the surviving corporation in any merger or consolidation, each
outstanding stock option shall pertain to and apply to the securities to which
a holder of the number of shares of the Company's Common Stock subject to the
stock option would have been entitled. In the event of (a) a dissolution or
liquidation of the Company; (b) a consolidation or merger in which the Company
is not the surviving corporation; (c) a sale of all or substantially all of the
assets of the Company; or (d) a sale of all or substantially all of the
outstanding Common Stock of the Company to one purchaser, then each outstanding
stock option shall terminate; provided, however, that in such event, each
optionee shall have the right immediately prior to such dissolution or
liquidation, consolidation or merger in which the Company is not the surviving
corporation, sale of all or substantially all of the assets of the Company, or
sale of all or substantially all of the outstanding Common Stock of the Company
to one purchaser, to exercise his stock option with respect to the full number
of shares covered thereby, without regard to any installment provision contained
in his Agreement.
In the event of a change in the Company's Common Stock which is limited to
a change of all of its authorized shares with par value into the same number of
shares with a different par value or without par value, the shares resulting
from any such change shall be deemed to be Common Stock within the meaning of
the Plan. The aforesaid adjustments shall be made by the Committee whose
determination in that respect shall be final, binding and conclusive.
Except as hereinbefore expressly provided in this Article VIII, the
------------
optionee shall have no rights by reason of any subdivision or consolidation of
shares of stock of any class or payment of any stock dividend or any other
increase or decrease in the number of shares of any class or by reason of any
dissolution or liquidation, merger or consolidation, sale of all or
substantially all assets, sale of all or substantially all of the outstanding
Common Stock of the Company, or spin-off of assets or stock of another
corporation; and any issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall not affect and
no adjustment by reason thereof shall be made with respect to the number or
price of shares of the Company's Common Stock subject to any stock option. The
grant of a stock option pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve or liquidate or sell or transfer all or any part
of its business or assets.
-5-
<PAGE>
ARTICLE IX
----------
PRIVILEGES OF STOCK OWNERSHIP
No person entitled to exercise any stock option granted under the Plan
shall have any of the rights or privileges of a shareholder of the Company in
respect of any shares of stock issuable upon exercise of such stock option until
certificates representing such shares shall have been issued and delivered.
ARTICLE X
---------
CONTINUATION OF EMPLOYMENT
Nothing contained in the Plan (or in any stock option granted pursuant to
the Plan) shall confer upon any employee any right to continue in the employ of
the Company or any subsidiary corporation or constitute any contract or
agreement of employment or interfere in any way with the right of the Company
or any subsidiary corporation to reduce any person's compensation from the rate
in existence at the time of the granting of a stock option or to terminate such
person's employment. Nothing contained herein or in any Agreement shall affect
any other contractual rights of an employee.
ARTICLE XI
----------
AMENDMENT OR DISCONTINUANCE
The Board or the Committee may at any time and from time to time amend,
rescind, suspend or terminate the Plan, as it shall deem advisable, provided,
however, that the Plan may not be amended in any manner which would cause the
Plan to no longer comply with Rule 16b-3 of the General Rules and Regulations
under the 1934 Act, or any successor rule, or the provisions of the Code
applicable to incentive stock options, as such rule or provision shall read as
of the time of amendment. In addition to Board approval of any amendment to the
Plan, if Rule 16b-3 of the General Rules and Regulations under the 1934 Act, or
any successor rule, or the provisions of the Code applicable to incentive stock
options, as such rule or provision shall read as of the time of amendment,
requires shareholder approval of such amendment, then such amendment shall be
approved by the holders of a majority of the voting stock of the Company (voting
as a single class) present, or represented, and entitled to vote at a meeting of
such shareholders duly held in accordance with the applicable laws of the state
or other jurisdiction in which the Company is incorporated.
No change may be made in, and no amendment, rescission, suspension or
termination of the Plan shall have an effect on, stock options previously
granted under the Plan which may impair or alter the rights or obligations of
the holders thereof, except that any change may be made in stock options
previously granted with the consent of the optionees.
-6-
<PAGE>
ARTICLE XII
-----------
SHAREHOLDER APPROVAL
The Plan shall be effective as of March 31, 1989, the date on which it
received the approval of the Board. However, the Plan and all stock options
granted under the Plan shall be void if the Plan is not approved before March
30, 1990 by the holders of the outstanding voting stock of the Company by the
affirmative votes of the holders of a majority of the outstanding voting stock
of the Company present, or represented, and entitled to vote at a meeting duly
held in accordance with the applicable laws of the state or other jurisdiction
in which the Company is incorporated.
-7-
<PAGE>
EXHIBIT 4.2
FORM OF
CLINICAL RESOURCE SYSTEMS, INC.
STOCK OPTION AGREEMENT
----------------------
________ SHARES
Clinical Resource Systems, Inc., a Texas corporation (the "Company")
hereby grants to ____________ (the "Optionee") an incentive stock option (the
"Option") to purchase from the Company at a price of $1.00 per share, ____
shares of the Company's authorized and unissued common stock, $0.002 par value
per share, subject, however, to the following terms and conditions:
1. STOCK OPTION PLAN. This Agreement (the "Agreement") and the option
-----------------
granted herein are made and accepted subject to the Company's Stock Option Plan
(the "Plan"), as amended to date. The terms and provisions of the Plan, and any
amendments thereto, are hereby incorporated herein and specifically made a part
hereof. In the event of any conflict between the provisions of this Agreement
and the provisions of the Plan, the provisions of the Plan will prevail.
2. TERM. The term of this Option shall be from the date hereof through the
----
date ten (10) years from the date hereof (the "Option Period"). In no event
shall any Option granted hereunder be exercisable after the expiration of the
Option Period.
3. GRANT AND VESTING OF OPTIONS. The Option granted herein shall be
----------------------------
exercisable in accordance with the following schedule:
(i) On ____________ shares will become exercisable.
(ii) On each of the next ____ anniversary dates of this Agreement, ____
shares will become exercisable.
4. RESTRICTIONS ON RIGHT TO EXERCISE OPTION.
----------------------------------------
A. If the Optionee's employment with the Company is terminated by the
Company with or without cause, or if the Optionee terminates his employment for
any reason other than death, the portion of the option granted herein which is
not exercisable at the date of such termination shall thereupon immediately
terminate and be null and void, and the portion of the option granted herein
which is then exercisable (and has not previously been exercised) shall remain
valid and exercisable for five (5) years from the date of termination; provided,
however, that in no event may an option be exercised after the Option Period.
B. Notwithstanding subparagraph A herein, if the Optionee's employment
with the Company is terminated by reason of Optionee's death, all unexercised
options granted hereunder shall terminate to the extent they were not
exercisable at the death of Optionee, but to the extent they were then
exercisable by Optionee, they shall be transferred to the Optionee's estate and
shall be entitled to be exercised by the Optionee's estate for one year from the
date of death.
<PAGE>
5. Limitation Upon Transfer. During the lifetime of Optionee, the option
------------------------
and all rights granted hereunder shall be exercisable only by Optionee, and the
option and all rights granted hereunder shall not be transferred, assigned,
pledged, or hypothecated in any way (whether by operation of law or otherwise)
except by will or by the laws of descent and distribution, and shall not be
subject to execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of such option or any
of such rights contrary to the provisions hereof, or upon the levy of any
attachment or similar process upon such option or such rights, such option and
such rights shall immediately become null and void.
6. Method of Exercise. Any exercise of this Option shall be by written
------------------
notice delivered by Optionee to the Company. The Company shall issue the shares
covered by any such notice to the Optionee as soon as practicable after receipt
of such notice. Said shares shall be delivered to Optionee against payment
therefor at the time of delivery in cash, or by the assignment to the Company of
shares of Common Stock of the Company theretofore owned by Optionee having a
value equal to such option price, or by any combination thereof. All Federal and
State stock transfer taxes, if any, on the issuance and sale of said shares by
the Company to Optionee shall be borne and paid by Optionee. Optionee shall not
be, nor have any rights or privileges of, a shareholder of the Company in
respect of any of the shares issuable upon the exercise of this Option, until
such certificates representing such shares shall have been issued and delivered.
7. Adjustments. Subject to any required action by the Company's Board of
-----------
Directors and shareholders, the number of shares provided for in the Option and
the price per share thereof, shall be proportionately adjusted for any increase
or decrease in the number of issued shares of the Company's Common Stock
resulting from a subdivision or consolidation of shares or the payment of a
stock dividend (but only on Common Stock) or any other increase or decrease in
the number of such shares effected without receipt of consideration by the
Company. Subject to any required action by the Company's Board of Directors and
shareholders, if the Company shall be the surviving corporation in any merger or
consolidation, the Option shall pertain to and apply to the securities to which
a holder of the number of shares of the Company's Common Stock subject to the
Option would have been entitled. In the event of: (a) a dissolution or
liquidation of the Company; (b) a merger or consolidation in which the Company
is not the surviving corporation; (c) a sale of all or substantially all of the
outstanding Common Stock of the Company to one purchaser, then the Option shall
terminate, provided, however, that in such event, the Optionee shall have the
right immediately prior to such dissolution or liquidation, merger or
consolidation in which the Company is not the surviving corporation, or sale of
all or substantially all of the outstanding Common Stock of the Company to one
purchaser, to exercise the Option with respect to the full number of shares
covered thereby. In the event of a change in the Company's Common Stock which is
limited to a change of all of its authorized shares with par value into the same
number of shares with a different par value or without par value, the shares
resulting from any such change shall be deemed to be Common Stock within the
meaning of the Plan. The aforesaid adjustments, if any, shall be made by the
Stock Option Committee (or such other successor committee having the same
function) or the Board of Directors of the Company whose determination in that
respect shall be final, binding and conclusive. Except as hereinbefore expressly
provided in this Paragraph 7, Optionee shall have no rights by reason of any
subdivision or consolidation of shares of stock
-2-
<PAGE>
of any class or payment of any stock dividend or any other increase or decrease
in the number of shares of any class or by reason of any dissolution or
liquidation, merger or consolidation, sale of all or substantially all assets,
sale of substantially all of the outstanding Common Stock of the Company, or
spin-off of assets or stock of another corporation; and any issue by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall not affect and no adjustment by reason thereof shall be made
with respect to the number or price of shares of the Company's Common Stock
subject to the Option. The grant of this Option shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge or
to consolidate or to dissolve or liquidate or sell or transfer all or any part
of its business or assets.
8. CONFIDENTIAL RELATIONSHIP. The terms and provisions of this Agreement
-------------------------
are confidential and neither the Company nor Optionee shall divulge any of the
contents of this Agreement to any person not authorized by the Company to have
access thereto. If Optionee shall violate the provisions of this Paragraph 8,
the Company shall have the right, at its option, to cancel and terminate this
Agreement and the underlying Option with respect to any shares of stock not
theretofore purchased by Optionee under the provisions of this Agreement.
9. SUCCESSORS OF COMPANY AND OPTIONEE. This Agreement shall inure to the
----------------------------------
benefit of and be binding upon the Company, and its successors and assigns as
well as upon Optionee and his heirs and legal representatives.
IN WITNESS WHEREOF, this Agreement has been executed effective
____________, 19____.
CLINICAL RESOURCE SYSTEMS, INC.
By:________________________________
[FORM]
___________________________________
ADDRESS OF RECORD: ___________________________________
___________________________________
___________________________________
SOCIAL SECURITY NUMBER: ______________________________
-3-
<PAGE>
EXHIBIT 4.3
THIS WARRANT AND THE UNDERLYING SHARES OF THE COMMON STOCK OF THE COMPANY TO BE
ACQUIRED UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. SUCH SECURITIES
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED
EXCEPT UPON SUCH REGISTRATION OR UPON DELIVERY TO THE COMPANY OF AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED FOR SUCH
SALE, PLEDGE, ASSIGNMENT OR TRANSFER.
THE TRANSFER OF THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF IS SUBJECT TO COMPLIANCE WITH THE CONDITIONS SPECIFIED BELOW,
AND NO TRANSFER OF THIS WARRANT OR SUCH SHARES SHALL BE VALID UNTIL SUCH
CONDITIONS HAVE BEEN FULFILLED.
CLINICAL RESOURCE SYSTEMS, INC.
COMMON STOCK PURCHASE WARRANT EXPIRING AUGUST 9, 1996
This Is to Certify That, for value received, Dr. Robert G. McConnell (the
"holder"), upon due exercise of this Warrant, is entitled to purchase from
Clinical Resource Systems, Inc., a Texas corporation (the "Company"), before the
close of business on August 9, 1996 (the "Expiration Date"), 66,670 shares of
fully paid and nonassessable common stock $.002 par value, of the Company (the
"Common Stock"), at a purchase price of $1.50 per share (the "Initial Purchase
Price").
This Warrant is hereinafter called the "Warrant" and the shares of Common
Stock issuable upon exercise hereof are hereinafter called the "Warrant Shares".
Section 1. Exercise of Warrant. The holder of this Warrant may exercise
-------------------------------
this Warrant for the purchase of the shares of Common Stock during such Exercise
Periods and for such Exercise Amounts as set forth below:
<TABLE>
<CAPTION>
Exercise Periods Exercise Amounts
---------------- ----------------
<S> <C>
8/9/91 - 8/8/92 13,334 shares not exercised
8/9/92 - 8/8/93 13,334 shares
8/9/93 - 8/8/94 13,334 shares
8/9/94 - 8/8/95 13,334 shares
8/9/95 - 8/8/96 13,334 shares
</TABLE>
The above options to exercise this Warrant shall be referred to herein as
the "Exercise Options". In order to exercise any of the Exercise Options of
this Warrant, the holder hereof shall deliver to the Company (i) a written
notice of such holder's election to exercise such Exercise Option of this
Warrant, (ii) payment of the aggregate purchase price of the shares of Common
Stock being purchased by certified or cashier's check and (iii) this Warrant;
provided that, in case such shares shall not have been registered under the
Securities Act of 1933 (the "Securities
<PAGE>
Act"), the Company may require that such holder furnish to the Company a written
statement that such holder is purchasing such shares for such holder's own
account for investment and not with a view to the distribution thereof, and that
none of such shares will be offered or sold in violation of the provisions of
the Securities Act or other applicable state securities law. Upon receipt
thereof, the Company shall, as promptly as practicable, execute or cause to be
executed and deliver to such holder a certificate or certificates representing
the aggregate number of shares of Common Stock obtained pursuant to the exercise
of the Exercise Option of this Warrant. The stock certificate or certificates so
delivered shall be in such denominations as may be specified in said notice and
shall be registered in the name of such holder or, subject to Section 3, such
other name as shall be designated in said notice.
No fractional shares of Common Stock are to be issued upon the exercise of
this Warrant, and the Company shall make no cash adjustment in respect of any
fraction of a share which would otherwise be issuable. The Company shall pay all
expenses, taxes and other charges payable in connection with the preparation,
execution and delivery of stock certificates under this Section, except that, in
case such stock certificates shall be registered in a name or names other than
the name of the holder of this Warrant, funds sufficient to pay all stock
transfer taxes which shall be payable upon the execution and delivery of such
stock certificates or certificates shall be paid by the holder hereof at the
time of delivering the notice of exercise mentioned above.
The Company represents, warrants and agrees that all shares of Common Stock
issuable upon any exercise of this Warrant shall be validly authorized and duly
issued, fully paid and nonassessable.
Prior to its exercise, this Warrant shall not entitle the holder hereof to
any of the rights of a shareholder of the Company.
Section 2. Transfer, Division and Combination. This Warrant is transferable in
----------------------------------------------
the same manner and with the same effect as in the case of a negotiable
instrument payable to a specified person. The Company, however, may treat the
registered holder hereof as the owner hereof for all purposes until this Warrant
shall have been surrendered for transfer as hereinafter provided.
Section 3. Restrictions on Transfer; Compliance with Securities Act.
--------------------------------------------------------------------
A. This Warrant and the related Warrant Shares shall not be transferable
except upon the conditions specified in this Section, which conditions are
intended, among other things to insure compliance with the provisions of the
Securities Act in respect of the transfer of this Warrant or such Warrant
Shares.
B. The holder of this Warrant by acceptance hereof agrees, prior to any
transfer or attempted transfer of this Warrant or the
2
<PAGE>
related Warrant Shares, to give written notice to the Company of such holder's
intention to effect such transfer. Each such notice (i) shall describe the
manner and circumstances of the proposed transfer in sufficient detail and shall
contain an undertaking by the person giving such notice to furnish such other
information as may be required to enable counsel to render the opinions referred
to below, and (ii) shall designate the counsel for the person giving such
notice. The person giving such notice shall submit a copy thereof to the counsel
designated in such notice and the Company shall submit a copy thereof to its
counsel, and the following provisions shall apply:
(1) If in the opinion of each such counsel the proposed transfer of
this Warrant or the Warrant Shares may be effected without registration of
this Warrant or the Warrant Shares under the Securities Act or other
applicable state securities laws, the Company shall, as promptly as
practicable, so notify the holder of this Warrant or the Warrant Shares and
such holder shall thereupon be entitled to transfer this Warrant or the
Warrant Shares in accordance with the terms of the notice delivered by such
holder to the Company.
(2) If in the opinion of either of such counsel the proposed transfer
of this Warrant or the Warrant Shares may not be effected without
registration of this Warrant or the Warrant Shares under the Securities Act
or other applicable state securities laws, the Company shall, as promptly
as practicable, so notify the holder of this Warrant or the Warrant Shares
and the Company shall not be obligated to effect such transfer of this
Warrant or the Warrant Shares, except pursuant to an offering made under a
registration statement in accordance with applicable law.
C. The holder of this Warrant or the Warrant Shares hereby covenants and
agrees with the Company as follows:
(1) The holder of this Warrant or Warrant Shares acknowledges being
informed that this Warrant or the Warrant Shares must be held by it
indefinitely unless this Warrant or the Warrant Shares are registered for
sale by such holder under the Securities Act and other applicable state
securities laws or an exemption from such registration is available. Each
such holder understands that any routine sale of the Warrant Shares made in
reliance upon Rule 144 promulgated under the Securities Act can be made
only in limited amounts after the expiration of a period of two years from
the date of receipt of the Warrant Shares and otherwise in accordance with
the terms and conditions of the Rule, and further understands that in the
event that such Rule is not applicable, compliance with Regulation A or
some other registration exemption under the Securities Act will be
required.
<PAGE>
(2) The Company may instruct its transfer agents not to transfer this
Warrant or the Warrant Shares unless such agents have been advised by the
Company or otherwise have been satisfied that such holder has complied
with the provisions above described.
(3) Such holder understands that the Company has not covenanted and is
not obligated to furnish a registration statement under the Securities Act
covering the Warrant Shares, to file a notification under Regulation A
with respect to the Warrant Shares, or to take any other action that
would make available an exemption from registration.
(4) This Warrant may not be transferred in part without the prior
consent of the Company, which consent may be granted or withheld in the
sole discretion of the Company.
Section 4. Adjustment of Purchase Price.
----------------------------------------
A. As used herein:
(1) "Purchase Price" at any time shall mean the price per share of
Common Stock of the Company at which at such time this Warrant shall be
exercisable (including the Initial Purchase Price) in accordance with the
provisions hereof.
(2) "Common Stock" shall mean stock of the Company of any class, whether
now or hereafter authorized, which has the right to participate in the
distribution of either earnings or assets of the Company without limit
as to the amount or percentage; provided, however, that the term
"Warrant Shares" shall mean only the Common Stock, $.002 par value, of
the Company authorized at the date of this Warrant and stock of any other
class into which said presently authorized Common Stock may hereafter
have been changed. In case by reason of the operation of this Section 4
this Warrant shall be exercisable for any other shares of stock or other
securities or property of the Company or of any other corporation, any
reference herein to the exercise of this Warrant shall be deemed to refer
to and include the exercise of this Warrant for such other shares of
stock or other securities or property.
B. The existence of this Warrant shall not affect in any way the right or
power of the Company or its shareholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Common Stock or the rights thereof, or the
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or
4
<PAGE>
otherwise. The Purchase Price shall be subject to adjustment from time to time
as hereinafter provided (such price or such price as last adjusted pursuant to
the terms hereof as the case may be, being herein called the "Purchase Price").
Upon each adjustment of the Purchase Price the holder of this Warrant shall
thereafter be entitled upon exercise of this Warrant, at the adjusted Purchase
Price, the number of shares of Common Stock determined by (a) multiplying the
Purchase Price in effect immediately prior to such adjustment by the number of
Shares obtainable pursuant hereto immediately prior to such adjustment and (b)
dividing the product thereof by the Purchase Price resulting from such
adjustment.
(1) If the Company shall issue or sell any shares of its Common Stock
for a consideration per share less than the Purchase Price in effect
immediately prior to the time of such issue or sale, then, forthwith upon
such issue or sale, the Purchase Price shall be reduced to the price,
calculated to the nearest cent, determined by dividing (i) an amount equal
to the sum of (a) the number of shares of Common Stock outstanding
immediately prior to such issue or sale multiplied by the then existing
Purchase Price and (b) the consideration, if any, received by the Company
upon such issue or sale by (ii) the total number of shares of Common Stock
outstanding immediately after such issue or sale.
(2) If the Company shall effect a subdivision or consolidation of
shares or other capital readjustment, the payment of a stock dividend, or
other increase or reduction of the number of shares of the Common Stock
outstanding without receiving compensation therefor in money, services or
property, then (a) the Purchase Price and number of shares of stock subject
to this Warrant shall be appropriately adjusted in such a manner as to
entitle the holder to receive upon exercise of this Warrant, for the same
consideration, the same total number of shares as it would have received
had it exercised this Warrant in full immediately prior to the event
requiring the adjustment; and (b) the number of shares then reserved for
issuance shall be adjusted by substituting for the total number and class
of shares of stock then reserved that number of shares of stock that would
have been received by the owner of an equal number of outstanding shares of
Common Stock as the result of the event requiring the adjustment.
(3) After a merger of one or more corporations into the Company, or
after a consolidation of the Company and one or more corporations in which
the Company shall be the surviving corporation, the holder of this Warrant
shall, at no additional cost, be entitled upon exercise of this Warrant to
receive in lieu of the number of shares as to which this Warrant shall then
be so exercisable, the number of shares of stock or other securities or
property to which such holder would have been entitled pursuant to the
terms of the
5
<PAGE>
agreement of merger or consolidation if, immediately prior to such merger
or consolidation, such holder had been the holder of record of a number of
shares of Common Stock equal to the number and class of shares as to
which this Warrant shall be so exercised.
(4) If the Company is merged into or consolidated with another
corporation under circumstances in which the Company is not the surviving
corporation, or if the Company is liquidated, or sells or otherwise
disposes of substantially all its assets to another corporation while
this Warrant remains outstanding after the effective date of such merger,
consolidation or sale, as the case may be, the holder of this Warrant
shall be entitled, upon exercise, to receive, in lieu of shares of Common
Stock, shares of such stock or other securities or property as the
holders of shares of Common Stock received pursuant to the terms of the
merger, consolidation or sale.
Section 5. Special Agreements of the Company.
---------------------------------------------
A. The Company covenants and agrees that it will reserve and set apart and
have at all times a number of authorized but unissued shares of Common Stock
deliverable upon the exercise of this Warrant or any other rights or privileges
provided for herein sufficient to enable it at any time to fulfill all its
obligations thereunder; if at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the exercise of this
Warrant at the Purchase Price then in effect, the Company will take such
corporation as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes.
B. Whenever the number of shares purchasable under this Warrant or the
Purchase Price shall be adjusted as required by the provisions of Section 4
hereof, the Company shall forthwith mail a notice setting forth the adjusted
Purchase Price and the adjusted number of Warrant Shares for which this Warrant
is exercisable to the registered holder of this Warrant at his last address as
it shall appear on the registration books, but failure to give or receive such
notice, or any defects therein, or in the mailing thereof, shall not affect such
adjustment in Purchase Price.
C. In case the Company proposes
(1) to pay any stock dividend upon the Common Stock or make any
distribution (other than ordinary cash dividends payable out of earnings)
or offer any subscription or other rights to the holders of Common Stock,
or
(2) to effect any capital reorganization or reclassification of capital
stock of the Company, or
6
<PAGE>
(3) to effect the consolidation, merger, sale of all or substantially
all of the assets, liquidation, dissolution or winding up of the Company,
then the Company shall cause notice of any such intended action to be given
to the holder of this Warrant not less than 15 nor more than 30 days prior to
the date on which the transfer books of the Company shall close or a record be
taken for such dividend or distribution, or the date when such capital
reorganization, reclassification, consolidation, merger, sale, liquidation,
dissolution or winding up shall be effected, as the case may be.
Section 6. Notices. Any notice or other document required or permitted to
-------------------
be given or delivered to the holder of this Warrant and the holders of the
Warrant Shares shall be sent by certified or registered mail to each such holder
at the address shown on such holder's Warrant or such other address as shall
have been furnished to the Company in writing by such holder. Any notice or
other document required or permitted to be given or delivered to the Company
shall be sent by certified or registered mail to the principal office of the
Company at 1111 West 6th Street, Suite 230, Austin, Texas 78703, or such other
address as shall have been furnished to the holders of this Warrant and the
holders of Warrant Shares by the Company.
Section 7. Limitation of Liability. No provision hereof, in the absence of
-----------------------------------
affirmative action by the holder to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of the holder hereof, shall give
rise to any liability of such holder for the Purchase Price or as a shareholder
of the Company, whether such liability is asserted by the Company or by
creditors of the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in its
name by an authorized officer and accepted by the holder.
CLINICAL RESOURCE SYSTEMS, INC.
By: /s/ CHARLES B. OWEN, M.D.
--------------------------
Charles B. Owen, M.D.
President
DATED: August 9, 1991
ACCEPTED on --------------
/s/ DR. ROBERT G. McCONNELL
- ---------------------------
Dr. Robert G. McConnell
7
<PAGE>
ASSIGNMENT
TO BE EXECUTED BY THE REGISTERED HOLDER
IF HE DESIRES TO TRANSFER THE WARRANT
FOR VALUE RECEIVED, __________________ hereby sells, assigns and
transfers unto ________________________ the right to purchase ________ shares of
Common Stock, evidenced by the within Warrant, and does hereby irrevocably
constitute and appoint __________________ Attorney to transfer the said Warrant
on the books of the Company, with full power of substitution.
___________________________________
Signature
Dated: _____________________________
In the presence of: ___________________________________
____________________________________ ___________________________________
Address
The Company hereby consents to the above assignment in part of ________
-------
shares of Common Stock.
CLINICAL RESOURCE SYSTEMS, INC.
By:____________________________________
Name:__________________________________
Title:_________________________________
NOTICE
The signature of the foregoing Assignment must correspond to the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE>
NOTICE OF EXERCISE
TO BE EXECUTED BY THE REGISTERED HOLDER
IF HE DESIRES TO EXERCISE THE WARRANT
The undersigned hereby exercises the right to purchase ________________
shares of stock covered by this Warrant according to the conditions thereof and
herewith makes full payment of the Purchase Price of $________________ for such
shares. Please issue a certificate representing said shares of Common Stock in
the name of the undersigned.
___________________________________
Signature
Dated: _____________________________ ___________________________________
___________________________________
Address
<PAGE>
EXHIBIT 4.4
AMONG
BUSINESS RECORDS CORPORATION
HOLDING COMPANY
(A DELAWARE CORPORATION)
BRC MERGER CORP.
(A TEXAS CORPORATION)
CLINICAL RESOURCE SYSTEMS, INC.
(A TEXAS CORPORATION)
AND CERTAIN INDIVIDUALS
<PAGE>
This Agreement and Plan of Merger (this "Agreement"), dated as of July ___,
1995, is made by and between BUSINESS RECORDS CORPORATION HOLDING COMPANY, a
Delaware corporation ("BRC"), BRC MERGER CORP., a Texas corporation and indirect
wholly owned subsidiary of BRC ("MC"), CLINICAL RESOURCE SYSTEMS, INC., a Texas
corporation (the "Company") (MC and the Company being collectively referred to
as the "Constituent Corporations"), Charles B. Owen, M.D., Robert G. McConnell,
M.D., Don Pippin, Jr., Christina G. Novelli and Andrew Galewsky (the
"Individuals") and Charles B. Owen, M.D., Elizabeth Owen and Robert G.
McConnell, M.D. (the "Noteholders").
In consideration of the mutual covenants and agreements contained herein,
the parties hereto covenant and agree as follows:
ARTICLE I
THE MERGER
1.1 MERGER. Upon the terms and subject to the conditions hereof, and in
accordance with the provisions of the Texas Business Corporation Act (the
"TBCA"), at the Effective Time (as hereinafter defined), MC shall be merged with
and into the Company (the "Merger"), and the Company shall be the surviving
corporation (the Company, in its capacity as the surviving corporation, is
sometimes referred to herein as the "Surviving Corporation") and, as such, shall
continue to be governed by the laws of the State of Texas. The terms and
conditions of the Merger shall be governed by this Agreement and the form of
Agreement of Merger attached hereto as Exhibit "A" (the "Agreement of Merger").
-----------
The Constituent Corporations, subject to the approval of their respective
shareholders in accordance with the provisions of this Agreement, adopt this
Agreement, together with the foregoing form of Agreement of Merger, as a "plan
of reorganization" within the meaning of Section 368 of the Internal Revenue
Code of 1986, as amended (the "Code").
1.2 CONTINUATION OF CORPORATE EXISTENCE. Except as may otherwise be set
forth herein, the corporate existence and identity of the Company, with all its
purposes, powers, franchises, privileges, rights and immunities, shall continue
unaffected and unimpaired by the Merger, and the corporate existence and
identity of MC, with all its purposes, powers, franchises, privileges, rights
and immunities, at the Effective Date shall be merged with and into that of the
Company, and the Surviving Corporation shall be vested fully therewith and the
separate corporate existence and identity of MC shall thereafter cease except to
the extent continued by statute.
1.3 EFFECTIVE TIME, EFFECTIVE DATE. The Merger shall become effective
(the "Effective Time") upon the issuance of a Certificate of Merger relating to
the Merger by the Secretary of State of the State of Texas.
1.4 CORPORATE GOVERNANCE.
(a) The Articles of Incorporation of the Company, as in effect at the
Effective Time, shall continue in full force and effect and shall
constitute the Articles of Incorporation of the Surviving Corporation.
(b) The Bylaws of the Company, at the Effective Time, shall continue
in full force and effect and shall constitute the Bylaws of the Surviving
Corporation.
(c) The person or persons who are the directors of MC immediately
prior to the Effective Time, shall after the Effective Time serve as the
directors of the Surviving Corporation until their successors have been
duly elected and qualified in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation. The persons who are
officers of MC immediately prior to the Effective Time shall, after the
Effective Time, serve as the officers of the Surviving Corporation until
their successors have been duly elected and qualified in accordance with
the Bylaws of the Surviving Corporation. In addition, certain officers of
the Company designated by BRC prior to the Effective Time
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shall be officers of the Surviving Corporation following the Effective Time
until their successors have been duly elected and qualified.
1.5 RIGHTS AND LIABILITIES OF THE SURVIVING CORPORATION. The Surviving
Corporation shall have the following rights and obligations:
(a) The Surviving Corporation shall have all the rights, privileges,
immunities and powers and shall be subject to all the duties and
liabilities of a corporation organized under the laws of the State of
Texas.
(b) The Surviving Corporation shall possess all of the rights,
privileges, immunities and franchises, of either a public or private
nature, of the Company and MC and all property, real, personal and mixed,
and all debts due on whatever account, including subscription to shares,
and all other intangible property rights, contract rights and causes of
action, and every other interest of or belonging or due to the Company and
MC shall be taken and deemed to be transferred or invested in the Surviving
Corporation without further act or deed.
(c) At the Effective Time, the Surviving Corporation shall thereafter
be responsible and liable for all liabilities and obligations of the
Company and MC, and any claim existing or action or proceeding pending by
or against the Company or MC may be prosecuted as if the Merger had not
occurred, or the Surviving Corporation may be substituted in its place.
Neither the rights of creditors nor any liens upon the property of the
Company or MC shall be impaired by the Merger.
1.6 CLOSING. Consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at such time as the Company and BRC
shall mutually agree ("Closing Date"). Unless otherwise agreed by the Company
and BRC, the Closing shall occur on the day (the "Effective Date") during which
the Effective Time shall occur. Closing shall occur at the offices of Arter,
Hadden, Johnson & Bromberg, 1717 Main Street, Suite 4100, Dallas, Texas. Each
party will cause to be prepared, executed and delivered all appropriate and
customary documents as any party or its counsel may reasonably request for the
purpose of consummating the transactions contemplated by this Agreement. All
actions taken at the Closing shall be deemed to have been taken simultaneously
at the time the last of any such actions is taken or completed.
ARTICLE II
CONVERSION OF SHARES; TREATMENT OF OPTIONS
2.1 CONVERSION OF SHARES.
(a) The shares of Common Stock of BRC (the "BRC Common Stock") and the
shares of Common Stock of MC that are outstanding immediately prior to
Effective Time shall remain outstanding after the Effective Time. Each
share of Common Stock of MC shall be converted into one share of the Common
Stock of the Surviving Corporation.
(b) At the Effective Time, except as provided in Sections 2.3 and 8.4
hereof, each holder of issued and outstanding shares of Common Stock,
$0.002 par value per share, of the Company (the "Company Common Stock")
shall be entitled to receive in exchange therefor, that number of shares of
BRC Common Stock equal to the number of shares of Company Common Stock
owned by such holder multiplied by the Exchange Rate. Each share of
Company Common Stock held in the treasury of the
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Company, if any, shall be cancelled as of the Effective Time and no portion
of the Merger Consideration (as hereinafter defined) shall be payable with
respect thereto. The Exchange Rate shall be calculated in accordance with
the following formula:
Exchange Rate = (4,300,000-NP+EP)/MP
--------------------
(OS + OO)
where:
EP = The aggregate exercise price for all Company Options (as defined
below) having an exercise or conversion price equal to or less than
the product of MP (as defined below) multiplied by the Exchange Rate.
MP = 35.00
NP = The aggregate of all outstanding principal and accrued but unpaid
interest on the Shareholder Notes (as defined in Section 5.13) as
determined in accordance with Section 5.13.
OS = The aggregate number of issued and outstanding shares, excluding
treasury shares, of Company Common Stock at the Effective Time. OS
shall not include shares of BRC Common Stock issued pursuant to
Section 5.13 hereof.
OO = The aggregate number of shares of Company Common Stock which could be
received by all of the holders (the "Optionholders") of the Company's
rights and obligations under all stock options granted by the Company,
or any other security, instrument or agreement exercisable for or
convertible into Company Common Stock, which are outstanding and
unexercised at the Effective Time (the "Company Options"), to the
extent that the exercise or conversion price thereof is less than or
equal to the product of MP multiplied by the Exchange Rate, assuming,
for this purpose only, that all such Company Options are fully vested
and exercisable on such date.
(c) At the Effective Time and subject to the provisions of this
Section 2.1(c), BRC shall assume all of the Company's rights and
obligations under the Company Options to the Optionholders which were
outstanding and unexercised immediately prior to the Effective Time. Such
Company Options shall be assumed in accordance with their terms and
conditions as in effect at the Effective Time, except that (i) each Company
Option shall thereafter evidence the right to purchase that number of whole
shares of BRC Common Stock (rounded down) equal to the number of Company
Options evidenced thereby multiplied by the Exchange Rate with such options
having a new per share option exercise price equal to the existing option
exercise price divided by the Exchange Rate and (ii) each reference in any
Option Agreement between the Optionholder and the Company, which,
immediately prior to the Effective Time, represented the right to receive
Company Common Stock upon exercise ("Company Option Agreements") to the
Company and Company Common Stock shall be deemed to be references to BRC
and BRC Common Stock, respectively, and such Company Option Agreement shall
be amended accordingly at the Closing Date. Notwithstanding the foregoing,
BRC shall be entitled to substitute for any agreement constituting a
Company Option (or that part of such agreement) an option agreement under
an existing BRC option plan having substantially similar terms as the
Company Option in question, as modified hereby.
(d) The Exchange Rate and the calculations described herein shall be
subject to appropriate adjustment in the event of a stock split, stock
dividend or recapitalization subsequent to the date of this Agreement
applicable to shares of Company Common Stock or BRC Common Stock held of
record on or before the Effective Date. As used in this Agreement, "Merger
Consideration" shall be equal to the gross number of shares of BRC Common
Stock exchanged by BRC for the Company Common Stock and Company Options;
which number shall equal (4,300,000-NP+EP)/MP.
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<PAGE>
where:
EP = As defined in Section 2.1(b) above.
MP = As defined in Section 2.1(b) above.
NP= As defined in Section 2.1(b) above.
2.2 FRACTIONAL SHARES. No scrip or fractional shares of BRC Common Stock
shall be issued in the Merger. All fractional shares of BRC Common Stock to
which a stockholder of the Company would otherwise be entitled at the Effective
Time shall be aggregated. If a fractional share results from such aggregation,
such stockholder of the Company shall be entitled, after the later of (a) the
Effective Time or (b) the surrender of such stockholder's stock certificates
which represent shares of Company Common Stock, to receive from BRC an amount in
cash, in lieu of such fractional share, based on MP (as defined in 2.1(b)
above).
2.3 DISSENTING SHARES.
(a) To the extent that appraisal rights are available under the TBCA,
shares of Company Common Stock that are issued and outstanding immediately
prior to the Effective Time and that have not been voted for adoption of
the Merger and with respect of which appraisal rights have been properly
demanded in accordance with the applicable provisions of the TBCA ("Company
Dissenting Shares") shall not be converted into the right to receive the
consideration provided for in Sections 2.1 and 2.2 at or after the
Effective Time unless and until the holder of such shares withdraws his
demand for such appraisal (in accordance with the applicable provisions of
the TBCA) or becomes ineligible for such appraisal. If a holder of Company
Dissenting Shares withdraws his demand for such appraisal (in accordance
with the applicable provisions of the TBCA) or becomes ineligible for such
appraisal, then, as of the Effective Time or the occurrence of such event,
whichever later occurs, such holder's Company Dissenting Shares shall cease
to be Company Dissenting Shares and shall be converted into and represent
the right to receive the consideration provided for in Sections 2.1 and
2.2.
(b) After the Effective Time, the Company, as the Surviving
Corporation, shall be the entity obligated to pay the fair value of any
shares held by any stockholder of the Company who has complied with the
requirements of the TBCA for recovery of the fair value of his or her
shares.
2.4 EXCHANGE OF SHARES.
(a) Promptly after the Effective Date, BRC shall cause its transfer
agent (the "Agent") to mail to each record holder of certificates
representing Company Common Stock (the "Certificates"), a letter of
transmittal and instructions for use in effecting the surrender of the
Certificates and any payment for fractional shares. Upon surrender to the
Agent of a Certificate, together with such letter of transmittal duly
executed, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate or certificates and cash, if applicable,
representing his, her or its percentage of the Merger Consideration as
provided in this Article II and such surrendered Certificate shall then be
cancelled. Any certificate representing shares of BRC Common Stock issued
pursuant hereto shall bear such restrictive legend or legends as BRC shall
deem reasonably necessary to assure compliance with applicable securities
laws. If issuance is to be made to a person other than the person in whose
name the Certificate surrendered is registered, it shall be a condition of
issuance that the Certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person requesting such
issuance shall pay transfer or other taxes required by reason of the
payment to a person other than the registered holder of the Certificate or
Certificates surrendered or established to the satisfaction of BRC that
such tax has been paid or is not applicable. Until surrendered in
accordance with the provisions of this Section 2.4, each Certificate shall
represent for all purposes only the right to receive his, her or its
percentage of the Merger Consideration.
5
<PAGE>
(b) At and after the Effective Time there shall be no transfers of
shares of Company Common Stock which were outstanding immediately prior to
the Effective Time on the stock transfer books of the Company. If, after
the Effective Time, Certificates are presented to BRC, they shall be
cancelled and exchanged for that part of the Merger Consideration provided
in this Article II.
(c) The Company shall use its best efforts following the Merger to
cause the Optionholders to exchange the Company Option Agreements for new
agreements with BRC evidencing the new options to acquire BRC Common Stock.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to BRC as follows:
3.1 ORGANIZATION; QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas. The Company has full corporate power and authority to own and lease all
of the properties and assets it now owns and leases and to carry on its business
as now being conducted. The Company is duly qualified as a foreign corporation
and is in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification necessary, except where the failure to so qualify
would not have a material adverse effect on the financial condition or results
of operations (with respect to the Company, a "Material Adverse Effect") of the
Company.
3.2 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has full power and
authority (corporate and otherwise) to execute, deliver and perform this
Agreement and, subject to the approval of the Merger by the stockholders of the
Company, to consummate the transactions contemplated hereby. The execution and
delivery by the Company of this Agreement and the other documents contemplated
hereby, and the consummation of the transactions contemplated hereby, have been
or will be duly and validly authorized by the Board of Directors of the Company
and no other corporate proceedings on the part of the Company are necessary with
respect thereto. This Agreement has been duly and validly executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company, enforceable against it in accordance with its terms.
3.3 CAPITALIZATION. The authorized capital stock of the Company consists
of 510,000,000 shares of Company Common Stock, of which, as of the date hereof,
2,983,892 shares of Company Common Stock are validly issued and outstanding,
fully paid and nonassessable. There are 10,000 shares of Company Common Stock
held in the treasury of the Company. Schedule 3.3 sets forth an accurate and
------------
complete list of the stockholders of the Company and the number of shares of
Company Common Stock owned thereby. No shares of capital stock of the Company
have been issued or disposed of in violation of any preemptive rights of any
stockholders of the Company or any other person. Except for options and
warrants to purchase 380,668 shares of Company Common Stock as more particularly
described on Schedule 3.3 hereto, there is no outstanding subscription,
------------
contract, convertible or exchangeable security, option, warrant, call or other
right obligating the Company to issue, sell, exchange or otherwise dispose of,
or to purchase, redeem or otherwise acquire any ownership interest of the
Company or any securities convertible into any ownership interest of the
Company. There are no voting trusts, stockholders agreements or other voting
arrangements by or between the stockholders of the Company, whether or not the
Company is a party thereto. Except as set forth on Schedule 3.3 hereto, no
------------
distribution, payment or dividend of any kind has been declared, paid or
distributed by the Company on or with respect to any of its capital stock at any
time.
3.4 SUBSIDIARIES; AFFILIATES. The Company does not own any equity, profit
sharing, participation or other interest in any entity. The Company does not
have any loans outstanding to any of its affiliates or any entity controlled by
or under common control with any of its affiliates.
6
<PAGE>
3.5 GOVERNMENTAL CONSENTS AND APPROVALS. The execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby requires no consent, approval, order or
authorization of, action by or in respect of, or registration or filing with,
any governmental body court, agency, or authority.
3.6 NO VIOLATIONS. The execution, delivery and performance of this
Agreement and the Agreement of Merger by the Company, the consummation by the
Company of the transactions contemplated hereby or compliance by the Company
with any of the provisions hereof does not and will not (a) conflict with or
result in any material breach or violation of any provision of the Articles of
Incorporation or Bylaws of the Company, (b) result in a default, or give rise to
any right of termination, cancellation or acceleration or loss of any material
benefit, or require the consent, approval, waiver or other action by any person,
entity or authority under any of the provisions of any note, bond, mortgage,
indenture, license, trust, agreement, lease or other instrument or obligation to
which the Company is a party or by which the Company may be bound, (c) result in
the creation or imposition of any material claim, lien, pledge, security
interest, obligation, restriction or other encumbrance on any of the property of
the Company, or (d) violate any judgment, order, writ, injunction, decree,
statute, rule or regulation applicable to the Company.
3.7 INFORMATION STATEMENT. On the date of mailing the Information
Statement (as defined in Section 5.8 below) and on the meeting date for the
Company's shareholders, the information relating to the Company and its
business, properties, management, stockholders or securities contained in the
Information Statement will not contain any untrue statement of material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
3.8 FINANCIAL STATEMENTS, ETC. The Company has furnished to BRC the
Company's financial statements for the preceding 39 months including balance
sheets as of December 31, 1992, 1993 and 1994 and for the quarter ended March
31, 1995, together with related statements of income and supporting schedules
and ledgers for such periods (collectively, the "Company Financial Statements").
The Company Financial Statements have been prepared from, and are in accordance
with, the books and records of the Company and fairly present, in all material
respects, the financial position of the Company as of the date thereof and the
results of operations and changes in financial position therefor for the period
then ended, in each case in conformity with generally accepted accounting
principles, consistently applied. There has been no change in accounting
principles applicable to, or methods of accounting utilized by, the Company,
except as noted in the Company Financial Statements. The books and records of
the Company have been and are being maintained in accordance with good business
practice, reflect only valid transactions, are complete and correct in all
material respects, and fairly present in all material respects a basis for the
financial position and results of operation of the Company set forth in the
Company Financial Statements.
3.9 POOLING. To the Company's knowledge, after due inquiry, the Company
is not aware of any facts or circumstances related to the Company which would
negate the availability of pooling-of-interests accounting treatment (as
determined in accordance with Accounting Principles Board Opinion No. 16 and the
rules and regulations of the Securities and Exchange Commission ("SEC")) for the
transactions contemplated by this Agreement.
3.10 LIABILITIES. Schedule 3.10 hereto sets forth a complete list of the
-------------
liabilities and obligations of the Company of any nature, whether absolute,
accrued, contingent or otherwise which individually exceed $5,000, or in the
aggregate exceed $15,000. Each of such liabilities or obligations is fully
reflected, accrued or reserved against, to the extent required by generally
accepted accounting principles, on the March 31, 1995 balance sheet of the
Company that has been given to BRC. Other than as set forth on Schedule 3.10,
the Company is not liable upon or with respect to, or obligated in any other way
to provide funds in respect of or to guarantee or assume in any manner, any
debt, obligation or liability of any person, corporation or other entity which
individually exceed $5,000 or in the aggregate exceed $15,000, and the Company,
after due inquiry, knows of no basis for the assertion of any such claims,
liabilities or obligations.
7
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3.11 TITLE TO AND CONDITION OF ASSETS AND PROPERTY.
(a) Except as set forth on Schedule 3.11 hereto and except for
-------------
dispositions of assets in the ordinary course of business, the Company has
good and marketable title to or valid leasehold interest in the assets
reflected on the Company's balance sheet or acquired after the date thereof
or used in its business.
(b) No hazardous or toxic material (as hereinafter defined) exists in
any structure located on, or exists on or under the surface of, any real
property owned, leased or otherwise used by the Company, successor to the
Company or affiliate to the Company in its business (the "Company Real
Property"). The Company is not and has never been in material violation of
any environmental law. For purposes of this section, "hazardous or toxic
material" shall mean waste, substance, materials, smoke, gas or particulate
matter designated as hazardous, toxic or dangerous under any environmental
law. For purposes of this section, "environmental law" shall include the
Comprehensive Environmental Response Compensation and Liability Act, the
Clean Air Act, the Clean Water Act and any other applicable federal, state
or local environmental, health or safety law, rule or regulation relating
to or imposing liability or standards concerning or in connection with
hazardous, toxic or dangerous waste, substance, materials, smoke, gas or
particulate matter. There are not any environmental assessments or audits
of the Company Real Property.
3.12 INVESTIGATION OR LITIGATION. Except as disclosed on Schedule 3.12
-------------
hereto, (i) no material investigation or review by any governmental entity with
respect to the Company, including without limitation, investigations or reviews
relating to hazardous substances, pollution or the environment, discrimination
in employment, trade practices, and competition in pricing is pending or, to the
best of the Company's knowledge, threatened, nor has any governmental entity
indicated in writing to the Company an intention to conduct any such
investigation or review, and (ii) there is no action, suit or proceeding
pending, or, to the best of the Company's knowledge, threatened against the
Company at law or in equity, or before any federal, state, municipal or other
court or authority of competent jurisdiction.
3.13 ABSENCE OF CHANGES. Since March 31, 1995, the business of the Company
has been operated in the ordinary course consistent with past practice, other
than changes that neither have had, nor reasonably may be expected to have, a
Material Adverse Effect on the business of the Company.
3.14 PENSION MATTERS
(a) Schedule 3.14 contains a list of all employee benefit plans
-------------
relating to employee benefits with respect to which the Company has or may
incur any future or contingent, obligations, including without limitation,
all plans, agreements or arrangements relating to deferred compensation,
pensions, profit sharing, retirement income or other benefits, stock
purchase and stock option plans, bonuses, severance agreements, health
benefits, insurance benefits and all other employee benefits or fringe
benefits (collectively, the "Plans").
(b) Each Plan has been administered and operated in all material
respects in accordance with its terms and applicable law. Except as listed
on Schedule 3.14 hereto, none of the Plans require "qualification" within
-------------
the meaning of Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). No liability under ERISA or similar statute has been
incurred or, based upon existing facts, may be expected to be incurred with
respect to any Plan, that would, individually or in the aggregate, be
material in amount.
(c) The Company has not engaged in any transactions in connection with
which it, directly or indirectly, will be subject to either a civil penalty
assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section
4975 of the Code. No liability of the Pension Benefit Guaranty Corporation
(the
8
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"PBGC") has been or is expected to be incurred with respect to any Plan by
the Company. The Company has not instituted proceedings to terminate any
Plan. No "reportable event" within the meaning of Section 4043(b) of ERISA
has occurred with respect to any Plan. There exists no condition or set of
circumstances that presents a material risk of termination or partial
termination of any Plan which would result in liability on the part of the
Company to the PBGC.
(d) Full payment has been made or accrued (in a manner consistent with
past practice) of all amounts that the Company was or will be required
under the terms of any Plan to have paid as contributions to such Plan on
or before the Closing Date, and no accumulated funding deficiencies (as
defined in Section 302 of ERISA and Section 4012 of the Code), whether or
not waived, exists with respect to any such Plan and any contributions or
distributions of securities related to calendar year 1994 shall have been
consummated.
(e) Other than claims in the ordinary course for benefits under the
Plans, there are no actions, suits, claims or proceedings, pending or
threatened, nor does there exist any basis therefor, that would result in
any liability with respect to any Plan or trust thereof to the Company or
any Plan or trust thereof, which would, individually or in the aggregate,
be material in amount.
(f) No Plan is subject to Title IV of ERISA or is a multi-employment
plan within the meaning of Section 3(37) of ERISA.
(g) No termination or partial termination of any Plan in accordance
with its terms will result in any liability to the Company.
3.15 EMPLOYMENT AND LABOR MATTERS. Except as set forth on Schedule 3.15,
-------------
the Company does not have any obligations, contingent or otherwise, under any
employment, commission, royalty or consulting agreement. The Company is in
substantial compliance with all federal, state or other applicable laws,
domestic or foreign, regarding employment and employment practices, terms and
conditions of employment and wages and hours, and has not and is not engaged in
any unfair labor practice. No employee of the Company is in violation of any
term of any employment contract, or any other contract or agreement with or any
restrictive covenant or any other common law obligation to a former employer
relating to the right of any such employee to be employed by the Company because
of the nature of the business conducted or to be conducted by the Company or to
the use of trade secrets or proprietary information of others, and the
employment of the Company's employees does not subject the Company to liability
in connection with such covenants or agreements. Except as disclosed on
Schedule 3.15, there are no pending petitions for recognition of a labor union
- -------------
or association as the bargaining agent for any employees of the Company and, to
the best knowledge of the Company, there are not presently any material
organizing efforts by any union or other groups seeking to represent any
presently unorganized employees of the Company as their bargaining agent. There
are no labor strikes, work stoppages or other employment troubles, other than
routine grievance matters, now pending or, to the best knowledge of the Company,
threatened against the Company that would have a Material Adverse Effect.
3.16 TAX MATTERS. The Company has duly filed all federal, state, county,
local and foreign income, excise, sales, customs, property, withholding, social
security and other tax and information returns and reports reasonably believed
to be required to have been filed by it to the date hereof, or, in the
alternative, has obtained extensions for filing in accordance with established
procedures, and has paid or made provision for payment of all taxes (including
interest and penalties) shown as due on the returns or reports, and with respect
to all periods ending prior to January 1, 1995, except where failure to file
would not have a Material Adverse Effect. The Company has no material liability
for any taxes of any nature whatsoever other than as shown on the Company's
Financial Statements. The federal income tax returns of the Company have been
audited or barred by applicable statute of limitations for all fiscal years to
and including 1987, and all material deficiencies asserted as a result of such
audits have been paid, fully settled or adequately provided for in the Company's
Financial Statements.
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3.17 PROPRIETARY RIGHTS. The Company owns or validly licenses the right to
use all technology, proprietary information, know-how, ideas (patented or
unpatented), data, licenses, customer lists, processes, formulas, trade secrets,
telephone numbers, computer software, computer programs, designs, inventions,
trademarks, trademark registrations and applications therefor, registered and
common law copyrights, and registered copyright applications, trade names
(whether or not registered or registrable), service marks, service mark
registrations and applications therefor (collectively, the "Proprietary Rights")
necessary to conduct the business of the Company as the business is presently
being conducted. Schedule 3.17 sets forth a complete and correct list
-------------
(including, where applicable, registration numbers and dates of filing, renewal
and termination) of all Proprietary Rights. No consent or approval of any third
party will be required for the use of the Proprietary Rights by the Company
after the consummation of the transactions contemplated hereby and the
transactions hereunder will not result in any breach of any agreement relating
to any Proprietary Rights. No claim or opposition has been asserted by any
person or entity to the ownership of or the Company's right to use any of the
Proprietary Rights or challenging or questioning the validity or effect of any
license or agreement relating thereto, and there is no valid basis for any such
claim or assertion. The Company has ownership of, or valid licenses to use all
of, the Proprietary Rights. Each of the Proprietary Rights is valid and
subsisting, has not been cancelled, abandoned or otherwise terminated and, if
applicable, has been duly asserted, registered and filed. The Proprietary
Rights owned by the Company are owned free and clear of all liens. The Company
has taken all reasonable steps to establish and preserve its ownership of all
Proprietary Rights. The Company's use of the Proprietary Rights will not, and
the conduct of the business as presently conducted does not, infringe on or
violate the rights of any other person or entity. No proceedings have been
instituted, are pending or are threatened that challenge or oppose the rights of
the Company with respect to any of the Proprietary Rights. The Company has not
received any notice or inquiry from any person or entity of any alleged
infringement by the Company. The Company has not given and is not bound by any
agreement of indemnification in connection with any Proprietary Rights or
product or service sold or performed by the Company. Set forth on Schedule 3.17
-------------
is a list of all confidentiality agreements and all other contracts, royalty
agreements, licenses or other understandings or arrangements entered into
relating to the Proprietary Rights and all such contracts are in full force and
effect.
3.18 NO BROKERS. The Company has not employed any broker, agent or finder
or incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the transactions contemplated hereby.
3.19 RECORDS. The respective minute books, books of account, stock record
books and other records of the Company, all of which have been or will be made
available to BRC, contain accurate and complete records of all corporate actions
of the stockholders and Boards of Directors (and committees thereof) during the
periods of time in which such minute books were maintained.
3.20 LEGAL COMPLIANCE. The Company has complied in all material respects
with all applicable laws, rules, regulations and ordinances, government or
governmental agency having jurisdiction over it, its property or businesses
including those relating to trademarks, trade names or copyrights, any zoning,
occupational safety or environmental protection laws, any antitrust, trade
regulation and trade practices laws or any laws relating the employment of
labor, other than such which, if not complied with, would not have a Material
Adverse Effect. The Company is not in violation of, or in default under, any
terms or provisions of any mortgage, indenture, security agreement, lease,
contract, agreement, instrument, or, arbitration, or judgment or decree other
than such violations or defaults which would not have a Material Adverse Effect.
3.21 INSURANCE. All the insurance policies maintained by the Company are
in full force and effect, all insurance premiums have been timely paid to date,
and no such policy can be cancelled as a result of the Company's execution and
delivery of this Agreement prior to Closing. The Company has not received a
notification from any such insurance company indicating that it intends to
cancel any policy of insurance currently in effect.
3.22 ACCOUNTS PAYABLE. Schedule 3.22 contains a complete and accurate list
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of all the Company's aged accounts payable at March 31, 1995, showing the name
of each account creditor and the amount due to each by invoice number and date.
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3.23 PRODUCT AND SERVICE WARRANTIES. There is no claim against or
liability of the Company on account of product or service warranties or with
respect to the manufacture, sale or lease of products or performance of
services, and there is no basis for any such claim on account of products
heretofore manufactured, sold or leased or services performed.
3.24 CONTRACTS; ORAL COMMITMENTS; DEFAULTS. The Company has provided BRC
with true and correct copies of all contracts of the Company (summaries of all
oral commitments) that are material to the business of the Company or that would
otherwise be required to be filed as a "material contract" pursuant to Item
601(b)(10) of Regulation S-K if the Company were a public company. There exists
no material breach or default under any of such contracts that would have a
Material Adverse Effect on the Company.
3.25 DISCLOSURE.
(a) The Company has delivered or made available to BRC complete and
accurate copies of all documents listed on the schedules delivered as a
part hereof and all other information requested for deciding whether to
consummate the transactions hereby. No representation or warranty of the
Company contained in this Agreement or statement in the schedules hereto
contains any untrue statement. No representation or warranty of the
Company contained in this Agreement or statement in the schedules hereto
omits to state a material fact necessary in order to make the statements
herein or therein, in light of the circumstances under which they were
made, not misleading.
(b) There is no fact known to the Company which has specific
application to BRC and which could have a Material Adverse Effect but which
has not been set forth in this Agreement or the schedules hereto.
(c) The disclosures in the schedules hereto shall relate only to the
representations and warranties in the Section of this Agreement to which
they expressly relate and to no other representation or warranty in this
Agreement.
(d) In the event of any inconsistency between the statements in the
body of this Agreement and those in the schedules hereto (other than an
exception expressly set forth as such in the schedules in relation to a
specifically identified representation or warranty), those in this
Agreement shall control.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BRC
BRC represents and warrants to the Company as follows:
4.1 ORGANIZATION; QUALIFICATION. BRC is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
BRC has full corporate power and authority to own and lease all of the
properties and assets it now owns and leases and to carry on its business as now
being conducted. BRC is duly qualified as a foreign corporation and is in good
standing to do business in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to so qualify would not have a
material adverse effect on the financial condition or results of operations
(with respect to BRC, a "Material Adverse Effect") of BRC.
4.2 AUTHORITY RELATIVE TO THIS AGREEMENT, CONFLICTS. BRC has full power
and authority (corporate and otherwise) to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery by BRC of this Agreement and the other documents contemplated
hereby, and the consummation of the transactions contemplated hereby, have been
or will be duly and validly authorized by the Board of Directors of BRC and no
other corporate proceedings on the part of BRC are necessary with respect
thereto. This Agreement has been duly and validly executed and delivered by
BRC, and constitutes a legal, valid
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and binding obligation of BRC, enforceable against it in accordance with its
terms. The execution and delivery of this Agreement and the Agreement of Merger
do not, and the consummation of the transactions contemplated hereby and thereby
will not, violate any provision of the Certificate of Incorporation or Bylaws of
BRC, and will not violate any provision of, or result in the breach or
acceleration of or default under or require any consent or approval of a third
party not obtained prior to the Effective Date, of any mortgage, indenture, loan
agreement, note, debenture, security agreement, lease, contract, agreement,
instrument, order, arbitration award, judgment or decree to which BRC or any
subsidiary of BRC is a party or by which BRC or any subsidiary of BRC is bound,
except for any violation, breach acceleration, default or consent or approval
the occurrence of which or the failure to obtain of which, as the case may be,
would not have a Material Adverse Effect.
4.3 CAPITALIZATION. The authorized capital stock of BRC consists of
10,000,000 shares of BRC Common Stock, of which, as of April 30, 1995, 6,228,929
shares of BRC Common Stock are validly issued and outstanding, fully paid and
nonassessable. As of April 30, 1995, there were no shares of BRC Common Stock
held in the treasury of BRC.
4.4 DIVIDENDS AND DISTRIBUTIONS. From December 31, 1993 to the date
hereof, BRC has not declared or paid any dividends on any shares of its capital
stock, nor has it made any other payments or distributions thereon to its
stockholders.
4.5 BRC REPORTS; FINANCIAL STATEMENTS. BRC has made available to the
Company (i) each registration statement, proxy statement and information
statement prepared by it since December 31, 1992, (ii) BRC's Annual Report on
Form 10-K for the fiscal years ended December 31, 1992, December 31, 1993, and
December 31, 1994, and BRC's Quarterly Report on Form 10-Q for the first fiscal
quarter of 1995, and (iii) each of BRC's Reports on Form 8-K relating to an
event or transaction occurring since December 31, 1992, each in the form
(including exhibits) filed with the SEC (collectively, the "BRC Reports"). Each
of the consolidated balance sheets included in or incorporated by reference into
the BRC Reports (including the related notes and schedules) fairly presents, in
all material respects, the consolidated financial position of BRC and its
subsidiaries as of its date, and each of the consolidated statements of income
and of cash flow included in or incorporated by reference into the BRC Reports
(including any related notes and schedules) fairly presents, in all material
respects, the results of operations, retained earnings and cash flows, as the
case may be, of BRC and its subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements to normal year-end audit
adjustments which will not be material in amount or effect), in each case in
accordance with generally accepted accounting principles consistently applied
during the periods.
4.6 INFORMATION STATEMENT. On the date of mailing the Information
Statement (as defined in Section 5.8) and on the Effective Date, the information
relating to BRC and its subsidiaries and its or their business, properties,
management, stockholders or securities contained in the Information Statement
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
4.7 DUE AUTHORIZATION. Not later than thirty (30) days following the date
hereof (the "Reference Date"), the Board of Directors of BRC shall have duly
authorized this Agreement, the Articles of Merger and the transactions
contemplated hereby and thereby.
4.8 LITIGATION AND CONTINGENT LIABILITIES. BRC has no litigation or
contingent liabilities that are required to be disclosed in the BRC Reports that
are not disclosed therein.
4.9 EMPLOYMENT MATTERS. Except as disclosed in the BRC Reports, there are
no pending petitions for recognition of a labor union or association as the
bargaining agent for any employees of BRC or any BRC subsidiary and, to the best
knowledge of BRC, there are not presently any material organizing efforts by any
union or other group seeking to represent any presently unorganized employees of
BRC or any BRC subsidiary as their bargaining agent. There are no labor
strikes, work stoppages or other employment troubles, other than routine
grievance
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matters, now pending or, to the best knowledge of BRC, threatened, against BRC
or any BRC subsidiary that would have a Material Adverse Effect.
4.10 TAX MATTERS. BRC and each BRC subsidiary have duly filed all federal,
state, county, local and foreign income, excise, sales, customs, property,
withholding, social security and other tax and information returns and reports
reasonably believed to be required to have been filed by them to the date
hereof, or, in the alternative, have obtained extensions for filing in
accordance with established procedures, and have each paid or made provision for
payment of all taxes (including interest and penalties) shown as due on the
returns and reports, and with respect to all periods ending prior to, January 1,
1995 except where failure to file would not have Material Adverse Effect. BRC
and each BRC subsidiary have no material liability for any taxes of any nature
whatsoever other than as shown on BRC's Consolidated Balance Sheet as of March
31, 1995 included in the BRC Reports, for the period then ended and all years
and periods prior thereto. The federal income tax returns of BRC and its
subsidiaries have been audited or barred by applicable statute of limitations
for all fiscal years to and including 1987, and all material deficiencies
asserted as a result of such audits have been paid, fully settled or adequately
provided for in BRC's Consolidated Balance Sheet as of March 31, 1995 included
in the BRC Reports.
4.11 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the BRC Reports,
since March 31, 1995, BRC and each BRC subsidiary have conducted their
respective businesses only in, and have not engaged in any material transaction
other than according to, the ordinary and usual course of such businesses and,
except as set forth on the list attached hereto as Schedule 4.11, there has not
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been (i) any material adverse change in the financial condition, earnings or
business; or (ii) any change by BRC in accounting principles, practices or
methods that would be required to be disclosed in the BRC Reports pursuant to
the rules and regulations promulgated by the SEC. Since March 31, 1995, except
as provided for herein or as disclosed in the BRC Reports and other than in the
ordinary course of business and in a manner consistent with past practices or
where same is not required by applicable law to be disclosed in the BRC Reports,
neither BRC nor any BRC subsidiary has: (1) authorized the creation or issuance
of or issued, sold or disposed of or created any obligation to issue, sell or
dispose of any capital stock, equity interest, notes, bonds or other securities,
or obligations convertible into or exchangeable for any stock, equity interest,
notes, bonds or other securities, or any option to purchase any of the
foregoing; (2) declared, set aside or made any dividend payment or other
distribution on its capital stock or equity payment or other distribution on its
capital stock or equity interests, or directly or indirectly redeemed, purchased
or otherwise acquired any shares or portion thereof or entered into any
agreement in respect of the foregoing or effected any stock split,
reclassification or combination; (3) adopted a plan of complete or partial
liquidation, dissolution, restructuring or reorganization; (4) amended its
certificate of incorporation or bylaws; (5) merged or consolidated with or into
any entity or enterprises or sold, leased, abandoned or otherwise disposed of
all or substantially all of its assets or acquired the stock, equity interests
or assets of any entity or enterprise; (6) purchased, sold, assigned or
transferred any material tangible assets or any patent, trademark, trade name,
copyright, license, franchise, construction permit or other intangible assets or
property, mortgaged, pledged or granted or suffered to exist any lien, security
interest or other encumbrance or charge on any material assets or properties,
tangible or intangible, except for liens for taxes not yet due and such other
liens, security interests, encumbrances or charges that do not have a Material
Adverse Effect or waived any rights of material value or cancelled any material
debts or claims; (7) incurred any indebtedness for borrowed money or liability
or obligation (absolute or contingent), in each case other than such which are
not material; (8) entered into any material contracts or agreements or material
amendments or modifications to material contracts or agreements; (9) incurred
any damage, destruction or similar loss (whether or not covered by insurance),
or otherwise suffered any loss, in each case other than such which are not
material; or (10) entered into any commitment, written or oral (other than this
Agreement), to do any of the things described in this Section 4.11.
4.12 LEGAL COMPLIANCE. BRC and each BRC subsidiary have complied in all
material respects with all applicable laws, rules, regulations and ordinances of
each, governmental or governmental agency having jurisdiction over it, its
property or businesses, including those relating to trademarks, trade names or
copyrights, and any zoning, occupational safety or environmental protection
laws, any antitrust, trade regulation and trade practices laws or any laws
relating to the employment of labor, other than such which, if not complied
with, would
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not have a Material Adverse Effect. Neither BRC, nor any BRC subsidiary, is in
violation of, or in default under, any terms or provisions of any mortgage,
indenture, security agreement, lease, contract, agreement, instrument, order,
arbitration award, judgment or decree other than such violations or defaults
which do not have a Material Adverse Effect.
ARTICLE V
ADDITIONAL COVENANTS
5.1 NOTICE OF ANY MATERIAL CHANGE. Each of the Company and BRC shall,
promptly after the first notice or occurrence thereof but not later than the
Closing Date, advise the other in writing of any event or the existence of any
state of facts that (a) would make any of its representations and warranties in
this Agreement untrue in any material respect; or (b) would otherwise constitute
a material adverse change in its financial position or results of operations.
No notice hereunder will have any effect for the purpose of determining the
satisfaction of or compliance with the conditions to the obligations of the
parties set forth elsewhere in this Agreement.
5.2 COOPERATION. Each of the Company and BRC shall use its best efforts
to:
(a) proceed promptly to make or give the necessary applications,
notices, requests and filings to obtain at the earliest practicable date
and, in any event, before the Closing Date, the approvals, authorizations
and consents necessary to consummate the transactions contemplated by this
Agreement;
(b) cooperate with and keep the other informed in connection with this
Agreement; and
(c) take such actions as the other party may reasonably request to
consummate the transactions contemplated by this Agreement and use its best
efforts and diligently attempt to satisfy, to the extent within its
control, all conditions precedent to the obligations to close this
Agreement.
5.3 SHAREHOLDER MEETING. Each of the Company and MC shall as soon as
practicable take all steps necessary to duly call, give notice of, convene and
hold, as soon as practicable, a special meeting of its shareholders (or a
unanimous consent of the shareholders in lieu of such meeting) for the purpose
of adopting and approving the Merger and all actions that require the approval
of MC's and the Company's shareholders under applicable law. The Board of
Directors of the Company has determined by the unanimous vote of all of its
directors that the Merger is advisable and in the best interest of its
shareholders, and, to the extent consistent with its fiduciary obligations, will
unanimously recommend to the shareholders the adoption and approval of the
Merger and the transactions contemplated hereby. If, at the special meeting of
the shareholders of the Company, less than ninety-five percent (95%) of shares
of Company Common Stock required to duly approve this Agreement and the Merger
would be voted in favor thereof, at the request of BRC, the Company will, to the
extent consistent with its Board's fiduciary obligations, adjourn the special
meeting on one or more occasions to a convenient date not later than thirty (30)
days after the original date of the special meeting and will use its best
efforts to solicit from its shareholders proxies in favor of approving the
Merger.
5.4 PUBLIC ANNOUNCEMENTS. The parties agree to consult with each other
prior to making any announcement or other disclosure concerning the transactions
contemplated by this Agreement. Except as otherwise required by law or
regulations (including, without limitation, those laws and regulations
promulgated by or for the SEC), neither party may make a public announcement
regarding the Merger or the transactions contemplated by this Agreement without
the prior written consent of the other party. Without limiting the foregoing,
the parties, subject to complying with their obligations under applicable law,
do not currently intend to make any announcement concerning the transactions
proposed hereby prior to the Effective Date.
5.5 ACCESS; CONFIDENTIALITY. From the date of this Agreement until the
Effective Date, the Company and BRC shall each provide the other with such
information and permit the other's officers and representatives such
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access during normal business hours to their respective properties and records
as the other may from time to time reasonably request if, and to the extent that
any such investigation shall be conducted in such manner as not to interfere
unreasonably with the operation of the business of the other or the other's
subsidiaries. No such investigation shall alter or diminish any of the
representations or warranties made under this Agreement. The Company and BRC
each recognize, acknowledge and agree that any of the information to be provided
hereunder is proprietary to the business of the other (hereinafter "Confidential
Information"). By way of illustration, but not limitation, Confidential
Information shall include trade secrets, processes, formulas, data, know-how,
software, documentation, object code, standards, specifications, inventions,
customer information, accounting data and the like. The Company and BRC agree,
therefore, except as directed in writing by the other party, neither party will
at any time during or after the term of this Agreement, use or disclose any
Confidential Information to any person or entity whatsoever, or permit any
person whatsoever to examine and/or make copies of or reports or documents from
any Confidential Information, and that upon termination of this Agreement, both
parties shall turn over to the other all documents, papers and other matter in
its possession or under its control that in any way relate to Confidential
Information. Confidential Information shall not include information which (1)
is or becomes generally available to the public other than as a result of a
disclosure in breach of this Agreement or (2) is or becomes required by
applicable law to be disclosed.
5.6 CONDUCT OF BUSINESS PRIOR TO CLOSING DATE.
(a) Unless BRC and the Company agree otherwise, during the period
pending the Closing Time, the Company:
(1) shall not issue any additional shares of Company Common
Stock, except in connection with the exercise of options or other
instruments described on Schedule 3.3, or change the outstanding
------------
number of shares of Company Common Stock into a different number of
shares or a different class by reason of reclassification,
recapitalization, split-up, combination, exchange of shares,
readjustment, stock split, stock dividend or otherwise;
(2) shall not issue, sell or grant options, warrants or rights to
purchase or subscribe to, or enter into any arrangement or contract
with respect to the issuance or sale of any of the capital stock of
the Company or rights or obligations convertible into or exchangeable
for any shares of the capital stock of the Company;
(3) shall not declare, pay or set aside for payment any dividend
or other distribution in respect of the capital stock or other equity
securities of the Company or redeem, purchase or otherwise acquire any
shares of the capital stock or other securities of the Company or
rights or obligations convertible into or exchangeable for any shares
of the capital stock or other securities of the Company;
(4) shall not intentionally take any action that, and shall not
intentionally fail to take any action the failure to take which, would
cause or permit its representations and warranties contained in this
Agreement to be untrue in any material respect at the Closing;
(5) shall not sell any assets not in the ordinary course of
business;
(6) shall conduct its operations in the ordinary and usual course
of business consistent with past and current practices, and shall use
its good faith efforts to maintain and preserve intact its business
organization and goodwill, to retain the services of its key officers
and employees, and to maintain satisfactory relationships with
suppliers, customers, and others having business relationships with
it;
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(7) shall notify BRC of any emergency or other change in the
normal course of Company business;
(8) shall not settle, compromise or discharge any lawsuit, claim
or proceeding or enter into an agreement to do any of the foregoing
without the prior written consent of BRC;
(9) shall not acquire any shares of its capital stock;
(10) shall not award or pay any increase in compensation or base
salary or award or pay any special or cumulative bonus;
(11) enter into any employment, consulting, brokerage, royalty or
commission agreement or arrangement;
(12) enter into, or modify any agreement, arrangement,
understanding or transaction of any kind or character with any
Individual or any person or entity affiliated or associated with any
Individual; or
(13) enter into any agreement to do any of the things described
in clauses (1) through (12) above.
(b) Each of BRC and the Company agrees that, after the date hereof
(and except for the Merger and related transactions specifically
contemplated by this Agreement), it will not take or omit to take any
action which would cause the Merger not to qualify as a reorganization
within the meaning of Section 368 of the Code, including without
limitation:
(1) any sale, exchange, distribution, transfer or other
disposition of the assets of the Company that would cause the Merger
to fail to satisfy the "continuity of business enterprise" requirement
of Section 1.368-1(d) of the regulations promulgated pursuant to the
Code or the "substantially all of the properties" requirements of
Section 368(a)(2)(E) of the Code;
(2) any reacquisition of shares of the Company's Common Stock
that would result in BRC failing to obtain or losing control of the
Company within the meaning of Section 368(c) of the Code.
5.7 NO SOLICITATIONS. From the date hereof until the Closing Date or
until this Agreement is terminated as provided in this Agreement, the Company
shall not directly or indirectly (i) solicit or initiate discussion with or (ii)
enter into negotiations or agreements with, or furnish any information that is
not publicly available to, any corporation, partnership, person or other entity
or group (other than BRC, MC or their authorized representatives pursuant to
this Agreement) concerning any proposal for an acquisition of substantial
assets, sale or acquisition of shares of stock or securities or other takeover
or business combination transaction (a "Company Acquisition Proposal") involving
the Company, and the Company will instruct its officers, directors, advisors and
its financial and legal representatives and consultants not to take any action
contrary to the foregoing provisions of this sentence. The Company will notify
BRC promptly in writing if the Company becomes aware that any inquiries or
proposals are received by, any information is requested from or any negotiations
or discussions are sought to be initiated with, the Company with respect to a
Company Acquisition Proposal.
5.8 SECURITIES MATTERS.
(a) In connection with the meeting of the Company's shareholders to be
called pursuant to Section 5.3 hereof, the Company shall prepare an
Information Statement ("Information Statement") relating to the Merger, the
respective businesses of BRC and the Company and such other matters as
shall be
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reasonably necessary to provide the shareholders of the Company with the
information necessary to make an informed investment decision regarding the
Merger, the BRC Common Stock constituting Merger Consideration and
exercising any rights arising from the Merger and relating to the Company
Common Stock. The Information Statement shall be reasonably acceptable in
substance to BRC. BRC shall provide for use in connection with the
Information Statement, sufficient copies of its most recent Annual Report
to Stockholders, including its Report on Form 10-K constituting a part
thereof, its most recent proxy statement and its Report on Form 10-Q for
the period ending March 31, 1995, together with such other information
concerning it, its businesses and prospects as the Company shall reasonably
request. Not later than twenty (20) days prior to the shareholder meeting
called for in Section 5.3, the Company and its Board of Directors shall
cause to be mailed to each of the record holders of Company Common Stock as
of the record date for such shareholder meeting the Information Statement,
together with a form of proxy naming one or more members of the Board of
Directors of the Company as proxy for the purpose of voting in favor of the
Merger. Notwithstanding any provision of the foregoing to the contrary, it
is the intent of the Company to conduct the solicitation and other
transactions contemplated in this Section 5.8(a) in such a manner as to
comply with one or more exemptions from the registration provisions of the
Securities Act, including, but not limited to, Rule 505 thereunder, and any
applicable state securities or blue sky laws. Each of the parties hereto
shall use its or his best reasonable efforts to assure compliance with such
exemptions from registration.
(b) BRC agrees to use reasonable efforts to file a Registration
Statement on Form S-3 with the SEC as soon as reasonably practicable
following the Effective Time to register the sale of the shares of BRC
Common Stock constituting Merger Consideration together with any BRC Common
Stock issued pursuant to Company Options described on Schedule 3.3, to the
------------
extent not otherwise covered by an effective registration statement, to use
reasonable efforts to cause such Registration Statement to become effective
as promptly as practicable thereafter and, subject to applicable law, to
maintain the effectiveness of such Registration Statement until the earlier
of the sale of the shares registered thereby or the second anniversary of
the Closing Date; provided, however, that each shareholder of the Company
desiring to become a selling shareholder thereunder shall execute a normal
and customary registration rights agreement with BRC in connection with the
Closing, or thereafter, to, among other things, assure compliance with
applicable securities laws and which registration rights agreement shall
have customary provisions relating to the provision of information and
indemnification. Prior to the Closing Date, the Company shall undertake,
in the Information Statement or otherwise, to advise shareholders of the
Company and all affiliates of the Company of the resale restrictions
imposed by federal securities laws, including Rule 145 under the Securities
Act, on shares of BRC Common Stock, received by them pursuant to and in
connection with the Merger.
(c) Subject to applicable law, the Company, the Individuals and BRC
each agree to indemnify the other and its respective directors, officers,
agents, employees, and each person who may be controlled by it or be under
common control with BRC or the Company, respectively, within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act,
and to hold each other harmless from and against any losses, claims,
damages or liabilities, joint or several, to which they, or any of them,
may become subject insofar as such losses,claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any alleged
untrue statement of any material fact included in information pertaining to
it and its subsidiaries contained or referred to in the Information
Statement or the Registration Statement or upon any alleged omission to
state therein 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.
5.9 IRREVOCABLE PROXY. The Individuals hereby irrevocably appoint the
Chairman and Chief Executive Officer of BRC, with full power of substitution,
the attorney and proxy of the Individuals, with full power of substitution, to
vote all Company Common Stock held, owned or controlled beneficially or of
record, including, without limitation, any shares of Company Common Stock which
the Individual has the right to direct the vote of, by the Individuals on the
record date for the Company stockholders' meeting, in favor of the Merger
contemplated
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hereby according to the number of votes that the Individuals would be entitled
to vote if personally present at the meeting of Company stockholders called and
held for the primary purpose of considering the Merger. Further, such
Individuals covenant not to take any action inconsistent with the consummation
of the transactions contemplated by this Agreement. The proxy contained in this
Section 5.9 is granted to BRC in connection with their agreement to merge the
Company with and into MC and, because coupled with an interest thereby, shall be
irrevocable to the fullest extent permitted by law; provided, however, that such
Proxy will become revocable upon the termination of this Agreement by BRC, MC or
the Company in accordance with the terms of Article VII of this Agreement. The
Individuals agree to cause the Company to make appropriate notation of the proxy
contained herein on the stock transfer records of the Company and elsewhere as
appropriate to document and protect said proxy.
5.10 STOCK OPTIONS. BRC covenants and agrees to grant to those employees
of the Company deemed critical to the business of the Company (the "Key
Employees") options to purchase an aggregate of 100,000 shares of BRC Common
Stock ("BRC Options"); provided, however, that the issuance of such BRC Options
is subject to, among other terms and conditions contained in the Stock Option
Agreement substantially in the same form as Exhibit B attached hereto. The BRC
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Options shall bear an exercise price equal to the market price of the BRC Common
Stock on the date of grant and 33.333% of such options shall vest on each of the
three anniversary dates of the date of grant subject to continued employment
through such date and the attainment by the Company of financial performance
goals described in exhibits to the Option Agreement attached hereto as Exhibit
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B. Such BRC Options shall be exercisable for a period of ten years from the
date of grant and shall be subject to Closing and to the execution by the
employee of a Confidentiality and Noncompetition Agreement with BRC and the
Company, substantially in the same form as Exhibit C attached hereto. Further,
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BRC shall have received, prior to Closing, a list ("Key Employee List") from the
Company designating the Key Employees and the number of BRC Options attributable
to each . BRC shall have the right to approve the names and number of BRC
Options listed on the Key Employee List, which such approval shall not be
unreasonably withheld.
5.11 CONFIDENTIALITY AND NON-COMPETITION AGREEMENTS. Charles B. Owen and
Andrew Galewsky shall enter into confidentiality and non-competition agreements
with the Company and BRC in substantially the form of Exhibit C attached hereto
and providing further for the payment of $200,000 to Mr. Owen and $50,000 to Mr.
Galewsky and restricting their ability to compete with BRC or the Company for
the later of five (5) years from the execution of such agreement or three (3)
years from the date upon which their employment with the Company or BRC shall
terminate, respectively.
5.12 REASONABLE BEST EFFORTS. Each of the Company and BRC shall take all
necessary corporate and other action and use its reasonable best efforts to
obtain all necessary consents, authorizations, and approvals and to make all
necessary filings required to carry out the transactions contemplated by this
Agreement, to satisfy the conditions specified in Articles V, VI and VII hereof
at the earliest practicable date and otherwise to perform its obligations under
this Agreement.
5.13 COMPANY INDEBTEDNESS. Attached hereto as Schedule 5.13 is a list of
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all shareholders of the Company to whom the Company has outstanding indebtedness
in the form of notes, credit agreements or other instruments (the "Shareholder
Notes"). Opposite each name set forth on Schedule 5.13 is the outstanding
-------------
principal and accrued interest owed such party with respect to Shareholder Notes
as of June 30, 1995. By their execution hereof, the Noteholders agree that,
subject to the provisions of Section 8.4, at the Closing, effective as of the
Effective Time, each of the Shareholder Notes and all of the record and
beneficial interest therein, shall be exchanged for that number of shares of BRC
Common Stock equal to (i) the sum of the then outstanding principal amount and
accrued but unpaid interest thereon, divided by (ii) the MP. Each of the record
holders of the Shareholder Notes shall execute an endorsement with regard
thereto in form and substance reasonably satisfactory to BRC and shall otherwise
satisfy BRC as to such party's beneficial and record ownership of the
Shareholder Note in question and the conveyance thereof to BRC free and clear of
all liens, claims or encumbrances of any kind.
18
<PAGE>
5.14 RELEASES. Following the Effective Time, the Company and BRC shall use
their best reasonable efforts to obtain the release of the Individuals from any
guarantees or other personal obligations under or with respect to the contracts
and agreements described on Schedule 5.14 hereto.
-------------
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
Except as may be waived by the Company, the obligations of the Company to
consummate the transactions contemplated by this Agreement shall be subject to
the satisfaction, on or before the Closing Date, of each of the following
conditions:
6.1 COMPLIANCE. BRC or MC shall have, or shall have caused to be,
satisfied or complied with and performed in all material respects all terms,
covenants and conditions of this Agreement to be complied with or performed by
BRC or MC on or before the Closing Date.
6.2 RESOLUTIONS. The Company shall have received copies of resolutions
duly adopted by the Board of Directors and the stockholder of MC approving the
execution and delivery of this Agreement, and the consummation of the
transactions contemplated hereby, certified as of the Closing Date by the
Secretary of MC.
6.3 REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties made by BRC or MC in this Agreement shall have been true and correct
in all material respects as of the date hereof, and shall be true and correct in
all material respects at the Closing Date with the same force and effect as if
such representations and warranties had been made at and as of the Closing Date,
except for changes permitted or contemplated by this Agreement; provided,
however, if one or more the representations and warranties made by BRC in this
Agreement were not true and correct in all material respects when made or would
not be true and correct in all material respects as of the Closing Date, but if
information is disclosed in the Information Statement/Prospectus that if stated
in this Agreement to have been an exception to one or more representations of
BRC would have caused such representations and warranties to be true and correct
in all material respects, then this condition shall be satisfied.
6.4 SHAREHOLDER APPROVAL. The Merger shall have been approved and adopted
by the requisite shareholder vote of the shareholders of the Company and MC.
6.5 CONSENTS; LITIGATION. All authorizations, consents, orders or
approvals of, or declarations or filings with, or expirations or terminations of
waiting periods imposed by any governmental entity, and all required third-party
consents, the failure to obtain which would have a Material Adverse Effect on
BRC shall have been filed, occurred or been obtained. No action, suit or
proceeding shall have been instituted before any court or other governmental
entity to restrain, modify, enjoin or prohibit the carrying out of the
transactions contemplated hereby.
6.6 CERTIFICATES. The Company shall have received a certificate or
certificates, executed on behalf of BRC by an executive officer of BRC, to the
effect that the conditions contained in Sections 6.1, 6.3 and 6.4 hereof have
been satisfied.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF BRC AND MC
Except as may be waived by BRC and MC, the obligations of BRC and MC to
consummate the transactions contemplated by this Agreement shall be subject to
the satisfaction, on or before the Closing Date, of each of the following
conditions:
19
<PAGE>
7.1 COMPLIANCE. The Company shall have, or shall have caused to be,
satisfied or complied with and performed in all material respects all terms,
covenants and conditions of this Agreement to be complied with or performed by
them on or before the Closing Date.
7.2 RESOLUTIONS. BRC shall have received copies of resolutions duly
adopted by the Board of Directors and the stockholders of the Company approving
the execution and delivery of this Agreement, and the consummation of the
transactions contemplated hereby, certified as of the Closing Date by the
Secretary of the Company.
7.3 REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties made by the Company in this Agreement shall have been true and
correct in all material respects as of the date hereof, and shall be true and
correct in all material respects at the Closing Date with the same force and
effect as if such representations and warranties had been made at and as of the
Closing Date, except for changes permitted or contemplated by this Agreement.
7.4 OPINIONS. The Company shall have received the opinion of qualified
Texas counsel for the Company, satisfactory to BRC and its counsel, dated as of
the Closing Date, in form and substance reasonably acceptable to BRC.
7.5 NO MATERIAL ADVERSE CHANGE. Subsequent to March 31, 1995, there shall
have occurred no material adverse change in the financial condition or results
of operations of the Company.
7.6 SHAREHOLDER, OPTIONHOLDER AND NOTEHOLDER APPROVAL. The Merger and the
provisions of this Agreement shall have been duly approved and adopted by the
record holders of not less than ninety-five percent (95%) of the issued and
outstanding Company Common Stock as of the record date of the shareholders'
meeting contemplated in Section 5.3 hereof and the holders of Company Options
shall have consented to this Agreement and to the conversion or modification of
the Company Options contemplated hereby. The record and beneficial holders of
all Shareholder Notes shall have consented to the Merger, this Agreement and to
the exchange of BRC Common Stock for the Shareholder Notes contemplated in
Section 5.13 and such exchange shall have been consummated.
7.7 CONSENT. All authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations or terminations of waiting periods
imposed by, any governmental entity, and all required third-party consents, the
failure to obtain which would have a Material Adverse Effect on the Surviving
Corporation shall have been filed, occurred or been obtained.
7.8 LEGISLATION. No law or legally binding regulation shall have been
enacted that does or would prohibit, restrict or delay consummation of the
transactions or any of the conditions to the consummation of the transactions or
that does or would have a Material Adverse Effect on the Company.
7.9 LITIGATION. There shall be no effective injunction, writ or
preliminary restraining order or any other order of any nature issued by a court
or governmental agency of competent jurisdiction restraining or prohibiting
consummation or altering the terms of any of the transactions provided for
herein, or actions seeking damages based upon the foregoing which BRC reasonably
deems material.
7.10 BRC'S INVESTIGATION. The investigations by BRC and its
representatives in connection with the proposed transaction shall not have
caused BRC, or its representatives to become aware of any facts or circumstances
(even if such facts or circumstances were previously disclosed to BRC or MC in
the schedules hereto) which relate to the business, operations, assets,
properties, liabilities, financial conditions, results of operation or affairs
of the Company that, in the sole judgment of BRC, make it inadvisable for BRC to
proceed with the transactions contemplated by this Agreement.
7.11 POOLING TREATMENT. BRC shall have received the reasonable assurances
of Price Waterhouse LLP, BRC's independent public accountants, to BRC's
satisfaction, that the transactions contemplated by this Agreement
20
<PAGE>
qualify for pooling-of-interests accounting treatment in accordance with
Accounting Principles Board Opinion No. 16 and the rules and regulations of the
SEC.
7.12 CONFIDENTIALITY AND NONCOMPETITION AGREEMENTS. The persons whose
names are set forth on Schedule 7.12 shall have executed and entered into a
-------------
Confidentiality and Noncompetition Agreement each substantially in the same form
as Exhibit C attached hereto.
---------
7.13 COMPANY CERTIFICATES. BRC shall have received certificates, executed
on behalf of the Company by the executive officers of the Company to the effect
that the conditions in Sections 7.1, 7.3, 7.5, 7.6, 7.7, 7.8 and 7.9 hereof have
been satisfied.
7.14 OTHER MATTERS. The Company shall have delivered to BRC, in form and
substance reasonably satisfactory to counsel for BRC, such certificates and
other evidence as BRC may reasonably request as to the satisfaction of the
conditions contained in this Agreement.
ARTICLE VIII
INDEMNIFICATION AND SECURITY ESCROW
8.1 INDEMNITY. Subject to Section 8.4 hereof, the Company and the
Noteholders agree to indemnify and hold BRC and MC, their respective officers,
directors, agents, attorneys and accountants ("BRC Indemnitees") harmless from
any and all damages, losses which shall include any diminution in value,
liabilities (joint or several), payments, obligations, penalties, claims,
litigation, demands, defenses, judgments, suits, proceedings, costs,
disbursements or expenses of any kind or nature whatsoever (collectively,
"Damages"), directly or indirectly resulting from, relating to or arising out
of:
(a) any breach or nonperformance (partial or total) of or inaccuracy
in any representation or warranty or covenant or agreement of the Company
or the Noteholders contained in this Agreement;
(b) any breach or nonperformance (partial or total) by the Company or
the Noteholders of any covenant or agreement of any of them contained in
the Agreement;
(c) any claims based on any Plans of whatsoever nature or for salary
or other compensation and benefits attributable to service or employment by
the Company prior to the Closing;
(d) any losses or costs of defending against any claims which may be
made against BRC, MC or the Company by any person claiming violations of
any local, state or federal laws relating to the employment relationship,
including, but not limited to, wages, hours, concerted activity,
nondiscrimination, occupational health and safety and the payment and
withholding of taxes, where such claims arise out of circumstances
occurring prior to the Closing Time.
8.2 INDEMNIFICATION IF NEGLIGENCE OF INDEMNITEE. The indemnification
provided in this Article VIII shall be applicable whether or not negligence of
the applicable BRC Indemnitee is alleged or proven.
8.3 NO THIRD PARTY BENEFICIARIES. The foregoing indemnification is given
solely for the purpose of protecting the parties of this Agreement and the BRC
Indemnitees and shall not be deemed extended to, or interpreted in any manner to
confer any benefit, right or cause of action, upon, any other person or entity.
8.4 SECURITY ESCROW. On the Closing Date, ten percent (10%) of the Merger
Consideration and ten percent (10%) of the amount to be paid to the Noteholders
pursuant to Section 5.13 hereof shall be escrowed (the "Escrow") with an
independent third party of BRC's choosing (the "Escrow Agent") to secure and
satisfy BRC's right to indemnification hereunder. The Escrow shall be governed
by the Escrow Agreement in form and substance
21
<PAGE>
reasonably satisfactory to BRC and the Company. The Escrow Agreement shall
provide, among other things, that subject to any claim by BRC for indemnity
hereunder, the Escrow shall remain in effect until the earlier of (1) the first
anniversary of the Effective Date or (2) the completion of the next regularly
scheduled audited financial statement for the Surviving Corporation. In the
event that at any time prior to termination of the Escrow, BRC shall reasonably
determine itself entitled to indemnification hereunder, BRC shall deliver notice
to the Escrow Agent of the aggregate value of its claims for indemnity and the
Escrow Agent shall retain in the Escrow that number of shares of BRC Common
Stock equal to the aggregate amount of such claims divided by the MP (as defined
in Section 2(b)). From time to time, upon submission to the Escrow Agent of a
final judgment or other evidence of the fixing or determination of an amount
giving rise to indemnity hereunder, the Escrow Agent shall distribute to BRC
from the Escrow that number of shares of BRC Common Stock having an aggregate
value, based upon the MP, equal to such claim. For all purposes hereunder, the
amount held in the Escrow with respect to the Merger Consideration and payments
to Noteholders under Section 5.13, shall be considered a single fund for
satisfying claims of indemnity by BRC. Notwithstanding any other provision
hereof to the contrary, BRC's right to indemnification hereunder shall be
limited to the shares of BRC Common Stock held in the Escrow. Upon termination
of the Escrow, the remaining shares of BRC Common Stock held therein shall be
distributed pro rata to the record holders of the Company Common Stock and the
Noteholders, treating all such parties as a single class, pro rata. For such
purposes, the Shareholder Notes shall have a value equal to the outstanding
principal and accrued but unpaid interest thereon as of the Effective Time and
shares of the Company Common Stock outstanding as of the Effective Time shall be
valued in accordance with the following formula:
Value Per Share = ($4,300,000 - NP + EP)
----------------------
OS + OO
where:
EP = as defined in Section 2.1(b) above.
NP = as defined in Section 2.1(b) above.
OS = as defined in Section 2.1(b) above.
OO = as defined in Section 2.1(b) above.
ARTICLE IX
MISCELLANEOUS
9.1 TERMINATION. In addition to the provisions regarding termination set
forth elsewhere herein, this Agreement and the transactions contemplated hereby
may be terminated at any time on or before the Closing Date:
(a) by mutual consent of the Boards of Directors of the Company and
BRC;
(b) by the Company if any representation or warranty of BRC or by BRC
if any representation or warranty of the Company contained herein shall
have been incorrect or breached in any material respect, as to which notice
shall have been given to such party, and shall not have been cured or
otherwise resolved to the reasonable satisfaction of the other party on or
before the Closing Date, or by either the Company or BRC if any condition
to the consummation of the transactions contemplated hereunder that must be
fulfilled by the other to its satisfaction has (in the good faith judgment
of a majority of the Board of Directors) become impractical to be
fulfilled;
(c) by the Company if the average of the last reported sale price of
the BRC Common Stock as reported on the National Market System of the
National Association of Securities Dealers for any three consecutive
trading days shall be less than $31.50 or by BRC if such average shall
exceed $38.50;
22
<PAGE>
(d) by either BRC or the Company if any permanent injunction or other order
of a court or other competent authority preventing the consummation of the
transactions shall have become final and nonappealable;
(e) by either the Company or BRC if the transactions contemplated by
this Agreement have not been consummated by September 1, 1995, unless such
failure of consummation is due to the failure of the terminating party to
perform or observe the covenants, agreements and conditions hereof to be
performed or observed by it at or before the Closing Date;
(f) by either MC or the Company if its stockholders or the other
Constituent Corporation's stockholders fail to approve the Merger at the
stockholders' meeting called for the purpose of considering and voting on
the Merger; and
(g) by BRC if, prior to the mailing of the Information Statement,
there shall have occurred a material adverse change in the financial
condition, results of operations or prospects of the Company or, if, after
the mailing of the Information Statement, there shall have occurred a
material change in the financial condition, results of operations or
prospects of the Company or BRC that is not disclosed in the Information
Statement or supplement thereto.
If this Agreement is rightfully terminated pursuant to this Section 9.1, no
party hereto (or any of its directors or officers) shall have any liability or
further obligation to any other party to this Agreement, except to the extent
set forth in Section 5.5 hereof.
9.2 EXPENSES. If the transactions contemplated by this Agreement are not
consummated, each party hereto shall pay its own expenses incurred in connection
with this Agreement and the transactions contemplated hereby.
9.3 ENTIRE AGREEMENT. This Agreement and the exhibits and schedules
hereto contain the complete agreement among the parties with respect to the
transactions contemplated hereby and supersede all prior agreements and
understandings among the parties with respect to such transactions. Section and
other headings are for reference purposes only and shall not affect the
interpretation or construction of this Agreement. The parties hereto have not
made any representation or warranty except as expressly set forth in this
Agreement or in any certificate or schedule delivered pursuant hereto. The
obligations of any party under any agreement executed pursuant to this Agreement
shall not be affected by this section.
9.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of each party contained herein or in any exhibit, certificate,
document or instrument delivered pursuant to this Agreement shall survive the
Closing until the earlier of (1) the first anniversary of the Effective Date or
(2) the completion of the next regularly scheduled audited financial statement
for the Company a consolidated financial statement (including the operating
results of the Company) of BRC.
9.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute only one original.
9.6 NOTICES. All notices, demands, requests or other communications that
may be or are required to be given, served or sent by any party to any other
party pursuant to this Agreement shall be in writing and shall be mailed by
first-class, registered or certified mail, return receipt requested, postage
prepaid, or transmitted by hand delivery, addressed as follows:
23
<PAGE>
(i) If to the Company:
Clinical Resource Systems, Inc.
3701 North Lamar, Suite 207
Austin, Texas 78705
Attention: President
(ii) If to BRC or MC:
Business Records Corporation Holding Company
1111 West Mockingbird, Suite 1400
Dallas, Texas 75247
Attention: President
Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served or sent.
Each notice, demand, request or communication that is mailed, delivered or
transmitted in the manner described above shall be deemed sufficiently given,
served, sent and received for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery receipt or the affidavit of
messenger being deemed conclusive evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
9.7 SUCCESSORS AND ASSIGNS. This Agreement and the rights, interests and
obligations hereunder shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns.
9.8 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Texas.
9.9 WAIVER AND OTHER ACTION. This Agreement may be amended, modified or
supplemented only by a written instrument executed by the parties against which
enforcement of the amendment, modification or supplement is sought.
9.10 SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision shall be fully severable, and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision were never a part hereof; the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance; and in lieu of
such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
CLINICAL RESOURCE SYSTEMS, INC.
(a Texas corporation)
By:
------------------------------------------
Charles B. Owen,M.D.
President
24
<PAGE>
BUSINESS RECORDS CORPORATION
HOLDING COMPANY (a Delaware corporation)
By: /s/Jerry Morrison
------------------
Name: Jerry Morrison
---------------
Title: Executive Vice President
-------------------------
BRC MERGER CORP.
(a Texas corporation)
By: /s/Thomas E. Kiraly
--------------------
Name: Thomas E. Kiraly
-----------------
Title: Executive Vice President
-------------------------
NOTEHOLDERS:
Charles B. Owen, M.D.
Elizabeth Owen
Robert G. McConnell, M.D.
INDIVIDUALS:
Charles B. Owen, M.D.
(an Individual)
Robert G. McConnell, M.D.
(an Individual)
Don Pippin, Jr.
(an Individual)
25
<PAGE>
Christina G. Novelli
(an Individual)
Andrew Galewsky
(an Individual)
26
<PAGE>
Exhibit "A" (the "Agreement of Merger")
- -----------
Stock Option Agreement substantially in the same form as Exhibit B
---------
Confidentiality and Noncompetition Agreement with BRC and the Company,
substantially in the same form as Exhibit C
---------
Escrow Agreement attached hereto as Exhibit D
Schedule 3.3 sets forth an accurate and complete list of the stockholders of the
- ------------
Company and the number of shares of Company Common Stock owned thereby.
Schedule 3.10 hereto sets forth a complete list of the liabilities and
- -------------
obligations of the Company of any nature, whether absolute, accrued, contingent
or otherwise which individually exceed $5,000, or in the aggregate exceed
$15,000.
Schedule 3.11
- -------------
Schedule 3.12
- -------------
Schedule 3.14 contains a list of all employee benefit plans
- -------------
Schedule 3.15
Schedule 3.17 sets forth a complete and correct list (including, where
- -------------
applicable, registration numbers and dates of filing, renewal and termination)
of all Proprietary Rights
Schedule 3.22 contains a complete and accurate list of all the Company's aged
- -------------
accounts payable at March 31, 1995, showing the name of each account creditor
and the amount due to each by invoice number and date.
Schedule 4.13
- -------------
Schedule 5.13 is a list of all shareholders of the Company to whom the Company
- -------------
has outstanding indebtedness in the form of notes, credit agreements or other
instruments
contracts and agreements described on Schedule 5.14
-------------
The persons whose names are set forth on Schedule 7.13 shall have executed and
-------------
entered into a Confidentiality and Noncompetition Agreement
27
<PAGE>
Schedule 4.13
None
28
<PAGE>
EXHIBIT 5.1
December 20, 1995
Business Records Corporation Holding Company
1111 West Mockingbird, Suite 1500
Dallas, Texas 75247
Re: Business Records Corporation Holding Company
Registration Statement on Form S-8
Gentlemen:
We have acted as counsel to Business Records Corporation Holding Company, a
Delaware corporation (the "Company"), in connection with the preparation and
filing of that Registration Statement on Form S-8 (the "Registration Statement")
to be filed with the Securities and Exchange Commission on December 21, 1995,
under the Securities Act of 1933, as amended (the "Securities Act"), relating to
an aggregate of up to 14,381 shares of the $0.10 par value common stock (the
"Common Stock") of the Company consisting of (i) 13,933 shares of Common Stock
issuable upon the exercise of stock options (collectively, the "Options")
granted under the Clinical Resource Systems, Inc. Stock Option Plan (the "Plan")
and (ii) 448 shares of Common Stock issuable to the holders of that certain
Clinical Resource Systems, Inc. Common Stock Purchase Warrant expiring August 9,
1996 (the "Warrant").
You have requested the opinion of this firm with respect to certain legal
aspects of the Registration Statement. In connection therewith, we have
examined and relied upon the original, or copies identified to our satisfaction,
of (1) the Certificate of Incorporation and the Bylaws of the Company; (2) the
Registration Statement and exhibits thereto; and (3) such other documents and
instruments as we have deemed necessary for the expression of the opinions
herein contained. In making the foregoing examinations, we have assumed the
genuineness of all signatures and the authenticity of all documents submitted to
us as originals, and the conformity to original documents of all documents
submitted to us as certified or photostatic copies. As to various questions of
fact material to this opinion, and as to the content and form of the Certificate
of Incorporation, the Bylaws, minutes, records, resolutions and other documents
or writings of the Company, we have relied, to the extent we deem reasonably
appropriate, upon representations or certificates of officers or directors of
the Company and upon documents,
<PAGE>
Business Records Corporation
December 21, 1994
Page 2
records and instruments furnished to us by the Company, without independent
check or verification of their accuracy.
Based upon our examination, consideration of, and reliance on the documents
and other matters described above, and subject to the comments and exceptions
noted below, we are of the opinion that, (1) assuming that (i) the outstanding
Options were duly granted and the Options to be granted in the future will be
duly granted in accordance with the terms of the Plan, (ii) the Company
maintains an adequate number of authorized but unissued shares and/or treasury
shares of Common Stock available for issuance to those persons who exercise
Options granted under the Plan and (iii) the consideration for the shares of
Common Stock issuable upon the exercise of such Options is actually received by
the Company as provided in the Plan and the particular Option and such
consideration exceeds the par value of such shares, then the 13,933 shares of
Common Stock issued pursuant to the exercise of the Options granted under and in
accordance with the terms of the Plan will be duly and validly issued, fully
paid and nonassessable and (2) assuming that (i) the outstanding Warrant was
duly issued, (ii) the Company maintains an adequate number of authorized but
unissued shares and/or treasury shares of Common Stock available for issuance to
the holder of the Warrant, (iii) the Warrant is properly exercised for shares of
Common Stock in accordance with the Warrant Certificate and other applicable
documents and (iv) the consideration for the shares of Common Stock issued
pursuant to the Warrants is actually received by the Company and such amount
exceeds the par value of such shares, then the 448 shares of Common Stock issued
upon the exercise of the Warrant will be duly and validly issued, fully paid and
nonassessable.
We bring to your attention the fact that this legal opinion is an
expression of professional judgment and not a guaranty of result. This opinion
is rendered as of the date hereof, and we undertake no, and hereby disclaim any,
obligation to advise you of any changes in or new developments that might affect
any matters or opinions set forth herein.
This opinion is limited in all respects to the General Corporation Law of
the State of Delaware as in effect on the date hereof; however, we are not
members of the Bar of the State of Delaware and our knowledge of its General
Corporation Law is derived from a reading of the most recent compilation of that
statute available to us without consideration of any judicial or administrative
interpretations thereof.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to references to our firm included in or made a part
of the Registration Statement. In giving this consent, we do not admit that we
come within the category of person whose consent is
<PAGE>
Business Records Corporation
December 21, 1994
Page 3
required under Section 7 of the Securities Act or the Rules and Regulations of
the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ ARTER, HADDEN, JOHNSON & BROMBERG
ARTER, HADDEN, JOHNSON & BROMBERG
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated March 21, 1995 appearing on page 42 of
Business Records Corporation Holding Company's Annual Report on Form 10-K for
the year ended December 31, 1994. We also consent to the incorporation by
reference of our report on the Financial Statement Schedule, which appears on
page 43 of such Annual Report on Form 10-K.
/s/ PRICE WATERHOUSE LLP
Price Waterhouse LLP
Dallas, Texas
December 20, 1995
