UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: (Date of earliest event reported) July 23, 1998
BIOSENSOR CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 0-11408 41-1427114
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification no.)
6 Woodcross Drive
Columbia, SC 29212
(Address of principal executive offices) (Zip Code)
(803) 407-3044
(Registrant's telephone number, including area code)
ITEM 1. CHANGE OF CONTROL OF REGISTRANT
On July 23, 1998, Biosensor Corporation (the "Registrant") acquired all
of the outstanding shares of capital stock of Carolina Medical, Inc., a
Minnesota corporation, in exchange for 149,025.15 shares of the Registrant's
Series A Preferred Stock. The holders of the Series A Preferred Stock now
have voting power equal to approximately eighty-three percent (83%) of the
voting power of all issued and outstanding shares of the Registrant's capital
stock. Of the thirty-two (32) Series A Preferred Stock holders, the
following eight (8) own more than four (4) per cent of the voting power of
the Company.
Name of Shareholder Approximate Percentage of Ownership*
Ronald G. Moyer 27.1%
C. Roger Jones 10.6%
Ronald D. Ordway 10.3%
Nishimoto Sangyo Co., LTD. 8.4%
Bernard B. Klawans 6.8%
Charles A. Barefoot 4.9%
Counterpoint Capital Management, LLC 4.2%
Woodhaven Investors, Inc. 4.2%
TOTAL FOR 8 76.50%
* calculated as if all issued and outstanding shares of Series A
Preferred Stock were converted into Common Stock at the ratio of 96
shares of Common Stock for each share of Series A Preferred Stock.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 23, 1998, the Registrant acquired all of the outstanding shares
of Carolina Medical, Inc. ("CMI"), a Minnesota corporation, pursuant to a
Plan of Reorganization and Agreement (the "Plan") by and between the
Registrant and CMI, dated May 29, 1998. The Registrant acquired 1,987,002
shares of the CMI's Common Stock in exchange for 149,025.15 shares of its
Series A Preferred Stock. Each share of Series A Preferred Stock is
convertible into 96 shares of the Registrant's Common Stock. Each share of
Series A Preferred Stock votes and participates in dividends and liquidations
on an as-if-converted basis.
CMI was organized to facilitate the share exchange with the Registrant.
Carolina Medical, Inc., a North Carolina corporation was recently merged with
and into CMI. CMI develops, manufactures, markets and services digital
ultrasound imagers, electronic instruments for detecting circulatory system
disorders and measuring the flow and pressure of blood, and cardiac
monitoring systems. CMI has two subsidiaries: Braemar, Inc., and Advance
Medical Products, Inc. Braemar, Inc., a North Carolina corporation, is a
wholly-owned subsidiary of CMI that develops, manufactures and markets tape
recording devices for ambulatory ECG monitoring devices. CMI owns
approximately 55% of the issued and outstanding common stock, and all of the
issued and outstanding preferred stock, of Advanced Medical Product, Inc., a
publicly held Delaware corporation, that develops, manufactures, and markets
ambulatory ECG and blood pressure monitors.
ITEM 5. OTHER EVENTS
On July 23, 1998, Dr. Stephen L. Zuckerman resigned as a director of
the Registrant and the following five persons were appointed to serve as
directors of the Registrant until the next annual meeting of shareholders:
Ronald G. Moyer
C. Roger Jones
L. John Ankney
Spencer M. Vawter
David Heiden
On July 21, 1998, the Registrant's Board of Directors authorized the
merger of a wholly owned subsidiary of the Registrant, which has not yet been
organized, with and into Advanced Medical Products, Inc., subject to certain
terms and conditions. The Registrant and Advanced Medical Products, Inc. are
currently negotiating a definitive agreement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired.
To be filed by amendment not later than October 6, 1998.
(b) Pro forma financial information.
To be filed by amendment not later than October 6, 1998.
(c) Exhibits
(1) Attached as Exhibit 1 please find the Plan of
Reorganization and Agreement by and between Biosensor
Corporation and Carolina Medical, Inc. dated May 29, 1998.
ITEM 8. CHANGE IN FISCAL YEAR
On July 23, 1998, the Registrant determined to change its fiscal year
end to June 30, 1998 from May 31, 1998. The Registrant will adopt the fiscal
year of CMI, the accounting acquiror, and as such no transition report is
necessary.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BIOSENSOR CORPORATION
By:_____________________________
Ronald G. Moyer, Chief Executive Officer
EXHIBIT 1
PLAN OF REORGANIZATION AND AGREEMENT
THIS PLAN OF REORGANIZATION AND AGREEMENT (the "Agreement") made this
29th day of May 1998, by and among BIOSENSOR CORPORATION, a Minnesota
corporation with its principal office located at 7001 East Fish Lake Road,
Maple Grove, Minnesota 55311-2833 ("Biosensor"); and CAROLINA MEDICAL, INC.,
a North Carolina corporation with its principal office located at 157
Industrial Drive, King, North Carolina 27021-0307 ("CMI");
R E C I T A L S:
A. Biosensor is and has been engaged in the design, manufacture and
sale of ambulatory cardiac monitoring systems and other medical instruments
and software.
B. CMI is and has been engaged in the design, manufacture, sale and
service of blood flow measurement instruments, ultrasound imaging systems,
cardiac monitoring systems and other medical instruments and software.
C. The parties desire to effect a reorganization of their respective
businesses to enhance their ability to provide quality products and services.
D. The parties desire to effect a reorganization pursuant to this
Agreement in accordance with Section 368(a)(1)(B) of the Internal Revenue
Code of 1986, as amended (the "Code"). It is contemplated that CMI will
redomesticate to the State of Minnesota (as used in this Agreement, the
definition "CMI" shall include reference to CMI of Minnesota, Inc., a
Minnesota corporation, into which CMI intends to merge) and all of the
outstanding shares of stock of CMI will be exchanged for shares of preferred
stock of Biosensor as described below (the "Exchange").
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual agreements set forth below, the parties agree as follows:
1. Share Exchange. Biosensor and CMI are the constituent
corporations to the Exchange as contemplated by the Minnesota Business
Corporation Act (the "MN Act").
1.1 Exchange. Subject to the terms and conditions set forth in
this Agreement, from and after the Effective Time (as defined in
paragraph 1.3) of the Exchange:
(a) Common Stock. All of the issued and outstanding
shares of common stock of CMI shall be exchanged for shares of
the Series A Preferred Stock of Biosensor as described in
Paragraph 3.
(b) Effect. The separate corporate existence of CMI
shall continue as a wholly-owned subsidiary of Biosensor, and CMI
shall continue to possess all of its rights, privileges, powers,
immunities, purposes and franchises, of a public as well as of a
private nature; and all property, real, personal and mixed, and
all debts due on whatever account, and all other choses in
action, and all and every other interest, of or belonging to or
due to CMI, shall remain vested in CMI.
(c) Articles of Incorporation. The Articles of
Incorporation of neither party shall be amended by virtue of the
Exchange, and they shall continue in effect as their respective
Articles of Incorporation.
(d) Bylaws. The Bylaws of each party as constituted
immediately prior to the Exchange shall remain their Bylaws.
(e) Directors and Officers. The directors and officers of
Biosensor shall be as set forth on Exhibit 1.1(e)-1, and the
directors and officers of CMI shall be as set forth on Exhibit
1.1(e)-2.
1.2 Filing; Plan of Share Exchange. The Exchange shall not
become effective unless this Agreement is duly approved by shareholders
holding a majority of the shares of CMI, or such greater percentage as
may be required by the MN Act. Upon fulfillment or waiver of the
conditions specified in this Agreement, the parties will cause Articles
of Share Exchange in substantially the form of Exhibit 1.2 (the
"Articles of Share Exchange") to be executed and filed with the
Secretary of State of Minnesota. The Plan of Share Exchange, which is
a part of the Articles of Share Exchange, is incorporated herein by
this reference, and adoption of this Agreement by the Boards of
Directors of the parties and approval by CMI's shareholders shall
constitute adoption and approval of the Plan of the Share Exchange.
1.3 Effective Time. The Exchange shall be effective at the
date and hour specified in the Articles of Share Exchange filed with
the Secretary of State of Minnesota (the "Effective Time"), and,
notwithstanding the actual time the Articles of Share Exchange are
filed with the Secretary of State of Minnesota, for tax and accounting
purposes the Exchange shall be deemed to be effective as of 12:01 a.m.
central time, July 1, 1998.
2. Dissenting Shares. Any CMI shareholder who shall have lawfully
dissented from the Exchange in accordance with applicable law, and who has
properly exercised such holder's rights to demand payment of the value of the
holder's shares of common stock of CMI (the "Dissenting Shares") as provided
by applicable law (a "Dissenting Shareholder"), shall thereafter have only
such rights as are provided a Dissenting Shareholder in accordance with
applicable law and shall have no rights under paragraph 3; provided; however,
that if a Dissenting Shareholder shall withdraw (in accordance with
applicable law) the demand for appraisal or shall become ineligible for such
appraisal, then each of such Dissenting Shareholder's Dissenting Shares shall
automatically cease to be a Dissenting Share and shall be converted into and
represent only the right to receive the Consideration (as defined in
paragraph 3(a)(i)), without interest, upon surrender of the certificate(s)
representing such former Dissenting Share(s).
3. Exchange Consideration.
(a) Exchange Ratio; Issuance of Shares; Surrendering Procedure.
(i) As of the Effective Time, by virtue of the Exchange
and without any action on the part of the parties or the holders
of record of CMI's issued and outstanding shares of common stock
("CMI Shareholders"), each share of CMI's common stock issued and
outstanding immediately prior to the Effective Time shall be
converted into and shall represent the right to receive, upon
surrender of the certificate(s) representing such shares of CMI's
common stock, .075 shares of the Series A Preferred Stock of
Biosensor, and Biosensor shall by virtue of the Exchange, and
without any action on the part of Biosensor, be deemed to be the
holder of record of the number of outstanding shares of CMI
common stock issued and outstanding prior to the Effective Time
(other than Dissenting Shares). A certified copy of the
resolution of Biosensor's Board of Directors establishing its
Series A Preferred Stock, which describes all of its rights,
privileges, limitations and other attributes, is attached as
Exhibit 3(a)(i). Any fractional shares which would result from
the application of the foregoing conversion ratio shall be
rounded to the nearest whole number, and no fractional shares
shall be issuable by virtue of the Exchange. The shares of stock
to be issued by Biosensor pursuant to this paragraph shall be
referred to as the "Consideration."
(ii) The shares of capital stock of Biosensor issued and
outstanding immediately prior to the Effective Time will not be
converted, exchanged or altered in any manner as a result of the
Exchange, and will remain outstanding as shares of Biosensor.
(iii) Until surrendered, each outstanding certificate which
prior to the Effective Time represented one or more shares of
CMI's common stock shall be deemed upon the Effective Time for
all purposes to represent only the right to receive the
Consideration as described above. If issuance of the
Consideration is to be made to a person other than the one in
whose name a certificate surrendered is registered, it shall be a
condition of such payment that the certificate so surrendered
shall be properly endorsed or otherwise in proper form for
transfer, be free and clear of all liens, pledges, encumbrances,
security interests and other restrictions and that the person
requesting such payment shall pay to Biosensor any transfer or
other taxes required by reason of the payment to a person other
than the registered holder of the certificate surrendered or
establish to the satisfaction of Biosensor that such tax has been
paid or is not applicable. With respect to any certificate for
CMI's common stock that has been lost or destroyed, the
Consideration attributable to such certificate shall be issued
upon receipt of evidence and indemnity reasonably satisfactory to
Biosensor of ownership of the shares represented thereby. After
the Effective Time, no transfer of the shares of CMI's common
stock outstanding immediately prior to the Effective Time shall
be made on the stock transfer books of CMI.
(iv) As of the Effective Time, Biosensor shall cause to be
delivered or mailed to each of CMI's Shareholders a form of
letter of transmittal and instructions for use in effecting the
surrender of the certificates which, immediately prior to the
Effective Time, represented shares of CMI's common stock (the
"Certificates") to be exchanged for the Consideration. Upon
surrender of the Certificates at Closing (defined in paragraph 4)
or thereafter, together with such letter of transmittal, duly
executed and completed in accordance with the instructions
thereto, and such other documents as may be reasonably requested,
Biosensor shall promptly (but not preceding the Effective Time)
cause the Consideration to be paid to the persons entitled
thereto.
(b) Unregistered Securities. CMI understands that (i) neither
the shares of Biosensor's Series A Preferred Stock representing the
Consideration, nor the shares of Biosensor's common stock into which it
is convertible, shall be registered under The Securities Act of 1933
(the "Securities Act"), as amended, or any state securities or "blue
sky" laws, and as such must be held for any applicable holding period
under Rule 144 of the Securities Act, or any successor rule or
regulation and under any applicable state law, unless a disposition is
registered under the Securities Act and under any applicable state law,
or is exempt from registration, (ii) the certificates representing the
Consideration (and the common stock into which it is convertible) shall
bear a legend to such effect, and (iii) Biosensor will make or cause to
be made a notation on its transfer books to such effect. CMI shall
inform each of its shareholders of the restrictions applicable to the
Consideration as described above.
(c) Amendment to Biosensor's Charter. Biosensor has agreed,
pursuant to paragraph 9(j), to submit to its shareholders for approval,
proposals to effect a 1 for 6 reverse stock split of its issued and
outstanding common stock and, following the consummation of same, to
increase its authorized common stock to an amount sufficient to allow
for the conversion of all of the Consideration into common stock of
Biosensor. In the event that Biosensor effects either or both of these
adjustments to its capital structure prior to Closing, an appropriate
adjustment shall be made in the amount of and/or type of Consideration
issuable as a result of the Exchange.
4. The Closing. Except as may otherwise be agreed by the parties,
the closing (the "Closing") of the Exchange shall take place at the offices
of CMI's counsel, Blanco Tackabery Combs & Matamoros, P.A., in Winston-Salem,
North Carolina, at 10:00 a.m. on June 30, 1998 (the "Closing Date"), but with
effect as of the Effective Time.
5. Mutual Representations and Warranties. In order to induce each
of the parties to enter into and consummate this transaction, Biosensor makes
the following representations, warranties and covenants to CMI, and CMI makes
the following representations, warranties and covenants to Biosensor, on the
date hereof and on the Closing Date as if made on such date. The following
representations, warranties and covenants are being made by each of the
representing parties only with respect to itself, and with respect to CMI its
wholly-owned subsidiary, Braemar, Inc. ("Braemar"), but not with respect to
Advanced Medical Products, Inc. ("AMP"), and the representations, warranties
and covenants of the other party shall not be imputed to any other party to
this Agreement. References to "Items" as set forth below and elsewhere in
this Agreement are references to each of the parties' Disclosure Schedules,
which are attached to this Agreement and incorporated herein by this
reference.
(a) No Violation. Except as shown in Item 5(a), the execution,
delivery and performance of this Agreement and the consummation of this
transaction do not and will not conflict with, contravene or result in
a breach of any term or provision of, or constitute a default under, or
result in the creation of any lien or encumbrance upon a party's
properties or assets pursuant to, its Articles of Incorporation or
Bylaws, or any agreement or other instrument to which such party is a
party or by which it is bound or its properties are subject, or any
law, rule, regulation, judgment, order or decree. All consents by
third parties that are required to prevent or eliminate every such
conflict, breach, default, lien and encumbrance shall have been validly
obtained before Closing and at Closing shall be in full force and
effect and valid and sufficient for such purpose.
(b) Equipment. Item 5(b) contains a complete list of each
party's material items of property and equipment, including all
vehicles used in its business, tools, office furniture and equipment,
computer equipment, equipment held for lease or rental, demo equipment,
service equipment and all supplies.
(c) Consents. Except as set forth in Item 5(c), no
authorizations, approvals or consents of, or filings with, any
governmental agency or regulatory authority or any person are required,
and no federal, state or local permits, licenses and similar
authorizations are necessary, in order to properly effect this
transaction.
(d) Title. Except as set forth in Item 5(d), each party has
good and marketable title in fee simple to all of its assets
constituting real property and to all of its material assets
constituting personal property, free and clear of any mortgage, pledge,
lien, encumbrance, charge or title retention or other security
arrangement.
(e) Lawsuits. Except as set forth in Item 5(e), there are no
pending or, to the best of their knowledge, threatened actions, suits
or proceedings against any party involving its assets or operations,
nor, to the best of their knowledge, is there any basis for any such
action or proceeding. There is no outstanding order, judgment or
decree of any court having jurisdiction in any way prohibiting the
closing of this transaction or the operation of its business.
(f) Condition of Assets. To the best of their knowledge, all
material facilities, equipment and all other material items of tangible
property comprising the assets of each party are in good operating
condition and repair, subject to normal wear and maintenance, are
usable in the regular and ordinary course of business and conform to
all applicable laws, ordinances, codes, rules and regulations relating
to their construction, use and operation, the failure to comply with
which would have a material adverse effect on such party. Except as
described in Item 5(f), no person other than such party owns any
material items of equipment or other tangible assets or properties
necessary to the operation of such party's business.
(g) Names. Each party uses only the names set forth in Item
5(g) in its business. To the best of their knowledge, the use of such
names in the manner used by the parties does not infringe upon or
violate the terms, conditions or provisions of any patent, trademark,
service mark, trade name or copyright or other proprietary or similar
rights of any third party or of any agreement to which such party is a
party or by which such party is bound or of any judgment to which it is
subject.
(h) Tax Returns. No party has any unpaid taxes, assessments
(special, general or otherwise) or bonds of any nature affecting its
assets or business, except for 1998 ad valorem taxes which are not yet
due and payable. Except as disclosed in Item 5(h), the parties have
filed all returns and reports due to governmental authorities, the
failure to so file would have a material adverse effect on its
business, including but not limited to franchise, sales, withholding
and income tax returns and reports, and no extension of due dates are
in effect for any such returns and reports; each party has paid all
taxes and other amounts due in respect of all such returns and reports;
all such returns and reports are correct and complete to the best of
their knowledge; no claim has been asserted that any such return or
report is incorrect or incomplete; no audits are pending with respect
to any such return or report; no party has extended the statute of
limitations with respect to any tax return or report; and there are no
unpaid deficiencies, additional taxes, penalties or interest.
(i) Compliance with Laws. Except as set forth on Item 5(i),
neither party has to the best of its knowledge committed any violation
of or undertaken any act in contravention of any federal, state or
local statute, rule or ordinance, including those pertaining to
environmental laws, pollution control, waste management, hazardous
waste or any similar statute, rule or ordinance, specifically including
but not limited to the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended, the Hazardous
Materials Transportation Act, as amended, the Resource Conservation and
Recovery Act, as amended, and the regulations adopted thereunder, the
violation of which would have a material adverse effect on such party.
(j) Intangible Assets. Set forth in Item 5(j) is a list of all
material intangible or intellectual property used by each party in its
business (including without limitation a list of all material clients
and customers, patents, trademarks, service marks, copyrights, trade
secrets, proprietary information and know-how). To the best of their
knowledge, there exists no restriction on the use or transfer of any
such item. There are no interferences, challenges, proceedings or
infringement suits pending or, to the best of their knowledge,
threatened with respect to any such item. Except as set forth in Item
5(j), no party has granted a license to any other person or entity with
respect to any such item.
(k) Compensation. Each party has properly and accurately
reflected on its books and records all compensation paid to, and
perquisites provided to or on behalf of, its agents and employees.
Such compensation and perquisites have been properly and accurately
disclosed in its financial statements as described in this Agreement.
Item 5(k) contains a complete list of all material employee benefit
plans, whether formal or informal, whether or not set forth in writing,
and whether covering one person or more, sponsored or maintained by
each party, including without limitation, 401(k) plan, pension and
profit sharing plans, sick leave, vacation and disability policies,
insurance arrangements and the like.
(l) Affiliated Debt. Except as set forth on their respective
financial statements as described in this Agreement, (i) no party is
indebted to any of its shareholders, directors, officers, employees or
agents except for amounts due as normal salaries and wages, accrued
vacation and sick leave and in reimbursement of ordinary expenses on a
current basis, and (ii) no such shareholder, director, officer,
employee or agent is indebted to a party except for advancements for
ordinary business expenses in a normal amount not to exceed $100.00 for
any one person. Item 5(l) contains a complete list of all of such
indebtedness, regardless of whether it is set forth on a party's
financial statements.
(m) Records. The books of account and other corporate records
of each party, including minute books and stock transfer books, are in
all material respects complete, correct and current, and have been
maintained in accordance with good business practices and the matters
contained therein are accurately reflected in all material respects on
their financial statements as described in this Agreement, to the
extent appropriate.
(n) Warranties. There are no claims existing or, to the best
of their knowledge, threatened under or pursuant to any warranty,
whether expressed or implied, on products or services sold prior to the
date of this Agreement. Item 5(n) sets forth a description of all
material, express warranties given by such party in the operation of
its business.
(o) No Options. Except as set forth in Item 5(o), there are no
existing agreements, options, commitments or rights with, of or to any
person or entity to acquire any of the assets, properties or rights of
a party, except for those contracts entered into in the normal course
of business consistent with past practice for the provision of
services.
(p) Accounts Receivable. All rights to the payment of money,
whether or not earned by performance, and all accounts receivable,
prepaid expenses, unbilled costs and fees, accounts, notes and other
receivables of each party (including receivables from shareholders,
directors, officers and employees), a detailed schedule of which as of
the dates shown therein is set forth in Item 5(p), are valid and
genuine; have arisen solely out of bona fide sales of product,
performance of services and other business transactions in the ordinary
course of business consistent with past practice; to the best of their
knowledge, are not subject to valid defenses, set-offs or
counterclaims; and, to the best of their knowledge, are collectible
within ninety (90) days after billing at the full recorded amount
thereof. There are no pending or, to the best of their knowledge,
proposed or threatened actions, proceedings or audits by any
governmental authority which is also a client or customer of any party
pursuant to which such governmental authority is seeking to renegotiate
any rates and charges previously established with any such authority
for any existing receivables. The allowance for collection losses on
each party's financial statements as described in this Agreement has
been determined in accordance with generally accepted accounting
principles consistent with past practice and, to the parties knowledge,
are reasonably sufficient in amount as of this date and will be as of
the Closing Date.
(q) Insurance. The assets, properties and operations of each
party are insured under various policies of general liability, property
and casualty, errors and omissions and other forms of insurance, all of
which are described in Item 5(q), which discloses for each policy the
risks insured against, coverage limits, deductible amounts, all
outstanding claims thereunder, and whether the terms of such policy
provide for retrospective premium adjustments. All such policies are
in full force and effect in accordance with their terms, no notice of
cancellation has been received, and there is no known existing default
or known event which, with the giving of notice or lapse of time or
both, would constitute a default thereunder. All premiums due thereon
to date have been paid in full. No party has been refused any
insurance coverage, nor has any such coverage been limited, by any
insurance carrier to which it has applied for such insurance or with
which it has carried insurance. Item 5(q) also contains a true and
complete description of all outstanding bonds and other surety
arrangements issued or entered into in connection with the business,
assets and liabilities of each of the parties.
(r) Undisclosed Liabilities. Neither party has any liabilities
or obligations with respect to its business, either direct or indirect,
matured or unmatured, or absolute, contingent or otherwise, except (i)
those liabilities or obligations set forth on its financial statements
described in this Agreement and not heretofore paid or discharged; (ii)
liabilities arising in the ordinary course of business under any
agreement, commitment or plan as disclosed in Item 5(k); and (iii)
those liabilities or obligations incurred, consistent with past
business practice, in or as a result of the normal and ordinary course
of business since such party's Interim Balance Sheet Date (as defined
in paragraphs 6(b) and 7(b)). Liabilities described in (ii) and (iii)
herein are not, in the aggregate, materially greater in amount or type
than the liabilities shown on the Financial Statements described in
this Agreement.
(s) No Interest in Other Entities. Except as disclosed in Item
5(s), no shares of any corporation or any ownership or other investment
interest, either of record, beneficially or equitably, in any
corporation, association, partnership, joint venture or other legal
entity is owned by a party.
(t) Transactions with Affiliates. No shareholder, director,
officer or employee of a party, or any member of his/her immediate
family or any other of its, his or her affiliates, owns or has a five
percent (5%) or more ownership interest in any corporation, other
entity or proprietorship that is or was during the last three (3) years
a party to, or in any property which is or was during the last three
(3) years the subject of, any material contract, agreement or
understanding, business arrangement or relationship with such party,
except as set forth in Item 5(t).
(u) Leased Real Property. Item 5(u) contains a true and
correct listing of all leases of real property by each party as lessor
or sublessor, and to such party as lessee or sublessee, true and
complete copies of every such lease and sublease being attached to the
Disclosure Schedules. Each such lease and sublease is, and as of the
Effective Time shall be, in full force and effect and has not been
assigned, modified, supplemented or amended and, to the best of their
knowledge, neither a party hereto nor the landlord or (sub)lessee under
any such lease is in default thereunder, and no circumstances or state
of facts presently exist which, with the giving of notice or passage of
time, or both, would permit the other party to such lease or sublease
to terminate the same.
(v) Employee Benefit Plans. Set forth on Item 5(k) is an
accurate and complete list of all employee benefit plans within the
meaning of Section 3 of the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations thereunder ("ERISA"),
whether or not such employee benefit plans are otherwise exempt from
the provisions of ERISA. No party maintains or contributes to any
employee benefit plan subject to ERISA which is not, or in the past has
not been, in substantial compliance with ERISA, or which has incurred
any accumulated funding deficiency, or which has applied for or
obtained a waiver from the Internal Revenue Service of any minimum
funding requirement under the Code. No party has incurred any
liability to the Pension Benefit Guaranty Corporation in connection
with any employee benefit plan, and neither party knows of any facts or
circumstances which might give rise to any such liability. Full
payment has been made of all amounts which such party is required,
under applicable law or under the terms of any employee benefit plan or
any agreement relating thereto, to have paid as contributions thereto
as of the last day of the most recent fiscal year of such employee
benefit plan ended prior to the date of this Agreement. Each party has
made adequate provision for reserves to meet contributions that have
not been made because they are not yet due under the terms of any such
plan or related agreements. Each employee benefit plan intended to be
qualified under Section 401(a) of the Code has been determined to be so
qualified by the Internal Revenue Service, and nothing has occurred
since the date of the last such determination which resulted or is
likely to result in the revocation of such determination. No party (or
its predecessors) has been a party to any "multi-employer plan" as
defined by Section 3(37) of ERISA. No "reportable event" (as defined
in Section 4043 of ERISA) has occurred with respect to any employee
benefit plan maintained by a party, and no party has engaged in any
transaction with respect to an employee benefit plan which would
subject it to a tax, penalty or liability for prohibited transactions
under ERISA or the Code, nor has its directors, officers or employees,
to the extent any of them are fiduciaries with respect to such plans,
breached any of their responsibilities or obligations imposed upon
fiduciaries under ERISA. The execution of, and consummation of the
transactions contemplated by, this Agreement do not and will not
constitute a triggering event under any employee benefit plan, policy,
arrangement, statement, commitment or agreement, whether or not
legally enforceable, which (either alone or upon the occurrence of any
additional or subsequent event) will or may result in any payment
(whether of severance pay or otherwise), acceleration, vesting or
increase in benefits to any of its employees, former employees or
directors.
(w) Conditions Affecting the Parties. Except as described in
Item 5(w), there is no fact, development or threatened development with
respect to the markets, products, services, clients, customers,
facilities, personnel, vendors, suppliers, operations, assets or
prospects of a party's business which are known to such party which
would materially adversely affect its business, operations or prospects
considered as a whole, other than such conditions as may affect the
economy generally. Neither party has any reason to believe that any
loss of any employee, agent, client, customer or supplier or other
advantageous arrangement will result because of the consummation of the
transactions contemplated by this Agreement.
(x) Advances and Deposits. Item 5(x) contains a complete list
of each party's employee advances, refundable deposits and refundable
dues, in each case in excess of $100, as of the dates shown therein.
(y) Inventories. Item 5(y) contains a complete list of all
material items of each party's inventories as of the dates shown
therein. The inventory of the parties consists of raw materials and
supplies, manufactured and purchased parts, goods in process and
finished goods, all material portions thereof being merchantable and
fit for the purpose for which it was procured or manufactured, subject
only to the reserve for inventory writedown set forth on such party's
balance sheet contained its Financial Statements described herein, as
adjusted for the passage of time through the Closing Date in accordance
with the past custom and practice of such party.
(z) Software. Item 5(z) contains a complete list of all
material software licensed by or to each of the parties.
(aa) Contracts. Item 5(aa) contains a complete list of each
party's material agreements, contracts and leases relating to its
business; true and complete copies of each such contract being attached
thereto.
(bb) Life Insurance Policies. Item 5(bb) contains a complete
list of all life insurance policies owned by each party on the life of
any shareholder, director, officer or employee, subject to policy loans
outstanding in the amounts shown in the Disclosure Schedules as of the
dates shown therein.
(cc) Licenses and Permits. Item 5(cc) contains a true, correct
and complete list of all material governmental permits, licenses,
registrations and other governmental consents which each party has
obtained in connection with its assets or operations, and to the best
of their knowledge no others are required. All such permits, licenses,
registrations and consents are in full force and effect, and the
continued validity thereof shall not be adversely affected by the
consummation of the Exchange. No party has received any notice of any
claim of revocation of any such permit, license, registration or other
consent, nor does any party have knowledge of any event which might
give rise to such a claim.
(dd) Accounts. Item 5(dd) lists the name and address of every
financial institution at which a party maintains an account (whether
checking, savings or otherwise), lock box or safety deposit box for its
business, and the account numbers and names of persons having signing
authority or other access thereto.
(ee) Employees. Except as set forth in Item 5(ee), no officer
or key employee, or any group of key employees, intends to terminate
his, her or their employment with the party, nor does the party have a
present intention to terminate the employment of any of the foregoing.
To the party's knowledge it has complied in all material respects with
all applicable state and federal equal employment opportunity and other
laws related to employment. To the party's knowledge, none of its
employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreements, or that
would interfere with the use of his or her best efforts to promote the
interests of such party or that would materially conflict with the
party's business as currently proposed to be conducted.
(ff) Labor Agreements and Actions. Neither party is bound by or
subject to (and none of its assets or properties is bound by or subject
to) any written or oral, express of implied, contract, commitment or
arrangement with any labor union, and no labor union has requested or,
to the party's knowledge, has sought to represent any of the employees,
representatives or agents of such party. There is no strike or other
labor dispute involving either party pending or, to the party's
knowledge, threatened, that could have a material adverse effect on the
assets, properties, financial condition, operating results or business
of such party (as such business is presently conducted and as it is
proposed to be conducted), nor is the party aware of any labor
organization activity involving its employees.
(gg) Patents and Trademarks. A complete and accurate list of
all patents, patent applications, licenses, trademarks and copyrights
owned by the party is set forth in Item 5(gg). Each party has
sufficient title and ownership of, or licenses to, all patents,
trademarks, trade names, copyrights, trade secrets, information,
proprietary rights and processes, without any conflict with or
infringement of the rights of others, necessary for its business as now
conducted and as currently proposed to be conducted. Except as set
forth in Item 5(gg), there are no outstanding options, licenses or
agreements of any kind relating to the foregoing, nor is such party
bound by or a party to any options, licenses or agreements of any kind
with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, proprietary rights
and processes of any other person or entity. The party has not
received any communications alleging that it has violated, or by
conducting its business as proposed would violate, any patents,
trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights of any other person or entity.
(hh) Accuracy. The information set forth in the parties'
respective Disclosure Schedules is true, complete and accurate in all
material respects.
(ii) Representations. No representation or warranty by a party
in this Agreement or any instrument, certificate or statement furnished
pursuant hereto, or in connection with this transaction, contains or
will contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements contained herein or
therein not misleading.
6. Representations and Warranties of Biosensor. In order to induce
CMI to enter into and consummate this transaction, in addition to the other
representations, warranties and covenants set forth elsewhere in this
Agreement, Biosensor represents, warrants and covenants to and with CMI on
the date hereof and unless otherwise indicated, on the Closing Date as
follows:
(a) Authority. Biosensor is a corporation duly formed and
validly existing under the laws of the State of Minnesota, and is duly
qualified in the State(s) listed in Item 6(a). Subject to satisfaction
of the conditions to Closing set forth in Section 10, Biosensor has
full power and authority to enter into and to perform its obligations
under this Agreement, and this Agreement is, and all other documents
delivered to CMI at Closing will be, duly executed and delivered on
behalf of Biosensor, and the legal, valid and binding obligations of
Biosensor, enforceable in accordance with their respective terms.
(b) Financial Statements. Attached to Item 6(b) of Biosensor's
Disclosure Schedules are financial statements of Biosensor
(collectively, "Biosensor's Financial Statements"), consisting of a
Balance Sheet and Statement of Operations dated May 31, 1997 and 1996
audited by McGladrey & Pullen, and an internally prepared Statement of
Income and Expenses and Balance Sheet as of February 28, 1998 (the
"Interim Balance Sheet Date"). Each of Biosensor's Financial
Statements fairly present in all material respects the financial
position and results of operations of Biosensor as of the dates thereof
and for the periods indicated. Since the Interim Balance Sheet Date,
there has been, and will be, no material adverse change in the
financial condition, results of operations, business or prospects of
Biosensor, nor has there been any damage or destruction in the nature
of a casualty loss, whether covered by insurance or not, that has had a
material adverse effect on Biosensor, its assets or business. Since
the Interim Balance Sheet Date, Biosensor has not engaged, and will not
engage, in any transaction not in the ordinary course of business,
including the transactions described in Section 8(c). The internally
prepared Financial Statements described above contain all adjustments,
which are solely of a normal recurring nature, necessary to present
fairly the financial position for the period then ended.
(c) Capitalization. As of the date hereof, but not as of the
Closing, the entire authorized capital of Biosensor consists of
5,000,000 shares of capital stock, 4,850,000 of which are designated as
Class A Common Stock and 150,000 of which have been designated Series A
Preferred Stock (each of which is convertible into 96 shares of common
stock). Of the 4,850,000 shares of Class A Common Stock authorized,
2,843,055 shares are issued and outstanding. There are no shares of
Series A Preferred Stock issued and outstanding. Except as provided
above or in Item 6(c) of Biosensor's Disclosure Schedules, there are no
authorized, outstanding or existing (i) voting trusts or other
agreements or understandings with respect to the voting of Biosensor's
stock; (ii) securities convertible into or exchangeable for capital
stock of Biosensor; (iii) options, warrants or other rights (including
preemptive rights) to purchase, repurchase or to subscribe for any of
Biosensor's capital stock, or any authorized but unissued shares of
Biosensor's capital stock; (iv) agreements of any kind relating to the
issuance of capital stock of Biosensor or any other type or form of
securities or any options, warrants or rights; or (v) agreements of any
kind which may obligate Biosensor to issue or repurchase any of its
securities. None of the issued and outstanding shares of Biosensor has
been issued in violation of any preemptive or other rights of
stockholders.
(d) Shares. The Consideration will, upon the issuance and
delivery thereof in accordance with this Agreement, constitute legally
and validly authorized and issued, fully paid and nonassessable shares
of Series A Preferred Stock of Biosensor. The shares of stock of
Biosensor representing the Consideration will be issued to CMI's
Shareholders in compliance with all applicable laws, rules and
regulations, including the Securities Act and state securities or "blue
sky" laws.
(e) Reports. Since December 31, 1994, Biosensor has filed all
reports, registrations and statements, together with any required
amendments thereto, that it was required to file with (i) The
Securities and Exchange Commission ("SEC"), including but not limited
to, Forms 10K, Forms 10Q and Proxy Statements, and (ii) all other
governmental authorities maintaining regulatory jurisdiction over
Biosensor. All such reports and statements filed with any such
regulatory body or authority are collectively referred to as the
"Biosensor Reports." As of their respective dates, the Biosensor
Reports complied in all material respects with all the rules and
regulations promulgated by the SEC, any applicable state securities
authorities, and all other governmental or regulatory bodies or
authorities maintaining jurisdiction over Biosensor, as the case may
be, and did not contain any untrue statement of a material fact or omit
to state a 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. None of the information
regarding Biosensor supplied by Biosensor for inclusion in any
documents to be filed with the SEC or any regulatory authority in
connection with this transaction will, at the respective times such
documents are filed with the SEC or any regulatory authority and, with
respect to any proxy statement when mailed and at the time of the
meeting of shareholders referred to therein, be false or misleading
with respect to any material fact or omit to state any material fact
necessary in order to make the statements therein not misleading. All
documents (or portions thereof) which Biosensor prepares and is
responsible for filing with the SEC and any other regulatory authority
or body in connection with this transaction will comply as to form and
substance in all material respects with the provisions of applicable
law; provided, however, Biosensor disclaims any responsibility or
liability for information included in such filings that was provided by
CMI, its agents or representatives.
(f) Contracts. Item 6(f) lists the following contracts and
other agreements to which Biosensor is a party:
(i) Any agreement (or group of related agreements) for
the lease of personal property to or from any person providing
for lease payments in excess of $25,000 per annum;
(ii) Any agreement (or group of related agreements) for
the purchase or sale of raw materials, commodities, supplies,
products or other personal property; for the furnishing or
receipt of services, the performance of which will extend over a
period of more than one year; or which will result in a loss to
Biosensor, or involve consideration, in excess of $25,000;
(iii) Any agreement concerning a partnership or joint
venture;
(iv) Any agreement (or group of related agreements) under
which it has created, incurred, assumed or guaranteed any
indebtedness for borrowed money, or any capitalized lease
obligation, in excess of $25,000 or under which it has imposed a
security interest on any of its assets, tangible or intangible;
(v) Any agreement concerning confidentiality or
noncompetition;
(vi) Any written agreement for the employment of any
individual on a full-time, part-time, consulting or other basis
providing annual compensation in excess of $75,000 or providing
severance benefits;
(vii) Any agreement under which it has advanced or loaned
any amount to any of its directors, officers and employees
outside the ordinary course of business;
(viii) Any agreement under which the consequences of a
default or termination could have a material adverse effect on
the business, financial condition, operations, results of
operations or future prospects of Biosensor; or
(ix) Any other agreement (or group of related agreements)
the performance of which involves consideration in excess of
$50,000.
Biosensor has delivered to CMI a correct and complete copy of
each written agreement listed in Item 6(f) (as amended to date) and a
written summary setting forth the terms and conditions of each oral
agreement referred to therein. With respect to each such agreement:
(A) the agreement is legal, valid, binding, enforceable and in full
force and effect; (B) the agreement will continue to be legal, valid,
binding, enforceable and in full force and effect on identical terms
following the consummation of this transaction; (C) Biosensor is not in
breach or default thereunder, and no event has occurred which with
notice or lapse of time would constitute a breach or default by
Biosensor, or permit termination, modification or acceleration, under
such agreement, and (D) no party has repudiated any provision of the
agreement.
70 Representations and Warranties of CMI. In order to induce
Biosensor to enter into and consummate this transaction, in addition to the
other representations, warranties and covenants set forth in this Agreement,
CMI represents, warrants and covenants to and with Biosensor on this date and
as of the Closing Date as follows:
(a) Corporate Organization of CMI. CMI is a corporation duly
organized, validly existing, and in good standing under the laws of the
State of North Carolina. Following the completion of CMI's
redomestication to Minnesota, CMI shall be a corporation duly
organized, validly existing, and in good standing under the laws of the
State of Minnesota. Subject to satisfaction of the conditions to
Closing set forth in Section 9, CMI has full power and authority to
enter into and to perform its obligations under this Agreement, and
this Agreement is, and all other documents delivered to Biosensor at
Closing will be, duly executed and delivered on behalf of CMI, and the
legal, valid and binding obligations of CMI, enforceable in accordance
with their respective terms.
(b) Financial Statements. Attached to Item 7(b) of CMI's
Disclosure Schedules are financial statements of CMI (collectively
"CMI's Financial Statements") consisting of a Balance Sheet and
Statement of Operations dated June 30, 1997 and June 30, 1996, audited
by Royster Smith Shelton & Co., and an internally prepared Balance
Sheet and Statement of Income and Expenses as of March 31, 1998 ("CMI's
Interim Balance Sheet Date"). Also attached to Item 7(b) is an
internally prepared Balance Sheet and Statement of Income and Expenses
(collectively "Braemar's Financial Statements") as of March 31, 1998
("Braemar's Interim Balance Sheet Date"). Each of CMI's and Braemar's
Financial Statements fairly present in all material respects the
financial position and results of operations of CMI or Braemar as of
the date thereof and for the periods indicated. Since the respective
Interim Balance Sheet Dates for CMI and Braemar, there has been, and
will be, no material adverse change in the financial condition, results
of operations, business or prospects of CMI or Braemar, as the case may
be, nor has there been any damage or destruction in the nature of a
casualty loss, whether covered by insurance or not, that has a material
adverse effect on CMI, its assets or business. Since the Interim
Balance Sheet Date, neither CMI nor Braemar has engaged, and neither
will engage, in any material transaction not in the ordinary course of
business, including the transactions described in Section 8(e). The
internally prepared Financial Statements described above contain all
adjustments, which are solely of a normal recurring nature, necessary
to present fairly the financial position for the period then ended.
(c) Capitalization. The entire authorized capital stock of CMI
consists of 4,000,000 shares of common stock, par value $.20 per share,
of which 1,974,608 shares are currently issued and outstanding and
owned of record and beneficially as listed in Item 7(c) of CMI's
Disclosure Schedules. Except as described in Item 7(c) of CMI's
Disclosure Schedules, there are no authorized, outstanding or existing
(i) voting trusts or other agreements or understandings with respect to
the voting of CMI's stock; (ii) securities convertible into or
exchangeable for CMI's capital stock; (iii) options, warrants or other
rights (including preemptive rights) to purchase, repurchase or
subscribe for any of CMI's capital stock, or any authorized but
unissued shares of CMI's capital stock; (iv) agreements of any kind
relating to the issuance of stock of CMI, any other type or form of
securities or any options, warrants or rights; or (v) agreements of any
kind which may obligate CMI to issue or repurchase any of its shares of
capital stock.
(d) Intentionally Omitted.
(e) Contracts. Item 7(e) lists the following contracts and
other agreements to which CMI or Braemar is a party:
(i) Any agreement (or group of related agreements) for
the lease of personal property to or from any person providing
for lease payments in excess of $25,000 per annum;
(ii) Any agreement (or group of related agreements) for
the purchase or sale of raw materials, commodities, supplies,
products or other personal property; for the furnishing or
receipt of services, the performance of which will extend over a
period of more than one year; or which will result in a loss to
CMI or Braemar, or involve consideration, in excess of $25,000;
(iii) Any agreement concerning a partnership or joint
venture;
(iv) Any agreement (or group of related agreements) under
which it has created, incurred, assumed or guaranteed any
indebtedness for borrowed money, or any capitalized lease
obligation, in excess of $25,000 or under which it has imposed a
security interest on any of its assets, tangible or intangible;
(v) Any agreement concerning confidentiality or
noncompetition;
(vi) Any written agreement for the employment of any
individual on a full-time, part-time, consulting or other basis
providing annual compensation in excess of $75,000 or providing
severance benefits;
(vii) Any agreement under which it has advanced or loaned
any amount to any of its directors, officers and employees
outside the ordinary course of business;
(viii) Any agreement under which the consequences of a
default or termination could have a material adverse effect on
the business, financial condition, operations, results of
operations, or future prospects of CMI or Braemar; or
(ix) Any other agreement (or group of related agreements)
the performance of which involves consideration in excess of
$50,000.
CMI has delivered to Biosensor a correct and complete copy of
each written agreement listed in Item 7(e) (as amended to date) and a
written summary setting forth the terms and conditions of each oral
agreement referred to therein. With respect to each such agreement:
(A) the agreement is legal, valid, binding, enforceable and in full
force and effect; (B) the agreement will continue to be legal, valid,
binding, enforceable and in full force and effect on identical terms
following the consummation of this transaction; (C) neither CMI nor
Braemar is in breach or default thereunder, and no event has occurred
which with notice or lapse of time would constitute a breach or default
by CMI or Braemar, or permit termination, modification or acceleration,
under such agreement, and (D) no party has repudiated any provision of
the agreement.
80 Mutual Covenants. The parties each agree that pending Closing,
except as otherwise agreed to in writing by the other party:
(a) Consummation of Agreement. They shall use their reasonable
efforts to perform and fulfill all conditions and obligations on their
respective parts to be performed and fulfilled under this Agreement, to
the end that the transactions contemplated by this Agreement shall be
fully carried out.
(b) Prohibition Against Employment of Personnel. In the event
this transaction is not consummated, no party shall offer employment to
any employee of the other or any of its affiliates for a period of
twenty-four (24) months from the effective date of Closing.
(c) Confidential Information. The parties agree to receive and
treat Confidential Information, as defined below, on a confidential and
restricted basis and to undertake the following additional obligations
with respect to the Confidential Information:
(i) To use the Confidential Information for the sole
purpose of evaluating the feasibility of consummating the
transactions described in this Agreement;
(ii) Not to disclose Confidential Information to any
entity, individual, corporation, partnership, sole
proprietorship, supplier, customer, client, attorney or
accountant without the express written consent of the providing
party, except for purposes of consummating or evaluating this
transaction;
(iii) To return all Confidential Information to the
provider thereof and to destroy all notes and records regarding
the Confidential Information, upon the termination of this
transaction within five (5) days of receiving a written request
from the providing party and to provide a written certification
to the providing party that the recipient party has not retained
any Confidential Information and has destroyed all notes and
records regarding the Confidential Information prepared by or on
behalf of the recipient;
(iv) To cause all agents and employees of a party,
including the agents and employees of any parent, subsidiary or
affiliated corporations or business entities, having access to
the Confidential Information to comply with the terms and
conditions of this paragraph 8(c); and
(v) For purposes of this Agreement, "Confidential
Information" shall mean all written and verbal information
provided by any party to the other in connection with this
transaction regardless of its labeling as "Confidential."
Confidential Information shall include, without limitation or
restriction, any and all customer lists, pricing information,
financial statements and information, agreements, records,
supplier contracts, customer contracts, trade secrets, and
business practices and methodologies.
(d) Conduct of Business. Their businesses shall be conducted
solely in the ordinary course consistent with past practice.
(e) Negative Covenants. No party shall:
(i) Incur any liabilities, other than liabilities
incurred in the ordinary course of business consistent with past
practice, or discharge or satisfy any lien or encumbrance, or pay
any liabilities, other than in the ordinary course of business
consistent with past practice, or fail to pay or discharge when
due any liabilities of which the failure to pay or discharge will
cause any material damage or risk of material loss to any of its
assets or properties;
(ii) Sell, encumber, assign or transfer any of its
material assets or properties, except for the sale of inventory
in the ordinary course of business consistent with past practice;
(iii) Create, incur, assume or guarantee any indebtedness
for money borrowed, or mortgage, pledge or subject any of its
assets to any mortgage, lien, pledge, security interest,
conditional sales contract or other encumbrance of any nature
whatsoever;
(iv) Make or suffer any amendment or termination of any
material agreement, contract, commitment, lease or plan to which
it is a party or by which it is bound, or cancel, modify or waive
any substantial debts or claims held by it or waive any rights of
substantial value, whether or not in the ordinary course of
business;
(v) Distribute any assets to any shareholder;
(vi) Suffer any material adverse change in its business,
operations, assets, properties or financial condition;
(vii) Make commitments or agreements for any material
capital expenditures or capital additions or betterments, except
such as may be involved in ordinary and necessary repair,
maintenance or replacement of its assets;
(viii) Renew, extend, modify or enter into any
existing or new employment contract, or increase the salaries or
other compensation of, or make any advance (excluding advances
for ordinary and necessary business expenses) or loan to,
shareholders, directors, officers and employees or make any
increase in, or any addition to, other benefits to which any of
its employees may be entitled;
(ix) Change any of the accounting principles followed by
it or the methods of applying such principles;
(x) Except as otherwise described in this Agreement or
any party's Disclosure Schedules, enter into any transaction
other than in the ordinary course of business consistent with
past practice;
(xi) Change its Articles of Incorporation (except, in the
case of Biosensor, for those changes as described in this
Agreement) or Bylaws, or issue any additional shares or options,
warrants or other rights to acquire any of its shares or other
securities (except, in the case of CMI, as described on Exhibit
8(e)(xi); or
(xii) Agree to any of the foregoing.
(f) Maintenance. They shall continue to maintain and service
the physical assets used in the conduct of their businesses in the same
manner as has been their consistent past practice.
(g) Employees. They shall use reasonable efforts to keep
available the services of the present employees and agents of their
businesses and to maintain the relations and goodwill with their
suppliers, clients, customers, distributors and any others having
business relations with them.
(h) Insurance. They shall notify the other party of any
changes in the terms of its insurance policies and binders.
(i) Compliance with Laws. They shall comply with all laws,
ordinances, rules, regulations and orders applicable to their
businesses or operations, assets or properties in respect thereof, the
noncompliance with which might materially adversely affect its
business.
(j) Disclosure. Each party shall promptly disclose to the
other party any information contained in its representations,
warranties, Exhibits or Disclosure Schedules which, because of an event
occurring after the date hereof, is incomplete or is no longer correct
as of all times after the date hereof until the Effective Time;
provided, however, but except as allowed pursuant to paragraph 23, that
none of such disclosures shall be deemed to modify, amend or supplement
such party's representations, warranties, Exhibits or Disclosure
Schedules for the purposes of paragraphs 5, 6 and 7, unless the other
party has consented thereto in writing.
(k) Representations and Warranties. Each party shall use
reasonable efforts to conduct its business in such a manner that as of
the Effective Time its representations and warranties contained in this
Agreement shall be true, as though such representations and warranties
were made on and as of such date. Furthermore, each party shall
cooperate with the other party and use reasonable efforts to cause all
of the conditions to its obligations under this Agreement to be
satisfied on or prior to the Closing Date.
(l) No Mortgaging. No party shall, directly or indirectly,
sell or encumber all or any part of its assets, other than in the
ordinary course of its business consistent with past practice, or
initiate or participate in any discussions or negotiations or enter
into any agreement to do any of the foregoing.
(m) Inspection and Access. Each party shall give to the other
party and its officers, employees, counsel, accountants and other
representatives free and full access to and the right to inspect,
during normal business hours, all of the premises, properties, assets,
records, contracts and other documents relating to its business and
shall permit them to consult with shareholders, employees, accountants,
counsel and agents for the purpose of making such investigations as
they shall desire to make, provided that such investigations shall not
unreasonably interfere with the investigated party's business
operations. Furthermore, each party shall furnish to the other party
all such documents and copies of documents and records and information
with respect to the affairs of its business and copies of any working
papers relating thereto as any party shall from time to time reasonably
request and shall permit any party and its agents to make such physical
inventories and inspections of the assets of its business as any party
may request from time to time.
90 Conditions Precedent to CMI's Obligations. All obligations of
CMI under this Agreement are subject to the fulfillment or satisfaction,
prior to or as of the Closing Date, of each of the following conditions
precedent:
(a) Accuracy of Representations and Warranties. The
representations and warranties of Biosensor contained in this Agreement
or in any Exhibit, Disclosure Schedule, certificate or document
delivered by Biosensor to CMI pursuant to this Agreement shall have
been true on this date without regard to any updates furnished by
Biosensor after this date and shall be true as of the Effective Time
with the same effect as though such representations and warranties were
made as of such date. For purposes of determining the truth or
accuracy of Biosensor's representations and warranties as of the
Effective Time under this provision only, use of the terms "material"
or "materiality" in or with respect to Biosensor's representations and
warranties shall mean the loss or potential loss of $100,000 or more.
(b) Compliance with Agreement. Biosensor shall have performed
and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it prior to or at the
Closing.
(c) Legal Opinion. Furber Timmer Zahn, PLLP, legal counsel for
Biosensor, shall have delivered to CMI a written opinion, dated the
Closing Date, which shall be in form and substance reasonably
satisfactory to CMI and its counsel.
(d) No Suits. As of the Effective Time, no suit, action or
other proceeding, or injunction or final judgment relating thereto of
which any party has received notice, shall be threatened or be pending
before any court or governmental or regulatory official, body or
authority in which it is sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no
investigation of which any party has received notice that might result
in any such suit, action or proceeding shall be pending or threatened.
(e) Consents. All of the consents and approvals described in
paragraph 5(c) shall have been obtained, together with all other
consents or approvals which are reasonably determined by CMI to be
necessary to the consummation of this transaction, and evidence thereof
shall be provided to CMI at or prior to Closing.
(f) No Material Adverse Effect. The business, operations,
assets, properties or prospects of Biosensor's business shall not have
been, or be threatened to be, adversely affected in any material way as
a result of any event or occurrence. For purposes of this provision
only, "materiality" shall mean the loss or potential loss of $100,000
or more.
(g) Employment Agreements. Each of the key employees of
Biosensor identified on Exhibit 9(g) shall have executed and delivered
to it an employment agreement in form and content satisfactory to CMI.
(h) Shareholder Approval. The shareholders of CMI shall have
approved the Exchange as required by applicable law, and CMI
Shareholders holding no more than five percent (5%) of its common stock
shall have given effective notice of intent to seek appraisal rights
with respect to his or her shares of capital stock of CMI.
(i) Release of Guaranty. Biosensor's guaranty with regard to
all financing for the construction and/or acquisition of Biosensor's
facility at 7001 East Fish Lake Road, Maple Grove, Minnesota shall be
terminated and released, and evidence of same shall be provided to CMI.
(j) Reverse Stock Split, Etc. Biosensor shall have prepared
and submitted to its shareholders a Proxy Statement which relates to
proposals to (A) effectuate a 1 for 6 reverse stock split of all the
outstanding shares of common stock of Biosensor and (B) amend
Biosensor's Articles of Incorporation to (i) change Biosensor's name
to "BIOTEL Inc.," and (ii) increase the amount of authorized common
stock (following the effectuation of the reverse stock split described
above) to 10,000,000 shares. CMI shall have the right to approve the
form and content of this Proxy Statement, and Biosensor agrees that it
shall use reasonable efforts to cause a meeting of shareholders to be
held to act on the foregoing matters no later than July 31, 1998;
provided, the parties acknowledge that certain aspects of holding a
shareholders' meeting are not within the control of Biosensor.
(k) Merger Consideration. Biosensor shall have made the
aggregate Consideration available for issuance to CMI's Shareholders
upon satisfaction of the surrender procedures set forth in this
Agreement.
(l) Certificate of Officer. Biosensor shall deliver to CMI a
certificate signed by Biosensor's chief executive officer and chief
financial officer to the effect that each of the conditions specified
in Section 9(a), (b), (f) and (j) have been satisfied in all respects.
100 Conditions Precedent to Biosensor's Obligations. All obligations
of Biosensor under this Agreement are subject to the fulfillment or
satisfaction, prior to or as of the Closing Date, of each of the following
conditions precedent:
(a) Accuracy of Representations and Warranties. The
representations and warranties of CMI contained in this Agreement or in
any Exhibit, Disclosure Schedule, certificate or document delivered by
CMI to Biosensor pursuant to this Agreement shall have been true on
this date without regard to any updates furnished by CMI after this
date and shall be true as of the Effective Time with the same effect as
though such representations and warranties were made as of such date.
(b) Compliance with Agreement. CMI shall have performed and
complied with all agreements and conditions required by this Agreement
to be performed or complied with by it prior to or at the Closing.
(c) Legal Opinion. Blanco Tackabery Combs & Matamoros, P.A.,
legal counsel for CMI, shall have delivered to Biosensor a written
opinion, dated the Closing Date, which shall be in form and substance
reasonably satisfactory to Biosensor and its counsel.
(d) No Suits. As of the Effective Time, no suit, action or
other proceeding, or injunction or final judgment relating thereto of
which any party has received notice, shall be threatened or be pending
before any court or governmental or regulatory official, body or
authority in which it is sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the
consummation of this transaction, and no investigation of which any
party has received notice that might result in any such suit, action or
proceeding shall be pending or threatened.
(e) Consents. All of the consents and approvals described in
paragraph 5(c) shall have been obtained, together with all other
consents or approvals which are reasonably determined by Biosensor to
be necessary to the consummation of this transaction, and evidence
thereof shall be provided to Biosensor at or prior to Closing.
(f) No Material Adverse Effect. The business, operations,
assets, properties or prospects of CMI's business shall not have been,
or be threatened to be, adversely affected in any way as a result of
any event or occurrence.
(g) CMI Shareholder Approval. CMI's shareholders shall have
approved the Exchange as required by NC law and MN law and CMI
Shareholders holding no more than five percent (5%) of CMI's common
stock shall have given effective notice of intent to seek appraisal
rights with respect to his or her shares of capital stock of CMI.
(h) Certificate of Officer. CMI shall deliver to Biosensor a
certificate signed by CMI's chief executive officer and chief financial
officer to the effect that each of the conditions specified in Section
10(a), (b) and (g) have been satisfied in all respects.
110 Indemnity.
(a) By Biosensor. Biosensor agrees to indemnify and hold CMI
and its directors, officers, employees, agents and representatives (an
"Indemnified Party") harmless from and against any and all losses,
costs, expenses, damages or liabilities (including, without limitation,
court costs and attorneys' fees) incurred or suffered by an Indemnified
Party arising out of, resulting from or attributable to any breach of
any agreement or covenant or any representation or warranty by
Biosensor contained in or given pursuant to this Agreement, regardless
of the nature or the manner in which any such claims or liabilities
arise.
(b) By CMI. CMI agrees to indemnify and hold Biosensor and its
directors, employees, agents and representatives (an "Indemnitee")
harmless from and against any and all losses, costs, expenses, damages
or liabilities (including, without limitation, court costs and
attorney's fees) incurred or suffered by an Indemnitee arising out of,
resulting from, or attributable to any breach of any agreement or
covenant or any representation or warranty by CMI contained in or given
pursuant to this Agreement, regardless of the nature or the manner in
which any such claims or liabilities arise.
(c) Limitations. Notwithstanding any provision contained
herein to the contrary, an Indemnified Party or Indemnitee shall have
no claim for indemnification hereunder unless such claim is asserted by
the Indemnified Party or Indemnitee within 120 days after discovery and
gives written notice to the indemnifying party of the discovery of any
breach of any covenant, warranty, representation or agreement giving
rise to a claim for indemnification as provided in this paragraph and
such claim is asserted, as provided in this paragraph, not later than
two (2) years from Closing. In case any event shall occur which would
otherwise entitle either party to assert a claim for indemnification,
no loss, damage or expense shall be deemed to have been sustained by
such party to the extent of (i) any tax savings realized by such party
with respect thereto, or (ii) any proceeds received by such party from
any insurance policy with respect thereto. No party shall be liable
under this provision for a loss resulting from any event relating to a
breach of any representation or warranty if it can be established that
the Indemnified Party or the Indemnitee had actual knowledge on or
before Closing of such event. Further, an Indemnified Party or
Indemnitee shall be entitled to indemnification only when, and only
with respect to amounts by which, the aggregate of all indemnifiable
claims asserted by such party exceeds the sum of $25,000.
120 Remedies. Nothing contained in this Agreement is intended to be
or shall be construed so as to limit the remedies which either party may have
against the other in the event of a breach by either party of any
representation, warranty or agreement made under or pursuant to this
Agreement, it being intended that any remedy shall be cumulative and not
exclusive. The parties agree that if any party is obligated to, but
nevertheless does not, consummate this transaction, then the other party, in
addition to all other rights or remedies, shall be entitled to the remedy of
specific performance mandating that the other party or parties consummate
this transaction. In any action for specific performance by any party
against any other party, the other party shall not plead adequacy of damages
at law.
130 No Public Announcement. The parties agree that they will make no
public announcements concerning the Exchange or which makes reference to this
transaction, unless each party has previously agreed to the content of such
announcement or unless it is otherwise required by law.
140 Notices. All notices and other communications under this
Agreement shall be sufficient if given in writing and if delivered
personally, with a receipt thereof obtained, or mailed, certified or
registered mail, return receipt requested, postage prepaid, or by a
recognized overnight delivery service, or by telecopier transmission to the
parties at their respective addresses as set forth at the heading of this
Agreement or to such other address as any party may designate from time to
time by written notice to the other party.
Notices to CMI shall be sent with a copy to:
Blanco Tackabery Combs & Matamoros, P.A.
P.O. Drawer 25008
Winston-Salem, NC 27114-5008
Attn: Brian L. Herndon
Notices to Biosensor shall be sent with a copy to:
Furber Timmer Zahn, PLLP
1100 One Financial Plaza
120 South Sixth Street
Minneapolis, MN 55402-1801
Attn: Kevin S. Spreng
150 Expenses. The parties shall pay their own expenses incurred in
connection with this Agreement.
160 Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
assigns. No party may assign all or any of its rights hereunder without the
prior written consent of the other party.
170 Survival. Notwithstanding any investigation by any party, all
representations, warranties and agreements of any party made under or
pursuant to this Agreement shall survive Closing for a period of two (2)
years from the effective date of this transaction.
180 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of North Carolina.
190 Liability for Finders' Fee. Each party represents to the other
party that it has not used the services of any broker or finder in connection
with this transaction, and each party agrees to indemnify and hold the other
party harmless from any and all liabilities (including, without limitation,
court costs and attorneys' fees) for brokerage commissions or finders' fees
claimed to be due or owing to any third party in connection with this
transaction insofar as such claims shall be based on arrangements or
agreements made by or on behalf of CMI or Biosensor, as the case may be.
200 Complete Agreement. This Agreement and the documents and
instruments contemplated hereby and thereby supersede all prior negotiations,
agreements and understandings, whether oral or written, and may not be
amended or supplemented except by an instrument, in writing, signed by the
party or parties to be charged.
210 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts
together shall constitute one and the same instrument.
220 Further Assurances; Access to Information. The parties agree
that each will, at any time prior to, at or after the Effective Time, duly
execute and deliver to the other any additional documents and instruments
which the other may reasonably determine are necessary in connection with the
consummation of this transaction.
230 CMI's Schedules. Biosensor acknowledges that neither CMI nor its
legal counsel have yet to review CMI's Schedules, and the Schedules
previously provided by CMI to Biosensor are in draft form. CMI shall have
until the close of business on June 5, 1998 to review its Schedules with its
counsel if it so chooses, to supplement any previously provided Schedule and
to provide any Schedule which was not provided to Biosensor as of or prior to
the execution of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
SEE SEPARATE SIGNATURE PAGES
SEPARATE SIGNATURE PAGE
TO
PLAN OF REORGANIZATION AND AGREEMENT
CAROLINA MEDICAL, INC., a North Carolina
corporation
By:
Name:
Title:
SEPARATE SIGNATURE PAGE
TO
PLAN OF REORGANIZATION AND AGREEMENT
BIOSENSOR CORPORATION, a Minnesota
corporation
By:
Name:
Title:
LIST OF EXHIBITS
Exhibit 1.1(e)-1 - Directors and Officers of Biosensor
Exhibit 1.1(e)-2 - Directors and Officers of CMI
Exhibit 1.2 - Articles of Share Exchange
Exhibit 3(a)(1) - Board of Directors Resolutions of Biosensor
Exhibit 8(e)(xi) - CMI Share Matters
Exhibit 9(g) - Key Employees
BIOSENSOR DISCLOSURE SCHEDULES
INDEX
Item 5(a) - Violations of Agreements, etc.
Item 5(b) - Equipment
Item 5(c) - Consents
Item 5(d) - Title Matters
Item 5(e) - Lawsuits and Claims
Item 5(f) - Condition and Ownership of Assets
Item 5(g) - Business Names
Item 5(h) - Taxes
Item 5(i) - Compliance with Laws
Item 5(j) - Intangible Assets
Item 5(k) - Employment Benefit Plans
Item 5(l) - Affiliated Debt
Item 5(n) - Warranties
Item 5(o) - Options with respect to Assets, etc.
Item 5(p) - Receivables
Item 5(q) - Insurance
Item 5(s) - Equity Investments
Item 5(t) - Transactions with Affiliates
Item 5(u) - Leased Real Property
Item 5(w) - Conditions Affecting the Parties
Item 5(x) - Advances and Deposits
Item 5(y) - Inventories
Item 5(z) - Software Licenses
Item 5(aa) - Contracts
Item 5(bb) - Life Insurance Policies
Item 5(cc) - Licenses and Permits
Item 5(dd) - Accounts
Item 5(ee) - Employees
Item 5(gg) - Patents and Trademarks
Item 6(a) - List of States Biosensor is Qualified to Do Business In
Item 6(b) - Financial Statements
Item 6(c) - Uncompleted Contracts
Item 6(f) - Contracts
CMI DISCLOSURE SCHEDULES
INDEX
Item 5(a) - Violations of Agreements, etc.
Item 5(b) - Equipment
Item 5(c) - Consents
Item 5(d) - Title Matters
Item 5(e) - Lawsuits and Claims
Item 5(f) - Condition and Ownership of Assets
Item 5(g) - Business Names
Item 5(h) - Taxes
Item 5(i) - Compliance with Laws
Item 5(j) - Intangible Assets
Item 5(k) - Employment Benefit Plans
Item 5(l) - Affiliated Debt
Item 5(n) - Warranties
Item 5(o) - Options with respect to Assets, etc.
Item 5(p) - Receivables
Item 5(q) - Insurance
Item 5(s) - Equity Investments
Item 5(t) - Transactions with Affiliates
Item 5(u) - Leased Real Property
Item 5(w) - Conditions Affecting the Parties
Item 5(x) - Advances and Deposits
Item 5(y) - Inventories
Item 5(z) - Software Licenses
Item 5(aa) - Contracts
Item 5(bb) - Life Insurance Policies
Item 5(cc) - Licenses and Permits
Item 5(dd) - Accounts
Item 5(ee) - Employees
Item 5(gg) - Patents and Trademarks
Item 7(b) - Financial Statements
Item 7(c) - Shareholdings, Options, etc.
Item 7(e) - Contracts
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