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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earlies event report) December 17, 1996
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Commission File Number 0-12516
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Dynamic Healthcare Technologies, Inc.
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(Exact name of registrant as specified in its charter)
Florida 0-12516 59-338971
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(State or other jurisdiction (Commission File Number) (IRS E.I.N.)
of Incorporation)
101 Southhall Lane, Suite 210 Maitland, Florida 32751
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(Address of principal executive offices) (ZIP Code)
(407) 875-9991
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(Registrant's telephone, including area code)
None
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(Former name of former address, if changed from last report)
This report consists of 83 pages.
The index to exhibit appears on page 5.
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FORM 8-K
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
DECEMBER 17, 1996
Item 1. Changes in Control of Registrant
None.
Item 2. Acquisition or Disposition of Assets
On December 17, 1996 pursuant to the terms of a Merger Agreement by
and among Collaborative Medical Systems, Inc. of Waltham,
Massachusetts ("CoMed"), CoMed Acquisition Corporation (a wholly owned
subsidiary of the Registrant, hereafter "Newco"), and the Registrant,
CoMed was merged with and into Newco. Under the terms of the Merger
Agreement the Registrant paid $8,500,000 cash, issued 1,000,000 shares
of restricted common stock, and 6,000 shares of Series CM Non-Voting,
Convertible Preferred Stock ("Series CM Preferred Stock") to the
shareholders of CoMed. The Series CM Preferred Stock shall be
automatically convertible into shares of the Registrant's common stock
at the close of business on August 29, 1997 ("Contingent Shares"),
pursuant to a formula based upon the average closing bid and ask price
of the Registrant's common stock as quoted on the National Market for
the five (5) trading day period ending August 29, 1997 (the "CSAVG").
If the CSAVG is greater than or equal to $8.00, an aggregate of 100
shares of the Registrant's common stock will be issued as Contingent
Shares; if the CSAVG is less than or equal to $5.00, then an aggregate
of 600,000 shares of the Registrant's common stock will be issued as
Contingent Shares; and if the CSAVG is greater than $5.00 but less than
$8.00, then the number of shares of the Registrant's common stock to
be issued as Contingent Shares will be pro-rated accordingly. Funds
for the transactions came from the Registrant's cash resources. Terms
of the Merger Agreement were based upon arms length negotiations.
Item 3. Bankruptcy or Receivership
None.
Item 4. Changes in Registrant's Certifying Accountants
None.
Item 5. Other Events
None.
Item 6. Resignations of Registrant's Directors
None.
Item 7. Financial Statements and Exhibits
2
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(a) Financial Statements of Businesses Acquired.
The Registrant will file with the Commission the financial
statements required by this item within 60 days after the date
of this Form 8-K.
(b) ProForma Financial Information
The Registrant will file with the Commission the financial
statements required by this item within 60 days after the date
of the Form 8-K.
(c) Exhibits
Exhibit 2: Agreement and Plan of Merger among Comed
Acquisition Corporation, Dynamic Healthcare
Technologies, Inc., and Collaborative Medical
Systems, Inc., dated December 17, 1996 (the
"Merger Agreement").
Exhibit 4: Certificate of Designation of Series CM Non-
Voting, Convertible Preferred Stock
Item 8. Change in Fiscal Year
None.
3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
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(Registrant)
Date: December 26, 1996 /S/MITCHEL J. LASKEY
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Mitchel J. Laskey
President, COO
Date: December 26, 1996 /S/PAUL S. GLOVER
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Paul S. Glover
Vice President of Finance, CFO
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FORM 8-K
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
INDEX TO EXHIBITS
Description of Exhibits: Page Number
Exhibit 2: Agreement and Plan of Merger among Comed
Acquisition Corporation, Dynamic Healthcare
Technologies, Inc., and Collaborative Medical
Systems, Inc., dated December 17, 1996 (the
"Merger Agreement"). 6
Exhibit 4: Certificate of Designation of Series CM Non-
Voting, Convertible Preferred Stock 81
5
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Execution Copy
AGREEMENT AND PLAN OF MERGER
by and among
COMED ACQUISITION CORPORATION,
a Florida corporation ("Newco"),
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.,
a Florida corporation ("DHT"),
COLLABORATIVE MEDICAL SYSTEMS, INC.,
a Massachusetts corporation ("CoMed"),
CHARLES M. COOPER,
JEROME LERMAN,
SAUL M. BLOOM,
MARTIN B. LEVIN,
MARIANNE BOSWELL,
and
KAY McDONALD,
(collectively, the "Shareholders")
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Dated as of December 17, 1996
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TABLE OF CONTENTS
ARTICLE 1
THE MERGER
SECTION 1.1 The Merger; Surviving Corporation . . . . . . . . . . . . . . 1
SECTION 1.2 Articles of Incorporation . . . . . . . . . . . . . . . . . . 1
SECTION 1.3 Bylaws. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.4 Directors and Officers. . . . . . . . . . . . . . . . . . . . 2
SECTION 1.5 Effective Time. . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.6 Effectuation of the Merger. . . . . . . . . . . . . . . . . . 2
SECTION 1.7 Conversion of Common Stock; Merger
Consideration . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.8 Payment of the Merger Consideration . . . . . . . . . . . . . 3
SECTION 1.9 No Other Rights . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.10 Further Assurances. . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.11 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF
COMED AND THE SHAREHOLDERS
SECTION 2.1 Status of the Shares. . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.2 Title to the Shares . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.3 Authority Relative to this Agreement. . . . . . . . . . . . . 4
SECTION 2.4 No Conflicts, Consents. . . . . . . . . . . . . . . . . . . . 4
SECTION 2.5 Corporate Existence and Power . . . . . . . . . . . . . . . . 5
SECTION 2.6 Charter Documents and Corporate Records . . . . . . . . . . . 5
SECTION 2.7 Financial Information . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.8 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.9 CoMed Receivables . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.10 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.11 Absence of Certain Changes. . . . . . . . . . . . . . . . . . 6
SECTION 2.12 Properties. . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.13 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.14 Intangible Property . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.15 Claims and Proceedings. . . . . . . . . . . . . . . . . . . . 9
SECTION 2.16 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.17 Employee Benefits Plans . . . . . . . . . . . . . . . . . . . 11
SECTION 2.18 Employee-Related Matters. . . . . . . . . . . . . . . . . . . 12
SECTION 2.19 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.20 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.21 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.22 Environmental Matters . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.23 Finders Fees. . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.24 Fees, Commissions and Royalties . . . . . . . . . . . . . . . 13
SECTION 2.25 FDA Regulations . . . . . . . . . . . . . . . . . . . . . . . 13
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SECTION 2.26 Software. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.27 Depositories; Powers of Attorney. . . . . . . . . . . . . . . 14
SECTION 2.28 Status of CoMed . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.29 Shareholder Status. . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.30 Certain Other Representations . . . . . . . . . . . . . . . . 14
SECTION 2.31 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.32 Board and Shareholder Approval. . . . . . . . . . . . . . . . 15
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF DHT AND NEWCO
SECTION 3.1 Authority Relative to This Agreement. . . . . . . . . . . . . 15
SECTION 3.2 No Conflicts; Consents. . . . . . . . . . . . . . . . . . . . 15
SECTION 3.3 Corporate Existence and Power . . . . . . . . . . . . . . . . 15
SECTION 3.4 Finders Fees. . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.5 Governmental Proceedings. . . . . . . . . . . .. . . . . . . 16
ARTICLE 4
COVENANTS AND AGREEMENTS
SECTION 4.1 Corporate Examinations and Investigations . . . . . . . . . . 16
SECTION 4.2 Filings and Authorizations; Taxes . . . . . . . . . . . . . . 16
SECTION 4.3 Efforts to Consummate . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.4 Negotiations With Others . . . . . . . . . . . . . . . . . . 17
SECTION 4.5 Notices of Certain Events . . . . . . . . . . . . . . . . . . 18
SECTION 4.6 Public Announcements. . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.7 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.8 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.9 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.10 Special Meeting . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.11 Merger Claims . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.12 Certain Renewals. . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.13 CoMed Employee Benefits Matters . . . . . . . . . . . . . . . 19
ARTICLE 5
CONDITIONS TO CLOSING
SECTION 5.1 Conditions to the Obligations of the Parties. . . . . . . . . 20
SECTION 5.2 Conditions to the Obligations of the
Shareholders and CoMed. . . . . . . . . . . . . . . . . . . 20
SECTION 5.3 Conditions to the Obligations of DHT and Newco. . . . . . . . 21
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ARTICLE 6
INDEMNIFICATION
SECTION 6.1 Survival of Representations and Warranties. . . . . . . . . . 23
SECTION 6.2 Obligation of the Shareholders to Indemnify . . . . . . . . . 24
SECTION 6.3 Obligation of DHT and Newco to Indemnify. . . . . . . . . . . 24
SECTION 6.4 Notice and Opportunity to Defend Third Party
Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 6.5 Limits on Indemnification . . . . . . . . . . . . . . . . . . 25
SECTION 6.6 Adjustment. . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 7
TERMINATION
SECTION 7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 7.2 Effect of Termination; Right to Proceed . . . . . . . . . . . 26
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 8.2 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 8.3 Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies . . . . . . . . . . . . . . . . 28
SECTION 8.4 Governing Law; Venue. . . . . . . . . . . . . . . . . . . . . 28
SECTION 8.5 Binding Effect; No Assignment . . . . . . . . . . . . . . . . 28
SECTION 8.6 Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 8.7 Severability. . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 8.8 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 8.9 Third Parties . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 9
DEFINITIONS
SECTION 9.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 9.2 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . 32
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 17, 1996 (the
"Agreement") by and among DYNAMIC HEALTHCARE TECHNOLOGIES, INC., a Florida
corporation ("DHT"), COMED ACQUISITION CORPORATION, a Florida corporation and a
wholly-owned subsidiary of DHT ("Newco"), COLLABORATIVE MEDICAL SYSTEMS, INC., a
Massachusetts corporation ("CoMed"), Charles M. Cooper, Jerome Lerman, Saul M.
Bloom, Martin B. Levin, Marianne Boswell and Kay McDonald, who constitute all of
the shareholders of record of CoMed (the "Shareholders"). CoMed and Newco are
sometimes hereinafter referred to as the "Constituent Corporations." Definitions
of capitalized terms used in Articles I through VIII herein which are not
otherwise defined are set forth in Section 9.1.
WHEREAS, the Boards of Directors of DHT, Newco and CoMed have each approved
the merger of CoMed with and into Newco (the "Merger"), upon the terms and
subject to the conditions set forth herein;
WHEREAS, each Shareholder will own immediately prior to the Closing the
number of shares (the "Shares") of common stock of CoMed (the "Common Stock")
set forth opposite his or her name on Schedule 2.1.
WHEREAS, pursuant to the Merger, the Shareholders will receive the merger
consideration specified herein; and
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
agreements and covenants contained herein, and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereby agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.1 The Merger; Surviving Corporation. Upon the terms and subject
to the conditions set forth herein, and in accordance with the provisions of
this Agreement, the Florida Business Corporation Act (the "FBCA") and the
General Laws of Massachusetts and at the Effective Time (as hereinafter
defined), CoMed shall be merged with and into Newco, with Newco being the
surviving corporation (hereinafter sometimes called the "Surviving Corporation")
and shall continue its corporate existence under the laws of the State of
Florida as a wholly-owned subsidiary of DHT.
SECTION 1.2 Articles of Incorporation. The Articles of Incorporation of
Newco, as in effect at the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law. The parties acknowledge that Newco's corporate name will be changed at
the Effective Time (as hereinafter defined) as provided in the Florida Articles
of Merger (as hereinafter defined) and that the name of the Surviving
Corporation will be "Collaborative Medical Systems Corp."
SECTION 1.3 Bylaws. The Bylaws of Newco, as in effect at the Effective
Time, shall be the Bylaws of the Surviving Corporation until thereafter amended
as provided by law.
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SECTION 1.4 Directors and Officers. The directors and officers of the
Surviving Corporation immediately following the Effective Time shall be the
directors and officers of Newco at the Effective Time until thereafter changed
in accordance with applicable law and appropriate corporate actions.
SECTION 1.5 Effective Time. The Merger shall become effective upon the due
filing of articles of merger (the "Florida Articles of Merger") in the form
attached hereto as Exhibit 1.5A with the Florida Department of State pursuant to
Section 607.1105 of the FBCA. The date and time when the Merger shall become
effective are herein referred to as the "Effective Time." On or within 30 days
prior to the Effective Time, articles of merger (the "Massachusetts Articles of
Merger") in the form attached hereto as Exhibit 1.5B shall be filed with the
Secretary of the Commonwealth of Massachusetts pursuant to the General Laws of
Massachusetts, Chapter 156B, Section 79, providing that the effective date and
time of the Merger shall be the Effective Time.
SECTION 1.6 Effectuation of the Merger. On December 17, 1996, or if on
such date the conditions specified in Article V shall not have been satisfied or
waived (other than conditions relating to transactions to occur at the Closing
and conditions requiring the delivery of certificates, opinions and other
instruments and documents), on a date agreed to by DHT and the Requisite
Shareholders in writing to CoMed not later than the second business day
following such satisfaction or waiver, but in no event later than December 31,
1996, the parties shall file the Florida Articles of Merger and the
Massachusetts Articles of Merger, and take any and all other lawful actions and
do any and all other lawful things necessary to cause the Merger to become
effective.
SECTION 1.7 Conversion of Common Stock; Merger Consideration. By virtue of
the Merger and without any action on the part of any holder of capital stock of
any of the Constituent Corporations:
(a) The Shares of CoMed issued and outstanding immediately prior to the
Effective Time (except for Shares which are held by CoMed in its treasury) shall
be converted at the Effective Time into and represent the right to receive the
Merger Consideration (as defined below) in accordance with the terms hereof.
(b) Each share of CoMed common stock held in its treasury immediately prior
to the Effective Time shall be canceled or retired and cease to exist at the
Effective Time without any conversion thereof.
(c) The term "Merger Consideration" shall mean, except as otherwise
adjusted pursuant to this Agreement:
(i) $8,500,000 to be paid in cash at the Closing to an escrow agent
(the "Escrow Agent") mutually selected by DHT and the Requisite Shareholders,
$8,200,000 of which shall be disbursed to the Shareholders on or about January
15, 1997, and $300,000 of which (the "Indemnification Funds") will provide a
fund for a period of 12 months following the Closing for the payment of any
claims for which DHT or the Surviving Corporation may be entitled to
indemnification as provided in Article VI, pursuant to the terms of an escrow
agreement (the "Escrow Agreement") in the form attached hereto as Exhibit 1.7A;
(ii) 1,000,000 shares of DHT common stock to be issued and delivered
at the Closing to the Shareholders; and
(iii) 6,000 shares of DHT Series CM Non-Voting, Convertible Preferred
Stock ("Series CM Preferred Stock") to be issued and delivered at the Closing
to the Shareholders. The Series CM
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Preferred Stock shall have the preferences, limitations and relative rights
described in the Certificate of Designation of Series CM Preferred Stock
attached hereto as Exhibit 1.7B, and shall be automatically convertible into
shares of DHT common stock at the close of business on August 29, 1997 pursuant
to the following formula based upon the average closing bid and ask prices of
DHT common stock as quoted on the Nasdaq National Market for the five (5)
trading day period ending August 29, 1997 (hereafter referred to as the
"CSAVG"):
(A) if the CSAVG is greater than or equal to $8.00 per share,
then each share of Series CM Preferred Stock will be converted into .0167
shares of DHT common stock (rounded to the nearest whole share);
(B) if the CSAVG is less than or equal to $5.00 per share,
then each share of Series CM Preferred Stock will be converted into 100
shares of DHT common stock; or
(C) if the CSAVG is greater than $5.00 per share, but less than
$8.00 per share, then each share of Series CM Preferred Stock will be
converted into that number of shares of DHT common stock to be determined
as follows (rounded to the nearest whole share):
number of shares of DHT common stock = 100 x ($8.00 - CSAVG)
---------------
$3.00
SECTION 1.8 Payment of the Merger Consideration. Upon the surrender of all
certificates evidencing Shares, together with delivery of such other documents
as may be required pursuant to this Agreement at Closing, DHT shall deliver to
the Escrow Agent pursuant to the Escrow Agreement immediately available funds
and shall deliver to the Shareholders shares of DHT common stock and Series CM
Preferred Stock equal to the amount of the Merger Consideration payable at
Closing. Payment of Merger Consideration becoming due and payable after Closing
shall be delivered to the Escrow Agent pursuant to the terms of the Escrow
Agreement. Each shareholder shall have the right to receive his or her Pro Rata
Share of all payments made of Merger Consideration. "Pro Rata Share" of any
Shareholder shall mean the percentage (calculated to the nearest thousandth of
percent) set forth on Schedule 2.1, which has been determined by dividing (a)
the number of Shares held of record on the Closing Date by such Shareholder as
indicated on Schedule 2.1, by (b) the aggregate number of Shares outstanding on
the Closing Date as indicated on Schedule 2.1. The delivery of certificates
representing Shares (together with evidence satisfactory to the Surviving
Corporation of the payment of all required transfer taxes relating to the Shares
and arising out of the Merger) shall be a condition precedent to the delivery of
any portion of the Merger Consideration relating to such Shares.
SECTION 1.9 No Other Rights. Until surrendered to the Surviving
Corporation, each certificate for Shares which immediately prior to the
Effective Time represented outstanding Shares shall represent solely the right
to receive the Merger Consideration relating thereto at and after the Effective
Time.
SECTION 1.10 Further Assurances. If at any time after the Effective Time
the Surviving Corporation shall consider or be advised that any further
documents, instruments or assurances in law or any other acts are necessary,
desirable or proper to carry out the intent and accomplish the purposes of this
Agreement, the Constituent Corporations agree that the Surviving Corporation and
its proper officers and directors will execute and deliver all documents,
instruments and assurances in law and do all acts necessary, desirable or proper
to carry out the intent and accomplish the purposes of this Agreement, and that
the proper officers and directors of the Surviving Corporation are fully
authorized in the name of the Constituent Corporations or otherwise to take any
and all such action.
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SECTION 1.11 The Closing. The Closing shall take place at the offices of
Kotin, Crabtree & Strong, LLP, One Bowdoin Square, Boston, Massachusetts
02114-2919 at 10:00 a.m. local time on the date ("Closing Date") of the filing
of the Florida Articles of Merger. Except as otherwise provided herein, all
transactions consummated at the Closing shall be deemed to have taken place
simultaneously at the Effective Time.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF
COMED AND THE SHAREHOLDERS
Each Shareholder, severally, but not jointly, with respect to any
representation or warranty concerning such Shareholder or his/her Shares, and
otherwise, such Shareholder and CoMed, jointly and severally, represents and
warrants to DHT and Newco that:
SECTION 2.1 Status of the Shares. The authorized and outstanding shares of
Common Stock (which is the only class of capital stock of CoMed authorized,
issued or outstanding) is as set forth on Schedule 2.1. Other than the Shares,
at the Closing, CoMed will not have outstanding any rights, warrants or options
to acquire securities of CoMed or any convertible or exchangeable securities
and, other than pursuant to this Agreement, no person will have any right to
acquire any securities of CoMed. All of the Shares have been duly authorized and
duly and validly issued and are fully paid and non-assessable, and none were
issued in violation of any preemptive rights, rights of first refusal or other
contractual or legal restrictions of any kind.
SECTION 2.2 Title to the Shares. Each Shareholder owns and holds good and
valid title to such Shareholder's Shares free and clear of any Lien of any kind.
SECTION 2.3 Authority Relative to this Agreement. CoMed and each
Shareholder has full power, capacity and authority to execute and deliver this
Agreement and each other Transaction Document to which it is a party and to
consummate the transactions contemplated hereby and thereby (the "Contemplated
Transactions"). The execution and delivery of this Agreement and the
consummation of the Contemplated Transactions to which CoMed or such Shareholder
is a party have been duly and validly authorized by CoMed or such Shareholder
and no other proceedings on the part of CoMed or such Shareholder, other than
the Shareholders' meeting or consent required by Section 79 of the Massachusetts
General Laws, Chapter 156B, are necessary to authorize the execution and
delivery by CoMed or such Shareholder of this Agreement or the consummation of
the Contemplated Transactions to which CoMed or such Shareholder is a party.
This Agreement and the other Transaction Documents to which CoMed or such
Shareholder is a party have been duly and validly executed and delivered by each
of CoMed or such Shareholder, and (assuming the valid execution and delivery
thereof by the other parties thereto) constitute the legal, valid and binding
agreements of CoMed and such Shareholder enforceable against CoMed or such
Shareholder in accordance with their respective terms.
SECTION 2.4 No Conflicts, Consents. The execution, delivery and
performance by CoMed and each Shareholder of this Agreement and each other
Transaction Document to which he or it is a party, the consummation of the
Contemplated Transactions to which CoMed or such Shareholder is a party or the
contemplated change of control of the stock ownership of CoMed, will not (i)
violate any provision of the Articles of Incorporation or By-laws (or comparable
instruments) of CoMed; (ii) require the Shareholders or CoMed to obtain any
consent, approval or action of or waiver from, or make any filing with, or give
any notice to, any Governmental Body or any other person except as set forth on
Schedule 2.4 (the "Required
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Consents"); (iii) if the Required Consents are obtained prior to Closing,
violate, conflict with or result in a breach or default under (after the giving
of notice or the passage of time or both), or permit the termination of, any
Contract of a type required to be listed on Schedule 2.13 to which any
Shareholder or CoMed is a party or by which any of them or any of their Assets
may be bound or subject, or result in the creation of any Lien upon the Shares
or upon any of the Assets of CoMed pursuant to the terms of any such Contract;
(iv) if the Required Consents are obtained prior to Closing, violate any Law or
Order of any Governmental Body against, or binding upon, any Shareholder or
CoMed or upon its Assets or the Business; or (v) if the Required Consents are
obtained prior to Closing, violate or result in the revocation or suspension of
any Permit.
SECTION 2.5 Corporate Existence and Power. CoMed is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all requisite corporate powers and all
material Permits required to carry on the Business as now conducted. CoMed is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where the character of the property owned or leased by it
or the nature of its activities makes such qualification necessary, except for
those jurisdictions where the failure to be so qualified would not, individually
or in the aggregate, have a material adverse effect on the Business or the
Assets, financial condition, prospects or the results of operations of CoMed and
its Subsidiaries taken as a whole (collectively, the "Condition of the
Business"). Schedule 2.5 sets forth each jurisdiction in which CoMed is duly
qualified to do business as a foreign corporation. CoMed does not directly or
indirectly own any interest or investment in any other person.
SECTION 2.6 Charter Documents and Corporate Records. CoMed and the
Shareholders have heretofore delivered to DHT true and complete copies of the
Articles of Incorporation and Bylaws, or comparable instruments, of CoMed as in
effect on the date hereof. The stock and transfer books of CoMed have been made
available to DHT and Newco for inspection and are true and complete.
SECTION 2.7 Financial Information. CoMed and the Shareholders have
previously furnished to DHT true and complete copies of (i) CoMed's financial
statements at and for the calendar years ended December 31, 1995, 1994 and 1993
(the "Annual Statements"), (ii) CoMed's unaudited financial statements at and
for each calendar month of 1996 and 1995 through October 31, 1996 (the "Interim
Statements"), and (iii) all management letters, and attorney audit response
letters issued in connection with CoMed's financial statements for each of the
three years comprising the Annual Statements. The Annual Statements have been
prepared in accordance with GAAP consistently applied as set forth in the notes
thereto and the Annual Statements were audited as to 1993 by Price Waterhouse
and otherwise by Ernst & Young LLP (without qualification in the report
thereof). Each Annual Statement and the Interim Statements present fairly the
financial position of CoMed as of its date, and its earnings, changes in
stockholders' equity and cash flow for the periods then ended; provided,
however, that in the case of the Interim Statements, they do not contain all
notes or any year-end adjustments which would be required by GAAP consistent
with prior practice and certain accruals listed in Schedule 2.7 in accordance
with prior practice which are customarily computed on an annual basis. Each
delivered balance sheet fully sets forth all Assets and Liabilities of CoMed
existing as of its date which, under GAAP, should be set forth therein, and each
delivered statement of earnings sets forth the items of income and expense of
CoMed which should appear therein under GAAP; provided, however, that in the
case of the Interim Statements, they do not contain all notes or any year-end
adjustments which would be required by GAAP consistent with prior practice and
certain accruals listed in Schedule 2.7 in accordance with prior practice which
are customarily computed on an annual basis. All financial and accounting books,
ledgers, accounts and official and other records relating to CoMed have been
properly and accurately kept and completed in all material respects.
SECTION 2.8 Liabilities. Except as and to the extent reflected in the
audited balance sheet of CoMed (the "Latest Balance Sheet") at December 31, 1995
(the "Latest Balance Sheet Date") referred to in
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Section 2.7, or as described in Schedule 2.8, CoMed did not have, as of the
Latest Balance Sheet Date, any Liabilities or obligations (other than
obligations of continued performance under Contracts and other commitments and
arrangements entered into in the ordinary course of business). Except as
described in Schedule 2.8, and except for current Liabilities for trade or
business obligations in the ordinary course of the Business, consistent with
past practice, and Liabilities reflected on any balance sheet included in the
Interim Statements, since the Latest Balance Sheet Date there has been (i) no
material adverse change in the Assets or Liabilities, or in the Condition of the
Business , financial or otherwise, or the result of operations of CoMed, and
(ii) to CoMed's or any Shareholder's knowledge and belief, no factor or
condition exists or is contemplated or threatened, which could reasonably be
expected to cause such a change in the future, and (iii) no dividends or other
distributions have been paid or made upon any shares of capital stock of CoMed
nor have any shares of capital stock of the Corporation been redeemed, retired,
purchased or acquired for value by CoMed. Schedule 2.8 also contains a true and
correct list of all Deferred Compensation Liabilities and CoMed Debt and a
description of the material terms thereof. Except as provided in Schedule 2.8,
there will exist no CoMed Debt at Closing. None of the CoMed Debt or any prior
indebtedness to the Shareholders constituted of constitutes a second class of
stock within the meaning of Code Section 1361(b)(1)(D) and the Treasury
Regulations promulgated thereunder. Schedule 2.8 sets forth a description of the
amount and terms and conditions and outstanding principal balance plus accrued
interest thereon of all outstanding loans or other advances made by any past or
current shareholder of CoMed.
SECTION 2.9 CoMed Receivables. Except as set forth in Schedule 2.9, all
Receivables of CoMed are valid and enforceable claims, constitute bona fide
Receivables resulting from the sale of goods and services in the ordinary course
of the Business, are not subject to any known defenses, offsets, returns,
allowances or credits of any kind, and to CoMed's and the Shareholder's
knowledge and belief, are collectible, subject to the reserves for bad debt
expressly set forth in Schedule 2.9. CoMed has not made any loan or advance to
any person except as provided in Schedule 2.9.
SECTION 2.10 Inventories. Schedule 2.10 sets forth a true and complete list
of Inventory by category as of the date hereof. All Inventory consists of items
which are good and merchantable and of a quantity and quality usable and
saleable in the ordinary course of the Business consistent with past practices.
SECTION 2.11 Absence of Certain Changes.
(a) Since the Latest Balance Sheet Date, except as set forth
in Schedule 2.11, CoMed has conducted the Business in the ordinary course
consistent with past practices and there has not been:
(i) Any material adverse change in the Condition of the
Business or any event, occurrence or circumstance known to CoMed or any
Shareholder that could reasonably be expected to cause such a material adverse
change.
(ii) Any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital stock of
CoMed.
(iii) Any damage, destruction or other casualty loss
(whether or not covered by insurance), condemnation or other taking affecting
the Assets of CoMed or any Subsidiary to the extent material to CoMed.
(iv) Any action taken to terminate or revoke its election
and qualification as an S Corporation within the meaning of Code Section 1362.
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(v) Any change in any method of accounting or
accounting practice by CoMed.
(vi) Any material adverse change in the relationships of
CoMed with its customers, suppliers and vendors.
(vii) Except for any chances made in the ordinary course
of Business, any material change in any of CoMed's business policies, including
advertising, marketing, pricing, purchasing, personnel, returns or budget
policies.
(b) Since October 31, 1996, except as set forth in Schedule
2.11, there has not been:
(i) Any transaction or Contract with respect to the
purchase, acquisition, lease, disposition or transfer of any Assets or to any
capital expenditure (in each case, other than in the ordinary course of the
Business in accordance with past practice), in excess of $10,000.
(ii) Any increase in the compensation payable or to
become payable to any officer, stockholder, director, consultant, agent or
full-time employee of CoMed, or any alteration in the benefits payable to any
thereof.
SECTION 2.12 Properties.
(a) Schedule 2.12A sets forth a complete list and description
of all real property leased by CoMed (the "Real Property"), which constitutes
all of the real property owned, used or occupied by CoMed. The lease for the
Real Property is in full force and effect and CoMed holds a valid and existing
leasehold interest and a right to quiet enjoyment of the such Real Property for
the term set forth in Schedule 2.12A. The leasehold interest in such Real
Property is not subject to or subordinate to any Lien except as disclosed on
Schedule 2.12A. Schedule 2.12A also sets forth with respect to such Real
Property a list of all title insurance policies, deeds, appraisal reports,
surveys and environmental reports held or controlled by CoMed or any
Shareholder, copies of which have been provided to DHT. The Business is not in
violation in any material respect of any building, zoning, anti-pollution,
health, occupational safety or other Law or any Order or Permit in respect of
such Real Property.
(b) CoMed has good and marketable title to (or valid leasehold
interest in) all personal property used in the Business, free and clear of all
Liens except as disclosed in Schedule 2.12B. The machinery, equipment and other
tangible personal property constituting a part of the Assets (whether owned or
leased), have been maintained in accordance with industry standards, are in good
condition and repair (subject to normal wear and tear) and are adequate in
quantity and quality for the operation of the Business as presently conducted.
Schedule 2.12B contains a list and description of all equipment and other
tangible personal property of CoMed with a book value (before depreciation) of
$1,000 or more.
SECTION 2.13 Contracts.
(a) Schedule 2.13 sets forth an accurate and complete list of
all Contracts to which CoMed is a party or by which it or its Assets are bound
or subject, except only for those with persons who are not Affiliates of either
CoMed or any Shareholder relating solely to the purchase or sale of property or
services by CoMed in the ordinary course of the Business which (i) require CoMed
to make or receive payments not in excess of $10,000 and (ii) have a remaining
term of less than six months from the date of this Agreement or are terminable
by CoMed without penalty during such period. True and correct copies of all
written Contracts listed on Schedule 2.13 (excepting Contracts for which a third
party's consent must be
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obtained prior to disclosure; provided, that, all such Contracts must be
disclosed and included in Schedule 2.13 prior to the Closing) and summaries of
the material provisions of all oral Contracts so listed have been delivered to
DHT.
(b) All Contracts listed on Schedule 2.13 are valid, existing,
in full force and effect and binding upon CoMed and, to the knowledge of CoMed
or the Shareholders, the other parties thereto in accordance with their terms.
CoMed is not in default (or alleged default) under any such Contract in any
material respect, or, to the knowledge of CoMed or the Shareholders, is any
other party thereto in default thereunder in any material respect, or does any
condition exist which is known or should reasonably be expected to be known to
CoMed or any Shareholder that with notice or the lapse of time or both would
constitute a material default (or give rise to a termination right or right to
claim offset, credit or chargeback) thereunder. To the knowledge of CoMed or the
Shareholders, no other party to any such Contract intends to terminate or
materially alter the provisions thereof by reason of the Contemplated
Transactions or otherwise. Since October 31, 1996, CoMed has not waived any
material right under any such Contract, materially amended or extended beyond
December 31, 1996 any such Contract or terminated or failed to renew (or
received notice of termination or failure to renew with respect to) any such
Contract.
SECTION 2.14 Intangible Property. Schedule 2.14 sets forth a true and
correct list of all registered patents, trademarks, trade names, copyrights,
intellectual properties or service marks owned by or registered in the name of
CoMed or, to the extent used in the Business, any Shareholder, all applications
for any of the foregoing, and all permits, grants, licenses and other rights
running to or from CoMed, or to the extent used in the Business, any of the
Shareholders relating to any of the foregoing (the "Intellectual Property
Rights"), not otherwise required to be set forth on Schedule 2.26. If the
Required Consents are obtained prior to Closing (provided, that, all
Intellectual Property Rights shall be disclosed and included on Schedule 2.14 or
2.26 prior to Closing). The Contemplated Transactions will not adversely affect
the right, title and interest of CoMed in and to the Intellectual Property
Rights. Neither CoMed nor any Shareholder has been notified by any third party
that the Intellectual Property Rights infringe upon or conflict with the rights
or intellectual property of third parties. Except as set forth on Schedule 2.14,
there are no outstanding claims, liens, encumbrances, options, licenses or
agreements of any kind relating to the Intellectual Property Rights, nor is
CoMed or any Shareholder bound by or party to any options, licenses or
agreements of any kind with respect to the patents, trademarks, service marks,
tradenames, copyrights, trade secrets, licenses, information, proprietary rights
and processes of any other person or entity. CoMed has full title and ownership
of all Intellectual Property Rights without any conflict with or infringement of
the rights of others. To the knowledge and belief of CoMed and the Shareholders,
CoMed has not infringed or violated in any way any valid patent, trademark,
trade name or copyright of others, nor has CoMed received any notice, claim or
protest respecting any such violation or infringement. Neither CoMed nor any
Shareholder is aware that any of CoMed's employees is obligated under any
contract (including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of such employee's best
efforts to promote the interests of CoMed or that would conflict with CoMed's
business as currently conducted. Neither the execution nor delivery of this
Agreement, nor the carrying on of CoMed's business by the employees of CoMed,
nor the conduct of CoMed's business as currently conducted, will, to the
knowledge of CoMed or the Shareholders, conflict with or result in a breach of
the terms, conditions or provisions of, or constitute a default under, any
contract, covenant or instrument under which any of such employees is now
obligated. Neither CoMed nor the Shareholders believes that it is or will be
necessary to utilize any inventions of any of its employees (or people it
currently intends to hire) made prior to their employment by CoMed. At Closing,
the Surviving Corporation will have sole right, title and interest in and to the
Intellectual Property Rights (other than described on Schedule 2.14) free and
clear of any claims by any person.
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SECTION 2.15 Claims and Proceedings. Except as set forth on Schedule 2.15,
there are no outstanding Orders of any Governmental Body against or involving
CoMed or the Business. Except as set forth on Schedule 2.15, there are no
actions, suits, claims or counterclaims or legal, administrative or arbitral
proceedings or investigations (collectively, "Claims") (whether or not covered
by insurance), pending or, to the knowledge of CoMed or the Shareholders,
threatened on the date hereof, against or involving CoMed or any of the
Shareholders, any of CoMed's Assets or the Business. Schedule 2.15 also
indicates those Claims the defense thereof or Liabilities in respect thereof are
covered by insurance. Except as set forth on Schedule 2.15, at the Closing there
will be no such Claims pending or, to the knowledge of CoMed or the
Shareholders, threatened, other than Claims that, individually or in the
aggregate, could not reasonably be expected to have a material adverse effect on
the Condition of the Business. Except as set forth on Schedule 2.15, to the
knowledge of CoMed or the Shareholders, on the date hereof, there is no fact,
event or circumstance that would give rise to any uninsured Claim. As of the
Closing, there will exist no such fact, event or circumstance known to CoMed or
the Shareholders that would give rise to any uninsured Claim that, if pending or
threatened on the Closing Date, could reasonably be expected to have a material
adverse effect on the Condition of the Business. All notices required to have
been given to any insurance company listed as insuring against any Claim set
forth on Schedule 2.15 have been timely and duly given and, except as set forth
on Schedule 2.15, no insurance company has asserted that such Claim is not
covered by the applicable policy relating to such Claim. There are no Claims
pending or, to the knowledge of CoMed or the Shareholders, threatened that would
give rise to any right of indemnification on the part of any director or officer
of CoMed or the heirs, executors or administrators of such director or officer,
against CoMed.
SECTION 2.16 Taxes.
(a) Except as set forth in Schedule 2.16:
(i) CoMed has timely filed or, if not yet due, will
timely file all Tax Returns required to be filed by it for all taxable periods
ending on or before the Closing Date and all such Tax Returns are true, correct
and complete in all material respects;
(ii) CoMed has paid or, if payment is not yet due,
will pay to the appropriate Tax Authority or has established, in accordance
with GAAP and consistent with past practice, accruals that are reflected on the
Latest Balance Sheet for the payment of, all Taxes of CoMed for all taxable
periods ending on or before the Closing Date;
(iii) no extension of time has been requested or granted
for CoMed to file any Tax Return that has not yet been filed or to pay any Tax
that has not yet been paid;
(iv) CoMed has not received notice of a determination by
a Tax Authority that Taxes are owed by CoMed or any Shareholder relating to such
Shareholder's ownership of the Common Stock of CoMed (such determination to be
referred to as a "Tax Deficiency") and, to the knowledge of CoMed or the
Shareholders, no Tax Deficiency is proposed or threatened;
(v) all Tax Deficiencies, if any, have been paid or
finally settled and all amounts determined by settlement to be owed have been
paid;
(vi) there are no Tax Liens on or pending against CoMed
or any of its properties, except Liens for Taxes not yet due or payable;
(vii) there are no presently outstanding waivers or
extensions or requests for waiver or extension of the time within which a Tax
Deficiency may be asserted or assessed;
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(viii) no issue has been raised in any examination,
investigation, audit, suit, action, claim or proceeding relating to Taxes (a
"Tax Audit") which, by application of similar principles to any past, present or
future period, would result in a Tax Deficiency for such period;
(ix) there are no pending or, to the knowledge of CoMed
or the Shareholders, threatened Tax Audits of CoMed;
(x) Since December 31, 1990, CoMed has not been
required to include in income any adjustment pursuant to Section 481 of the Code
and no Tax Authority has made or proposed any such adjustment;
(xi) CoMed is not a party to any arrangement to which
Section 280G of the Code could under any circumstances apply;
(xii) Neither CoMed nor any of the Shareholders have
elected to terminate CoMed's S corporation election by revocation pursuant to
Code Section 1362(d); or
(xiii) CoMed is not now nor has it ever been (a) an
includable member of an "affiliated group" within the meaning of section 1504(a)
of the Code, (b) a member of any consolidated, combined or unitary Tax Return
filing group, (c) a party to an agreement that obligates it to make any payment
computed by reference to the Taxes, taxable income or tax losses of any other
individual or entity, (d) a personal holding company as defined in Section 542
of the Code, (e) the owner of an interest in an entity that is or is treated as
a partnership, trust, regulated investment company as defined in section 851 of
the Code, real estate investment trust as defined in Section 856 of the Code or
foreign personal holding company as defined in Section 552(a) of the Code, (f) a
United States shareholder as defined in Section 951(b) of the Code of a
controlled foreign corporation as defined in Section 957 of the Code or (g) a
United States real property holding company within the meaning of Section
897(c)(2) of the Code.
(b) Schedule 2.16 contains (i) a schedule of the filing
dates of all Tax Returns required to be filed by CoMed, (ii) a description of
all past Tax Audits within the past five years involving CoMed, and (iii) a
schedule of the tax attributes of CoMed (including but not limited to net
operating and capital losses and investment and alternative minimum tax credits)
shown on a separate company basis, together with a description of all
limitations to which such tax attributes are subject (e,q., Section 382
limitations or separate return limitation year restrictions) that can be
carried forward to a taxable year ending after 1995. Except as set forth in
Schedule 2.16, CoMed has retained all supporting and backup papers, receipts,
spreadsheets and other information necessary for (i) the preparation of all Tax
Returns that have not yet been filed and (ii) the defense of all Tax Audits
involving taxable periods either ending on or during the six (6) years prior to
the Closing Date or from which there are unutilized net operating loss, capital
loss or investment tax credit carryovers. Promptly following the date of this
Agreement, CoMed will deliver to DHT: (i) a schedule of CoMed's tax basis in
its assets and the year such depreciation will be completed, and (ii) a
schedule of the amortization period and annual amortization deductions for each
item subject to amortization and a description of the asset or other item that
is subject to amortization (e.g., loan issuance costs).
(c) Except as set forth in Schedule 2.16 and except for sales
Taxes which result from the consummation of the Contemplated Transactions, CoMed
has collected and remitted to the appropriate Tax Authority all sales and use or
similar Taxes required to have been collected on or prior to the Closing Date
and has been furnished properly completed exemption certificates for all exempt
transactions. CoMed has maintained and has in its possession all records,
supporting documents and exemption certificates required by applicable sales Tax
statutes and regulations to be retained in connection with the collection and
remittance of
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sales and use Taxes for all periods up to and including the Closing Date, the
failure of which to retain would not have a material adverse effect upon the
condition of CoMed, financial or otherwise.
SECTION 2.17 Employee Benefits Plans.
(a) Schedule 2.17 lists all bonus, deferred compensation,
pension, retirement, profit-sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock and stock option plans, all
employment or severance contracts, health and medical insurance plans, life
insurance and disability insurance plans, other employee benefit plans,
contracts or arrangements including, but not limited to, "employee benefit
plans" within the meaning of Section 3(3) of ERISA (the "Employee Benefit
Plans") which cover any current or (to the extent currently in effect) former
employee, officer, director or consultant of CoMed or any portion of the
Business. Schedule 2.17 separately identifies all Deferred Compensation
Liabilities and all Employee Benefit Plans providing retiree benefits and a
calculation of the present value of all retiree Liabilities. All Employee
Benefit Plans have been established and maintained in accordance with their
terms. No Employee Benefit Plan is or was collectively bargained for. The
Employee Benefit Plans which are described in Section 3(3) of ERISA (the "ERISA
Plans") are in material compliance with all provisions of ERISA, other
applicable Laws and, if intended to be tax qualified, Sections 401(a) and 501(a)
of the Code. All ERISA Plans which are intended to qualify under Section 401(a)
of the Code have been submitted to and approved under Section 401(a) of the Code
by the IRS and, to the best knowledge of CoMed and the Shareholders, nothing has
occurred which would cause the loss of such tax qualification. No Liability
under ERISA has been or is expected to be incurred by CoMed or any Affiliate of
CoMed with respect to any ongoing, frozen or terminated "single-employer plan,"
within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of any entity which is
considered one employer with CoMed under Section 4001 of ERISA or Section 414 of
the Code (an "ERISA Affiliate"). CoMed and its Affiliates have not incurred and
do not expect to incur any Liability with respect to a multi-employer plan under
Subtitle E of Title IV of ERISA (regardless of whether based on contributions of
an ERISA Affiliate) and have not made and are not obligated to make any
contributions to any multi-employer plan. All contributions required to be made
under the terms of any Employee Benefit Plan have been timely made or have been
duly provided for. No single-employer plan of CoMed or any ERISA Affiliate of
CoMed has any unfunded pension liability or any "accumulated funding deficiency"
(whether or not waived) within the meaning of Section 412 of the Code or Section
302 of ERISA. No Reportable Event has occurred with respect to any ERISA Plan.
Neither CoMed nor any of its Affiliates has provided, or is required to provide,
security to any single-employer plan of an ERISA Affiliate pursuant to Section
401 (a) of the Code. CoMed and each ERISA Affiliate have paid all premiums
(together with any interest, charges or penalties for late payment thereon)
required to be paid to the Pension Benefit Guaranty Corporation with respect to
each ERISA plan for which such premiums are required. No ERISA Plan has engaged
in any transaction described in Section 406 or 407 of ERISA or Section 4975 of
the Code. Each ERISA Plan has at all times complied with the bonding
requirements of Section 412 of ERISA. Each Employee Benefit Plan can be
unilaterally terminated without penalty by CoMed on no more than sixty (60)
days' notice. There are no pending or, to the knowledge of CoMed or the
Shareholders, threatened Claims relating to any Employee Benefit Plan, other
than routine Claims for benefits in the ordinary course, asserted against (i)
any Employee Benefit Plan or its assets, (ii) CoMed or any ERISA Affiliate, or
(iii) any fiduciary, for which CoMed may be directly or indirectly liable,
through indemnification obligations or otherwise.
(b) With respect to each Employee Benefit Plan, CoMed and the
Shareholders have made available to DHT a current, accurate and complete copy
(or, to the extent no such copy exists, an accurate and complete description)
thereof (including all amendments thereto which will become effective at a later
date) and, to the extent applicable, (i) any related trust agreement, annuity
contract or other funding instrument, (ii)
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the most recent summary plan description, (iii) the most recent annual report
form (FORM 5500 series), financial statement and actuarial report and (iv) the
most recent IRS determination letter.
SECTION 2.18 Employee Related Matters.
(a) Schedule 2.18 contains a true and correct list of all
directors, full-time employees and consultants of CoMed, including any agreement
relating thereto, and a description of the rate and nature of all compensation
payable by CoMed to each such person. Schedule 2.18 also contains a description
of all existing severance arrangements, accrued vacation policies or retiree
benefits of any current or former director, officer, employee or consultant (to
the extent not included on Schedule 2.17). Except as set forth on such Schedule,
the employment or consulting arrangement of all such persons is terminable at
will.
(b) Except as set forth in Schedule 2.18, (a) CoMed is not a
party to any Contract with any labor organization or other representative of its
employees; (b) there is no unfair labor practice charge or complaint pending or,
to the knowledge of CoMed or the Shareholders, threatened against CoMed; (c)
CoMed has not experienced any labor strike, slowdown, work stoppage or similar
material labor controversy within the past three years; (d) no representation
question has been raised respecting any of CoMed's employees working within the
past three years, nor, to the knowledge of CoMed or the Shareholders, are there
any campaigns being conducted to solicit authorization from CoMed's employees to
be represented by any labor organization; (e) no Claim before any Governmental
Body brought by or on behalf of any employee, prospective employee, former
employee, retiree, labor organization or other representative of CoMed's
employees is pending or, to the knowledge of CoMed or the Shareholders,
threatened against CoMed; (f) CoMed is not a party to, or otherwise bound by,
any Order relating to its employees or employment practices; and (g) except with
respect to ongoing disputes of a routine nature involving immaterial amounts,
CoMed has paid in full to all of its employees all wages, salaries, commissions,
bonuses, benefits and other compensation due and payable to such employees.
SECTION 2.19 Insurance. Schedule 2.19 sets forth a list of all insurance
policies, fidelity and surety bonds and fiduciary liability policies ("the
Insurance Policies") covering the Assets, the Business, operations, employees,
officers and directors of CoMed. True and complete copies of all such Insurance
Policies have been delivered to DHT. Schedule 2.19 also sets forth (a) with
respect to each Insurance Policy, the applicable deductible amounts and any
material limitations to coverage, (b) any letter of credit relating to any such
Insurance Policy and all inspections and reports delivered to CoMed by any
insurer with respect to such Insurance Policies, copies of which have been
delivered to DHT and (c) a true and complete list of Claims made in respect of
Insurance Policies during the three years prior to the date hereof. True and
correct copies of all loss runs with respect to such period have been delivered
to DHT. There is no Claim by CoMed pending under any of such Insurance Policies
as to which coverage has been questioned, denied or disputed by the underwriters
of such Insurance Policies or requirement by any insurer to perform work which
has not been satisfied. All premiums due and payable under all Insurance
Policies have been paid, and CoMed is otherwise in compliance in all material
respects with the terms and conditions of all such Insurance Policies. All
Insurance Policies are in full force and effect. Neither CoMed nor the
Shareholders know of any threatened termination of, premium increase with
respect to, or uncompleted requirements under any Insurance Policy. No premiums
are or will be payable under Insurance Policies after the Closing in respect of
insurance provided for periods prior to the Closing Date.
SECTION 2.20 Compliance with Laws. CoMed is not in violation of any order,
judgment, injunction, award, citation, decree, consent decree or writ applicable
to CoMed (collectively, "Orders"), or any law, statute, code, ordinance, rule,
regulation or other requirement (collectively, "Laws"), of any government or
political subdivision thereof, whether federal, state, local or foreign, or any
agency or
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instrumentality of any such government or political subdivision, or any court or
arbitrator (collectively, "Governmental Bodies") affecting its Assets or the
Business in any material respect.
SECTION 2.21 Permits. CoMed has obtained all licenses, permits,
certificates, certificates of occupancy, orders, authorizations and approvals of
(collectively, "Permits"), and have made all required registrations and filings
with, any Governmental Body that are material to the conduct of the Business.
All Permits material to the Business are listed on Schedule 2.21 and are in full
force and effect, no material violations are or have been recorded in respect of
any Permit, and no proceeding is pending or, to the knowledge of CoMed or the
Shareholders, threatened to revoke or limit any Permit. Except as provided on
Schedule 2.21, no Permit will terminate by reason of the Contemplated
Transactions.
SECTION 2.22 Environmental Matters.
(a) Except as set forth in Schedule 2.22, there has been no
manufacture, refining, storage, transport, disposal or treatment of Hazardous
Substances by CoMed (or, to the knowledge of CoMed or the Shareholders, any
predecessor in interest), or any Release at, on or under any Real Property by
CoMed or, to the knowledge of CoMed or the Shareholders, by any other person, in
violation of any Environmental Law or which would require remedial action under
any Environmental Law and, to the knowledge of CoMed or the Shareholders, none
of the soil, ground water or surface water of such Real Property is or has been
contaminated by any Release.
(b) CoMed has not received any written (i) notice of any
violation with respect to any Environmental Law, or (ii) notice of any prior,
pending or threatened Regulatory Action or other Claim involving CoMed or any
present or former owner, lessee or operator of the Real Property.
(c) Except as set forth in Schedule 2.22, to the knowledge of
CoMed or any Shareholder, (i) there are no incinerators, septic tanks,
underground tanks or cesspools located, or which had been located on, at or
under the Real Property, (ii) all sewage from the Real Property is discharged
into a public sanitary sewer system, and (iii) there has been no Release by
CoMed into the atmosphere, any adjoining or adjacent body of water, or adjoining
or adjacent property. CoMed has delivered to DHT copies of all environmental
reports and all other written materials in the possession of CoMed or the
Shareholders regarding the environmental matters set forth in this Section 2.22.
SECTION 2.23 Finders Fees. Except as otherwise set forth in Schedule
2.23, there is no investment banker, broker, finder or other intermediary which
has been retained by or is authorized to act on behalf of any Shareholder or
CoMed who might be entitled to any fee or commission from CoMed upon
consummation of the Contemplated Transactions.
SECTION 2.24 Fees, Commissions and Royalties. CoMed has no relationships
with any distributors, agents, employees or other representatives anywhere in
the world which is entitled to fees, commissions, royalties or any other
payments as a result of the sale of CoMed's securities, products, services, or
pursuant to its on going business, except as disclosed on Schedule 2.24.
SECTION 2.25 FDA Regulation. Except as provided in Schedule 2.25, the
Business as presently conducted by CoMed complies with all applicable
regulations promulgated by the United States Food and Drug Administration (the
"FDA") when noncompliance may reasonably be expected to have a materially
adverse effect on the properties, operation, business or financial condition of
CoMed.
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SECTION 2.26 Software. CoMed has complete and exclusive right, title and
interest in and to all tangible and intangible property rights existing in the
software listed on Schedule 2.26 (the "Software"). The Software has either been
acquired or developed by CoMed entirely through its own efforts for its own
account and the Software is free and clear of all liens, claims, co-ownership
rights of any kind or nature, encumbrances, or equities whatsoever of any third
party except as set forth on Schedule 2.26. The Software does not infringe upon
any patent, copyright, or trade secret of any third party, is fully eligible for
protection under applicable copyright law and has not been forfeited to the
public domain, and the source code and system specifications for the Software
have been maintained in confidence or when disclosed been subject to a
confidentiality agreement. Except as provided in Schedule 2.26, personnel,
including employees, agents, consultants and contractors who have contributed to
or participated in the conception and development of the Software either (i)
have been party to a for-hire relationship with CoMed that has accorded CoMed
full, effective and exclusive original ownership of all tangible and intangible
property thereby arising with respect to the Software, or (ii) have executed
appropriate instruments of assignment in favor of CoMed as assignee that have
conveyed to CoMed full, effective and exclusive ownership of all tangible and
intangible property thereby arising with respect to the Software. There are no
agreements or arrangements in effect with respect to the marketing,
distribution, licensing or promotion of the Software by any independent
salesperson, distributor, sublicensor or other remarketer or sales organization,
or any escrow arrangements with any person regarding the Software, except as set
forth on Schedule 2.26. The Software performs substantially in accordance with
all material functional specifications and documentation with respect thereto.
Current documentation exists for all commercially available software products of
CoMed.
SECTION 2.27 Depositories; Powers of Attorney. Schedule 2.27 sets forth (i)
the name of each bank or similar entity in which CoMed has an account, lock box
or safe deposit box and the names of all persons authorized to draw thereon or
to have access thereto; and (ii) the name of each person holding a general or
special power of attorney from CoMed and a description of the terms thereof.
SECTION 2.28 Status of CoMed. CoMed is a qualified S Corporation as such
term is defined in Code Section 1361(a) with respect to each taxable year of
CoMed since January 1, 1987. Neither CoMed nor any shareholder of CoMed has
taken any action or failed to take any action in any taxable year of CoMed,
which would have caused the election and qualification of CoMed's S Corporation
status to be revoked or terminated.
SECTION 2.29 Shareholder Status. Each present and prior shareholder of
CoMed is and was, as the case may be, an individual and a citizen of the United
States.
SECTION 2.30 Certain Other Representations. Schedule 2.30 sets forth, as
of the dates stated therein, the amount of: (i) the aggregate backlog of
contracted sales and installations; (ii) the annualized recurring maintenance
and support revenue for existing customers; (iii) the annualized new maintenance
and support revenue for installations to be completed from existing contract
backlog; and (iv) total liabilities.
SECTION 2.31 Disclosure. Neither this Agreement, nor the Schedules hereto,
or any audited or unaudited financial statements, documents or certificates
furnished or to be furnished to DHT or Newco by or on behalf of CoMed or any
Shareholder pursuant to this Agreement, taken as a whole, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances in which they were made, not misleading. Notwithstanding any right
of DHT or Newco to fully investigate the affairs of CoMed nor any knowledge of
facts determined or determinable by DHT or Newco pursuant to such investigation,
DHT and Newco have the right to rely fully upon the representations, warranties,
covenants and agreements of CoMed and the Shareholders contained herein or
listed or disclosed on any Schedule hereto or in any instrument delivered in
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connection herewith or any of the foregoing. If an exception is disclosed under
a Schedule hereto referencing one section, it shall be deemed disclosed under
the Schedule for any and all other sections if the disclosure contained therein
cross references such other Schedules or sections or makes clear on its face the
nature and extent of any inconsistency with the representations and warranties
in such other sections or Schedules.
SECTION 2.32 Board and Shareholder Approval. The Board of Directors of
CoMed has (i) determined that the Merger is in the best interests of the
Shareholders, (ii) approved the Merger, and (iii) resolved to recommend adoption
of this Agreement and authorization of the Merger to the Shareholders. No
anti-takeover provisions under the Laws of Massachusetts are applicable to the
Contemplated Transactions. The Shareholders shall have irrevocably waived any
and all notice requirements under applicable law relating to the delivery of an
agreement of merger prior to a stockholders' meeting for the purpose of voting
in favor of the Merger.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF DHT AND NEWCO
DHT and Newco, jointly and severally, represent and warrant to the
Shareholders that:
SECTION 3.1 Authority Relative to This Agreement. Each of DHT and Newco
has full power and authority to execute and deliver this Agreement and each
other Transaction Document to which it is a party and to consummate the
Contemplated Transactions. The execution and delivery of this Agreement and the
consummation of the Contemplated Transactions to which DHT or Newco is a party
have been duly and validly authorized and approved by the board of directors
thereof and no other corporate proceedings on the part of DHT or Newco are
necessary to authorize the execution and delivery by such party of this
Agreement or the consummation of the Contemplated Transactions to which it is a
party. This Agreement has been duly and validly executed and delivered by each
of DHT and Newco and (assuming the valid execution and delivery of this
Agreement by the other parties hereto) constitutes the legal, valid and binding
agreement of such party, enforceable against such party in accordance with its
terms.
SECTION 3.2 No Conflicts; Consents. The execution, delivery and
performance by each of DHT and Newco of this Agreement and each other
Transaction Document to which it is a party and the consummation of the
Contemplated Transactions to which it is a party will not (i) violate any
provision of the Articles of Incorporation or by-laws of DHT or Newco; (ii)
require DHT or Newco to obtain any consent, approval or action of or waiver
from, or make any filing with, or give any notice to, any Governmental Body or
any other person, except as set forth in Schedule 3.2 (the "DHT Required
Consents"); (iii) if DHT Required Consents are obtained prior to the Closing,
violate, conflict with or result in the breach or default under (after the
giving of notice or the passage of time) or permit the termination of, any
material Contract to which DHT or Newco is a party or by which either thereof or
their respective Assets may be bound or subject; or (iv) if DHT Required
Consents are obtained prior to the Closing, violate any Law or Order of any
Governmental Body against, or binding upon, DHT or Newco or upon its respective
assets or business.
SECTION 3.3 Corporate Existence and Power. Each of DHT and Newco is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation and has all requisite corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted. Newco is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the character of the property owned or leased by it or the nature
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of its activities makes such qualification necessary, except for those
jurisdictions where the failure to be so qualified would not, individually or in
the aggregate, have a material adverse effect on the business, its Assets,
financial condition or the results of operations of DHT and Newco taken as a
whole.
SECTION 3.4 Finders Fees. Except as set forth on Schedule 3.4, there is no
investment banker, broker, finder or other intermediary which has been retained
by or is authorized to act on behalf of DHT or Newco who might be entitled to
any fee or commission from DHT or Newco upon consummation of the Contemplated
Transactions.
SECTION 3.5 Governmental Proceedings. There are no outstanding, or to the
knowledge of DHT or Newco threatened, Orders, Claims, demands, suits or
proceedings of any Governmental Body against or involving DHT or Newco which
could reasonably be expected to prohibit or materially interfere with CoMed's
obtaining any Required Consents or which would conflict with or result in a
breach or default under or permit the termination of any Contract of a type
required to be listed on Schedule 2.13 with any Governmental Body.
ARTICLE 4
COVENANTS AND AGREEMENTS
SECTION 4.1 Corporate Examinations and Investigations. Prior to the
Closing Date, CoMed agrees that DHT shall be entitled, through its directors,
officers, Affiliates, employees, attorneys, accountants, representatives,
lenders, consultants and other agents (collectively, "Representatives") to make
such investigation of the Assets, the Business and operations of CoMed, and such
examination of the books, records and financial condition of CoMed, as DHT
reasonably deems necessary in order to fully complete its investigations and
examinations prior to Closing, and CoMed and the Shareholders shall cooperate
fully therein. In that connection, CoMed and the Shareholders shall make
available to the Representatives of DHT during such period all such information
and copies of such documents and records concerning the affairs of CoMed as such
Representatives may reasonably request (subject to existing obligations of
confidentiality which CoMed shall diligently seek to have waived; provided, that
all such information, documents and records shall have been made available
within a reasonable time prior to Closing), shall permit the Representatives of
DHT access to the Assets of CoMed and all parts thereof and to their respective
employees, customers, suppliers, Contractors and others, and shall cause CoMed's
representatives and agents to cooperate fully in connection with such review and
examination. No investigation by DHT shall diminish or obviate any of the
representations, warranties, covenants or agreements of a Shareholder or CoMed
contained in this Agreement.
SECTION 4.2 Filings and Authorizations; Taxes. CoMed and the Shareholders,
on the one hand, and DHT and Newco, on the other, shall file or supply, or cause
to be filed or supplied, all notifications, reports and other information
required to be filed or supplied by Law to effectuate the consummation of the
Contemplated Transactions. CoMed and the Shareholders, on the one hand, and DHT
and Newco, on the other, shall cooperate with each other in connection with such
filings and furnish each other with copies of such filings and any
correspondence received from any Governmental Body in connection therewith. The
Shareholders will pay when due all Taxes imposed upon them or CoMed by Law
arising out of the Contemplated Transactions. DHT will pay when due all Taxes
imposed upon it or Newco by Law arising out of the Contemplated Transactions.
CoMed and the Shareholders, on the one hand, and DHT and Newco, on the other, as
promptly as practicable, shall make, or cause to be made, all filings and
submissions under such Laws as are applicable to them or to their respective
Affiliates, as may be required for them to consummate the Contemplated
Transactions in accordance with the terms of this Agreement and shall furnish
copies thereof
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to each other party prior to such filing and shall not make any such filing or
submission to which DHT or the Requisite Shareholders, as the case may be,
reasonably objects in writing. All such filings shall comply in form and content
in all material respects with applicable Law. If DHT or Newco realizes a
reduction in its Taxes (the "Tax Reduction") for a taxable period ending after
the Closing Date because it claims a deduction, credit, reduction of income or
other Tax allowance solely as a result of an adjustment to CoMed's or
Shareholders' taxable income in any period through the Closing Date where such
an adjustment resulted in payment by Shareholders to DHT or Newco under Section
6.2(a), DHT and/or Newco shall pay to the Shareholders an amount equal to the
lesser of: (i) the amount paid by Shareholders to DHT or Newco pursuant to
Section 6, or (ii) the Tax Reduction. Any payment by DHT or Newco to
Shareholders hereunder shall be made within 30 days of the filing of the tax
return to which the Tax Reduction relates or, in the case of a Tax Reduction
realized by way of refund by a Taxing Authority, within 30 days of Newco's or
DHT's receipt of the refund.
Any refunds or credits of Taxes of CoMed incurred during any taxable period
ending on or before the Closing Date that are not reflected on the schedules
shall be for the account of Shareholders and shall be paid by DHT or Newco to
Shareholders within 10 days after DHT or Newco receives such refund. Any refunds
or credits of Taxes of CoMed for any taxable period beginning after the Closing
Date or any carryback of any refund or credit incurred in any taxable period
beginning after the Closing Date shall be for the account of DHT or Newco and
shall be paid by Shareholders to DHT or Newco within ten days after Shareholders
receive any such refund.
DHT and Newco shall provide Shareholders with copies of any Returns
covering Taxes described in this Section at least 20 days prior to the due date
hereof (giving effect to any extensions thereto), accompanied by a statement
calculating any Shareholder's indemnification obligation pursuant to Section
6.2(a). The Shareholders shall have the right to engage a tax advisor of their
choice to review such Returns. Iin the event such returns report net taxable
income, the reasonable cost of such review shall be reimbursed by DHT.
Shareholders shall pay to DHT or Newco the amount of Shareholder's
indemnification obligation at least 2 business days prior to the due date
thereof (giving effect to any extensions thereof availed of by DHT or Newco)
unless the parties are unable to agree on the amount of Shareholders'
indemnification obligation thereunder in which case such dispute shall be
resolved by independent accountants acceptable to both parties whose fees and
expenses shall be paid by DHT and Shareholders in proportion to each party's
respective liability for Taxes as determined by such accountants, and
Shareholders shall pay the amount determined by such accountants within 5 days
of such determination.
SECTION 4.3 Efforts to Consummate. Subject to the terms and conditions
herein, each party hereto, without payment or further consideration, shall use
its good faith efforts to take or cause to be taken all action and to do or
cause to be done all things necessary, proper or advisable under applicable
Laws, Permits and Orders to consummate and make effective, as soon as reasonably
practicable, the Contemplated Transactions, including, but not limited to, the
obtaining of all Required Consents, DHT Required Consents and Permits or
consents of any third party, whether private or governmental, required in
connection with such party's performance of such transactions and each party
hereto shall cooperate with the other in all of the foregoing.
SECTION 4.4 Negotiations With Others. From and after November 21, 1996,
neither CoMed or the Shareholders have will directly or indirectly (i)
solicited, engaged in discussions or engaged in negotiations with any person
(other than DHT or any of its Affiliates) with respect to an Acquisition
Proposal; (ii) provided information to any person (other than DHT or any of its
Representatives) in connection with an Acquisition Proposal; or (iii) entered
into any transaction with any person (other than DHT or any of its Affiliates)
with respect to an Acquisition Proposal.
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SECTION 4.5 Notices of Certain Events. Prior to the Closing Date, each of
CoMed and the Shareholders, on the one hand, and DHT and Newco, on the other,
shall promptly notify the other of:
(a) any notice or other communication received from an person
alleging that the consent of such person is or may be required in connection
with the Contemplated Transactions;
(b) any notice or other communication received from any
Governmental Body in connection with the Contemplated Transactions;
(c) any event, condition or circumstance occurring that would
constitute a violation or breach of any representation or warranty, whether made
as of the Closing Date, or that would constitute a violation or breach of any
covenant of any party contained in this Agreement; and
(d) any event, condition or circumstance occurring prior to
the Closing Date that could reasonably be expected to have a material adverse
effect on the Condition of the Business.
SECTION 4.6 Public Announcements. Prior to the Closing Date, CoMed and the
Shareholders, on the one hand, and DHT and Newco, on the other, will consult
with each other before issuing any press release or otherwise making any public
statement with respect to the Contemplated Transactions, and will not issue any
such press release or make any such public statement without the prior approval
of DHT or the Requisite Shareholders, as the case may be, except as may be
required by applicable Law in which event the other party shall have the right
to review and comment upon any such press release or public statement prior to
its issuance.
SECTION 4.7 Confidentiality.
(a) Each of DHT and Newco shall hold in strict confidence, and
shall use its best efforts to cause all its Representatives to hold in strict
confidence, unless compelled to disclose by judicial or administrative process,
or by other requirements of law, all information concerning the Shareholders and
CoMed which it has obtained from CoMed, the Shareholders or their
representatives prior to, on or after the date hereof in connection with the
Contemplated Transactions, and neither DHT nor Newco shall use or disclose to
others, or permit the use of or disclosure of, any such information so obtained,
and will not release or disclose such information to any other person, except to
its Representatives who need to know such information in connection with this
Agreement and who shall be advised of the provisions of this Section 4.8. The
foregoing provision shall not apply to any such information to the extent (i)
known by DHT or Newco prior to the date such information was provided to such
party in connection with the Contemplated Transactions, (ii) made known to DHT
or Newco from a third party not in breach of any confidentiality requirement, or
(iii) made public through no fault of DHT or Newco or any of its
Representatives.
(b) If the Contemplated Transactions are not consummated and
if requested by CoMed, DHT and Newco shall return at their expense to CoMed all
tangible evidence of such information regarding the Shareholders and CoMed.
SECTION 4.8 Expenses. Except as otherwise specifically provided in this
Agreement, DHT and Shareholders shall bear their respective expenses, DHT will
bear the expenses of Newco, and CoMed will bear the expenses of CoMed prior to
the Closing, in each case, incurred in connection with the preparation,
execution and performance of this Agreement and the Contemplated Transaction,
including, without limitation, all fees and expenses of their respective
Representatives.
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SECTION 4.9 Tax Matters. For any taxable period of CoMed that ends before
the Closing Date, CoMed shall timely (i) prepare and file with the appropriate
Tax Authorities all Tax Returns required to be filed with respect to such
taxable periods and (ii) pay or accrue (no later than the day prior to the
Closing Date) to the appropriate Tax Authorities all Taxes shown on such Tax
Returns. CoMed shall timely prepare and file with the appropriate Tax
Authorities all Tax Returns other than income Tax Returns that are required to
be filed with respect to periods on or before the Closing Date and pay (no later
than the day prior to the Closing Date) to the appropriate Tax Authorities all
Taxes shown on such Tax Returns. Drafts of all prepared Tax Returns will be
provided by CoMed to the Shareholders no less than 20 days prior to the
respective filing date (inclusive of extensions) and the Shareholders shall have
the election of engaging their own tax advisor to review the Tax Returns before
filing. The reasonable cost of such tax advisor, in the event the Tax Return
reflects taxable income, shall be the responsibility of DHT.
SECTION 4.10 Special Meeting. As soon as practicable (but in no event later
than ten days following the execution and delivery hereof) following execution
and delivery of the Agreement, CoMed and the Shareholders shall cause to be
convened a duly called and held special meeting or will take action by unanimous
written consent (the "Meeting") of the Shareholders to vote to approve the
Merger and to take any other actions required by the Shareholders under the laws
of Massachusetts, other applicable Law or the Articles of Incorporation or
Bylaws of CoMed, to approve the Contemplated Transactions. At such meeting, each
Shareholder will vote his or her Shares in favor of the Merger and the other
Contemplated Transactions.
SECTION 4.11 Merger Claims. If, prior to the Closing, any Merger Claim is
commenced, the Shareholders will bear all of the expenses (including reasonable
counsel fees and expenses) incurred in defending or investigating such Claim and
CoMed and the Shareholders will each use its or his/her diligent efforts to
cause such Claim to be dismissed (without the incurrence of Liability by CoMed
thereby) prior to the Closing. CoMed and the Shareholders will give DHT (i)
immediate notice of the commencement of any Merger Claim and (ii) subject to the
provisions of Article 6, the opportunity to participate in all negotiations and
proceedings in connection therewith.
SECTION 4.12 Certain Renewals. With respect to each Permit required to be
listed on Schedule 2.21 which may expire prior to the Closing Date, CoMed shall
(i) timely file with the appropriate Governmental Bodies applications for
renewal of each such Permit (the "Applications"), (ii) deliver to DHT true and
complete copies of such Applications, (iii) diligently prosecute such
Applications to conclusion, and (iv) cooperate fully with all Governmental
Bodies in the processing of such Applications.
SECTION 4.13 CoMed Employee Benefits Matters. Following the Effective Time,
DHT covenants and agrees, notwithstanding any contrary provisions herein or in
DHT's standard Employee Policies Manual, that for employees of CoMed whom become
employees of DHT or Newco, the following shall apply:
(i) in the event of employment termination by DHT or Newco
prior to December 17, 1997, such employees with receive the
severance benefits based on the formula as agreed upon and
set forth on Schedule 4.13A, and.
(ii) with respect to the employee contribution portion of
health insurance premiums, DHT and Newco shall provide that
such employee contribution shall, for the one year period
ending December 17, 1997, not be greater than the employee
health insurance premium level in effect by CoMed as of the
date hereof.; and
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(iii) with respect to vacation benefits, CoMed employees
shall receive in 1997 the same vacation benefits as they
would have earned under the ComMed vacation policy in
existence prior to Closing except that the total vacation
benefit for any one employee shall not exceed five (5)
weeks, and further that no more than two (2) weeks of unused
vacation benefits may be eligible for carryover into 1998.
ARTICLE 5
CONDITIONS TO CLOSING
SECTION 5.1 Conditions to the Obligations of the Parties. The obligations
of CoMed and the Shareholders, on the one hand, and DHT and Newco, on the other,
to consummate the Contemplated Transactions are subject to the satisfaction of
the following conditions, which, in the case of Section 5.1(b), may be waived by
DHT and the Requisite Shareholders:
(a) No Injunction. No provision of any applicable Law and no Order
shall prohibit the consummation of the Contemplated Transactions.
(b) No Proceeding or Litigation. No Claim (other than Claims
for appraisal rights of Dissenting Shareholders) instituted by any person, shall
have been commenced or pending against a Shareholder, CoMed, DHT or Newco or any
of their respective Affiliates, officers or directors which Claim seeks to
restrain, prevent, change or delay in any material respect the Contemplated
Transactions or seeks to challenge any of the material terms or provisions of
this Agreement or seeks material damages in connection with any of such
transactions.
SECTION 5.2 Conditions to the Obligations of the Shareholders and CoMed.
All obligations of the Shareholders and CoMed hereunder are subject, at the
option of the Requisite Shareholders, to the fulfillment prior to or at the
Closing of each of the following further conditions:
(a) Performance. Each of DHT and Newco shall have performed
and complied in all material respects with all agreements, obligations and
covenants required by this Agreement to be performed or complied with by it at
or prior to the Closing Date.
(b) Representations and Warranties. The representations and
warranties each of DHT and Newco contained in this Agreement and in any
certificate or other writing delivered by each of DHT and Newco pursuant hereto
shall be true in all material respects at and as of the Closing Date as if made
at and as of such time.
(c) Merger. The Florida Articles of Merger shall have been
duly executed by the Surviving Corporation and DHT shall have tendered to the
Shareholders that portion of the Merger Consideration constituting DHT common
stock and Series CM Preferred Stock and shall have delivered to the Escrow Agent
that portion of the Merger Consideration constituting cash in accordance with
the terms of this Agreement.
(d) DHT Required Consents. All material DHT Required Consents
shall have been obtained.
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<PAGE> 25
(e) Documentation. There shall have been delivered to CoMed and
the Shareholders the following:
(i) A certificate, dated the Closing Date, of the President
or any Vice President of each of DHT and Newco confirming the matters set forth
in Section 5.2(a) and (b) hereof.
(ii) A certificate, dated the Closing Date, of the Secretary
or Assistant Secretary of DHT and Newco certifying, among other things, that
attached or appended to such certificate (A) is a true and correct copy of its
Articles of Incorporation and all amendments if any thereto as of the date
thereof; (B) is a true and correct copy of its By-laws as of the date hereof,
(C) is a true copy of all corporate actions taken by it, including resolutions
of its board of directors authorizing the execution, delivery and performance of
this Agreement, and each other document to be delivered by such party pursuant
hereto; and (D) are the names and signatures of its duly elected or appointed
officers who are authorized to execute and deliver this Agreement and any
certificate, document or other instrument in connection herewith.
(iii) Evidence of the good standing and corporate existence
of DHT and Newco reasonably requested by CoMed or the Requisite Shareholders.
(iv) A signed opinion of DHT's counsel, dated the Closing
Date and addressed to the Shareholders, substantially in the form of opinion
annexed as Exhibit 5.2A hereto.
(v) Copies of all DHT Required Consents.
(f) Registration Rights Agreement. DHT shall have executed and
delivered to the Shareholders a Registration Rights Agreement in the form
attached hereto as Exhibit 5.2B.
(g) Employment Agreements. Newco shall have executed and
delivered, and DHT shall have guaranteed, Employment Agreements with Charles M.
Cooper, Saul M. Bloom, Jerome B. Lerman, Martin B. Levin and Marianne Boswell
and an Assumption Agreement with Kay McDonald upon such terms mutually agreed
upon at Closing between Newco and each of them respectively.
(h) Stock Option Agreements. DHT shall have executed and
delivered Stock Option Agreements in the form attached hereto as Exhibit 5.2C
with Charles M. Cooper, Saul M. Bloom, Jerome B. Lerman, Martin B. Levin and
Marianne Boswell.
(i) Changes in Market. The average of the closing bid and ask
prices of DHT common stock for the five (5) trading day period immediately
preceding the date of Closing shall not be less than $4.00 per share.
SECTION 5.3 Conditions to the Obligations of DHT and Newco. All
obligations of DHT and Newco hereunder are subject, at the option of DHT, to the
fulfillment prior to or at the Closing of each of the following further
conditions:
(a) Performance. Each of CoMed and the Shareholders shall have
performed and complied in all material respects with all agreements, obligations
and covenants required by this Agreement to be performed or complied with by it,
him or her at or prior to the Closing Date.
(b) Representations and Warranties. The representations and
warranties of CoMed and the Shareholders contained in this Agreement and in any
certificate or other writing delivered by CoMed and
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<PAGE> 26
the Shareholders pursuant hereto shall be true in all material respects at and
as of the Closing Date as if made at and as of such time.
(c) Required Consents. All Required Consents shall have been
obtained, or shall be attainable as of right or subject to a condition not to be
unreasonably withheld after Closing.
(d) CoMed 401(k) Plan. CoMed's existing 401(k) plan shall have
been frozen prior to the Closing Date.
(e) CoMed Employment Agreements. Except as set forth on Schedule
5.3(e), all existing employment agreements, together with any and all amendments
thereto, between CoMed and any of its employees (including, without limitation,
all phantom stock, bonus, incentive, severance or other compensation agreements)
shall be terminated prior to Closing.
(f) Shareholder Approval of Merger. This Agreement and the Merger
shall have been approved and adopted by no less than 100% of the Shareholders
entitled to vote thereon at the Meeting and the Florida Articles of Merger and
the Massachusetts Articles of Merger shall have been duly filed.
(g) S Corporation Status is in Force. CoMed is a qualified S
corporation as such term is defined in Code Section 1361(a) during each taxable
year of CoMed, and shall have continuously been a qualified S corporation since
January 1, 1987.
(h) Schedules. All schedules not delivered to DHT and Newco upon
execution hereof, and all updates to schedules delivered upon execution hereof,
shall have been delivered prior to Closing and accepted and agreed to by DHT and
Newco at their sole discretion.
(i) Documentation. There shall have been delivered to DHT and
Newco the following:
(i) A certificate dated the Closing Date of CoMed and each
Shareholder confirming the matters relating to it set forth in Sections 5.3(a)
and (b).
(ii) A certificate, dated the Closing Date, of the President
and Clerk or Assistant Clerk of CoMed certifying, among other things, that
attached or appended to such certificate (A) is a true and correct copy of its
Articles of Incorporation and all amendments if any thereto as of the date
thereof; (B) is a true and correct copy of its By-laws as of the date hereof,
(C) is a true copy of all corporate actions taken by it, including resolutions
of its board of directors authorizing the execution, delivery and performance of
this Agreement, and each other document to be delivered by such party pursuant
hereto; and (D) are the names and signatures of its duly elected or appointed
officers who are authorized to execute and deliver this Agreement and any
certificate, document or other instrument in connection herewith.
(iii) Evidence of the good standing and corporate existence
of CoMed reasonably requested by DHT.
(iv) The resignations, dated on or before the Closing Date,
of each director and officer of CoMed.
(v) A signed opinion of CoMed's and the Shareholders'
counsel, dated the Closing Date, addressed to DHT and Newco, substantially in
the form of the opinion annexed as Exhibit 5.3A hereto.
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<PAGE> 27
(vi) Copies of all Required Consents and Permits.
(vii) An executed general release by each Shareholder in
favor of CoMed substantially in the form of Exhibit 5.3B hereto.
(viii) An executed estoppel certificate and consent to
assignment of Lease from the landlord under the Lease substantially in the form
of Exhibit 5.3C hereto.
(ix) An executed copy of the Escrow Agreement.
(x) Executed employment agreements with Charles M. Cooper,
Saul M. Bloom, Jerome B. Lerman, Martin B. Levin and Marianne Boswell and an
Assumption Agreement with Kay McDonald upon such terms mutually agreed at
Closing between Newco and each of them respectively.
(xi) Possession and control of the Assets of CoMed
(including all corporate books, seals, bank accounts, records and documents).
ARTICLE 6
INDEMNIFICATION
SECTION 6.1 Survival of Representations and Warranties.
(a) Notwithstanding any right of DHT or Newco fully to investigate
the affairs of CoMed and notwithstanding any knowledge of facts determined or
determinable by DHT or Newco pursuant to such investigation or right of
investigation, DHT and Newco have the right to rely fully upon the
representations, warranties, covenants and agreements of CoMed and the
Shareholders contained in this Agreement, or listed or disclosed on any Schedule
hereto, as the same may be modified by any certificate delivered by
Shareholders, CoMed or any of them on or before Closing and approved by DHT or
Newco, or in any instrument delivered in connection with or pursuant to any of
the foregoing. All such representations, warranties, covenants and agreements
shall survive the execution and delivery of this Agreement and the Closing
hereunder. Notwithstanding the foregoing, all representations and warranties of
CoMed and the Shareholders contained in this Agreement, on any Schedule hereto
or in any instrument delivered in connection with or pursuant to this Agreement,
the indemnification obligations of the Shareholders in respect of the matters
specified in clause (i) and (ii) of Sections 6.2(a) shall terminate and expire
12 months after the Closing Date; provided, however, that the liability of the
Shareholders shall not terminate as to any specific claim or claims of the type
referred to in Section 6.2 hereof, whether or not fixed as to liability or
liquidated as to amount, with respect to which such Shareholders have been given
specific notice on or prior to the date on which such liabilities would
otherwise terminate pursuant to the terms of this Section 6.1. Notwithstanding
the foregoing, the Shareholders acknowledge that their obligation to indemnify
DHT and the Surviving Corporation with respect to any Excluded Tax Liabilities,
Environmental Liabilities and Merger Claims shall survive the Closing until the
expiration of any applicable statute of limitations with respect thereto, and
such obligation shall not be affected by the expiration of any representation
and warranty of CoMed or the Shareholders under this Section 6.1(a).
(b) All representations, warranties, covenants and agreements of
DHT and Newco shall terminate and expire 12 months after the Closing Date,
provided, however, that the liability of DHT or Newco shall not terminate as to
any specific claim or claims of the type referred to in Section 6.3 hereof,
whether or
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<PAGE> 28
not fixed as to liability or liquidated as to amount, with respect to which DHT
or Newco has been given specific notice on or prior to the date on which such
Liability would otherwise terminate pursuant to the terms of this Section
6.1(b).
SECTION 6.2 Obligation of the Shareholders to Indemnify.
(a) Subject to the provisions of Section 6.5, each Shareholder,
severally (it being understood that no Shareholder shall be liable under the
provisions of this Section 6.2 as to any representation, warranty and covenant
made by any other Shareholder concerning such other Shareholder or the Shares
owned by it), agrees to indemnify, defend and hold harmless DHT and the
Surviving Corporation (and their respective directors, officers, employees,
Affiliates, successors and assigns) from and against all Claims, losses,
liabilities, damages, deficiencies, judgments, settlements, costs of
investigation or other expenses (including interest, penalties and reasonable
attorneys' fees and disbursements and expenses incurred in enforcing this
indemnification) (collectively, the "Losses") suffered or incurred by DHT or the
Surviving Corporation or any of the foregoing persons arising out of (i) any
breach of the representations and warranties of CoMed or the Shareholders
contained in this Agreement or in the Schedules or any Transaction Document,
(ii) any breach of the covenants and agreements of CoMed or the Shareholders
contained in this Agreement or in the Schedules or any Transaction Document,
(iii) any Environmental Liabilities, (iv) any Merger Claims and (v) any Excluded
Tax Liabilities.
(b) The Shareholders agree that in the event of any Losses of DHT
or the Surviving Corporation as to which it is entitled to indemnification under
this Section 6.2, DHT or the Surviving Corporation may assert its rights under
the Escrow Agreement with respect to the Indemnification Funds, to the full
extent of the amount of such Losses in excess of $150,000 (provided, that,
indemnification for Loss attributable to a particular Shareholder shall be borne
in full by such Shareholder without deduction).
SECTION 6.3 Obligation of DHT and Newco to Indemnify. DHT and Newco,
jointly and severally, agree to indemnify, defend and hold harmless each
Shareholder (and any director, officer, employee, Affiliate or successors and
assigns of any thereof) from and against any Losses suffered or incurred by such
Shareholder or any of the foregoing persons arising out of any breach of the
representations and warranties of DHT and Newco or of the covenants and
agreements of DHT and Newco contained in this Agreement or in the Schedules or
any Transaction Documents.
SECTION 6.4 Notice and Opportunity to Defend Third Party Claims.
(a) Promptly after receipt by any party hereto (the "Indemnitee")
of notice of any demand, claim, circumstance or Tax Audit which would or might
give rise to a claim or the commencement (or threatened commencement) of any
action, proceeding or investigation (an "Asserted Liability") that may result in
a Loss, the Indemnitee shall give prompt notice thereof (the "Claims Notice") to
the party or parties obligated to provide indemnification pursuant to Section
6.2 or 6.3 (collectively, the "Indemnifying Party"). The Claims Notice shall
describe the Asserted Liability in reasonable detail and shall indicate the
amount (estimated, if necessary, and to the extent feasible) of the Loss that
has been or may be suffered by the Indemnitee. The rights of the Indemnifying
Party to defend Asserted Liabilities under Section 6.4(b) in the case of
Asserted Liabilities against CoMed or the Shareholders shall be exercised by the
Requisite Shareholders.
(b) The Indemnifying Party may elect to defend, at its own expense
and with its own counsel, any Asserted Liability unless (i) the Asserted
Liability seeks an injunction or other equitable or declaratory relief against
the Indemnitee or (ii) the Indemnitee shall have reasonably concluded that there
is
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<PAGE> 29
a conflict of interest between the Indemnitee and the Indemnifying Party in the
conduct of such defense. If the Indemnifying Party elects to defend such
Asserted Liability, it shall within thirty (30) days (or sooner, if the nature
of the Asserted Liability so requires) notify the Indemnitee of its intent to do
so, and the Indemnitee shall cooperate, at the expense of the Indemnifying
Party, in the defense of such Asserted Liability. If the Indemnifying Party
elects not to defend the Asserted Liability, is not permitted to defend the
Asserted Liability by reason of the first sentence of this Section 6.4(b), fails
to notify the Indemnitee of its election as herein provided or contests its
obligation to indemnify under this Agreement with respect to such Asserted
Liability, the Indemnitee may pay, compromise or defend such Asserted Liability
at the sole cost and expense of the Indemnifying Party. Notwithstanding the
foregoing, neither the Indemnifying Party nor the Indemnitee may settle or
compromise any claim over the reasonable written objection of the other,
provided that the Indemnitee may settle or compromise any claim as to which the
Indemnifying Party has failed to notify the Indemnitee of its election under
this Section 6.4(b) or as to which the Indemnifying Party is contesting its
indemnification obligations hereunder and provided further, that if any
Indemnitee shall fail to consent to the monetary terms of any proposed
settlement or compromise of any Asserted Liability, the Indemnifying Party shall
not thereafter be obligated to pay the Indemnitee in respect of such Asserted
Liability under this Article 6 in excess of the amount it would have been
required to pay to the Indemnitee in connection with such proposed settlement or
compromise. In any event, the Indemnitee and the Indemnifying Party may
participate, at their own expense, in the defense of any Asserted Liability. If
the Indemnifying Party chooses to defend any Asserted Liability, the Indemnitee
shall make available to the Indemnifying Party any books, records or other
documents within its control that are necessary or appropriate for such defense.
Any Losses of any Indemnitee for which indemnification is available hereunder
shall be paid within thirty (30) days following written demand therefor.
SECTION 6.5 Limits on Indemnification. Notwithstanding anything contained
in this Article 6 to the contrary, the Shareholders shall not have any
obligation to indemnify DHT or the Surviving Corporation pursuant to Section
6.2(a) hereof with respect to any Losses specified therein unless and until DHT
and the Surviving Corporation shall have incurred Losses in an aggregate amount
in excess of $150,000 (provided, that, indemnification for Loss attributable to
a particular Shareholder shall be borne in full by such Shareholder without
being subject to any deduction), in which event DHT and the Surviving
Corporation shall be entitled to be indemnified for all of their Losses in
excess of such $150,000. Indemnification for Losses (to the extent not
attributable to a particular Shareholder) shall be borne by the Shareholders
severally in proportion to their respective ownership of Shares. The liability
of any Shareholder for indemnification arising out of all Losses shall not
exceed the Merger Consideration delivered to such Shareholder pursuant to
Article 1.
SECTION 6.6 Adjustment. It is the intent of the parties that any amounts
paid under Sections 6.2 or 6.3 shall represent an adjustment of the Merger
Consideration and the parties will report such payments consistent with such
intent. Nevertheless, if any payment pursuant to Section 6.2 or 6.3 hereof would
be treated by any Tax Authority as other than a Merger Consideration adjustment
and would, on that basis, be includable in the gross income of the Indemnitee
that is reported to such Tax Authority, then such payment shall be increased by
the amount necessary so that the Indemnitee is fully and completely indemnified
on an after-tax basis. For purposes of this Agreement, the term "Losses" shall
be calculated after taking into account the receipt of any and all insurance
proceeds.
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<PAGE> 30
ARTICLE 7
TERMINATION
SECTION 7.1 Termination. This Agreement may be terminated and the
Contemplated Transactions may be abandoned at any time prior to the Closing:
(a) By mutual written consent of the Requisite Shareholders and
DHT;
(b) By the Requisite Shareholders if (i) there has been a material
misrepresentation or breach of warranty on the part of DHT or Newco in the
representations and warranties contained herein and such material
misrepresentation or breach of warranty, if curable, is not cured within thirty
(30) days after written notice thereof from the Requisite Shareholders, (ii) DHT
or Newco has committed a material breach of any covenant imposed upon it
hereunder and fails to cure such breach within thirty (30) days after written
notice thereof from the Requisite Shareholders, or (iii) any condition to
CoMed's or the Shareholders' obligations hereunder becomes incapable of
fulfillment through no fault of CoMed or any Shareholder and is not waived by
the Requisite Shareholders.
(c) By DHT, if (i) there has been a material misrepresentation or
breach of warranty on the part of CoMed or any Shareholder in the
representations and warranties contained herein and such material
misrepresentation or breach of warranty, if curable, is not cured within thirty
(30) days after written notice thereof from DHT, (ii) CoMed or any Shareholder
has committed a material breach of any covenant imposed upon it or him/her
hereunder and fails to cure such breach within thirty (30) days after written
notice thereof from DHT, or (iii) any condition to DHT's or Newco's obligations
hereunder becomes incapable of fulfillment through no fault of DHT or Newco and
is not waived by DHT or Newco.
(d) By the Requisite Shareholders or by DHT, if there shall be any
Law that makes consummation of the Contemplated Transactions illegal or
otherwise prohibited, or if any Order enjoining CoMed or Newco from consummating
the Contemplated Transactions is entered and such Order shall have become final
and nonappealable; and
(e) By either the Requisite Shareholders or DHT if the Closing
shall not have occurred on or prior to December 31, 1996, provided if so
terminated by the Requisite Shareholders, the conditions specified in Section
7.1(b), above shall have been satisfied on the date of termination, or, if
terminated by DHT, the conditions specified in Section 7.1(c) shall have been
satisfied on the date of termination.
SECTION 7.2 Effect of Termination; Right to Proceed. In the event that this
Agreement shall be terminated pursuant to Section 7.1, all further obligations
of the parties under the Agreement shall terminate without further liability of
any party hereunder except (i) to the extent that a party has made a material
misrepresentation hereunder or committed a breach of the material covenants and
agreements imposed upon it hereunder, (ii) to the extent that any condition to a
party's obligations hereunder became incapable of fulfillment because of the
breach by a party of its obligations hereunder, (iii) that the agreements
contained in Sections 4.7, 4.8 and 4.9 shall survive the termination hereof. In
the event that a condition precedent to its obligation is not met, nothing
contained herein shall be deemed to require any party to terminate this
Agreement, rather than to waive such condition precedent and proceed with the
Contemplated Transactions.
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<PAGE> 31
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 Notices.
(a) Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally by hand or by
recognized overnight courier, telecopied or mailed (by registered or certified
mail, postage prepaid) as follows:
(i) If to DHT or Newco, one copy to:
Dynamic Healthcare Technologies, Inc.
101 Southhall Lane, Suite 210
Maitland, FL 32751
Attention: Mitchel J. Laskey, President and CEO
with a copy to:
Cohen, Berke, Bernstein,
Brodie & Kondell, P.A.
2601 South Bayshore Drive, 19th Floor
Miami, FL 33133
Attention: Richard N. Bernstein, Esq.
(ii) If to CoMed, one copy to:
Collaborative Medical Systems, Inc.
2 University Office Park
51 Sawyer Road
Waltham, MA 02154-9387
Attention: Charles M. Cooper, President and CEO
with a copy to:
Kotin, Crabtree & Strong, LLP
One Bowdoin Square
Boston, MA 02114
Attention: Rene D. Varrin, Esq.
(iii) If to the Shareholders, one copy to the addresses
listed on Schedule 2.1
(b) Each such notice or other communication shall be effective (i)
if given by telecopier, when such telecopy is transmitted to the telecopier
number specified in Section 8.1(a) (with confirmation of transmission; provided,
however, that if such confirmation is received later than 5 p.m., notice shall
be effective on the next following business day) or (ii) if given by any other
means, when delivered at the address specified in Section 8.1(a). Any party by
notice given in accordance with this Section 8.1 to the other party may
designate another address (or telecopier number) or person for receipt of
notices hereunder. Notices by a party may be given by counsel to such party.
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<PAGE> 32
SECTION 8.2 Entire Agreement. This Agreement (including the Schedules and
Exhibits hereto) and the collateral agreements executed in connection with the
consummation of the Contemplated Transactions contain the entire agreement
between the parties with respect to the subject matter hereof and related
transactions and supersede all prior agreements, written or oral, with respect
thereto.
SECTION 8.3 Waivers and Amendments; Non-Contractual Remedies; Preservation
of Remedies. This Agreement may be amended, superseded, canceled, renewed or
extended only by a written instrument signed by the Requisite Shareholders and
DHT. The provisions hereof may be waived in writing by the Requisite
Shareholders and DHT. No delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
Waiver on the part of any party of any such right, power or privilege, nor any
single or partial exercise of any such right, power or privilege, preclude any
further exercise thereof or the exercise of any other such right, power or
privilege. Except as otherwise provided herein, the rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies that any
party may otherwise have at law or in equity.
SECTION 8.4 Governing Law; Venue. This Agreement shall be governed and
construed in accordance with the laws of the State of Florida applicable to
agreements made and to be performed entirely within such State, without regard
to the conflict of laws rules thereof. Venue with respect to any disputes
arising in connection herewith shall be Middlesex County, Massachusetts. Each of
the parties consents to the jurisdiction of the courts of the Commonwealth of
Massachusetts (and of the appropriate appellate courts) in any such action or
proceeding.
SECTION 8.5 Binding Effect; No Assignment. This Agreement and all of its
provisions, rights and obligations shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors, heirs and legal
representatives. This Agreement may not be assigned (including by operation of
Law) by a party without the express written consent of DHT (in the case of
assignment by CoMed or any Shareholder) or the Requisite Shareholders (in the
case of assignment by DHT or Newco) and any purported assignment, unless so
consented to, shall be void and without effect. Nothing herein express or
implied is intended or shall be construed to confer upon or to give anyone other
than the parties hereto and their respective heirs, legal representatives and
successors any rights or benefits under or by reason of this Agreement and no
other party shall have any right to enforce any of the provisions of this
Agreement.
SECTION 8.6 Exhibits. All Exhibits and Schedules attached hereto are hereby
incorporated by reference into, and made a part of, this Agreement.
SECTION 8.7 Severability. If any provision of this Agreement for any reason
shall be held to be illegal, invalid or unenforceable, such illegality shall not
affect any other provision of this Agreement, but this Agreement shall be
construed as if such illegal, invalid or unenforceable provision had never been
included herein.
SECTION 8.8 Counterparts. The Agreement may be executed in any number of
counterparts, each of which shah be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.
SECTION 8.9 Third Parties. Except as specifically set forth or referred to
herein, nothing herein express or implied is intended or shall be construed to
confer upon or give to any person other than the parties
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<PAGE> 33
hereto and their permitted successors or assigns, any rights or remedies under
or by reason of this Agreement or the Contemplated Transactions.
ARTICLE 9
DEFINITIONS
SECTION 9.1 Definitions. The following terms, as used herein, have the
following meanings:
"Acquisition Proposal" shall mean any proposal for the acquisition of,
or merger or other business combination involving CoMed or the sale of the
Shares or the sale of any equity interest in, or the Business or any Assets of,
CoMed (except in the ordinary course), other than the transactions contemplated
by this Agreement.
"Affiliate" of any person means any other person directly or
indirectly through one or more intermediary persons, controlling, controlled by
or under common control with such person.
"Agreement" or "this Agreement" shall mean, and the words "herein",
"hereof" and "hereunder" and words of similar import shall refer to, this
agreement as it from time to time may be amended.
"Articles of Incorporation" shall mean, in the case of any
corporation, the certificate of incorporation, articles of incorporation or
charter of a corporation, howsoever denominated under the laws of the
jurisdiction of its incorporation.
"Assets" shall mean properties, rights, interests and assets of every
kind, real, personal or mixed, tangible and intangible, used or usable in the
Business.
The term "audit" or "audited" when used in regard to financial
statements shall mean an examination of the financial statements by a firm of
independent certified public accountants in accordance with generally accepted
auditing standards for the purpose of expressing an opinion thereon.
"Business" shall mean the ownership and operation of the Assets
comprising the business operations of CoMed.
"CoMed Debt" shall mean (i) money borrowed by CoMed from any person;
(ii) any indebtedness of CoMed arising under leases required to be capitalized
under GAAP or evidenced by a note, bond, debenture or similar instrument; (iii)
any indebtedness of CoMed arising under purchase money obligations or
representing the deferred purchase price of property and services (other than
current trade payables incurred in the ordinary course of the Business) and (iv)
any Liability of CoMed under any guaranty, letter of credit, performance credit
or other agreement having the effect of assuring a creditor against loss.
"Contract" shall mean any contract, agreement, indenture, note, bond,
lease, conditional sale contract, mortgage, license, franchise, instrument,
commitment or other binding arrangement, whether written or oral.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
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<PAGE> 34
The term "control", with respect to any person, shall mean the power
to direct the management and policies of such person, directly or indirectly, by
or through stock ownership, agency or otherwise, or pursuant to or in connection
with an agreement, arrangement or understanding (written or oral) with one or
more other persons by or through stock ownership, agency or otherwise; and the
terms "controlling" and "controlled" shall have meanings correlative to the
foregoing.
"Deferred Compensation Liabilities" shall mean all payments required
to be made by CoMed under any Employee Benefit Plan.
"Environmental Laws" shall mean any federal, state or local statute,
ordinance or promulgated rule or regulation, any judicial or administrative
order or judgment applicable to CoMed (whether or not by consent), any duties
imposed by common law and any provision or condition of any permit, license or
other operating authorization, in each case as in effect as of the date of this
Agreement and relating to (a) the protection of (i) the environment or (ii) the
public welfare from actual or potential exposure (or the effects of exposure) to
any actual or potential release, discharge, disposal or emission (whether past
or present) of any Hazardous Substance, or (b) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, of any
Hazardous Substance.
"Environmental Liabilities" shall mean any and all Liabilities of the
Shareholders, CoMed (or the Surviving Corporation) arising out of (i) Claims by
third parties made under Environmental Laws or (ii) remedial action required by
Environmental Laws. in each case, to the extent arising out of events,
transactions, facts or circumstances occurring or existing on or prior to the
Closing Date.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Excluded Tax Liabilities" shall mean any and all Liabilities for
Taxes (other than Tax Liabilities arising out of the Contemplated Transactions
that are payable by DHT or the Surviving Corporation hereunder) that are payable
by the Shareholders or CoMed pursuant to the terms of this Agreement or pursuant
to Law or that are payable by the Shareholders, CoMed (or the Surviving
Corporation) arising out of events, transactions, facts or circumstances
occurring or existing on or prior to the Closing Date.
"GAAP" shall mean generally accepted accounting principles in effect
on the date hereof as set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession of the United
States.
"Hazardous Substances" shall mean any pollutants, contaminants,
hazardous or toxic substance. material, or waste which is or becomes regulated
by any local or state governmental authority, or the United States government.
The term "Hazardous Substances" includes, without limitation, any material or
substance which is (i) designated as a "hazardous substance" pursuant to Section
311 of the Federal Water Pollution Control Act, 33 U.S.C. Section 1321, (ii)
defined as a "hazardous waste" pursuant to Section 1004 of the Federal Resource
Conservation and Recovery Act, 42 U.S.C Section 6901 et seq. (42 U.S.C. Section
6903), (iii) defined as a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., (iv) petroleum products and wastes, or (v) asbestos or
asbestos-containing material.
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<PAGE> 35
"Inventory" shall mean, as of any date, collectively, all inventories
of products owned by CoMed and held for sale, distribution or license, together
with packaging and samples thereof, owned by CoMed as of such date.
"IRS" shall mean the Internal Revenue Service.
The term "knowledge" with respect to (a) any individual shall mean
actual knowledge and (b) any corporation shall mean the actual knowledge of the
directors and the executive officers of such corporation; and "knows" has a
correlative meaning.
"Liability" shall mean any direct or indirect indebtedness, liability,
assessment, claim. loss, damage, deficiency, obligation or responsibility, fixed
or unfixed, choate or inchoate. liquidated or unliquidated, secured or
unsecured, accrued, absolute, actual or potential, contingent or otherwise
(including any liability under any guaranties, letters of credit, performance
credits or with respect to insurance loss accruals).
"Lien" shall mean, with respect to any Asset, any mortgage, lien
(including mechanics, warehousemen, laborers and landlords liens), claim,
pledge, charge, security interest, preemptive right, right of first refusal,
option, judgment, title defect, or encumbrance of any kind in respect of or
affecting such Asset, except for (i) liens for current taxes not yet due or
payable, (ii) liens imposed by law and incurred in the ordinary course of
business for obligations not yet due to carriers, warehousemen, laborers and
materialmen, and (iii) liens in respect of pledges or deposits under workers'
compensation laws, all of which liens aggregate less than $15,000.
"Merger Claims" shall mean any Claim made by any Shareholder, any
Representative of any Shareholder or CoMed, whether arising prior to or after
the Closing, that challenges the validity, legality or fairness of the
Contemplated Transactions or any actions of CoMed or the Shareholders taken in
connection therewith, or the adequacy or fairness of the Merger Consideration,
including any Claims for appraisal rights commenced by any Dissenting
Shareholder.
"Noncurrent Liabilities" shall mean all Liabilities (other than
deferred Tax Liabilities) of the Surviving Corporation and its Subsidiaries on a
consolidated basis that, in accordance with GAAP, are or should be classified as
noncurrent liabilities.
The term "person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity,
including a government or political subdivision or an agency or instrumentality
thereof.
"Receivables" shall mean as of any date any trade accounts receivable,
notes receivable, sales representative advances and other miscellaneous
receivables of CoMed (or the Surviving Corporation) arising in the ordinary
course of the Business.
"Regulatory Actions" shall mean any claim, demand, action, suit or
proceeding brought or instigated by any Governmental Body in connection with any
Environmental Law, Including, without limitation, civil, criminal and/or
administrative proceedings, whether or not seeking costs, damages, penalties or
expenses.
- 31 -
<PAGE> 36
"Release" shall mean the intentional or unintentional, spilling,
leaking, disposing, discharging or disturbance of, or emitting, depositing,
injecting, leaching, escaping, or any other release or threatened release to or
from, however defined, any Hazardous Substance in violation of any Environmental
Law.
"Requisite Shareholders" shall mean the Shareholders holding Shares as
indicated on Schedule 2.1 that equal in the aggregate two-thirds of all Shares
indicated on Schedule 2.1.
"Reportable Event" shall mean any of the events described in Section
4043(b)(1), (2), (3), (5), (6), (8) or (9) of ERISA.
"Tax" (including, with correlative meaning, the terms "Taxes" and
"Taxable") shall mean (i) any net income, gross income, gross receipts, sales,
use, ad valorem, transfer, transfer gains, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, rent, recording,
occupation, premium, real or personal property, intangibles, environmental or
windfall profits tax, alternative or add-on minimum tax, customs duty or other
tax, fee, duty, levy, impost, assessment or charge of any kind whatsoever
(including but not limited to taxes assessed to real property and water and
sewer rents relating thereto), together with any interest and any penalty,
addition to tax or additional amount imposed by any Governmental Body (domestic
or foreign) (a "Tax Authority") responsible for the imposition of any such tax,
with respect to CoMed, the Shareholders, the Surviving Corporation, any
Subsidiary, the Business or the Assets (or the transfer thereof or of the
Merger); (ii) any liability for the payment of any amount of the type described
in the immediately preceding clause (i) as a result of CoMed or any Subsidiary
being a member of an affiliated or combined group with any other corporation at
any time on or prior to the Closing Date and (iii) any liability of CoMed or the
Surviving Corporation for the payment of any amounts of the type described in
the immediately preceding clause (i) as a result of a contractual obligation to
indemnify any other person.
"Tax Return" shall mean any return or report (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to any Tax Authority.
"Transaction Documents" shall mean, collectively, this Agreement, and
each of the other agreements and instruments to be executed and delivered by all
or some of the parties hereto in connection with the consummation of the
transactions contemplated hereby.
The term "voting power" when used with reference to the capital stock
of, or units of equity interests in, any person shall mean the power under
ordinary circumstances (and not merely upon the happening of a contingency) to
vote in the election of directors of such person (if such person is a
corporation) or to participate in the management and control of such person (if
such person is not a corporation).
SECTION 9.2 Interpretation. Unless the context otherwise requires, the
terms defined in Section 9.1 shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms defined herein. All accounting terms defined in Section 9.1,
and those accounting terms used in this Agreement not defined in Section 9.1,
except as otherwise expressly provided herein, shall have the meanings
customarily given thereto in accordance with GAAP. When a reference is made in
this Agreement to Sections, such reference shall be to a Section of this
Agreement unless otherwise indicated. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
- 32 -
<PAGE> 37
IN WITNESS WHEREOF, the undersigned have executed this Agreement and
Plan of Merger as of the date set forth above.
DYNAMIC HEALTHCARE
TECHNOLOGIES, INC., a Florida corporation
By: /s/ MITCHELL J. LASKEY
---------------------------------------------
Mitchel J. Laskey, President and Chief
Executive Officer
COMED ACQUISITION CORPORATION, a
Florida corporation
By: /s/ MITCHELL J. LASKEY
---------------------------------------------
Mitchel J. Laskey, President and CEO
By: /s/ PAUL S. GLOVER
---------------------------------------------
Paul S. Glover, Assistant Secretary
COLLABORATIVE MEDICAL SYSTEMS,
INC., a Massachusetts corporation
By: /s/ CHARLES M. COOPER
---------------------------------------------
Charles M. Cooper, President and Chief
Executive Officer
By: /s/ JEROME B. LERMAN
---------------------------------------------
Jerome B. Lerman, Treasurer
/s/ CHARLES M. COOPER
------------------------------------------------
Charles M. Cooper
/s/ JEROME B. LERMAN
------------------------------------------------
Jerome B. Lerman
/s/ SAUL M. BLOOM
------------------------------------------------
Saul M. Bloom
/s/ MARTIN B. LEVIN
------------------------------------------------
Martin B. Levin
/s/ MARIANNE BOSWELL
------------------------------------------------
Marianne Boswell
/s/ KAY MCDONALD
------------------------------------------------
Kay McDonald
<PAGE> 38
EXHIBIT 1.5A
ARTICLES OF MERGER AND AGREEMENT AND
PLAN OF MERGER
This Articles of Merger and Agreement and Plan of Merger ("Agreement
of Merger") is made as of December 17, 1996 by and between CoMed Acquisition
Corporation, a Florida corporation (the "Surviving Corporation"), and
Collaborative Medical Systems, Inc., a Massachusetts corporation ("CoMed").
The Surviving Corporation and CoMed are sometimes hereinafter collectively
referred to as "Constituent Corporations".
W I T N E S S E T H:
WHEREAS, the Surviving Corporation is corporation duly organized and
existing under the laws of the State of Florida and, as of the date hereof, the
authorized capital stock of the Surviving Corporation consists of 10,000 shares
of common stock, $.01 par value, of which one hundred (100) shares are issued
and outstanding;
WHEREAS, CoMed is a corporation duly organized and existing under the
laws of the State of Massachusetts and, as of the date hereof, the authorized
capital stock of CoMed consists of 12,500 shares of common stock, without par
value per share ("CoMed Common Stock"), of which 380.10 shares are issued and
outstanding;
WHEREAS, the Surviving Corporation, CoMed and certain shareholders of
CoMed have entered into a certain Merger Agreement dated as of December 17,
1996, as amended, (the "Merger Agreement"), which sets forth certain
representations, warranties, covenants and other agreements in connection with
the transactions therein and herein contemplated and which contemplates the
merger (the "Merger") of CoMed with and into the Surviving Corporation in
accordance with this Agreement of Merger; and
WHEREAS, the Boards of Directors of each of the Constituent
Corporations deem the Merger advisable and in the best interests of each such
corporation and their respective shareholders, and the Boards of Directors of
each of the Constituent Corporations and the shareholders of each of the
Constituent Corporations have adopted and approved the Merger Agreement and
this Agreement of Merger in accordance with the laws of their respective States
of incorporation.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
1.1 THE MERGER. Upon the terms and subject to the conditions set
forth herein and in the Merger Agreement, CoMed shall be merged with and into
the Surviving Corporation effective as of 11:59 p.m. Eastern Standard Time on
December 17, 1996. Such time shall be referred to as the "Effective Time," and
the "Effective Date" of the Merger shall be the date of
<PAGE> 39
the Effective Time. On or about the Effective Date, the Constituent
Corporations shall file with the Secretary of the Commonwealth of Massachusetts
articles of merger prepared and executed in accordance with Chapter 156B,
Section 79 of the General Laws of Massachusetts, together with such other
agreements and documents required to be filed by a foreign surviving
corporation pursuant to Chapter 181, Section 4 of the Massachusetts General
Laws and otherwise. As of the Effective Date, the separate corporate existence
of CoMed shall cease and the Surviving Corporation shall be the surviving
corporation of the Merger. The separate corporate existence of the Surviving
Corporation shall continue unaffected and unimpaired by the Merger.
ARTICLE 2
2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of
the Surviving Corporation, as in effect immediately prior to the Effective
Time, shall remain in effect and be the Articles of Incorporation of the
Surviving Corporation at and after the Effective Time until duly amended in
accordance with the Florida Business Corporation Act ("FBCA"). The changes to
the Surviving Corporation's Articles of Incorporation, which shall take place
on the Effective Date are as follows:
"ARTICLE I
NAME
The name of the Corporation is: Collaborative Medical Systems
Corp."
2.2 BYLAWS. The Bylaws of the Surviving Corporation, as in effect
immediately prior to the Effective Time, shall remain in effect and be the
Bylaws of the Surviving Corporation at and after the Effective Time until duly
amended in accordance with such Bylaws and applicable law.
ARTICLE 3
3.1 EXCHANGE AND CANCELLATION OF SECURITIES IN THE MERGER. At the
Effective Time:
3.1.1 Each share of the common stock of the Surviving
Corporation that is issued and outstanding immediately prior to the Effective
Time shall remain issued and outstanding thereafter and shall constitute the
only outstanding shares of capital stock of the Surviving Corporation.
3.1.2 Each share of CoMed Common Stock which constitutes
treasury stock immediately prior to the Effective Time shall be canceled
immediately prior to the Effective Time.
3.1.3 Each holder of issued and outstanding shares of CoMed
Common Stock which are outstanding immediately prior to the Effective Time
shall exchange all of his, her or its shares of CoMed Common Stock for shares
of DHT common stock and cash to which such
<PAGE> 40
holder is entitled pursuant to the terms and conditions set forth in the Merger
Agreement, subject to the rights of dissenting shareholders pursuant to Section
85 of Chapter 156B of the General Laws of Massachusetts. The procedures
regarding the assertion of dissenters' rights shall be conducted in accordance
with Sections 86 to 98, inclusive, of Chapter 156B of the General Laws of
Massachusetts.
3.1.4 Each and every share of CoMed Common Stock and other
capital stock of CoMed, if any, and any and all options, warrants, securities
and/or other rights to directly or indirectly acquire, whether of record or
beneficially, shares of CoMed Common Stock and/or other capital stock,
securities, equity interests or profit participation rights with respect to
CoMed, whether or not vested, which prior to the Effective Date are issued or
outstanding, shall be canceled, terminated and of no further force or effect.
3.2 SURRENDER AND PAYMENT.
3.2.1 As soon as practicable after the Effective Date, each
holder of record of a stock certificate (a "Certificate") entitled to be
exchanged as set forth in Section 3.1.3 [other than holders who properly
exercise rights of dissenting shareholders under Massachusetts law] will be
entitled to receive, upon proper surrender thereof to the Surviving
Corporation, shares of DHT capital stock and the cash as described in Section
3.1.3. Until so surrendered, each Certificate shall be deemed for all
corporate purposes to evidence only the right to receive upon proper surrender
shares of DHT capital stock and the cash into which the holder thereof may
exchange same.
3.2.2 Upon the Effective Time, the stock transfer books of
CoMed shall be closed and no transfer of shares of CoMed Common Stock shall
thereafter be made. No interest shall accrue or be payable to or for the
benefit of such holders with respect to any cash or other consideration held by
the Surviving Corporation. No dividends or other distributions declared after
the Effective Time with respect to shares of DHT capital stock and payable to
the holder of record thereof after the Effective Time shall be paid to the
holder of any unsurrendered certificates representing shares of CoMed of such
holder which were outstanding immediately prior to the Effective Time, until
all such certificates shall be surrendered as provided herein. Upon the
surrender of all such outstanding certificates, however, there shall be paid to
the record holder of the certificate representing DHT capital stock issued in
exchange for the shares of CoMed's previously represented by the surrendered
certificates, the aggregate amount of dividends and distributions, if any,
which became payable after the Effective Time. No interest shall be payable on
or in respect of the payment of such dividends on surrender of outstanding
certificates.
ARTICLE 4
4.1 EFFECT OF MERGER. When the Merger has been effected:
4.1.1 The separate existence of CoMed shall cease and the
corporate existence and corporate identity of the Surviving Corporation shall
continue as the surviving corporation of the Merger.
<PAGE> 41
ATTEST: COLLABORATIVE MEDICAL
SYSTEMS, INC., a Massachusetts
corporation
By: By:
------------------------- -------------------------------
Name: Abbott L. Reichlin Name: Charles M. Cooper
Title: Clerk Title: President
By:
-------------------------------
Name: Jerome Lerman
Title: Treasurer
<PAGE> 42
4.1.2 The Surviving Corporation shall have the rights,
privileges, immunities and powers, and shall be subject to all of the duties
and liabilities, of a corporation under the FBCA.
4.1.3 The Surviving Corporation shall possess all of the
rights, privileges, immunities and franchises, of a public as well as a private
nature, of CoMed, and all property, real (immovable), personal (movable),
intangible and mixed, and all debts due on whatever accounts, including
subscriptions to shares, and all other choses of action, and all and every
other interest belonging to CoMed, shall be taken and deemed to be transferred
to and vested in the Surviving Corporation without act or deed.
4.1.4 The Surviving Corporation shall be responsible and
liable for all liabilities and obligations of CoMed, and any claim existing or
action or proceeding pending by or threatened against CoMed may be prosecuted
as if the Merger had not taken place, and the Surviving Corporation may be
substituted in its place. Neither the rights of creditors nor liens upon the
property of CoMed shall be impaired by the Merger.
ARTICLE 5
5.1 COUNTERPARTS. This Agreement of Merger may be executed in one
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one agreement.
5.2 DATES OF SHAREHOLDER APPROVAL. This Articles of Merger and
Agreement and Plan of Merger, the Merger Agreement and the Merger were duly
approved and adopted by (i) the sole shareholder of the Surviving Corporation
at a meeting of its board of directors held on December 11, 1996, and (ii)
unanimous written consent of the shareholders of CoMed dated as of December 17,
1996.
5.3 DATES OF BOARD OF DIRECTOR APPROVAL. This Articles of Merger
and Agreement and Plan of Merger, the Merger Agreement and the Merger were duly
approved and adopted by (i) unanimous written consent of the Board of Directors
of the Surviving Corporation dated as of December 11, 1996, and (ii) the Board
of Directors of CoMed at a meeting held on December 11, 1996.
IN WITNESS WHEREOF, each of the Constituent Corporations have caused
this Agreement of Merger to be executed by their respective officers hereunto
duly authorized, all as of the date first above written.
ATTEST: COMED ACQUISITION
CORPORATION, a Florida corporation
By: By:
------------------------- -------------------------------
Name: Mitchel J. Laskey Name: Mitchel J. Laskey
Title: Secretary Title: President
<PAGE> 43
CERTIFICATE OF THE SECRETARY
OF
COMED ACQUISITION CORPORATION
I, MITCHEL J. LASKEY, Secretary of CoMed Acquisition Corporation, a
Florida corporation (the "Corporation"), hereby certify that:
1. The Articles of Merger and Agreement and Plan of Merger to
which this Certificate is attached has been duly executed on behalf of the
Corporation by its President and Secretary under the corporate seal of the
Corporation.
2. The Articles of Merger and Agreement and Plan of Merger was
approved and adopted by the sole shareholder of the Corporation at a meeting
held on December 11, 1996.
IN WITNESS WHEREOF, the undersigned has executed this certificate as
of December 17, 1996.
-----------------------------
Mitchel J. Laskey, Secretary
<PAGE> 44
CERTIFICATE OF THE CLERK
OF
COLLABORATIVE MEDICAL SYSTEMS, INC.
I, ABBOTT L. REICHLIN, Clerk of Collaborative Medical Systems, Inc., a
Massachusetts corporation (the "Corporation"), hereby certify that:
1. The Articles of Merger and Agreement and Plan of Merger to
which this Certificate is attached has been duly executed on behalf of the
Corporation by its President, Treasurer and Clerk under the corporate seal of
the Corporation.
2. The Articles of Merger and Agreement and Plan of Merger was
approved and adopted by unanimous written consent of the shareholders of the
Corporation dated as of December 17, 1996.
IN WITNESS WHEREOF, the undersigned has executed this certificate as
of December 17, 1996.
-----------------------------
Abbott L. Reichlin, Clerk
<PAGE> 45
EXHIBIT 1.7A
ESCROW AGREEMENT
This Escrow Agreement ("Agreement") made as of December 17, 1996, by
and among Dynamic Healthcare Technologies, Inc. ("DHT"), Charles M. Cooper,
Jerome Lerman, Saul M. Bloom, Martin B. Levin, Marianne Boswell and Kay
McDonald (collectively, the "Shareholders") and Cohen, Berke, Bernstein, Brodie
& Kondell, P.A. (the "Escrow Agent").
DHT, its wholly-owned subsidiary, CoMed Acquisition Corporation
("Newco" or the "Surviving Corporation"), Collaborative Medical Systems, Inc.
("CoMed") and the Shareholders have executed and delivered an Agreement and
Plan of Merger dated as of December 17, 1996 (the "Merger Agreement") pursuant
to which CoMed has been merged into Newco (the "Merger").
Pursuant to the Merger Agreement, the parties have agreed that an
amount (the "Escrow Funds") equal to the sum of (i) $300,000, the
Indemnification Funds, and (ii) $8,200,000, the Distribution Funds, shall be
placed and held in escrow in accordance with the terms hereof.
The parties, intending to be legally bound, agree as follow:
1. Capitalized terms used herein and not otherwise defined herein
which are defined in the Merger Agreement, shall have the same meaning herein
as set forth in the Merger Agreement.
2. (a) On the date hereof, DHT has on its own behalf
deposited with the Escrow Agent immediately available funds in the amount of
the Escrow Funds. The Escrow Agent, as agent for DHT and Newco, acknowledges
receipt of the Escrow Funds. The respective percentage amounts of the Escrow
Funds that shall, subject to the terms and condition contained herein, be
distributed to each of the Shareholders, is set forth in Schedule 2(a) attached
hereto. All distributions by the Escrow Agent to the Shareholders, pursuant to
this Agreement, shall be divided among the Shareholders in proportion with the
respective percentage amounts as set forth in Schedule 2(a).
(b) The Escrow Agent shall hold the Escrow Funds separate
and apart from its other funds and accounts and shall keep an accurate record
of all the transactions with respect thereto.
3. (a) The Escrow Agent shall for the period through and
including January 15, 1997 invest and reinvest the Escrow Funds in U.S.
treasury securities, interest-bearing accounts maintained at, or interest
bearing instruments issued by, commercial banks acceptable to DHT. The Escrow
Agent shall promptly after January 15, 1997 invest and reinvest the
Indemnification Funds in U.S. treasury securities, interest-bearing accounts
maintained at, or interest bearing instruments issued by, commercial banks
acceptable to the Requisite Shareholders, or other
<PAGE> 46
investments to which the Requisite Shareholders have consented in writing
subject to the reasonable approval of DHT. Except as otherwise provided
herein, the Escrow Agent shall not be responsible for any loss arising out of
or resulting from any such investments.
(b) Any interest or other income received on the
investment of Escrow Funds (net of any expenses of such investments) in respect
of the period through and including January 15, 1997 shall be the sole property
of DHT and shall be held and disbursed by Escrow Agent at DHT's instruction.
Any interest or other income received on the investment of Indemnification
Funds (net of any expenses of such investments) in respect of the period
beginning January 16, 1997 shall be deemed deposited as part of the
Indemnification Funds and shall be held and distributed in accordance with this
Agreement.
(c) To the extent required by law, all federal, state and
local income or other taxes on any interest or other income received on the
Indemnification Funds during the term of this Agreement shall be deducted and
paid from the Indemnification Funds by the Escrow Agent.
(d) During or after the term of this Agreement, the
Escrow Agent may retain such accountants, attorneys and other experts as it
shall deem advisable in connection with any audits by any taxing authorities
concerning the Escrow Funds. Any costs, expenses or advances incurred by the
Escrow Agent shall be deducted and paid from the Escrow Funds, or, if the
Escrow Funds shall have been delivered pursuant to the provisions of this
Agreement, shall be advanced promptly to the Escrow Agent (upon its written
request, delivered to all parties, accompanied by appropriate supporting
documentation) by DHT and the Shareholders equally. The Escrow Agent shall
have no personal liability for any such taxes or costs.
4. Escrow Agent shall disburse the Indemnification Funds and
Distribution Funds, as the case may be, as follows:
(a) Distribution Funds. On or about January 15, 1997,
the Escrow Agent shall release and deliver to the Shareholders Distribution
Funds in the amount of $8,200,000 in the manner herein provided.
(b) Indemnification Funds.
(i) In the event that the Escrow Agent does not
receive written notice of any claim against the Indemnification Funds ("Notice
of Claim") from DHT or the Surviving Corporation on or before December 31, 1997
(the "Indemnification Period"), then the Indemnification Funds shall be
delivered to the Shareholders as soon as is reasonable practicable.
(ii) In the event one or more Notices of Claim by
DHT or the Surviving Corporation are received by the Escrow Agent (together
with documentary evidence of the date on which a copy of such Notice of Claim
has been received by the Shareholders in accordance with the Merger Agreement)
on or before the last day of the Indemnification Period, an amount equal to the
amount specified in such Notice of Claim shall continue to be held by
- 2 -
<PAGE> 47
the Escrow Agent until 30 days after the date of receipt of such Notice by the
Requisite Shareholders. If within 30 days after receipt of a Notice of Claim
by the Requisite Shareholders, the Escrow Agent receives a written notice from
the Requisite Shareholders objecting to such claim by DHT or the Surviving
Corporation (which notice shall include documentary evidence of the date on
which a copy thereof has been received by DHT and the Surviving Corporation)
then the Escrow Agent shall continue to hold the amount claimed by DHT or the
Surviving Corporation until a Final Determination (as defined in Paragraph 5
hereof), at which time it shall disburse the Indemnification Funds as directed
thereby. In the event no written notice is received by the Escrow Agent from
the Requisite Shareholders within such 30-day period, the amount claimed by
DHT or the Surviving Corporation shall be immediately delivered to DHT or the
Surviving Corporation in such manner as DHT or the Surviving Corporation shall
direct in writing; provided, however, that if the aggregate amount claimed
pursuant to all Notices of Claims received by the Escrow Agent during the
Indemnification Period is less than the amount of the Indemnification Funds,
then upon the expiration of the Indemnification Period, the amount equal to
such unclaimed Indemnification Funds shall be delivered to the Shareholders.
(iii) Notwithstanding anything contained herein to
the contrary, the Escrow Agent shall not release to DHT or the Surviving
Corporation any Indemnification Funds pursuant to this Paragraph 4 in respect
of indemnification claims under Section 6.2(a) of Merger Agreement (to the
extent not attributable to a particular Shareholder) unless and until the
aggregate amount of all claims by DHT and the Surviving Corporation with
respect to Indemnification Funds which are not challenged by the Requisite
Shareholders within the 30-day period set forth in Paragraph 4(a)(ii), together
with the amount of all challenged claims which is directed to be disbursed to
DHT or the Surviving Corporation pursuant to a Final Determination, is in
excess of $150,000, in which event the Escrow Agent shall release all such
amounts to the extent provided in Paragraph 4(a)(ii); provided, that,
indemnification claims attributable to a particular Shareholder shall be borne
in full by such Shareholder without being subject to any minimum threshold or
deduction, and shall be disbursed to DHT or the Surviving Corporation to the
extent of the percentage amount of the Indemnification Funds allocated to such
Shareholder as set forth in Schedule 2.1(a).
(iv) Any Notice of Claim given pursuant to this
Paragraph 4 shall state in reasonably specific terms the basis of DHT's or the
Surviving Corporation's claim and a good faith estimate of the amount of such
claim. It is understood and agreed, however, that nothing contained in a
Notice of Claim given pursuant hereto shall limit any claim which DHT or the
Surviving Corporation may have against the Shareholders or the amount of any
such claim.
(c) Except as otherwise provided in any Final
Determination, the Escrow Agent shall deliver the Escrow Funds in immediately
available funds. Upon delivery of all Escrow Funds and payment to the Escrow
Agent of the fees and reimbursements to which it is entitled pursuant to
Paragraph 3(d) hereof, this Agreement shall terminate.
- 3 -
<PAGE> 48
5. A "Final Determination" shall be comprised of (i) a written
instruction signed by DHT or the Surviving Corporation and the Requisite
Shareholders, or (ii) a written opinion of either counsel to the Requisite
Shareholders or counsel to DHT (a copy of which shall be delivered to the other
parties hereto at least five days prior to any release of the Indemnification
Funds or any portion thereof) that an order of a court of competent
jurisdiction which has become final by appeal or lapse of time has been issued
directing the disposition of the Indemnification Funds or the Distribution
Funds or any portion thereof, a certified copy of which order shall be annexed
to such opinion.
6. Notwithstanding any other provision of this Agreement, if at
any time the Escrow Agent shall receive from DHT and the Requisite Shareholders
(prior to being directed to take action by a court) joint written instructions
as to the delivery of the Escrow Funds, the Escrow Agent shall deliver the
Escrow Funds in accordance with such joint written instructions.
7. It is understood and agreed that the duties of the Escrow
Agent are purely ministerial in nature, and that:
(a) The Escrow Agent shall not be responsible for, or be
required to enforce any of, the terms or conditions of the Merger Agreement.
(b) The Escrow Agent shall be entitled to rely upon the
accuracy, act in reliance upon the contents, and assume the genuineness, of any
written notice, instruction, certificate, signature or document that is
delivered to the Escrow Agent pursuant to this Agreement without the necessity
of the Escrow Agent verifying its truth or accuracy.
(c) In the event that the Escrow Agent shall be uncertain
as to its duties or rights under this Agreement or shall receive instructions
with respect to the Escrow Funds which, in its reasonable determination, are in
conflict with either other instructions received by it or with any provision of
this Agreement, (i) the Escrow Agent shall be entitled to hold the Escrow Funds
pending a Final Determination; or (ii) the Escrow Agent may deposit the Escrow
Funds with the clerk of a court of competent jurisdiction in a proceeding to
which all parties in interest are joined. Upon the deposit by the Escrow Agent
of the Escrow Funds with such clerk, the Escrow Agent shall be relieved of all
further obligations and released from all obligations and responsibilities
under this Agreement.
(d) The Escrow Agent shall not be liable for any error of
judgment or any action taken or omitted under this Agreement, except in the
case of willful misconduct or fraud. The Escrow Agent shall be entitled to
consult with counsel of its own choosing and shall not be liable for any action
taken, suffered or omitted by it in accordance with the advice of such counsel.
The Escrow Agent may rely, without liability, upon the contents of any order or
judgment of any court served upon it.
8. DHT agrees to pay, or to reimburse the Escrow Agent for,
promptly following written demand and accounting therefor, all expenses
incurred by the Escrow Agent in
- 4 -
<PAGE> 49
connection with this Agreement, including, but not limited to, reasonable
attorneys' fees and expenses.
9. Each of DHT and the Shareholders (collectively, the
"Indemnitors") jointly and severally agree to indemnify and hold harmless the
Escrow Agent from and against any and all liabilities, losses, damages or
expenses (including, but not limited to, reasonable attorneys' fees and
expenses and court costs), which the Escrow Agent may suffer or incur as a
result of any claim, action or proceeding asserted or brought against the
Escrow Agent by any third party arising out of to this Agreement, unless such
claim, action or proceeding is the result of the fraud or wilful misconduct of
the Escrow Agent. The Escrow Agent shall not be under any obligation to
institute suit or defend any claim, action or proceeding by reason of its
serving as Escrow Agent or having custody of the Escrow Funds unless and until
the expenses of any such claim, action or proceeding are advanced to it by the
Indemnitors.
10. The Escrow Agent may resign from its duties and obligations
hereunder by giving DHT and the Shareholders at least 30 days' written notice,
specifying the date when such resignation shall take effect. Prior to the
effective date of such resignation, DHT and the Requisite Shareholders shall
jointly appoint a successor escrow agent to assume the duties and obligations
of, and to be substituted for, the Escrow Agent. Upon the appointment of a
successor escrow agent, the Escrow Agent shall deliver the Escrow Funds (or
assign its rights to the Escrow Funds) to its successor, and the Escrow Agent
shall then be relieved and released of and from its duties and obligations
under this Agreement, except to execute such documents and take such further
actions as may be reasonably required to effect the termination and transfer of
its obligations and responsibilities under this Agreement.
11. All notices and other communications required or permitted
under this Agreement shall be deemed given if delivered personally or by
prepaid overnight courier (in each case, against receipt) or mailed by
registered or certified mail, return receipt requested, as follows:
(i) If to DHT or Newco:
Dynamic Healthcare Technologies, Inc.
101 Southhall Lane, Suite 210
Maitland, Florida 32751
Telephone: (407) 875-9991
Telecopier: (407) 875-9915
Attention: Mitchel J. Laskey, President and CEO
(ii) If to the Shareholders, one copy to
the addresses specified in Schedule
2.1 of the Merger Agreement
- 5 -
<PAGE> 50
with a copy to:
Rene D. Varrin, Esq.
Kotin, Crabtree & Strong, LLP
One Bowdoin Square
Boston, Massachusetts 02114
Telephone: (617) 227-7031
Telecopier: (617) 367-2988
(iii) If to the Escrow Agent:
Cohen, Berke, Bernstein, Brodie & Kondell, P.A.
Terremark Centre, 19th Floor
2601 South Bayshore Drive
Miami, Florida 33133
Telephone: (305) 854-5900
Telecopier: (305) 857-9322
Attn: Richard N. Bernstein, Esq.
or to such other address as any party may hereafter designate in writing in the
manner provided in this Section 11. All such notices and other communications
shall be effective when received. Copies of any notice sent to the Escrow
Agent by any party shall be sent by such party to the other party or parties.
12. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement
between the parties relating to its subject matter and merges and supersedes
and terminates all prior written and oral agreements relating to the subject
hereof (other than the Merger Agreement), and all contemporaneous oral
agreements, between the parties. This Agreement may not be changed in any
respect except by a writing duly executed by the party to be charged.
(b) This Agreement is entered into in the State of
Florida and shall be governed by, and construed in accordance with, the laws of
the State of Florida, without regard to conflict of laws principles applied in
the State of Florida.
(c) This Agreement shall be binding upon and shall inure
to the benefit of the parties and to their respective successors and assigns.
(d) The headings of the Sections of this Agreement are
for convenience of reference only, are not part of this Agreement and shall not
be used in its interpretation.
(e) The failure of any party at any time to require
performance by any other party of a provision of this Agreement or to resort
to a remedy at law or in equity or otherwise
- 6 -
<PAGE> 51
shall in no way affect the right of such party to require full performance or
to resort to such remedy at any time thereafter nor shall a waiver by any party
of the breach of any provision of this Agreement be taken or held to be a
waiver of any subsequent breach of such provision unless expressly so stated
in writing. No waiver of any of the provisions of this Agreement shall be
effective unless in a writing signed by the party to be charged.
(f) No provision of this Agreement that is held to be
unenforceable by a court of competent jurisdiction shall in any way invalidate
any other provision of this Agreement, all of which shall remain in full force
and effect.
(g) The rights and obligations of DHT and the
Shareholders under this Agreement may not be assigned or delegated without the
prior written consent of the other parties (other than the Escrow Agent).
(h) This Agreement may be executed in counterparts, each
of which shall constitute an original document and all of which together shall
constitute one and the same document.
DYNAMIC HEALTHCARE
TECHNOLOGIES, INC., a Florida
corporation
By:
-------------------------------
Mitchel J. Laskey, President
and Chief Executive Officer
By:
-------------------------------
David M. Pomerance, Secretary
COLLABORATIVE MEDICAL
SYSTEMS, INC., a Massachusetts
corporation
By:
-------------------------------
Charles M. Cooper, President
and Chief Executive Officer
By:
-------------------------------
Jerome Lerman, Treasurer
-----------------------------------
Charles M. Cooper
- 7 -
<PAGE> 52
-----------------------------------
Jerome Lerman
-----------------------------------
Saul M. Bloom
-----------------------------------
Martin B. Levin
-----------------------------------
Marianne Boswell
-----------------------------------
Kay McDonald
- 8 -
<PAGE> 53
SCHEDULE 2.(A)
<TABLE>
<CAPTION>
SHAREHOLDERS PERCENTAGE AMOUNTS
------------ ------------------
<S> <C>
Charles M. Cooper 25.730%
Jerome Lerman 25.730%
Saul M. Bloom 25.730%
Martin B. Levin 13.623%
Marianne Boswell 5.104%
Kay McDonald 4.083%
------
100.00%
</TABLE>
- 9 -
<PAGE> 54
EXHIBIT 1.7B
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
CERTIFICATE OF DESIGNATION OF
SERIES CM NON-VOTING,
CONVERTIBLE PREFERRED STOCK
1. The name of the corporation is Dynamic Healthcare Technologies,
Inc. (the "Corporation").
2. The resolution determining the Series CM Non-Voting,
Convertible Preferred Stock is as follows:
NOW, THEREFORE BE IT RESOLVED: that the Corporation be, and it hereby
is authorized to issue Six Thousand (6,000) shares of Series CM Non-Voting,
Convertible Preferred Stock, $.01 par value ("Series CM Preffered Stock"),
which shall have the following preferences, limitations and relative rights:
(1) RANK. The Series CM Preferred Stock shall, upon voluntary or
involuntary liquidation, winding-up, dissolution, merger and combination, rank
prior to all classes of common stock.
(2) DIVIDENDS. No dividends shall be payable or otherwise accrue
with respect to any shares of Series CM Preferred Stock.
(3) LIQUIDATION RIGHTS. Upon the liquidation, dissolution or
winding up of the Corporation (other than upon a Sale Event, as hereinafter
defined), whether voluntary or involuntary, the holders of the Series CM
Preferred Stock will be entitled to receive and to be paid out of the assets of
the Corporation available for distribution a liquidation distribution in cash
in an amount equal to the greater of (a) $1.00 per share before any payment may
be made to the holders of common stock, or (b) the liquidation value per share
of that number of shares of Common Stock at the time of such distribution into
which each share of Series CM Preferred Stock would have been converted if the
Conversion Time (as hereinafter defined) had occurred immediately prior to said
liquidation, dissolution or winding up of the Corporation (taking into account
the dilutive effect of said conversion). Neither the sale of all or
substantially all of the assets of the Corporation, nor the merger or
consolidation of the Corporation into or with any other entity will be deemed
to be a liquidation, dissolution or winding up of the Corporation. After the
payment to the holders of the Series CM Preferred Stock of the full
preferential amounts provided for above, the holders of the Series CM Preferred
Stock as such will have no right or claim to any of the remaining assets of the
Corporation.
(4) CONVERSION RIGHTS. Shares of Series CM Preferred Stock will
automatically convert into shares of common stock ("Common Stock") of the
Corporation at 5:00 p.m. Eastern Standard Time on Friday, August 29, 1997 (the
"Conversion Time") pursuant
<PAGE> 55
to the following formula based upon the average closing bid and ask prices of
the Common Stock as quoted on the Nasdaq National Market for the five (5)
trading day period ending August 29, 1997 (hereafter referred to as the
"CSAVG"):
(A) if the CSAVG is greater than or equal to $8.00
per share, then each share of Series CM Preferred Stock will be converted
into .0167 shares of Common Stock (rounded to the nearest whole
share);
(B) if the CSAVG is less than or equal to $5.00 per
share, then each shaare of Series CM Preferred Stock will be converted
into 100 shares of Common Stock; or
(C) if the CSAVG is greater than $5.00 per share,
but less than $8.00 per share, then each share of Series CM PReferred
Stock will be converted into that number of shares of Common Stock to be
determined as follows (rounded to the nearest whole share):
number of shares of Common Stock = 100 x ($8.00 - CSAVG)
---------------
$3.00
No fractional shares will be issued upon conversion.
Upon such conversion, holders of the Series CM Preferred Stock shall be
entitled to receive a certificate for that number of shares of Common Stock
into which their Series CM Preferred Stock has been converted within 10
business days following surrender of their certificates of Series CM Preferred
Stock to the Corporation, accompanied by proper assignment thereof in blank
and, if required by the Corporation, signature guaranties.
If the Corporation shall prior to the Conversion Time split, subdivide
or combine its Common Stock, then the conversion formula set forth above shall
be proportionately adjusted so that the holders of Series CM Preferred Stock
shall be entitled to receive an equivalent number of shares of Common Stock as
if such split, subdivision or combination of its Common Stock had occurred
immediately after the Conversion Time.
(5) ACCELERATION OF CONVERSION. In the event that at any time
prior to the Conversion Time DHT shall cease to be a publicly traded company by
virtue of a merger, share exchange, business combination or sale of all or
substantially all of DHT's capital stock or assets (a "Sale Event"), then
immediately prior to the effectuation of such Sale Event, all shares of Series
CM Preferred Stock shall be converted into shares of Common Stock upon the same
terms as described in paragraph 4 above as if the Conversion Time had occurred
at 5:00 p.m. on the business day immediately preceding the date on which the
Sale Event was effectuated.
(6) REDEMPTION. The shares of the Series CM Preferred Stock are
not subject to redemption.
-2-
<PAGE> 56
(7) VOTING RIGHTS. The holders of shares of the Series CM
Preferred Stock are not entitled to any voting rights as may be required by
law.
(8) RETIREMENT. All shares of Series CM Preferred Stock shall be
canceled, retired and rendered null and void immediately following the
Conversion Time and certificates therefor shall only represent the right of the
holder to receive Common Stock in exchange thereof.
3. The foregoing resolution was duly adopted by the Board of Directors
of the Corporation on December 11, 1996.
4. Such resolution was signed by the President of the Corporation.
DYNAMIC HEALTHCARE
TECHNOLOGIES, INC., a Florida
corporation
By:
----------------------------
Mitchel J. Laskey, President
- 3 -
<PAGE> 57
EXHIBIT 5.2 A
December ____, 1996
Collaborative Medical Systems, Inc.
Two University Office Park
51 Sawyer Road
Waltham, MA 02154-9387
Gentlemen:
We have acted as counsel for Dynamic Healthcare Technologies, Inc., a
Florida corporation ("DHT") and CoMed Acquisition Corporation, a Florida
corporation ("Newco") in connection with the merger (the "Merger") of
Collaborative Medical Systems, Inc., a Massachusetts corporation ("CoMed) with
and into Newco, pursuant to the terms of an Agreement and Plan of Merger and
exhibits thereto dated as of December ____, 1996 by and among Newco, DHT, CoMed
and Charles M. Cooper, Jerome Lerman, Saul M. Bloom, Martin B. Levin, Marianne
Boswell and Kay McDonald (the "Merger Agreement").
This opinion has been prepared and is to be construed in accordance
with the Report on Standards for Florida Opinions dated April 8, 1991 issued by
the Business Law Section of The Florida Bar (the "Report"). The Report is
incorporated by reference into this opinion. The opinions set forth herein are
rendered as of the date hereof. In rendering the following opinions, we have
made no assumption other than those set forth in the Report and those
additional assumptions stated herein.
Based upon the foregoing, we are of the opinion that:
i. Newco and DHT are corporations duly organized
and validly existing under the laws of t the State of
Florida.
<PAGE> 58
ii. The execution, delivery and performance of
Newco of its obligations under the Merger Agreement
have been duly authorized by its Board of Directors,
and all other corporate proceedings required to be
taken by or on the part of Newco to authorize the
Merger Agreement and to consummate the Merger and all
transactions contemplated thereby have been duly and
properly taken.
iii. The execution, delivery and performance of
DHT of its obligations under the Merger Agreement
have been duly authorized by its Board of Directors,
and all other corporate proceedings required to be
taken by or on the part of DHT to authorize the
Merger Agreement and to consummate the Merger and all
transactions contemplated thereby have been duly and
properly taken.
iv. The Merger Agreement has been duly executed
and delivered by Newco, and constitutes the legal,
valid and binding obligation of Newco, enforceable
against Newco in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors' rights and remedies generally and
equitable principles.
v. The Merger Agreement has been duly executed
and delivered by DHT, and constitutes the legal,
valid and binding obligation of DHT, enforceable
against DHT in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors' rights and remedies generally and
equitable principles.
vi. The performance by Newco of its obligations
under the Merger Agreement will not violate any of
the provisions of its Articles of Incorporation or
Bylaws; or, to our knowledge after investigation,
result in the breach of any term or provision of, or
constitute a default or result in the acceleration of
any obligation under, any indenture, mortgage, deed
of trust or other agreement and to which Newco is a
party or by which it is bound, which breach, default
or acceleration would have a material adverse effect
on the business of Newco taken as a whole; or, to our
knowledge after investigation, violate a judgment,
decree or order of any court or administrative
tribunal, which judgment, decree or order is binding
on it or any of its assets; or violate any law, rule
or regulation or the corporation statute of its
jurisdiction of incorporation or any rules or
regulations promulgated pursuant thereto.
<PAGE> 59
vii. The performance by DHT of its obligations
under the Merger Agreement will not violate any of
the provisions of its Articles of Incorporation or
Bylaws; or, to our knowledge after investigation,
result in the breach of any term or provision of, or
constitute a default or result in the acceleration of
any obligation under, any indenture, mortgage, deed
of trust or other agreement and to which DHT is a
party or by which it is bound, which breach, default
or acceleration would have a material adverse effect
on the business of DHT taken as a whole; or, to our
knowledge after investigation, violate a judgment,
decree or order of any court or administrative
tribunal, which judgment, decree or order is binding
on it or any of its assets; or violate any law, rule
or regulation or the corporation statute of its
jurisdiction of incorporation or any rules or
regulations promulgated pursuant thereto.
viii. No authorization, approval, or other action
by, and no notice to or filing with, any governmental
authority or regulatory body, which has not already
been obtained or accomplished, is required for the
due execution, delivery and performance by Newco or
by DHT of the Merger Agreement and for the
consummation of the Merger.
ix. To our knowledge without investigation, no
representation or warranty made by Newco or by DHT in
the Merger Agreement is false, inaccurate or
misleading.
We do not purport to express any opinion herein concerning any law
other than the corporate law of the State of Florida and applicable Federal law
of the United States of America.
Very truly yours,
COHEN, BERKE, BERNSTEIN,
BRODIE & KONDELL, P.A.
<PAGE> 60
EXHIBIT 5.2B
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is entered into as of December ___,
1996 by and among DYNAMIC HEALTHCARE TECHNOLOGIES, INC. (the "Corporation"),
CHARLES M. COOPER, JEROME B. LERMAN, SAUL M. BLOOM, MARTIN B. LEVIN, MARIANNE
BOSWELL and KAY MCDONALD (collectively, together with permitted transferees and
assigns in accordance with Section 7 hereof, the "Shareholders").
WITNESSETH
WHEREAS, the Corporation and the Shareholder, among others, are parties
to that certain Agreement and Plan of Merger (the "Agreement") dated as of
December ___, 1996, pursuant to which the Shareholders are being issued
1,000,000 shares of the Corporation's common stock, $.01 par value, and 6,000
shares of Series CM Non-Voting, Convertible Preferred Stock (the "Series CM
Preferred Stock"), which is convertible into shares of common stock pursuant to
its Certificate of Designation as filed with the Florida Secretary of State.
WHEREAS, all shares of the Corporation's common stock issued and delivered
pursuant to the Agreement, including all shares of Corporation's common stock
into which Series CM Preferred Stock has been converted and any common stock of
the Corporation issued as a dividend or other distribution with respect to or
in exchange for or in replacement of any such shares of common stock, shall
hereinafter collectively be referred to as the "Merger Shares."
WHEREAS, the Merger Shares have not been registered under the Securities
Act of 1933, as amended (the "Securities Act").
WHEREAS, the Corporation desires to grant to the Shareholders certain
registration rights relating to the Merger Shares upon the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants set forth herein and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Corporation and the
Shareholders agree as follows:
1. DEMAND REGISTRATION RIGHTS. At any time prior to December 31, 1999,
whenever one or more Shareholders owning two-thirds of the Merger Shares shall
make a written request to the Corporation to register all or part of such
Shareholders' Merger Shares under the Securities Act, the Corporation shall
within thirty (30) days after such request is received promptly give written
notice to all of the Shareholders stating the estimated approximate date of
filing such registration statement, and shall thereupon promptly use reasonable
diligent efforts to file a registration statement with respect to all or part
of such Shareholders' Merger Shares as soon as reasonably practical after the
date of receipt of such notice by the Corporation.
- 1 -
<PAGE> 61
The Corporation shall not be required at its expense to effect more than one
registration statement pursuant to this Section 1.
2. PIGGY-BACK REGISTRATION RIGHTS. At any time prior to December
31, 1999, whenever the Corporation proposes to file a registration statement
under the Securities Act relating to its common stock (other than in connection
with an exchange offer, a "rights" offering to shareholdrs, a registration
statement on Form S-8 or S-4 or any successor forms relating to employee
benefit plans, or in connection with a dividend reinvestment plan, an employee
benefit plan, the conversion of any convertible securities, or a stand-by
underwriting with respect to the call of a warrant, option, right or
convertible security for redemption), the Corporation shall, at least thirty
(30) days prior to such filing, give written notice of such proposed filing to
each Shareholder. Upon receipt by the Corporation not more than thirty (30)
days after such notice of a written request from each Shareholder for
registration of all or part of such Shareholder's Merger Shares, the
Corporation shall (A) include in such registration statement or in a separate
registration statement concurrently filed, and shall use diligent efforts to
cause such registration statement to become effective with respect to, the
Merger Shares as to which the Shareholders request registration and (B) if such
proposed registration is in connection with an underwritten offering of common
stock for the benefit of the Corporation, upon request of the Shareholders, use
its best efforts to cause the managing underwriter therefor to include in such
offering the Merger Shares as to which the Shareholders request such inclusion,
on terms and conditions comparable to those of the securities offered on
behalf of the Corporation. The Shareholders shall cooperate with the
Corporation in the preparation of such registration statement to the extent
required to furnish information concerning the Shareholders therein. If the
managing underwriter of a proposed public offering shall advise the Corporation
in writing that, in its opinion, the distribution of the Corporation of the
Merger Shares requested to be included in the registration concurrently with
the securities being registered by the Corporation would materially and
adversely affect the distribution of such securities by the Corporation, then
all selling security holders (including holdrs of Merger Shares) shall reduce
the amount of securities each intended to distribute through such offering on a
pro rata basis.
3. REGISTRATION PROCEDURES. If the Corporation is required by the
provisions of Section 1 or 2 to effect the registration of any of its
securities under the Act, the Corporation will at its expense, as expeditiously
as is possible:
(a) Prepare and file with Securities and Exchange
Commission (the "Commission") a registration statement with respect to such
securities and use diligent efforts to cause such registration statement to
become effective and remain effective for at least one year thereafter or until
the Shareholdrs have completed the distribution described in the registration
statement relating thereto, whichever occurs first.
(b) Prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for at least one year following its effective date or until the
Shareholders have completed the distribution described in the registration
statement relating thereto, whichever occurs first, and to comply with the
provisions of the Securities Act with respect to the sale or other disposition
of all securities covered by such registration statement.
- 2 -
<PAGE> 62
(c) Furnish to the Shareholders such number of copies of a summary
prospectus or other prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other
documents, as the Shareholders may reasonably request in order to facilitate
the sale of the securities owned by the Shareholders.
(d) Use diligent efforts to register or qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdicitions within the United States as shall be reasonably
appropriate for the distribution of the securities covered by such Registration
Statement or as such participating Shareholders and underwriters may reasonably
request within twenty (20) days following the original filing of such
Registration Statement (except that the Corporation shall not for any purposes
be required to execute a general consent to service of process or to qualify to
do business as a foreign corporation in any jurisdiction where it is not so
qualified), and do such other reasonable acts and things as may be required in
such jurisdictions.
(e) Cause all of such Merger Shares registered pursuant hereunder
to be listed on each securities exchange on which similar securities issued by
the Corporation are then listed.
(f) Provide a transfer agent and registrar for all Merger Shares
pursuant to such registration statement and a CUSIP number for all Merger
Shares, in each case not later than the effective date of such registration.
(g) Notify each seller of Merger Shares covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statment, as
then in effect, includes an untrue statment of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of circumstances
the existing, and at the request of any such seller, prepare and furnish to
such seller a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such shares, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or incomplete
in the light of the circumstances then existing.
(h) Otherwise use diligent efforts to comply with all application
rules and regulations of the Commission and obtain all necessary approvals from
the National Association of Securities Dealers, Inc.
4. EXPENSES. Each of the Shareholders agrees to pay all of the
underwriting discounts and commissions with respect to the Merger Shares owned
by them being registered. The Corporation will pay those costs and expenses
incurred in connection with effecting a registration statement to be filed
pursuant hereto, including registration fees, reasonable fees and expenses of
counsel and accountants for the Corporation, printing fees, escrow fees, filing
fees and costs incurred in connection with the qualification of such securities
for sale under the
- 3 -
<PAGE> 63
Securities Act and the securities or blus sky laws of such jurisdictions within
the United States where the Merger Shares shall be sold in accordance herewith,
and the costs of supplying a reasonable number of copies of the registration
statement, each preliminary prospectus, final prospectus and any supplements or
amendments thereto to the Shareholders.
5. INDEMNITY. If the Corporation shall file any registration
statement including therein all or any part of the Merger Shares, the
Corporation and the Shareholders shall enter into an appropriate
cross-indemnity agreement whereby the Corporation shall indemnify and hold
harmless the Shareholders against any losses, claims, damages or liabilities
(or actions in respect thereof) arising out of or based upon any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement, prospectus, offering circular or related document, or
any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make statements therein not misleading unless
such statment or omission was made in reliance upon and in conformity with
written information furnished or required to be furnished by the Shareholders,
and each Shareholder shall indemnify and hold harmless the Corporation, each of
its directors and officers who have signed the registration statement and each
person, if any, who controls the Corporation within the meaning of the
Securities Act, against any losses, claims, damages or liabilities (or actions
in respect thereof) arising out of or based upon any untrue statement or
alleged untrue statement of any material fact contained in such registration
statement, prospectus, offering circular or related document or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make statements therein not misleading, if the statement or
omission was made in reliance upon and in conformity with written information
furnished by such Shareholder to the Corporation and stated to be specifically
for use therein. Notwithstanding the foregoing, other than claims in the
nature of fraud, gross negligence or wilful misconduct, the liability of each
Shareholder to the Corporation and its directors and officers under such
indemnity agreement shall be limited to an amount equal to the aggregate
proceeds received by such Shareholder from the sale of the Merger Shares in
such registration, and the Corporation shall endeavor in good faith to include
in any underwriting agreement a similar limitation on the liability of such
Shareholder to the underwriters.
6. NOTICE. Any notice, demand or delivery to be made pursuant to
the provisions of this Agreement shall be sufficiently given or made if in
writing sent by first class mail, postage prepaid, or verified overnight
delivery, addressed to (a) a Shareholder at his/her last known address
appearing on the books of the Corporation maintained for such purpose or (b)
the Corporation at its principal office at 101 Southhall Lane, Suite 210,
Maitland, Florida 32751. The Shareholders and the Corporation may each
designate a different address by notice to the other pursuant to this Section.
7. TRANSFER OR ASSIGNMENT OF REGISTRATION RIGHTS. The rights to
cause the Company to register Merger Shares granted to a Shareholder by the
Corporation under Sections 1 and 2 may be transferred or assigned by a
Shareholder, together with any permitted transfer of his/her Merger Shares;
provided, that, the Corporation is given written notice at the time of or
within a reasonable time after said transfer or assignment, stating the name
and address of the transferee or assignee and identifying the securities with
respect to which such registration
- 4 -
<PAGE> 64
rights are being transferred or assigned, and, provided further, that the
transferee or assignee of such rights assumes the obligations of such
Shareholder under this Agreement by a written agreement reasonably acceptable
to the Corporation.
8. RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission that may permit the sale of the
Merger Shares to the public without registration, the Corporation at all times
during the term of this Agreement agrees to use all reasonable efforts to:
(a) Make and keep public information regarding the Corporation
available as those terms are understood and defined in Rule 144 under the
Securities Act;
(b) File with the Commission in a timely manner all reports and other
documents required of the Corporation under the Securities Act and the
Securities Exchange Act of 1934, as amended, (the "Exchange Act"), all as the
same shall be in effect from time to time; and
(c) So long as a Shareholder owns any Merger Shares, furnish to the
Shareholder upon written request a written statement by the Corporation as to
its compliance with the reporting requirements of Rule 144 and of the
Securities and Exchange Acts, a copy of the most recent annual or quarterly
report of the Corporation, and such other reports and documents so filed as a
Shareholder may reasonably request in availing itself of any rule or regulation
of the commission allowing a Shareholder to sell any such securities without
registration.
9. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter contained herein.
10. AMENDMENT. This Agreement may not be modified or amended except by
written agreement of the parties.
11. GOVERNING LAW; VENUE. This Warrant shall be governed by the laws of
the State of Florida, with proper venue with respect to any dispute relating
hereto being Orange County, Florida.
12. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit or, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
13. SEPARABILITY. In the event any provision of this Agreement shall be
invalid, illegal, or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
- 5 -
<PAGE> 65
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
DYNAMIC HEALTHCARE
TECHNOLOGIES, INC., a Florida
corporation
By:
-------------------------------
Mitchel J. Laskey, President
and Chief Executive Officer
SHAREHOLDERS:
-------------------------------
Charles M. Cooper
-------------------------------
Jerome B. Lerman
-------------------------------
Martin B. Levin
-------------------------------
Marianne Boswell
-------------------------------
Kay McDonald
-------------------------------
Saul B. Bloom
- 6 -
<PAGE> 66
EXHIBIT 5.2C
FORM OF
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT is entered into as of the ____ day of
December, 1996, by and between______________________the "Optionee") and DYNAMIC
HEALTHCARE TECHNOLOGIES, INC., a Florida corporation (the "Corporation" or
"Company").
WITNESSETH:
----------
WHEREAS, Optionee and Collaborative Medical Systems Corp. f/k/a CoMed
Acquisition Corporation ("CMSC"), a wholly-owned subsidiary of the Corporation,
have concurrently herewith entered into a certain Employment Agreement (the
"Employment Agreement"); and
WHEREAS, the Corporation desires to grant to the Optionee the option to
acquire shares of common stock, $.01 par value, of the Corporation (the "Common
Stock") upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants set forth herein and other good and valuable consideration, the
receipt of which is hereby acknowledged, the Optionee and the Corporation
hereby agree as follows:
1. GRANT OF THE OPTIONS. Subject to the terms and conditions of this
Agreement, and the obtaining of the Shareholder Approval described in paragraph
7 hereinafter, the Corporation hereby grants to the Optionee the right to
purchase (individually referred to as the "Option" or collectively referred to
as the "Options") from the Corporation_______ thousand (___________) shares of
the Common Stock (the "Option Shares"), subject to the following vesting
schedule, at the Purchase Price (as defined in Section 2 of this Agreement) for
a five (5) year period ("Exercise Period") commencing on the date hereof:
(a) ______ Option Shares shall vest on the date hereof;
(b) ______ Option Shares shall vest one (1) year from the date hereof.
(c) ______ Option Shares shall vest two (2) years from the date hereof;
and
(d) ______ Option Shares shall vest three (3) years from the date
hereof.
<PAGE> 67
1. PURCHASE PRICE. The Optionee shall have the right to purchase each
Option Share pursuant to Section 5 of this Agreement at a purchase price equal
to the average of the closing bid and ask price on the date hereof (the
"Purchase Price").
2. RIGHTS OF THE OPTIONEE. The Optionee by virtue of holding the
Options to purchase the Option Shares shall not have any rights to any
dividends to be distributed by the Corporation to the shareholders or any other
rights of a shareholder in the Corporation with respect to any of the Option
Shares until the Optionee exercises the Option to purchase the Option Shares
pursuant to Section 5 of this Agreement.
3. TRANSFERABILITY OF THE OPTIONS. The Options may not be assigned,
transferred, or otherwise disposed of, or pledged or hypothecated or in any way
be subject to execution, attachment or other process. Any assignment,
transfer, pledge, hypothecation or other disposition of the Options attempted
contrary to the provisions of this Agreement or any levy, execution, attachment
or other process attempted upon the Options will be null and void and without
effect.
4. EXERCISE OF THE OPTIONS. The Option to purchase the Option Shares
shall be exercisable upon the terms and conditions hereinafter set forth:
(a) Subject to the terms and conditions of this Agreement, the
Option to purchase the Option Shares shall be exercisable by the Optionee upon
delivery of notice to the Corporation (the "Exercise Notice") in accordance
with the procedure prescribed in this Section 5. The Exercise Notice shall
state that the Optionee has elected to exercise the Option or any portion
thereof. Delivery of the Exercise Notice prior to the expiration of the Option
Period shall be sufficient to entitle the Optionee to purchase the Option
Shares notwithstanding that the Closing (as subsequently defined in Section
5(b) of this Agreement) may occur after the expiration of the Option Period.
Within ten (10) business days of receipt of the Exercise Notice, the
Corporation will specify, by written notice to the Optionee, the number and the
Purchase Price of the Option Shares to be purchased by the Optionee, a date and
time (the "Closing Date"), and place for payment of the Purchase Price of the
Option Shares to be purchased by the Optionee. The Closing Date will not be
more than fifteen (15) business days from the date that the Exercise Notice is
received by the Corporation unless another date is agreed upon in writing by
the Corporation and the Optionee.
(b) Payment of the Purchase Price of the Option Shares to be
acquired pursuant to the exercise of the Option will be made by the Optionee at
the closing ("Closing") by either: (i) delivering to the Corporation cash or a
cashier's check payable to the order of the Corporation for the full amount of
the Purchase Price; or (ii) by the tender to the Corporation of common stock of
the Corporation with a market value, determined as of the close of business on
the day before Closing, equal to the Purchase Price where such shares are
endorsed in blank, and/or delivered with all applicable stock powers, for the
free transfer and assignment to the Corporation in full satisfaction and
payment of the Purchase Price. At Closing, the Corporation shall deliver.
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<PAGE> 68
to the Optionee the stock certificates representing the Option Shares being
purchased upon the exercise of the Option.
5. ACCELERATED VESTING AND EXERCISE PERIOD.
a. DEATH; DISABILITY. In the event of the Optionee's
death or disability while employed with CMSC or the Corporation prior to the
Optionee's vesting or exercise of all of the Options, then all of the Options
shall become immediately vested and exercisable; provided, that, the Exercise
Period shall expire on the date six (6) months following the date of death, or
the determination of disability, as the case may be. For purposes hereof,
"disabled" or "disability" shall mean that Optionee shall be reason of permanent
illness, accident or other physical condition be unable to engage in gainful
employment of the type similar to that Optionee was engaged by CMSC, as
verified by a licensed physician reasonably acceptable to the Corporation.
b. CESSATION OF EMPLOYMENT. Notwithstanding anything to
the contrary contained herein, in the event that the Optionee ceases to be
employed by CMSC or the Corporation for any reason (the date of the Optionee's
cessation of employment shall be referred to as the "Cessation Date"), then all
non-vested Options shall expire and be forfeited on the Cessation Date and all
unexercised vested Options shall expire on the date sixty (60) days following
the Cessation Date.
6. SHARE AUTHORIZATION AND OTHER SHAREHOLDER APPROVALS. The
Company covenants and agrees that at all times that this Stock Option Agreement
shall be in effect it shall have authorized, and reserved, Common Stock of the
Corporation sufficient for the exercise of the Options and the purchase of
Common Stock by the Optionee. Further, the Company covenants and agrees to use
its best efforts, at the earliest date practicable, at the annual and special
meeting of the shareholders of the Company (the "Shareholders") to be held
within twelve (12) months of the date hereof, to obtain the consent of the
Shareholders to the granting of this Stock Option Agreement and the transactions
contemplated herein. The Company, in the exercise of such best efforts, agrees
and shall recommend that the Shareholders approve this Stock Option Agreement
and the transactions contemplated herein and that the Company shall vote all
proxies held by management or the Company in favor of such approval.
7. REGISTRATION RIGHTS. Upon the exercise of any Option, and the
issuance of Option Shares by the Optionee, the Company hereby grants to
Optionee certain demand registration rights and piggy-back registration rights,
upon the same terms and conditions as set forth in that certain Registration
Rights Agreement between the Company, the Optionee, and other parties, of even
date. Such terms as set forth in Registration Rights Agreements shall be
deemed incorporated herein by reference as if set forth in the first instance.
8. INVESTMENT. The Optionee acknowledges that the Option Shares
are not being offered pursuant to a registration statement under the Securities
Act of 1933, as amended (the "Act"), or any other securities laws. The
Optionee acknowledges that the Option Shares are being
- 3 -
<PAGE> 69
acquired for the Optionee's own account for investment purposes only and not
with a view to, or for sale in connection with, any public distribution thereof
and will not sell, or offer to sell or otherwise dispose, of any interest in the
Option Shares acquired by the Optionee in violation of the Act. The Optionee
has had substantial experience in business and financial matters and in making
investments of the type contemplated by this Agreement, is capable of
evaluating the merits and risks of the purchase of the Option Shares and is
able to bear the economic risks of such investment.
9. LIQUIDITY. Although there can be no assurance that the Option
Shares will be registered under the Act, that an exemption from such
registration will be available, or that there will be a market for the Option
Shares in the future, the Corporation agrees to use its best efforts to enable
and facilitate the Optionee's sale or disposition of the Option Shares in
compliance with the Act at the earliest date reasonably practicable.
10. ADJUSTMENTS. In the event of a stock dividend, stock split,
share combination, recapitalization, merger, consolidation or reorganization of
or by the Corporation, the number or class of shares purchasable (and purchase
price per share) upon exercise of the Option immediately prior thereto shall be
adjusted so that the Optionee shall be entitled to receive the kind and number
of shares or other securities which the Optionee would have owned or have
been entitled to receive after the happening of any of the events described
above, had the Option been exercised immediately prior to the happening of any
of such events or any record date with respect thereto. Any adjustment made
pursuant to this Section shall become effective immediately after the effective
date of such events retroactive to the record date, if any, for such events.
11. NOTICES. Each notice relating to this Agreement shall be in
writing and delivered in person or by hand delivery or certified mail, return
receipt requested, postage prepaid, as follows:
If to the Optionee: _____________________
_____________________
_____________________
If to the Corporation: Dynamic Healthcare Technologies, Inc.
201 Southhall Lane, Suite 210
Maitland, Florida 32751
Attn: Mitchel J. Laskey
With a copy to: Richard N. Bernstein, Esq.
Cohen, Berke, Bernstein,
Brodie & Kondell, P.A.
2601 South Bayshore Drive, 19th Floor
Miami, Florida 33133
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<PAGE> 70
or to such other address as either party may have designated by written notice
to the other.
12. BENEFITS OF AGREEMENT. This Agreement shall inure to the
benefit and shall be binding upon the successors, heirs, legal representatives
and permitted assigns of the parties hereto.
13. SEVERABILITY. In the event that any one or more provisions of
this Agreement shall be deemed to be illegal or unenforceable such illegality
or unenforceability shall not affect the validity and enforceability of the
remaining legal and enforceable provisions hereof, which shall be construed as
if such illegal or unenforceable provision or provisions had not been inserted.
14. GOVERNING LAW; VENUE. This Agreement will be construed and
governed in accordance with the laws of the State of Florida. The proper venue
with respect to any dispute arising hereunder or connected herewith shall be
Dade County, Florida.
15. COUNTERPARTS. This Agreement may be executed in two (2) or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
THE CORPORATION:
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.,
a Florida corporation
By:
-------------------------------------
Mitchel J. Laskey, President and
Chief Executive Officer
OPTIONEE:
----------------------------------------
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<PAGE> 71
EXHIBIT 5.3B
RELEASE
FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which is hereby
acknowledged, the undersigned _______________________, with an address at
_____________________________________, individually and for the undersigned's
heirs, personal representatives, successors and assigns (collectively, the
"Releasor"), hereby releases and discharges Collaborative Medical Systems,
Inc., with an address at Two University Office Park, 51 Sawyer Road, Waltham,
Massachusetts, and its subsidiaries, directors, officers, agents, affiliates,
attorneys, employees, successors and assigns (collectively, the "Releasee"),
from any and all claims, demands, actions, suits, causes of action,
counterclaims, damages and liabilities of whatever kind or nature, whether in
law or in equity, whether now known or unknown, of every nature and kind
whatsoever (except for salary accrued and not yet paid since December 15, 1996
through the date hereof), against the Releasee, which the Releasor ever had,
now has or hereafter can, shall, or may have, for, upon, or by reason of any
matter, cause or thing whatsoever from the beginning of the world upon to and
including the date of this Release, except for those claims arising out of the
Agreement and Plan of Merger dated December 17, 1996 (the "Agreement") and all
rights of indemnity in favor of Releasor provided by statute or the articles of
incorporation or bylaws of CoMed in effect as of this date relating to his/her
being an officer or director of CoMed. The undersigned is not as of this date
aware of any claims for indemnification or any facts or circumstances which
could reasonably be expected to give rise thereto.
Releasor covenants and agrees not to hereafter sue or otherwise bring
legal action against Releasee as a result of or in connection with Taxes,
Losses or Liabilities incurred by Releasee directly or indirectly arising out
of or in connection with the characterization, treatment or taxability by the
IRS or other Government Bodies of all or any portion of the Merger
Consideration, or any reliance by Releasor upon, or any failure by Releasor,
CoMed or any other Shareholder to obtain tax advice or a tax opinion relating
to the Merger, or as a result of any misrepresentation, action or omission by
CoMed or the Shareholders.
Capitalized terms not defined herein shall have the meanings ascribed
to them in the Agreement.
This Release shall be governed by the laws of the State of Florida
(without regard to the conflict of laws principles applied by the Courts of the
State of Florida).
IN WITNESS WHEREOF, the Releasor has caused this Release to be
executed on December 17, 1996.
RELEASOR:
<PAGE> 72
EXHIBIT 5.3C
LANDLORD'S ESTOPPEL CERTIFICATE
Date:
--------------
TO: CoMed Acquisition Corporation,
a Florida corporation
RE: Lease (the "Lease") dated August 4, 1992, by and between I & G
University, Inc., a Delaware corporation, successor in interest to
Connecticut General Life Insurance Company, a Connecticut corporation,
as Landlord, and Collaborative Medical Systems, Inc., a Massachusetts
corporation, as Tenant, with respect to 29,600 square feet of rentable
floor area (the "Premises") at Two University Office Park, 51 Sawyer
Road, Waltham, Massachusetts.
Gentlemen:
As Landlord under the above-referenced Lease, the undersigned hereby
acknowledges for the benefit of Comed Acquisition Corporation, a Florida
corporation, or its assigns, which has or is about to take an assignment of the
Tenant's interest the above-referenced Lease, the truth and accuracy of the
following statements pertaining to said Lease:
1. The copy of the Lease attached hereto is a true, complete and
correct copy, and includes all modifications, amendments or other terms of the
Lease.
2. Except as otherwise set forth in Paragraph 7 below, Tenant is
paying the full rent stipulated in said Lease, and Tenant is in good standing
and not in default or breach of any of its obligations under the Lease.
3. Current monthly base rent under the Lease is $______________,
rent is fully paid through December 31, 1996, and no monies have been paid to
Landlord in advance of the due date except as follows:
Current Operating Expense Reimbursements or other rent due in addition to the
current monthly base rent is payable as follows:
and is fully paid through:
Landlord is presently holding a security deposit in the amount of $ _________.
<PAGE> 73
4. The current term of the Lease commenced on August 4, 1992, and
the current term ends on _____________________ and there are no renewal or
extension options except:
5. Landlord hereby acknowledges that (a) there have been no
modifications or amendments to said Lease other than as specifically stated
herein, (b) it has not assigned, hypothecated or pledged the rents or the
Lease, and (c) notice of the proposed assignment of Tenant's interest in said
lease may be given to Landlord by certified or registered mail, return receipt
requested, at the address below.
6. The Tenant has not been granted any options to purchase or
concessions of free rent except:
LANDLORD:
I & G UNIVERSITY, INC.,
a Delaware corporation
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
NOTICE ADDRESS:
c/o LaSalle Partners
95 Sawyer Rd.
Waltham, MA 02154
- 2 -
<PAGE> 74
ASSIGNMENT OF LEASE
FOR VALUE RECEIVED, Collaborative Medical Systems, Inc., a
Massachusetts corporation, ("Assignor"), hereby assigns all of its right, title
and interest in and to that Lease (the "Lease") dated August 4, 1992, by and
between Assignor, as Tenant, and I & G University, a Delaware corporation,
successor in interest to Connecticut General Life Insurance Company, a
Connecticut corporation, as Landlord, which leased property is located at Two
University Office Park, 51 Sawyer Road, Waltham, Massachusetts, to CoMed
Acquisition Corporation, a Florida corporation ("Assignee").
IN WITNESS WHEREOF, the parties have hereunto set their hands and
seals the day and year above written.
Signed, sealed and delivered COLLABORATIVE MEDICAL
in the presence of: SYSTEMS, INC., a Massachusetts
corporation
- -----------------------------
By:
- ----------------------------- -------------------------------
Charles M. Cooper, President
and Chief Executive Officer
ACCEPTANCE OF ASSIGNMENT
In consideration of the above Assignment of Lease and pursuant to
Section 5.1.6(A), of the Lease, Assignee hereby assumes and expressly agrees to
perform all covenants and conditions to that Lease. Assignee further agrees to
timely make all payments required by and under the Lease in a timely manner and
fashion and to faithfully perform all terms and conditions of the Lease.
IN WITNESS WHEREOF, the parties have hereunto set their hands and
seals the day and year first above written.
Signed, sealed and delivered COMED ACQUISITION CORPORATION, a
in the presence of: Florida corporation
- -----------------------------
By:
- ----------------------------- -------------------------------
Mitchel J. Laskey, President
<PAGE> 75
CONSENT TO ASSIGNMENT OF LEASE
I & G University, Inc.,a Delaware corporation ("Landlord"), consents
to the assignment of the Lease from Collaborative Medical Systems, Inc., a
Massachusetts corporation, to CoMed Acquisition Corporation, a Florida
corporation.
IN WITNESS WHEREOF, the parties have hereunto set their hands and
seals the day and year first above written.
Signed, sealed and delivered I & G UNIVERSITY, INC.,
in the presence of: a Delaware corporation
- ----------------------------
By:
- ---------------------------- --------------------------------
Name:
------------------------------
Title:
-----------------------------
- 2 -
<PAGE> 1
ARTICLES OF AMENDMENT
OF
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
CERTIFICATE OF DESIGNATION OF
SERIES CM NON-VOTING,
CONVERTIBLE PREFERRED STOCK
1. The name of the corporation is Dynamic Healthcare
Technologies, Inc. (the "Corporation").
2. The resolution determining the Series CM Non-Voting,
Convertible Preferred Stock is as follows:
NOW, THEREFORE BE IT RESOLVED: that the Corporation be, and it hereby
is authorized to issue Six Thousand (6,000) shares of Series CM Non-Voting,
Convertible Preferred Stock, $.01 par value ("Series CM Preferred Stock"),
which shall have the following preferences, limitations and relative rights:
(1) RANK. The Series CM Preferred Stock shall, upon
voluntary or involuntary liquidation, winding-up, dissolution, merger and
combination, rank prior to all classes of common stock.
(2) DIVIDENDS. No dividends shall be payable or
otherwise to accrue with respect to any shares of Series CM Preferred Stock.
(3) LIQUIDATION RIGHTS. Upon the liquidation,
dissolution or winding up of the Corporation (other than upon a Sale Event, as
hereinafter defined), whether voluntary or involuntary, the holders of the
Series CM Preferred Stock will be entitled to receive and to be paid out of the
assets of the Corporation available for distribution a liquidation distribution
in cash in an amount equal to the greater of (a) $1.00 per share before any
payment may be made to the holders of common stock, or (b) the liquidation
value per share of that number of shares of Common Stock at the time of such
distribution into which each share of Series CM Preferred Stock would have been
converted if the Conversion Time (as hereinafter defined) had occurred
immediately prior to said liquidation, dissolution or winding up of the
Corporation (taking into account the dilutive effect of said conversion).
Neither the sale of all or substantially all of the assets of the Corporation,
nor the merger or consolidation of the Corporation into or with any other
entity will be deemed to be a liquidation, dissolution or winding up of the
Corporation. After the payment to the holders of the Series CM Preferred Stock
of the full preferential amounts provided for above, the holders of the Series
CM Preferred Stock as such will have no right or claim to any of the remaining
assets of the Corporation.
(4) CONVERSION RIGHTS. Shares of Series CM Preferred
Stock will automatically convert into shares of common stock ("Common Stock")
of the Corporation at 5:00 p.m. Eastern Standard Time on Friday, August 29, 1997
(the "Conversion Time") pursuant to the following formula based upon the average
closing bid and ask prices of the Common
<PAGE> 2
Stock as quoted on the Nasdaq National Market for the five (5) trading day
period ending August 29, 1997 (hereafter referred to as the "CSAVG"):
(A) if the CSAVG is greater than or equal to $8.00
per share, then each share of Series CM Preferred Stock will be
converted into .0167 shares of Common Stock (rounded to the nearest
whole share);
(B) if the CSAVG is less than or equal to $5.00
per share, then each share of Series CM Preferred Stock will be
converted into 100 shares of Common Stock; or
(C) if the CSAVG is greater than $5.00 per share,
but less than $8.00 per share, then each share of Series CM Preferred
Stock will be converted into that number of shares of Common Stock to
be determined as follows (rounded to the nearest whole share):
number of shares of Common Stock = 100 x ($8.00 - CSAVG)
---------------
$3.00
No fractional shares will be issued upon conversion.
Upon such conversion, holders of the Series CM Preferred Stock shall be
entitled to receive a certificate for that number of shares of Common Stock
into which their Series CM Preferred Stock has been converted within 10
business days following surrender of their certificates of Series CM Preferred
Stock to the Corporation, accompanied by proper assignment thereof in blank
and, if required by the Corporation, signature guaranties.
If the Corporation shall prior to the Conversion Time split, subdivide
or combine its Common Stock, then the conversion formula set forth above shall
be proportionately adjusted so that the holders of Series CM Preferred Stock
shall be entitled to receive an equivalent number of shares of Common Stock as
if such split, subdivision or combination of its Common Stock had occurred
immediately after the Conversion Time.
(5) Acceleration of Conversion. In the event that at any
time prior to the Conversion Time DHT shall cease to be a publicly traded
company by virtue of a merger, share exchange, business combination or sale of
all or substantially all or DHT's capital stock or assets (a "Sale Event"),
then immediately prior to the effectuation of such Sale Event, all shares of
Series CM Preferred Stock shall be converted into shares of Common Stock upon
the same terms as described in paragraph 4 above as if the Conversion Time had
occurred at 5:00 p.m. on the business day immediately preceding the date on
which the Sale Event was effectuated.
(6) Redemption. The shares of the Series CM Preferred Stock are
not subject to redemption.
- 2 -
<PAGE> 3
(7) VOTING RIGHTS. The holders of shares of the Series CM
Preferred Stock are not entitled to any voting rights except as may be required
by law.
(8) RETIREMENT. All shares of Series CM Preferred Stock shall
be canceled, retired and rendered null and void immediately following the
Conversion Time and certificates therefor shall only represent the right of the
holder to receive Common Stock in exchange thereof.
3. The foregoing resolution was duly adopted by the Board of Directors of
the Corporation on December 11, 1996; shareholder approval was not required.
4. Such resolution was signed by the President of the Corporation.
DYNAMIC HEALTHCARE
TECHNOLOGIES, INC., a Florida
corporation
By: /s/ MITCHEL J. LASKEY
---------------------------
Mitchel J. Laskey, President
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