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 earliest event report) May 22,1997
Commission File Number 0-12516
Dynamic Healthcare Technologies, Inc.
(Exact name of registrant as specified in its charter)
Florida 0-12516 59-3389871
(State or other jurisdiction (Commission File Number) (IRS E.I.N.)
of Incorporation)
101 Southhall Lane, Suite 210, Maitland, Florida 32751
(Address of principal executive offices) (ZIP Code)
(407) 875-9991
(Registrant's telephone, including area code)
None
(Former name of former address, if changed from last report)
This report consists of thirty six (36) pages.
The index to exhibit appears on page four (4 ).
Page 1
FORM 8-K
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
MAY 22, 1997
Item 1. Changes in Control of Registrant
None.
Item 2. Acquisition or Disposition of Assets
On May 22, 1997 pursuant to the terms of an Agreement and Plan
of Merger ("Merger Agreement") by and among Dynacor, Inc. of
Apple Valley, Minnesota ("Dynacor"), and the Registrant, Dynacor
was merged with and into the Registrant. Under the terms of the
Merger Agreement the Registrant issued 250,000 shares of
restricted common stock to the shareholders of Dynacor, 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
(a) Financial Statements of Business 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 this Form 8-K.
(c) Exhibits
Exhibit 2: Agreement and Plan of Merger among Dynacor, Inc.
and Dynamic Healthcare Technologies, Inc., dated May 22,
1997 (the "Merger Agreement").
Item 8. Change in Fiscal Year
None.
Page 2
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.
(Registrant)
Date: June 2, 1997 /S/MITCHEL J.LASKEY
Mitchel J. Laskey
President, CEO
Date: June 2, 1997 /S/ PAUL S. GLOVER
Paul S. Glover
Vice President of Finance, CFO
Page 3
FORM 8-K
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
MAY 22, 1997
INDEX TO EXHIBITS
Description of Exhibits: Page Number
Exhibit 2: Agreement and Plan of Merger among Dynacor, Inc. 5
and Dynamic Healthcare Technologies, Inc., dated
May 22, 1997 (the "Merger Agreement").
Page 4
AGREEMENT AND PLAN OF MERGER
by and among
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.,
a Florida corporation ("DHT"),
DYNACOR, INC.,
a Minnesota corporation ("Dynacor"),
CRAIG T. ARNESON,
RICHARD D. HAUSTEN,
ROBERT R. HARRIS,
DYNACOR INVESTMENTS, LLP,
EUGENE W. DIETZ,
E.W.D. DYNACOR GROUP, LLP,
and
RONALD D. BRAATZ
(collectively referred to as the "Shareholders")
Dated as of May 16, 1997
Page 5
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 2
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 2
SECTION 1.9 No Other Rights 3
SECTION 1.10 Further Assurances 3
SECTION 1.11 The Closing 3
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF
DYNACOR AND THE SHAREHOLDERS
SECTION 2.1 Status of the Shares 3
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 4
SECTION 2.6 Charter Documents and Corporate Records 4
SECTION 2.7 Financial Information 5
SECTION 2.8 Liabilities 5
SECTION 2.9 Dynacor Receivables 5
SECTION 2.10 Inventories 6
SECTION 2.11 Absence of Certain Changes 6
SECTION 2.12 Properties 6
SECTION 2.13 Contracts 7
SECTION 2.14 Intangible Property 7
SECTION 2.15 Claims and Proceedings 8
SECTION 2.16 Taxes 9
SECTION 2.17 Employee Benefits Plans 10
SECTION 2.18 Employee Related Matters 11
SECTION 2.19 Insurance 12
SECTION 2.20 Compliance with Laws 12
SECTION 2.21 Permits 12
SECTION 2.22 Environmental Matters 13
SECTION 2.23 Finders Fees 13
SECTION 2.24 Fees, Commissions and Royalties 13
SECTION 2.25 FDA Regulation 13
SECTION 2.26 Software 13
SECTION 2.27 Depositories; Powers of Attorney 14
SECTION 2.28 Certain Other Representations 14
SECTION 2.29 Third Party Software 14
Page 6
SECTION 2.30 Disclosure 14
SECTION 2.31 Board and Shareholder Approval 14
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF DHT
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 15
ARTICLE 4
COVENANTS AND AGREEMENTS
SECTION 4.1 Conduct of Business of Dynacor 16
SECTION 4.2 Corporate Examinations and Investigations 17
SECTION 4.3 Filings and Authorizations; Taxes 17
SECTION 4.4 Efforts to Consummate 17
SECTION 4.5 Negotiations With Others 17
SECTION 4.6 Notices of Certain Events 18
SECTION 4.7 Public Announcements 18
SECTION 4.8 Confidentiality 18
SECTION 4.9 Expenses 18
SECTION 4.10 Special Meeting 19
SECTION 4.11 Merger Claims 19
SECTION 4.12 Certain Renewals 19
SECTION 4.13 Registration of Rights 19
SECTION 4.14 Dynacor Employee Options 19
ARTICLE 5
CONDITIONS TO CLOSING
SECTION 5.1 Conditions to the Obligations of the Parties 19
SECTION 5.2 Conditions to the Obligations of the
Shareholders and Dynacor 20
SECTION 5.3 Conditions to the Obligations of DHT 21
ARTICLE 6
INDEMNIFICATION
SECTION 6.1 Survival of Representations and Warranties 22
SECTION 6.2 Obligation of the Shareholders to Indemnify 23
SECTION 6.3 Obligation of DHT to Indemnify 23
SECTION 6.4 Notice and Opportunity to Defend Third
Party Claims 23
Page 7
SECTION 6.5 Limits on Indemnification 24
SECTION 6.6 Adjustment 24
ARTICLE 7
TERMINATION
SECTION 7.1 Termination 25
SECTION 7.2 Effect of Termination; Right to Proceed 25
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 Notices 26
SECTION 8.2 Entire Agreement 27
SECTION 8.3 Waivers and Amendments; Non-Contractual
Remedies; Preservation of Remedies 27
SECTION 8.4 Governing Law; Venue 27
SECTION 8.5 Binding Effect; No Assignment 27
SECTION 8.6 Exhibits 27
SECTION 8.7 Severability 27
SECTION 8.8 Counterparts 27
SECTION 8.9 Third Parties 28
ARTICLE 9
DEFINITIONS
SECTION 9.1 Definitions 28
SECTION 9.2 Interpretation 31
Page 8
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 16, 1997 (the
"Agreement") by and among DYNAMIC HEALTHCARE TECHNOLOGIES, INC.,
a Florida corporation ("DHT"), DYNACOR, INC., a Minnesota
corporation ("Dynacor"), Craig T. Arneson, Richard D. Hausten,
Robert R. Harris, Dynacor Investments, LLP, a Minnesota limited
liability partnership, Eugene W. Dietz, E.W.D. Dynacor Group,
LLP, a Minnesota limited liability partnership, and Ronald D.
Braatz, who constitute all of the shareholders of record of
Dynacor (collectively referred to as the "Shareholders").
Dynacor and DHT 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 parties acknowledge that Messrs. Arneson, Hausten
and Harris, while not shareholders of record of Dynacor, are the
sole partners of Dynacor Investments, LLP, which owns of record
more than 90% of the issued and outstanding capital stock of
Dynacor, and, accordingly, the terms "Shareholder" and
"Shareholders" shall include said individuals for all purposes
of this Agreement.
WHEREAS, the Boards of Directors of DHT and Dynacor have each
approved the merger of Dynacor with and into DHT (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
Dynacor (the "Common Stock") set forth opposite his or her name
on Schedule 2.1.
WHEREAS, pursuant to the Merger, the Shareholders of Dynacor
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 Laws of Minnesota
and at the Effective Time (as hereinafter defined), Dynacor
shall be merged with and into DHT, with DHT being the surviving
corporation (hereinafter sometimes called the "Surviving
Corporation") and shall continue its corporate existence under
the laws of the State of Florida.
SECTION 1.2 Articles of Incorporation. The Articles of
Incorporation of DHT, as in effect at the Effective Time, shall
be the Articles of Incorporation of the Surviving Corporation
until thereafter amended as provided by law.
SECTION 1.3 Bylaws. The Bylaws of DHT, as in effect at the
Effective Time, shall be the Bylaws of the Surviving Corporation
until thereafter amended as provided by law.
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 DHT at the Effective
Time until thereafter changed in accordance with applicable law
and appropriate corporate actions.
Page 9
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
"Minnesota Articles of Merger") in the form attached hereto as
Exhibit 1.5B shall be filed with the Secretary of the State of
Minnesota pursuant to Section 302A.651 of the Minnesota Business
Corporation Act ("MBCA") providing that the effective date and
time of the Merger shall be the Effective Time.
SECTION 1.6 Effectuation of the Merger. On May 22, 1997, 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 Dynacor not later than the second
business day following such satisfaction or waiver, but in no
event later than June 30, 1997, the parties shall file the
Florida Articles of Merger and the Minnesota 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 Dynacor issued and outstanding immediately
prior to the Effective Time 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 Dynacor 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, 250,000 shares of
DHT common stock.
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 the Merger
Consideration to the Shareholders identified on Schedule 2.1.
In lieu of issuing any fractional shares of DHT common stock,
each Shareholder entitled to receive a fractional share, if any,
shall be paid a cash sum equal to the average of the closing bid
and ask prices of DHT common stock on the business day
immediately preceding the Closing Date multiplied by the
fraction of the share to which such Shareholder is entitled.
Each Shareholder identified on Schedule 2.1 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 hundredth 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. In lieu of issuing any fractional
shares of DHT common stock, each Shareholder entitled to receive
a fractional share, if any, shall be paid a cash sum equal to
the average of the closing bid and ask prices of DHT common
stock on the business day immediately preceding the Closing Date
multiplied by the fraction of the share to which such
Shareholder is entitled. 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
Page 10
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.
SECTION 1.11 The Closing. The Closing shall take place at the
offices of DHT, 101 Southhall Lane, Suite 210, Maitland, Florida
32751 at 10:00 a.m. local time (or such other place and/or time
of day as the parties shall mutually agree) 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
DYNACOR AND THE SHAREHOLDERS
Each Shareholder and Dynacor, jointly and severally, represents
and warrants to DHT as follows:
SECTION 2.1 Status of the Shares. The authorized and
outstanding shares of Common Stock (which is the only class of
capital stock of Dynacor authorized, issued or outstanding) is
as set forth on Schedule 2.1. Other than the Shares and except
as set forth on Schedule 2.1, at the Closing, Dynacor will not
have outstanding any rights, warrants or options to acquire
securities of Dynacor or any convertible or exchangeable
securities and, other than pursuant to this Agreement, no person
will have any right to acquire any securities of Dynacor. 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 marketable title to such Shareholder's Shares
free and clear of any Lien of any kind.
SECTION 2.3 Authority Relative to this Agreement. Dynacor 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
Dynacor or such Shareholder is a party have been duly and
validly authorized by Dynacor or such Shareholder and no other
proceedings on the part of Dynacor or such Shareholder (or any
other person) are necessary to authorize the execution and
delivery by Dynacor or such Shareholder of this Agreement or the
consummation of the Contemplated Transactions to which Dynacor
or such Shareholder is a party. This Agreement and the other
Transaction Documents to which Dynacor or such Shareholder is a
party have been duly and validly executed and delivered by each
of Dynacor or such Shareholder, and (assuming the valid
execution and delivery thereof by the other parties thereto)
constitute the legal, valid and binding agreements of Dynacor
and such Shareholder enforceable against Dynacor or such
Shareholder in accordance with their respective terms.
SECTION 2.4 No Conflicts, Consents. The execution, delivery
and performance by Dynacor 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 Dynacor or such Shareholder is a party or the contemplated
change of control of the stock ownership of Dynacor, will not
(i) violate any provision of the Articles of Incorporation or
By-laws (or comparable instruments) of Dynacor; (ii) require the
Shareholders or Dynacor 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 Consents"); (iii) if the
Page 11
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 Dynacor 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 Dynacor 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 Dynacor 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. Dynacor 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. Dynacor 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 Dynacor and its Subsidiaries taken
as a whole (collectively, the "Condition of the Business").
Schedule 2.5 sets forth each jurisdiction in which Dynacor is
duly qualified to do business as a foreign corporation. Dynacor
does not directly or indirectly own any interest or investment
in any other person.
SECTION 2.6 Charter Documents and Corporate Records. Dynacor
and the Shareholders have heretofore delivered to DHT true and
complete copies of the Articles of Incorporation and Bylaws, or
comparable instruments, of Dynacor as in effect on the date
hereof. The stock and transfer books of Dynacor have been made
available to DHT for inspection and are true and complete.
SECTION 2.7 Financial Information. Dynacor and the
Shareholders have previously furnished to DHT true and complete
copies of (i) Dynacor's financial statements at and for the
calendar years ended December 31, 1996 and 1995 (the "Annual
Statements"), (ii) Dynacor's unaudited quarterly financial
statements at and for each calendar quarter of 1996 and for the
calendar quarter ended March 31, 1997 (the "Interim
Statements"), and (iii) Dynacor's audited financial statements
for the fiscal years ended June 30, 1996 and 1995 ("Audited
Fiscals"). The Audited Fiscals have been prepared in accordance
with GAAP consistently applied as set forth in the notes thereto
and were audited by its regularly engaged certified public
accountants (without qualification in the report thereof). Each
delivered financial statement presents fairly the financial
position of Dynacor as of its date, and its earnings, changes in
stockholders' equity and cash flow for the periods then ended.
Each delivered balance sheet fully sets forth all Assets and
Liabilities of Dynacor 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
Dynacor which should appear therein under GAAP. All financial
and accounting books, ledgers, accounts and official and other
records relating to Dynacor have been properly and accurately
kept and completed in all material respects. Dynacor and the
Shareholders have further prepared and delivered to DHT
financial projections for the calendar years 1997 and 1998
("Projections"). The Projections have been prepared in good
faith and are reasonable and obtainable based upon the Dynacor's
and the Shareholders' reasonable interpretation of all
information available to them.
SECTION 2.8 Liabilities. Except as and to the extent reflected
in the Interim Statements of Dynacor (the "Latest Balance
Sheet") at March 31, 1997 (the "Latest Balance Sheet Date")
referred to in Section 2.7, Dynacor 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 Business or condition of
Dynacor, financial or otherwise, or the result of operations of
Dynacor, and (ii) no change in the Assets or Liabilities or in the Business
Page 12
or condition of Dynacor, financial or otherwise, or
in the results of operations or prospects of Dynacor, except in
the ordinary course of business; and (iii) no factor or
condition exists or, to Dynacor's or any Shareholder's knowledge
and belief, is contemplated or threatened, which might cause
such a change in the future, and (iv) no dividends or other
distributions have been paid or made upon any shares of capital
stock of Dynacor nor have any shares of capital stock of Dynacor
been redeemed, retired, purchased or acquired for value by
Dynacor. Schedule 2.8 also contains a true and correct list of
all Deferred Compensation Liabilities and Dynacor Debt and a
description of the material terms thereof. Except as provided
in Schedule 2.8, there will exist no Dynacor Debt at Closing.
None of the Dynacor Debt or any prior indebtedness to the
Shareholders constituted or 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 Dynacor.
SECTION 2.9 Dynacor Receivables. Except as set forth in
Schedule 2.9, all Receivables of Dynacor 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 defenses, offsets, returns,
allowances or credits of any kind, and are fully collectible.
Dynacor 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. Since the Latest
Balance Sheet Date, except as set forth in Schedule 2.11,
Dynacor has conducted the Business in the ordinary course
consistent with past practices and there has not been:
(a) Any material adverse change in the Condition of the
Business or any event, occurrence or circumstance that could
reasonably be expected to cause such a material adverse change.
(b) 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.
(c) Any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital
stock of Dynacor.
(d) Any damage, destruction or other casualty loss (whether or
not covered by insurance), condemnation or other taking
affecting the Assets of Dynacor or any Subsidiary to the extent
material to Dynacor.
(e) Any change in any method of accounting or accounting
practice by Dynacor.
(f) Any increase in the compensation payable or to become
payable to any officer, stockholder, director, consultant, agent
or full-time employee of Dynacor, or any alteration in the
benefits payable to any thereof.
(g) Any material adverse change in the relationships of
Dynacor with its customers, suppliers and vendors.
(h) Except for any changes made in the ordinary course of
Business, any material change in any of Dynacor's business
policies, including advertising, marketing, pricing, purchasing,
personnel, returns or budget policies.
Page 13
(i) Except in the ordinary course of the Business, consistent
with past practice, any payment, directly or indirectly, of any
Liability before or after the same became due in accordance with
its terms.
SECTION 2.12 Properties.
(a) Schedule 2.12A sets forth a complete list and description
of all real property owned or leased by Dynacor (the "Real
Property"), which constitutes all of the real property owned,
used or occupied by Dynacor. The lease for the Real Property is
in full force and effect and Dynacor 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 Dynacor or any Shareholder, copies of which have
been provided to DHT. All structures and buildings of the
Business are in good operating condition (subject to normal wear
and tear) with no structural or other defects known to Dynacor
or the Shareholders that would materially interfere with the
operation of the Business, are located within applicable
boundary lines and are suitable for the purposes for which they
are currently used. 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, structures and buildings.
Except as disclosed on Schedule 2.12A, no person, other than
Dynacor, has any right to occupy or possess any of the Real
Property or any such structures or buildings.
(b) Dynacor 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 Dynacor 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 Dynacor 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 Dynacor or any Shareholder
relating solely to the purchase or sale of property or services
by Dynacor in the ordinary course of the Business which (i)
require Dynacor 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 Dynacor
without penalty during such period. True and correct copies of
all written Contracts listed on Schedule 2.13 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 Dynacor and, to the
knowledge of Dynacor or the Shareholders, the other parties
thereto in accordance with their terms. Dynacor is not in
default (or alleged default) under any such Contract in any
material respect, or, to the knowledge of Dynacor or the
Shareholders, is any other party thereto in default thereunder
in any material respect, or does any condition exist that with
notice or the lapse of time or both would constitute a material
default (or give rise to a termination right) thereunder. To
the knowledge of Dynacor 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 the Latest Balance Sheet Date, Dynacor 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
Page 14
Dynacor or any Shareholder, all applications for any of the foregoing,
and all permits, grants, licenses and other rights running to or from
Dynacor or 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. The Contemplated
Transactions will not adversely affect the right, title and
interest of Dynacor in and to the Intellectual Property Rights.
Neither Dynacor 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 Dynacor 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. Dynacor 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 Dynacor and the Shareholders, Dynacor
has not infringed or violated in any way any valid patent,
trademark, trade name or copyright of others, nor has Dynacor
received any notice, claim or protest respecting any such
violation or infringement. Neither Dynacor nor any Shareholder
is aware that any of Dynacor'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 Dynacor or that would conflict with
Dynacor's business as currently conducted. Neither the
execution nor delivery of this Agreement, nor the carrying on of
Dynacor's business by the employees of Dynacor, nor the conduct
of Dynacor's business as currently conducted, will, to the
knowledge of Dynacor 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
Dynacor 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 Dynacor. At Closing, the Surviving Corporation
will have sole right, title and interest in and to the
Intellectual Property Rights free and clear of any claims by any
person.
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 Dynacor 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 in respect thereof are covered by insurance), pending
or, to the knowledge of Dynacor or the Shareholders, threatened
on the date hereof, against or involving Dynacor or any of the
Shareholders, any of Dynacor'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 Dynacor 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
Dynacor 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 Dynacor 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
Dynacor or the Shareholders, threatened that would give rise to
any right of indemnification on the part of any director or
officer of Dynacor or the heirs, executors or administrators of
such director or officer, against Dynacor.
SECTION 2.16 Taxes.
(a) Except as set forth in Schedule 2.16:
(i) Dynacor 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;
Page 15
(ii) Dynacor 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 Dynacor for all taxable periods ending on or
before the Closing Date;
(iii) no extension of time has been requested or granted for
Dynacor to file any Tax Return that has not yet been filed or to
pay any Tax that has not yet been paid,
(iv) Dynacor has not received notice of a determination by a
Tax authority that Taxes are owed by Dynacor (such determination
to be referred to as a "Tax Deficiency") and, to the knowledge
of Dynacor 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 Dynacor or
any of its properties;
(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;
(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 Dynacor or
the Shareholders, threatened Tax Audits of Dynacor;
(x) Dynacor has never been required to include in income any
adjustment pursuant to Section 481 of the Code and no Tax
authority has ever made or proposed any such adjustment;
(xi) Dynacor is not a party to any arrangement to which
Section 280G of the Code could under any circumstances apply;
(xii) Dynacor has not filed a consent pursuant to Section
341(f) of the Code or agreed for Section 341(f)(2) to apply to
the disposition of any asset;
(xiii) Dynacor 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; or
(xiv) Dynacor does not have any deferred intercompany gains
or losses that have not been fully taken into income for income
Tax purposes.
(b) Schedule 2.16 contains (i) a schedule of the filing dates
of all Tax Returns required to be filed by Dynacor, (ii) a
description of all past Tax Audits within the past five years
involving Dynacor, (iii) a list of all elections made by Dynacor
or its Shareholders relating to Taxes, (iv) a description of the
accounting methods employed by Dynacor and any changes in such
accounting methods that occurred during any year for which the
statute of limitations remains open, (v) a schedule of the tax
attributes of Dynacor (including but not limited to net
Page 16
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., ' 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, Dynacor 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,
Dynacor will deliver to DHT: (i) a schedule of Dynacor's tax
basis in its assets and the annual depreciation deductions for
such assets over their remaining tax recovery period, 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, Dynacor has in all material respects 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 have been furnished properly completed
exemption certificates for all exempt transactions. Dynacor 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 sales and use Taxes for
all periods up to and including the Closing Date.
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
former employee, officer, director or consultant of Dynacor 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 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 Dynacor 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 Dynacor or any Affiliate of Dynacor 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 Dynacor under
Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate"). Dynacor 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 Dynacor or any ERISA Affiliate of
Dynacor 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 Dynacor 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.
Dynacor 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 Dynacor on no more
Page 17
than sixty (60) days' notice.
There are no pending or, to the knowledge of Dynacor 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) Dynacor or any ERISA Affiliate, or (iii) any
fiduciary, for which Dynacor may be directly or indirectly
liable, through indemnification obligations or otherwise.
(b) With respect to each Employee Benefit Plan, Dynacor 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) 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 Dynacor,
including any agreement relating thereto, and a description of
the rate and nature of all compensation payable by Dynacor 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) Dynacor 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
Dynacor or the Shareholders, threatened against Dynacor; (c)
Dynacor 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 Dynacor's employees working within the past
three years, nor, to the knowledge of Dynacor or the
Shareholders, are there any campaigns being conducted to solicit
authorization from Dynacor'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 Dynacor's employees is pending or, to the
knowledge of Dynacor or the Shareholders, threatened against
Dynacor; (f) Dynacor 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, Dynacor 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 Dynacor. 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
Dynacor 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 Dynacor 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 Dynacor 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. The insurance in effect
with respect to any Real Property is in an amount of the full
like-kind replacement value of such Real Properly, including the
buildings and improvements thereon. Neither Dynacor 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.
Page 18
SECTION 2.20 Compliance with Laws. Dynacor is not in
violation of any order, judgment, injunction, award, citation,
decree, consent decree or writ applicable to Dynacor
(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
instrumentality of any such government or political subdivision,
or any court or arbitrator (collectively, "Governmental Bodies")
affecting its Assets or the Business.
SECTION 2.21 Permits. Dynacor 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 Dynacor or
the Shareholders, threatened to revoke or limit any Permit. 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 Dynacor (or, to the knowledge of
Dynacor or the Shareholders, any predecessor in interest), or
any Release at, on or under any Real Property by Dynacor or, to
the knowledge of Dynacor 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 Dynacor 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) Dynacor 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 Dynacor or any present or former owner, lessee
or operator of the Real Property.
(c) Except as set forth in Schedule 2.22, (i) there are no
incinerators, septic tanks, underground tanks or cesspools
located, or to the knowledge of Dynacor or the Shareholders,
which have been located on, at or under the Real Properly, (ii)
all sewage from the Real Property is discharged into a public
sanitary sewer system, and (iii) to the knowledge of Dynacor or
the Shareholders, there has been no Release by Dynacor into the
atmosphere, any adjoining or adjacent body of water, or
adjoining or adjacent property. Dynacor has delivered to DHT
copies of all environmental reports and all other written
materials in the possession of Dynacor 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 Dynacor who might be
entitled to any fee or commission from Dynacor upon consummation
of the Contemplated Transactions. The Shareholders are solely
responsible for payment of all fees and commissions of the type
required to be set forth on Schedule 2.23 and at Closing, no
claims will exist against the Surviving Corporation for any such
fees or commissions.
SECTION 2.24 Fees, Commissions and Royalties. Dynacor 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 Dynacor'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 Dynacor 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
Dynacor.
Page 19
SECTION 2.26 Software. Dynacor 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 Dynacor 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. All 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
Dynacor that has accorded Dynacor 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
Dynacor as assignee that have conveyed to Dynacor 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 functional specifications and
documentation with respect thereto.
SECTION 2.27 Depositories; Powers of Attorney. Schedule 2.27
sets forth (i) the name of each bank or similar entity in which
Dynacor 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 Dynacor and a
description of the terms thereof.
SECTION 2.28 Certain Other Representations. As of the date
hereof and the Closing Date, (i) the aggregate backlog of
contracted sales and installations, (ii) the annualized
recurring maintenance and support revenue for existing
customers, (iii) the annualized recurring maintenance and
support for installation to be completed from existing contract
backlog, and (iv) minimum working capital reserves, shall not be
less than the respective amounts set forth on Schedule 2.28. In
addition total liabilities of Dynacor shall not be greater than
the amount set forth on Schedule 2.28.
SECTION 2.29 Third Party Software. Schedule 2.29 sets forth a
true and complete list of all Third Party Software. Except as
set forth in Schedule 2.29, no other Third Party Software is
required, recommended or otherwise used in connection with the
Software. Dynacor has full authority and right to indefinitely
use and utilize all Third Party Software and is not in any
manner subject to payment of any ongoing fees, commissions or
other expenses in connection therewith except as set forth in
one or more Contracts identified on Schedule 2.13.
SECTION 2.30 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 by or on behalf of Dynacor or any Shareholder
pursuant to this Agreement 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 not
misleading. Notwithstanding any right of DHT to fully
investigate the affairs of Dynacor nor any knowledge of facts
determined or determinable by DHT pursuant to such
investigation, DHT have the right to rely fully upon the
representations, warranties, covenants and agreements of Dynacor
and the Shareholders contained herein or listed or disclosed on
any Schedule hereto or in any instrument delivered in connection
herewith or any of the foregoing.
SECTION 2.31 Board and Shareholder Approval. The Board of
Directors of Dynacor has pursuant to unanimous written consent
(i) determined that the Merger is fair to and 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 Minnesota 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.
Page 20
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF DHT
DHT represents and warrants to the Shareholders that:
SECTION 3.1 Authority Relative to This Agreement. DHT 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 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
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 DHT 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 DHT 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 (ii) require DHT 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 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 upon its respective assets or business.
SECTION 3.3 Corporate Existence and Power. DHT 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. DHT 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, its
Assets, financial condition or the results of operations of DHT
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 who might be entitled to any fee or commission
from DHT upon consummation of the Contemplated Transactions.
ARTICLE 4
COVENANTS AND AGREEMENTS
SECTION 4.1 Conduct of Business of Dynacor.
(a) From the date hereof through the Closing Date, Dynacor
agrees, and the Shareholders agree to cause Dynacor to: (i)
conduct its operations according to the ordinary and usual
course of the Business consistent with past practice, (ii) use
best efforts to preserve intact its present business
organization, structure and personnel, (iii) use best efforts to
preserve and maintain its Assets, Real Property and goodwill of
the Business, (iv) use best efforts to preserve its
relationships with customers and suppliers and others having
business dealings with it, (v) provide DHT with weekly written
or telephonic reports relating to Dynacor's business operations
and with such information as DHT reasonably requests in writing,
telephonically or at a meeting, (vi) carry insurance,
Page 21
including liability insurance, in character and amount in accordance
with past custom and practice; (vii) notify DHT of any lawsuits,
Claims, proceedings or investigations that are instituted
against it, its officers or directors, or to their knowledge,
threatened against Dynacor, its officers or directors, and
(viii) use best efforts to comply with all material laws, rules,
regulations and governmental authorities applicable to it and to
the conduct of the Business.
(b) Except as otherwise specifically set forth on Schedule
4.1(b), and other than in the ordinary course of the Business
consistent with past practices, from the date hereof through the
Closing Date, without the prior written consent of DHT, Dynacor
will not, and the Shareholders will cause Dynacor not to: (i)
change its articles of incorporation, bylaws or organizational
structure; (ii) incur any debt or other financial obligations;
(iii) sell, transfer, assign, mortgage, pledge, encumber or
permit the creation of any lien or security interest with
respect to, any of its Assets, Real Property or other
properties; (iv) make any investments or expenditures, incur any
Liabilities, enter into any Contracts or commitments, or
otherwise undertake or assume any obligations which,
individually or in the aggregate, exceed $5,000; (v) hire or
terminate employees or contractors; (vi) modify, assign or
hypothecate any existing material Contract; (vii) declare any
dividends or make any distribution of Assets or cash with
respect to its capital stock or any bonus or other incentive
plans; (viii) authorize, issue, sell, restructure or exchange
any Dynacor Debt or equity securities (including, without
limitation, stock options or warrants); (ix) make loans,
advances or prepayments or extend credit to any party; (x) sell,
discount or factor any Receivables or enter into any similar
arrangements; (xi) increase compensation payable or to become
payable to any officer, shareholder, director, consultant, agent
or employee or otherwise modify benefits payable to any of them;
or (xii) pay, discharge, settle or satisfy any Claim or
Liability; or (xiii) not to undertake (nor permit to be
undertaken) any of the actions specified in Section 2.11.
(c) From the date hereof through the Closing Date, Dynacor and
the Shareholders agrees that the affairs of Dynacor will be
conducted in such a manner so that the representations and
warranties of Dynacor and the Shareholders contained herein
shall continue to be true and correct in all material respects
on and as of the Closing Date as if made on and as of the
Closing Date.
(d) From the date hereof through the Closing Date, Dynacor and
the Shareholders agree that Dynacor will consult with DHT prior
to any renewal, amendment, extension or termination of, waiver
of any material right under, or any failure to renew, any
Contract of the type required to be listed on Schedule 2.13 and
will not take any such action if DHT objects thereto in writing.
SECTION 4.2 Corporate Examinations and Investigations. Prior
to the Closing Date, Dynacor 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
Dynacor, and such examination of the books, records and
financial condition of Dynacor, as DHT reasonably deems
necessary in order to fully complete its investigations and
examinations at least three (3) days prior to Closing, and
Dynacor and the Shareholders shall cooperate fully therein. In
that connection, Dynacor 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 Dynacor as such Representatives may
reasonably request, shall permit the Representatives of DHT
access to the Assets of Dynacor and all parts thereof and to
their respective employees, customers, suppliers, Contractors
and others, and shall cause Dynacor'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 Dynacor contained in this Agreement.
SECTION 4.3 Filings and Authorizations; Taxes. Dynacor and the
Shareholders, on the one hand, and DHT 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. Dynacor and the Shareholders, on the one hand,
and DHT 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
Page 22
Taxes imposed upon them or Dynacor by Law
arising out of the Contemplated Transactions. DHT will pay when
due all Taxes imposed upon it by Law arising out of the
Contemplated Transactions. Dynacor and the Shareholders, on the
one hand, and DHT, 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 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.
SECTION 4.4 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 4.5 Negotiations With Others. From and after the date
hereof, unless and until this Agreement shall have terminated in
accordance with its terms, Dynacor and the Shareholders agree
that none of them will directly or indirectly (i) solicit,
engage in discussions or engage in negotiations with any person
(other than DHT or any of its Affiliates) with respect to an
Acquisition Proposal; (ii) provide information to any person
(other than DHT or any of its Representatives) in connection
with an Acquisition Proposal; or (iii) enter into any
transaction with any person (other than DHT or any of its
Affiliates) with respect to an Acquisition Proposal. If any
Shareholder, Dynacor or any representative thereof receives any
offer or proposal to enter into discussions or negotiations
relating to any of the above, Dynacor and the Shareholders will
immediately notify DHT in writing as to the identity of the
offeror or the party making any such proposal and the specific
terms of such offer or proposal.
SECTION 4.6 Notices of Certain Events. Prior to the Closing
Date, each of Dynacor and the Shareholders, on the one hand, and
DHT, 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 from the
date hereof through the Closing Date that would constitute a
violation or breach of any representation or warranty, whether
made as of the date hereof or 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 from the
date hereof through the Closing Date that may have a material
adverse effect on the Condition of the Business.
SECTION 4.7 Public Announcements. Prior to the Closing Date,
Dynacor and the Shareholders will consult with DHT 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, except as may be
required by applicable Law in which event DHT shall have the
right to review and comment upon any such press release or
public statement prior to its issuance.
SECTION 4.8 Confidentiality.
(a) DHT 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 Dynacor which it has
obtained from
Page 23
Dynacor, the Shareholders or their representatives
prior to, on or after the date hereof in connection with the
Contemplated Transactions, and DHT shall not 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 prior to the
date such information was provided to such party in connection
with the Contemplated Transactions, (ii) made known to DHT from
a third party not in breach of any confidentiality requirement,
or (iii) made public through no fault of DHT or any of its
Representatives.
(b) If the Contemplated Transactions are not consummated and
if requested by the Requisite Shareholders, DHT shall return to
the Shareholders all tangible evidence of such information
regarding the Shareholders and Dynacor.
SECTION 4.9 Expenses. Except as otherwise specifically
provided in this Agreement, DHT and Dynacor shall bear their
respective expenses. DHT will bear its own expenses and Dynacor
will bear the expenses of Dynacor, in each case, incurred in
connection with the preparation, execution and performance of
this Agreement and the transactions contemplated hereby,
including, without limitation, all fees and expenses of their
respective representatives.
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, Dynacor 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
Minnesota, other applicable Law or the Articles of Incorporation
or Bylaws of Dynacor, 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 Dynacor
and the Shareholders will each use its or his best efforts to
cause such Claim to be dismissed (without the incurrence of
Liability by Dynacor thereby) prior to the Closing. Dynacor 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, Dynacor 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 Registration of Rights. DHT shall grant to the
Shareholders certain incidental or "piggy-back" registration
rights with respect to the DHT common stock representing Merger
Consideration in accordance with the terms of a certain
Registration Rights Agreement to be delivered at Closing, the
form of which is attached hereto as Exhibit 4.13.
SECTION 4.14 Dynacor Employee Options. DHT shall make
available (as and when approved by the shareholders of DHT) to
key Dynacor employees (other than Shareholders owning 10% or
more of Dynacor) an aggregate pool of 60,000 shares of DHT
common stock pursuant to the terms and conditions of the DHT
1993 incentive stock option plan.
Page 24
ARTICLE 5
CONDITIONS TO CLOSING
SECTION 5.1 Conditions to the Obligations of the Parties. The
obligations of Dynacor and the Shareholders, on the one hand,
and DHT 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, Dynacor or DHT 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 Dynacor. All obligations of the Shareholders and Dynacor
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. DHT 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 of DHT contained in this Agreement and in any
certificate or other writing delivered by DHT 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 payable at the Closing in accordance with the
terms of this Agreement.
(d) DHT Required Consents. All material DHT Required Consents
shall have been obtained.
(e) Documentation. There shall have been delivered to Dynacor
and the Shareholders the following:
(i) A certificate, dated the Closing Date, of the President
or any Vice President of DHT 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 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 reasonably requested by Dynacor or the Requisite
Shareholders.
Page 25
(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 5.2C hereto.
(v) Copies of all DHT Required Consents.
(f) Employment Agreements. DHT shall have executed and
delivered Employment Agreements substantially in the form of
Exhibit 5.2A with the following Shareholders: Craig T. Arneson,
Richard D. Hausten and Robert R. Harris.
(g) Stock Option Agreements. DHT shall have executed and
delivered Stock Option Agreements substantially in the form
attached hereto as Exhibit 5.2B with Craig T. Arneson, Richard
D. Hausten, Robert R. Harris.
SECTION 5.3 Conditions to the Obligations of DHT. All
obligations of DHT 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 Dynacor 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 Dynacor and the Shareholders contained in this
Agreement and in any certificate or other writing delivered by
Dynacor and 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) Environmental Matters. DHT shall not have received an
environmental report from an environmental consultant regarding
the Real Property stating that the representations in Article 2
with respect to environmental matters are inaccurate in any
material respect.
(d) Required Consents. All Required Consents shall have been
obtained.
(e) Dynacor 401(k) Plan. Dynacor's existing 401(k) plan shall
have been frozen prior to the Closing Date.
(f) Dynacor Employment Agreements. Except as set forth on
Schedule 5.3(e), all existing employment agreements, together
with any and all amendments thereto, between Dynacor and any of
its employees (including, without limitation, all phantom stock,
bonus, incentive, severance or other compensation agreements)
shall be terminated prior to Closing.
(g) Shareholder Approval. 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 Minnesota Articles of Merger
shall have been duly filed.
(h) Schedules. All schedules not delivered to DHT 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 at its sole discretion.
(i) Documentation. There shall have been delivered to DHT the
following:
(i) A certificate dated the Closing Date of Dynacor 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 Secretary of Dynacor
Page 26
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 Dynacor reasonably requested by DHT.
(iv) The resignations, dated on or before the Closing Date,
of each director and officer of Dynacor.
(v) A signed opinion of Dynacor's and the Shareholders'
counsel, dated the Closing Date, addressed to DHT, substantially
in the form of the opinion annexed as Exhibit 5.3A hereto.
(vi) Copies of all Required Consents and Permits.
(vii) An executed general release by each Shareholder in
favor of Dynacor 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 Craig T. Arneson,
Richard D. Hausten and Robert R. Harris, fully executed copies
of which shall be attached hereto at Closing as Exhibit 5.3D.
(xi) Possession and control of the Assets of Dynacor
(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 fully to investigate the
affairs of Dynacor and notwithstanding any knowledge of facts
determined or determinable by DHT pursuant to such investigation
or right of investigation, DHT has the right to rely fully upon
the representations, warranties, covenants and agreements of
Dynacor and the Shareholders contained in this Agreement, or
listed or disclosed on any Schedule hereto 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 Dynacor 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 clauses (i)
and (ii) of Section 6.2 shall terminate and expire 18 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
Page 27
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 Dynacor or
the Shareholders under this Section 6.1(a).
(b) All representations, warranties, covenants and agreements
of DHT shall terminate and expire 18 months after the Closing
Date, provided, however, that the liability of DHT shall not
terminate as to any specific claim or claims of the type
referred to in Section 6.3 hereof, whether or not fixed as to
liability or liquidated as to amount, with respect to which DHT
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.
Subject to the provisions of Section 6.5, each Shareholder,
jointly and severally 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 Dynacor or
the Shareholders contained in this Agreement or in the Schedules
or any Transaction Document, (ii) any breach of the covenants
and agreements of Dynacor 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.
SECTION 6.3 Obligation of DHT to Indemnify. DHT agrees 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 or of
the covenants and agreements of DHT 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 Dynacor 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 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
Page 28
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 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 $25,000, in which event DHT and
the Surviving Corporation shall be entitled to be indemnified
for all of their Losses.
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.
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 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, or (ii) DHT 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.
(c) By DHT, if (i) there has been a material misrepresentation
or breach of warranty on the part of Dynacor 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) Dynacor or any Shareholder has committed a
material breach of any covenant imposed upon it or him hereunder
and fails to cure such breach within thirty (30) days after
written notice thereof from DHT, or (iii) any condition to DHT's
obligations hereunder becomes incapable of fulfillment through
no fault of DHT and is not waived by DHT.
(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 Dynacor
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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 June 30, 1997, 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.
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, one copy to:
Dynamic Healthcare Technologies, Inc.
101 Southhall Lane, Suite 210
Maitland, FL 32751
Attention: Mitchel J. Laskey, President and CEO
Fax: (407) 875-9915
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.
Fax: (305) 857-0857
(ii) If to Dynacor, one copy to:
Dynacor, Inc.
7300 W. 147th Street
Apple Valley, Minnesota 55124
Attention: Craig T. Arneson, President
Fax: (612) 431-4989
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with a copy to:
Severson, Sheldon, Daugherty & Molenda, P.A.
7300 W. 147th Street, Suite 600
Apple Valley, Minnesota 55124
Attention: Larry S. Severson, Esq.
Fax: (612) 432-3780
(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.
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
law rules thereof. Venue with respect to any disputes arising
in connection herewith shall be Orange County, Florida.
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 Dynacor or any Shareholder) or the
Requisite Shareholders (in the case of assignment by DHT) 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.
Page 31
SECTION 8.8 Counterparts. The Agreement may be executed in any
number of counterparts, each of which shall 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 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 Dynacor or the sale of the Shares or the sale of any
equity interest in, or the Business or any Assets of, Dynacor
(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 Dynacor.
"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.
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
Page 32
have meanings correlative to the foregoing.
"Deferred Compensation Liabilities" shall mean all payments
required to be made by Dynacor under any Employee Benefit Plan.
"Dynacor Debt" shall mean (i) money borrowed by Dynacor from
any person; (ii) any indebtedness of Dynacor arising under
leases required to be capitalized under GAAP or evidenced by a
note, bond, debenture or similar instrument; (iii) any
indebtedness of Dynacor 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
Dynacor under any guaranty, letter of credit, performance credit
or other agreement having the effect of assuring a creditor
against loss.
"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
Dynacor (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, Dynacor (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 Dynacor pursuant to the terms of this Agreement
or pursuant to Law or that are payable by the Shareholders,
Dynacor (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. ' 1321, (ii) defined as a "hazardous waste"
pursuant to Section 1004 of the Federal Resource Conservation
and Recovery Act, 42 U.S.C ' 6901 et seq. (42 U.S.C. ' 6903),
(iii) defined as a "hazardous substance" pursuant to Section 101
of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. ' 9601 et seq., (iv) petroleum products
and wastes, or (v) asbestos or asbestos-containing material.
"Inventory" shall mean, as of any date, collectively, all
inventories of products owned by Dynacor and held for sale,
distribution or license, together with packaging and samples
thereof, owned by Dynacor as of such date.
Page 33
"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.
"Merger Claims" shall mean any Claim made by any Shareholder,
any Representative of any Shareholder, Dynacor or any Contractor
of Dynacor, whether arising prior to or after the Closing, that
challenges the validity, legality or fairness of the
Contemplated Transactions or any actions of Dynacor 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 Dynacor (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.
"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
a majority 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
Page 34
Authority") responsible for the imposition of any such tax, with
respect to Dynacor, 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 Dynacor 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 Dynacor 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.
"Third Party Software" shall mean the computer programs
developed and owned by parties other than Dynacor which are
used, specified or utilized in or in conjunction with the
Software or recommended for use in or in conjunction therewith.
"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."
Page 35
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
/S/ CRAIG T. ARNESON By: /S/ MITCHEL J. LASKEY
Craig T. Arneson,individually Mitchel J. Laskey, President
and Chief Executive Officer
/S/ RICHARD D. HAUSTEN
Richard D. Hausten, individually DYNACOR INC., a Minnesota corporation
/S/ ROBERT R. HARRIS By: /S/ CRAIG T. ARNESON
Robert R. Harris Craig T. Arneson, President
/S/ EUGENE W. DIETZ
Eugene W. Dietz, individually DYNACOR INVESTMENTS, LLP., a
Minnesota limited liability partnership
/S/ RONALD D. BRAATZ
Ronald D. Braatz, individually By: /S/ CRAIG T. ARNESON
Craig T. Arneson, partner
By: /S/ RICHARD D. HAUSTEN
Richard D. Hausten, partner
By: /S/ ROBERT R. HARRIS
Robert R. Harris, partner
E.W.D. DYNACOR GROUP, LLP,
a Minnesota limited liability partnership
By: /S/ EUGENE W. DIETZ
Eugene W. Dietz, managing partner
Page 36
