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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Dimensional Medicine, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
DIMENSIONAL MEDICINE, INC.
10901 BREN ROAD EAST
MINNETONKA, MN 55343
March 28, 1996
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of
Dimensional Medicine, Inc. (the "Company"), which will be held on April 29, 1996
at 9:00 a.m., Minneapolis Time, at the offices of the Company at 10901 Bren Road
East, Minnetonka, Minnesota.
The purpose of the Special Meeting is to consider and vote upon approval of
a Merger Agreement, dated as of February 5, 1996 (the "Merger Agreement"), by
and among the Company, Dynamic Healthcare Technologies, Inc. ("DHT"), DMI
Acquisition Corp., a wholly owned subsidiary of DHT ("Newco") and National
Computer Systems, Inc., the Company's principal shareholder ("NCS"), pursuant to
which the Company will be merged with and into Newco (the "Merger"). If the
Merger is approved and is consummated, the Company will cease to exist and the
holders of the Company's common stock will receive an aggregate $550,000, of
which NCS, the holder of approximately 85% of the Company's outstanding common
stock, will be entitled to receive $355,000 or approximately $.013 in exchange
for each share of the Company's common stock, and the remaining holders of the
Company's common stock (the "Minority Shareholders") will become entitled to
receive in exchange for each share of Company common stock they hold a cash
payment of $.040, or approximately $195,000 in the aggregate.
Enclosed is a Proxy Statement which describes the proposed Merger and
contains financial and other information relating to the Merger. You are urged
to read the Proxy Statement carefully.
The Board of Directors of the Company has concluded that the Merger is in
the best interests of the Company's shareholders and unanimously recommends that
you vote FOR the proposed Merger. NCS, which owns approximately 85% of the
outstanding shares of the common stock of the Company, has, pursuant to the
Merger Agreement, agreed to vote all shares of such common stock held by it in
favor of the approval of the Merger (unless such vote would cause NCS to breach
its fiduciary duties under applicable law). NCS has indicated it intends to vote
in favor of the Merger, and, if NCS votes in such manner, approval of the Merger
is assured. In connection with the Company's approval of the Merger Agreement,
the Board received the opinion of John G. Kinnard & Company, Incorporated that
both the aggregate consideration of $550,000 cash to be received for all
outstanding shares of common stock of the Company and the $.040 per share cash
to be received by the Minority Shareholders in connection with the Merger are
fair to the Minority Shareholders from a financial point of view.
We hope you will be able to attend the Special Meeting. Whether or not you
plan to attend, we urge you to complete, sign, date and return the accompanying
proxy in the enclosed business reply envelope to make certain that your shares
will be represented at the Special Meeting.
Promptly after the Merger, a Letter of Transmittal will be mailed to all
shareholders of record to use in surrendering their Company stock certificates.
PLEASE RETAIN YOUR STOCK CERTIFICATE UNTIL YOU RECEIVE A LETTER OF TRANSMITTAL
WHICH WILL INCLUDE INSTRUCTIONS AS TO THE PROCEDURE TO BE USED IN SENDING YOUR
CERTIFICATES.
Sincerely,
/s/ John P. Paumen
John P. Paumen
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
<PAGE>
DIMENSIONAL MEDICINE, INC.
10901 BREN ROAD EAST
MINNETONKA, MN 55343
---------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 29, 1996
------------------------
Notice is hereby given that a Special Meeting of Shareholders of Dimensional
Medicine, Inc. (the "Company") will be held on Monday, April 29, 1996 at 9:00
a.m. Minneapolis Time at the offices of the Company at 10901 Bren Road East,
Minnetonka, Minnesota, for the following purposes:
1. To approve the Merger Agreement, dated as of February 5, 1996 (the
"Merger Agreement") by and among the Company, Dynamic Healthcare
Technologies, Inc. ("DHT"), DMI Acquisition Corp., a wholly owned subsidiary
of DHT ("Newco") and National Computer Systems, Inc., the Company's
principal shareholder ("NCS"), pursuant to which the Company will be merged
with and into Newco (the "Merger"). Upon consummation of the Merger, shares
of the Company's common stock, par value $.15 per share ("Common Stock"),
held by the Company's shareholders will be converted into the right to
receive an aggregate $550,000 in cash, of which an aggregate $355,000, or
approximately $.013 per share, will be paid to NCS, and approximately
$195,000, or $.040 per share, will be paid to the Minority Shareholders and
the Company will cease to exist.
2. To transact such other business as may be properly brought before
the Special Meeting.
Only holders of record of shares of Company Common Stock outstanding at the
close of business on March 25, 1996 will be entitled to notice of, and to vote
at, the Special Meeting and any adjournment or adjournments thereof. Prior to
the actual voting thereof, a proxy may be revoked by the person executing such
proxy by filing with the Secretary of the Company a written notice of
revocation, by a duly executed proxy bearing a later date or by voting in person
at the Special Meeting.
NCS, which owns approximately 85% of the outstanding shares of Common Stock,
has, pursuant to the Merger Agreement, agreed to vote all shares of Common Stock
held by it in favor of the approval of the Merger (unless such vote would cause
NCS to breach its fiduciary duties under applicable law). NCS has indicated it
intends to vote in favor of the Merger, and, if NCS votes in such manner,
approval of the Merger is assured.
Company shareholders have certain rights to dissent from the Merger and to
obtain payment for their shares pursuant to the provisions of Sections 302A.471
and 302A.473, of the Minnesota Business Corporation Act, copies of which
Sections are attached as Appendix C to the accompanying Proxy Statement.
By Order of the Board of Directors
/s/ John P. Paumen
John P. Paumen,
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Minnetonka, Minnesota
March 28, 1996
YOUR VOTE IS IMPORTANT. TO VOTE YOUR SHARES, PLEASE MARK, SIGN AND DATE THE
ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
DIMENSIONAL MEDICINE, INC.
10901 BREN ROAD EAST
MINNETONKA, MINNESOTA 55343
---------------------
PROXY STATEMENT
---------------------
INTRODUCTION
This Proxy Statement is being furnished to the shareholders of Dimensional
Medicine, Inc., a Minnesota corporation ("DMI" or the "Company"), in connection
with the solicitation of proxies by the Board of Directors of the Company for
use at the Special Meeting of Shareholders of the Company to be held at 9:00
a.m., Minneapolis Time, on April 29, 1996, at the offices of the Company at
10901 Bren Road East, Minnetonka, Minnesota 55343, and at any adjournments or
postponements thereof (the "Special Meeting"). The Special Meeting is being held
for the purpose of voting upon the approval of a Merger Agreement (the "Merger
Agreement") providing for a merger transaction (the "Merger") pursuant to which
Newco will acquire the Company. The Merger Agreement is attached to this Proxy
Statement as Appendix A.
NCS, which owns approximately 85% of the outstanding shares of the Company's
common stock, par value $.15 per share ("Common Stock"), has, pursuant to the
Merger Agreement, agreed to vote all shares of Common Stock held by it in favor
of the approval of the Merger (unless such vote would cause NCS to breach its
fiduciary duties under applicable law). NCS has indicated it intends to vote in
favor of the Merger, and, if NCS votes in such manner, approval of the Merger is
assured.
The Company's directors and officers may solicit proxies from shareholders
by telephone or in person. Directors and officers will not receive additional
compensation for aiding in the solicitation. The cost of the solicitation of
proxies, if any, will be borne by the Company.
The close of business on March 25, 1996 has been fixed as the record date
(the "Record Date") for the determination of shareholders entitled to notice of,
and to vote at, the Special Meeting and any adjournments thereof. On the Record
Date there were outstanding and entitled to vote 32,533,460 shares of Common
Stock. Each share of Common Stock is entitled to one vote at the Special
Meeting. The shares of Common Stock shall continue to be transferable until the
effective time of the Merger.
All proxies that are properly executed and received in a timely manner will
be voted in accordance with the instructions noted thereon. Any properly
executed proxy which does not specify to the contrary will be voted in favor of
the approval of the Merger Agreement described herein. A shareholder giving a
proxy has the right to revoke it at any time before it is voted by filing with
the Secretary of the Company a written notice of revocation or a duly executed
later-dated proxy, or by attending the Special Meeting and voting in person.
------------------------
The date of this Proxy Statement and the approximate date it will first be
mailed to shareholders is March 28, 1996.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS
IN CONNECTION WITH THE TRANSACTIONS DESCRIBED IN THIS PROXY STATEMENT OTHER THAN
THOSE CONTAINED HEREIN, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY DIMENSIONAL
MEDICINE, INC. OR DYNAMIC HEALTHCARE TECHNOLOGIES, INC., OR THEIR RESPECTIVE
MANAGEMENTS OR AFFILIATES. EXCEPT AS OTHERWISE EXPRESSLY INDICATED, ALL
INFORMATION IS GIVEN AS OF THE DATE OF THIS PROXY STATEMENT.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information concerning the Company can be inspected and copied at the
public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices at Room 1400,
Seven World Trade Center, 12th Floor, New York, New York 10048 and Suite 1400,
Northwestern Atrium Center, 500 Madison Street, Chicago, Illinois 60604. Copies
of such materials can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates.
The Annual Report on Form 10-K to Shareholders of the Company for the fiscal
year ended March 31, 1995 and the Company's Form 10-Q Quarterly Report for the
quarter ended December 31, 1995 accompany this Proxy Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Proxy Statement incorporates documents by reference which are not
presented herein or delivered herewith. Documents relating to the Company
(excluding exhibits unless specifically incorporated therein) are available
without charge upon written or oral request to Mark D. Holman, Chief Financial
Officer, 10901 Bren Road East, Minnetonka, Minnesota 55343, telephone number
(612) 938-8280. In order to ensure timely delivery of the documents, any request
for documents from the Company should be made by April 19, 1996.
The following Company documents which have been filed by the Company with
the Commission are hereby incorporated by reference in this Proxy Statement: (i)
Annual Report on Form 10-K for the year ended March 31, 1995 and (ii) Quarterly
Reports on Form 10-Q for the fiscal quarters ended July 30, 1995, September 30,
1995 and December 31, 1995.
All documents filed by the Company pursuant to Sections 13(a) or 15(d) of
the Exchange Act after the date hereof and before the Special Meeting shall be
deemed to be incorporated herein by reference and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Proxy Statement to the
extent that a statement contained herein or in another subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Proxy Statement.
The information relating to the Company appearing in this Proxy Statement
does not purport to be comprehensive and should be read together with, and is
qualified in its entirety by, the information and financial statements
(including notes thereto) appearing in the documents incorporated herein by
reference.
ALL INFORMATION HEREIN REGARDING THE COMPANY AND ITS AFFILIATES HAS BEEN
FURNISHED BY THE COMPANY AND ALL INFORMATION IN THIS PROXY STATEMENT REGARDING
DHT AND ITS AFFILIATES HAS BEEN FURNISHED BY DHT. NO PERSON IS AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROXY
STATEMENT IN CONNECTION WITH THE SOLICITATION OF PROXIES HEREBY AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR NEWCO. THIS PROXY STATEMENT DOES NOT
CONSTITUTE THE SOLICITATION OF A PROXY, OR AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO PURCHASE ANY SECURITIES, IN ANY JURISDICTION IN WHICH SUCH
SOLICITATION OR OFFER MAY NOT LAWFULLY BE MADE.
2
<PAGE>
DIMENSIONAL MEDICINE, INC.
PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION.............................................................. 1
AVAILABLE INFORMATION..................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... 2
TABLE OF CONTENTS......................................................... 3
SUMMARY................................................................... 4
GENERAL INFORMATION....................................................... 8
Purpose of the Special Meeting.......................................... 8
Votes Required and Ownership............................................ 8
THE MERGER................................................................ 8
Background of the Merger................................................ 8
Basis and Reasons for the Merger; Recommendation........................ 11
Terms of the Merger Agreement........................................... 12
Opinion of Investment Banker............................................ 14
Interests of Certain Persons in the Merger and Related Transactions..... 17
Employee Benefit Plans; Employment Agreements........................... 17
Surrender of Stock Certificates......................................... 18
Deregistration of Company Common Stock.................................. 18
Source of Funds......................................................... 18
Certain Federal Income Tax Consequences................................. 18
Appraisal Rights........................................................ 19
BENEFICIAL OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT............. 22
PRICE RANGE OF COMMON STOCK, TRADING VOLUME AND DIVIDENDS................. 23
CAPITALIZATION............................................................ 24
BUSINESS OF THE COMPANY................................................... 24
SELECTED FINANCIAL DATA AND MANAGEMENT'S DISCUSSION....................... 24
DESCRIPTION OF CAPITAL STOCK.............................................. 25
BUSINESS OF DHT........................................................... 25
EXPERTS................................................................... 25
SHAREHOLDER PROPOSALS..................................................... 25
APPENDIX A -- MERGER AGREEMENT............................................ A-1
APPENDIX B -- OPINION OF JOHN G. KINNARD & COMPANY, INCORPORATED.......... B-1
APPENDIX C -- TEXT OF MINNESOTA STATUTES SECTIONS......................... C-1
302A.471. Rights of dissenting shareholders............................. C-1
302A.473. Procedures for asserting dissenters' rights................... C-2
</TABLE>
3
<PAGE>
SUMMARY
THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE
IN THIS PROXY STATEMENT. THIS SUMMARY DOES NOT CONTAIN A COMPLETE STATEMENT OF
SUCH INFORMATION OR OF ALL MATERIAL FEATURES OF THE PROPOSED MERGER AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, AND SHOULD BE READ IN CONJUNCTION
WITH, THE DETAILED INFORMATION AND FINANCIAL STATEMENTS CONTAINED HEREIN AND IN
THE APPENDICES HERETO. CAPITALIZED TERMS USED AND NOT DEFINED IN THE FOLLOWING
SUMMARY HAVE THE MEANING SET FORTH UNDER "INTRODUCTION" ABOVE.
SPECIAL MEETING
A special meeting of shareholders of the Company will be held at the offices
of the Company at 10901 Bren Road East, Minnetonka, Minnesota 55343, on Monday,
April 29, 1996, at 9:00 a.m., Minneapolis Time, to consider and vote upon the
proposed Merger.
DESCRIPTION OF MERGER
Company shareholders will be asked to consider and vote upon the Merger
Agreement by and between Newco, the Company and NCS, pursuant to which the
Company will be merged with and into Newco. If the Merger is approved and is
consummated, the Company will cease to exist and holders of Company Common Stock
will receive an aggregate $550,000, of which NCS, the holder of approximately
85% of the Company's outstanding Common Stock, will be entitled to receive
$355,000, or approximately $.013 in exchange for each share of Common Stock it
holds, and the shares held by all other Shareholders (the "Minority
Shareholders") will be entitled to receive $.040 in exchange for each share of
Common Stock they hold, or approximately $195,000 in the aggregate. In addition,
Newco shall retire existing indebtedness of DMI to NCS represented by a
promissory note dated March 31, 1995. Upon consummation of the Merger, holders
of Company Common Stock will have no continuing interest in the future of the
Company or Newco. See "THE MERGER -- Terms of the Merger Agreement."
SHAREHOLDER APPROVAL OF MERGER AGREEMENT
Under Minnesota law, the affirmative vote of at least a majority of the
outstanding shares of DMI Common Stock is required to approve and adopt the
Merger Agreement. NCS, which owns approximately 85% of the outstanding shares of
Common Stock, has, pursuant to the Merger Agreement, agreed to vote all shares
of Common Stock held by it in favor of the approval of the Merger (unless such
vote would cause NCS to breach its fiduciary duties under applicable law). NCS
has indicated it intends to vote in favor of the Merger, and, if NCS votes in
such manner, approval of the Merger is assured. See "GENERAL INFORMATION --
Votes Required and Ownership."
RECOMMENDATION OF BOARD OF DIRECTORS
The Board of Directors of DMI has unanimously approved the Merger Agreement,
having determined that the Merger is in the best interests of DMI and its
shareholders. Among the factors considered by the Board in approving the Merger
and the Merger Agreement and in making its recommendation were the current and
anticipated competitive environment and market conditions in the industry, the
Board's knowledge of DMI's current and anticipated business, financial condition
and results of operations, the $.040 per share to be paid in cash to the
Company's Minority Shareholders and the approximately $.013 per share to be paid
in cash to NCS, the other terms of the Merger, and the opinion of John G.
Kinnard & Company, Incorporated that both the aggregate consideration of
$550,000 cash to be received for all outstanding shares of Common Stock and the
$.040 per share cash to be received by the Minority Shareholders in connection
with the Merger are fair to the Minority Shareholders from a financial point of
view. See "THE MERGER -- Background of the Merger" and "THE MERGER -- Basis and
Reasons for the Merger; Recommendation."
OPINION OF INVESTMENT BANKER
DMI's investment banker, John G. Kinnard & Company, Incorporated ("Kinnard")
has rendered an opinion to the Board of Directors of DMI that both the aggregate
consideration of $550,000 cash to be received for all outstanding shares of
Common Stock and the $.040 per share cash to be received by
4
<PAGE>
the Minority Shareholders in connection with the Merger are fair to the Minority
Shareholders from a financial point of view. See "THE MERGER -- Opinion of
Investment Banker" and the copy of such opinion annexed hereto as Appendix B.
INTERESTS OF CERTAIN PERSONS IN THE MERGER AND RELATED TRANSACTIONS
At December 31, 1995, John P. Paumen, a member of the Board of Directors of
DMI, beneficially owned 62,361 shares, or 0.2% of all outstanding Common Stock
of the Company, excluding options (all of which have exercise prices in excess
of the per share cash consideration to be paid pursuant to the Merger
Agreement). Pursuant to the Merger Agreement, approximately $2,495 will be paid
with respect to the shares of Common Stock beneficially owned by Mr. Paumen.
Adrienne T. Tietz and Mark D. Holman, the only other directors of the Company,
do not beneficially own any shares of Common Stock. However, Ms. Tietz is an
executive officer of NCS, the Company's majority shareholder, and Mr. Holman is
an employee of NCS and provides the services of Chief Financial Officer to the
Company under a contract between the Company and NCS. Pursuant to the Merger
Agreement, NCS will receive an aggregate $355,000, or approximately $.013 per
share, for its shares of Common Stock. In connection with the Merger, Newco or
DHT has agreed to (i) pay to NCS the balance outstanding at the time of Closing
under a promissory note between the Company and NCS (estimated to be $542,000),
(ii) obtain the release of NCS from its guarantee of the Company's bank
indebtedness, (iii) assume guarantees provided by NCS of performance under
certain customer service contracts and (iv) obtain releases of NCS from certain
customer and bank lease commitments. In the event Newco or DHT is unable to
secure the release of NCS from such customer and bank lease commitments, Newco
or DHT has agreed to indemnify NCS against any losses relating to such
commitments. See "THE MERGER -- Interests of Certain Persons in the Merger and
Related Transactions" and "BENEFICIAL OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND
MANAGEMENT."
FINANCING THE MERGER
The source of funds for the transaction will come from DHT cash resources.
See BUSINESS OF DHT."
EFFECTIVE DATE
The Merger will become effective (the "Effective Date") when approved by the
Company's shareholders and upon the filing of documents necessary to consummate
the Merger with the Minnesota Secretary of State and the Florida Secretary of
State. The Effective Date is expected to be at 11:59 p.m., Minneapolis Time, on
April 29, 1996. Until the Effective Date, Company shareholders will retain their
equity interest in the Company and shares of Common Stock shall continue to be
transferable. At the Effective Date each outstanding share of Common Stock held
by Minority Shareholders, except those shares held by shareholders who validly
perfect appraisal rights, will be converted into the right to receive $.040 in
cash, without interest. At the Effective Date, each outstanding share of Common
Stock held by NCS will be converted into the right to receive approximately
$.013 in cash, or $355,000 in the aggregate, without interest. See "THE MERGER
- -- Terms of the Merger Agreement -- EFFECTIVE DATE."
PAYMENT FOR SHARES; PAYING AGENT
Upon consummation of the Merger, Norwest Bank Minnesota, N.A. (the "Paying
Agent") will promptly distribute to each shareholder a Letter of Transmittal and
instructions for delivering their stock certificates to the Paying Agent.
Promptly after receipt of a properly executed Letter of Transmittal, together
with such holder's stock certificates, the Paying Agent will distribute to each
shareholder an amount of cash to which such holder is entitled under the Merger
Agreement. See "THE MERGER -- Surrender of Stock Certificates."
CONDITIONS TO CONSUMMATION OF MERGER; REGULATORY APPROVALS
The obligations of the Company and Newco are each subject to the
satisfaction of certain conditions customary in transactions of this nature.
Upon successful satisfaction of all conditions, the
5
<PAGE>
Company and Newco will file appropriate articles of merger with the respective
Secretary of State in the States of Minnesota and Florida. See "THE MERGER --
Terms of the Merger Agreement -- TERMINATION RIGHTS; CONDITIONS TO THE MERGER."
RIGHTS OF DISSENTING SHAREHOLDERS
Company shareholders have the right to dissent from the Merger and, subject
to certain conditions provided for under Minnesota law, are entitled to receive
payment of the "fair value" of their Common Stock (herein "Appraisal Rights").
Shareholders will be bound by the terms of the Merger unless they dissent by
complying with all of the requirements of Sections 302A.471 and 302A.473 of the
Minnesota Business Corporation Act. Shareholders wishing to dissent from the
Merger must file with the Company, prior to the vote at the Special Meeting, a
written notice of any intention to demand the payment of fair compensation for
such shareholders' shares of Common Stock if the Merger is effectuated, and such
dissenting shareholders must not vote their shares in favor of the Merger.
Shareholders who fail to file such notice or vote in favor of the Merger will be
bound by the terms of the Merger. See "THE MERGER -- Appraisal Rights" and
Appendix C which is the full text of Sections 302A.471 and 302A.473 of the
Minnesota Business Corporation Act.
FEDERAL INCOME TAX CONSEQUENCES OF MERGER
Cash paid to Company shareholders pursuant to the Merger or pursuant to the
exercise of Appraisal Rights will be a taxable transaction for federal income
tax purposes and may also be a taxable transaction under applicable state, local
and foreign tax laws. Shareholders are urged to consult their own tax advisors.
See "THE MERGER -- Certain Federal Income Tax Consequences."
BUSINESS OF THE COMPANY PENDING MERGER
The Company has agreed, pending consummation of the Merger, to conduct its
business in the ordinary course consistent with past practice and will use its
best efforts to maintain and preserve intact its business organization and
business relationships and to keep available the services of its present
officers and employees. The Company has also agreed to provide reasonable access
to its offices, properties, books and records to representatives of Newco in
connection with their evaluation of the business, assets and financial condition
and prospects of DMI. See "THE MERGER -- Terms of the Merger Agreement --
BUSINESS OF THE COMPANY PENDING THE MERGER."
PRICE RANGE OF DMI COMMON STOCK
The Common Stock trades under the symbol "DIMM" in the over-the-counter
market. The price of the Common Stock has ranged from $.01 to $.12 per share
since January 1, 1995. On December 7, 1995, the day immediately prior to the
public announcement of the agreement between DMI and Newco for the Merger, the
closing sale price per share for the Common Stock was $.03. The Board believes,
based on the very small volume of trading in the DMI Common Stock, that the
historical trading prices are not representative of the selling prices which
could be expected for the sale of a large number of shares of DMI Common Stock
and expects that the anticipated selling price for a large number of shares,
independent of a transaction such as the Merger, would be much lower than the
historical prices. See "PRICE RANGE OF COMMON STOCK, TRADING VOLUME AND
DIVIDENDS."
BUSINESS OF THE COMPANY
DMI designs, develops and markets application software and imaging
workstations for the radiology medical market. The address of DMI's principal
executive offices is Dimensional Medicine, Inc., 10901 Bren Road East,
Minnetonka, Minnesota 55343 and its telephone number is (612) 938-8280. See
"BUSINESS OF THE COMPANY."
BUSINESS OF DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
DHT develops, markets, installs and supports clinical information systems,
document imaging solutions and DynamicVision, on enterprise-wide, multi-media
software and servicer that integrates
6
<PAGE>
health-related data from many sources into a comprehensive electronic health
record. Its principal executive office is at 101 Southhall Lane, Suite 210,
Maitland, Florida 32751. Its telephone number is (407) 875-9991. See "BUSINESS
OF DHT."
BUSINESS OF COMPANY SUBSEQUENT TO MERGER
If the Merger is consummated, the Company shall cease to exist and its
business will be conducted by Newco. See "BUSINESS OF THE COMPANY -- Business of
the Company Subsequent to Merger."
7
<PAGE>
GENERAL INFORMATION
PURPOSE OF THE SPECIAL MEETING
The Special Meeting is being held at 9:00 a.m., Minneapolis Time, on April
29, 1996 at the offices of the Company at 10901 Bren Road East, Minnetonka,
Minnesota 55343, to consider and act upon a proposal to approve the Merger
Agreement pursuant to which Newco will acquire the Company.
The Company's Board of Directors has approved the Merger Agreement, having
determined that the acquisition of the Company by Newco is in the best interests
of the Company and its shareholders. The Board unanimously recommends that
shareholders vote FOR approval of the Merger Agreement.
Pursuant to and subject to the terms and conditions of the Merger Agreement,
on the Effective Date, NCS shall receive in exchange for its DMI Common Stock,
$355,000, or approximately $.013 per share, and each outstanding share of DMI
Common Stock held by the Minority Shareholders, except those shares held by
Minority Shareholders who validly perfect Appraisal Rights, will be converted
into the right to receive $.040 in cash, without interest, or approximately
$195,000 in the aggregate.
VOTES REQUIRED AND OWNERSHIP
Only holders of record of Company Common Stock at the close of business on
March 25, 1996 (the "Record Date"), are entitled to vote at the Special Meeting.
A quorum for purposes of conducting business at the Special Meeting is a
majority of the outstanding shares of Common Stock entitled to vote. On the
Record Date, the Company had outstanding 32,533,460 shares of Common Stock
entitled to vote at the Special Meeting. Each holder of Common Stock on the
Record Date is entitled to one vote for each share held. The affirmative vote,
in person or by proxy, of at least a majority of the outstanding shares of
Common Stock entitled to vote at the Special Meeting is required to approve and
adopt the Merger Agreement.
Abstentions will be treated as shares that are present and entitled to vote
for purposes of determining the presence of a quorum and in tabulating votes
cast on proposals presented to shareholders, but as unvoted for purposes of
determining the approval of the matter. Consequently, an abstention will have
the same effect as a negative vote. If a broker indicates on the proxy that it
does not have discretionary authority as to certain shares to vote on a
particular matter, those shares will not be considered as present and entitled
to vote with respect to that matter.
NCS, which owns approximately 85% of the outstanding shares of Common Stock,
has, pursuant to the Merger Agreement, agreed to vote all shares of Common Stock
held by it in favor of the approval of the Merger (unless such vote would cause
NCS to breach its fiduciary duties under applicable law). NCS has indicated it
intends to vote in favor of the Merger, and, if NCS votes in such manner,
approval of the Merger is assured.
If the Merger is not consummated, the Company expects to continue to seek
merger or corporate partnering opportunities while operating generally in
accordance with the description of the business set forth under "BUSINESS OF THE
COMPANY" herein.
THE MERGER
BACKGROUND OF THE MERGER
On December 17, 1993, the shareholders of the Company approved the issuance
of (i) 27,533,441 shares of Common Stock to NCS resulting in NCS holding
approximately 85% of the then outstanding shares of the Company, and (ii)
1,326,673 shares of Common Stock to the Company's Employee Stock Ownership Plan
(the "ESOP"), resulting in the ESOP holding approximately 5% of the then
outstanding shares of Common Stock, pursuant to an agreement with NCS which
provided for, among other things, the elimination of a significant portion of
the Company's outstanding indebtedness to NCS. At the closing, $4,857,000 was
outstanding and of this amount, only $1,105,000 was carried forward and
converted to a long-term note. This indebtedness resulted from the Company's
inability to repay trade accounts payable and notes payable to NCS. To that
point, the Company had operating
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losses and had struggled to meet its financial obligations in every year since
inception. A primary motivation for converting the NCS indebtedness into Common
Stock was to improve the Company's balance sheet to facilitate sales and
marketing efforts, which the Company believed had been severely hampered by its
financial position, and continuing uncertainty about its ability to continue as
a going concern.
Faced with continuing losses from operations and a continuing inability to
honor its repayment obligations to NCS, in May 1992, the Company engaged the
services of an investment banking firm to seek a strategic partner or investor
to acquire 80 to 90 percent of the Company, with the proceeds of such
acquisition to be used to repay the outstanding debt to NCS. During an
approximately one-year period of seeking such strategic partner or investor, the
investment banking firm approached approximately 40 to 50 entities, and the
Company had direct discussions with approximately 10 to 12 entities. By December
1993, none of the entities had offered acceptable proposals.
Subsequent to shareholder approval of the NCS debt restructuring and stock
issuance, the engagement of the investment banking firm was extended to December
31, 1994, and the firm continued to seek purchasers or strategic partners for
the Company. By May 1994, a list of primary and secondary companies had been
targeted as potential purchasers or partners and revised descriptive materials
had been forwarded and contacts initiated. By December 31, 1994, it was the
opinion of the Company's Board of Directors (the "Board") that the efforts of
the investment banking firm were unlikely to result in a firm proposal from any
of the potential partners or purchasers and the agreement with the investment
banking firm, in accordance with its terms, was allowed to terminate with the
exception of a provision in the agreement which permitted the firm to receive a
commission if the Company were to enter into a definitive agreement or close a
transaction on or before December 31, 1995.
Beginning in July 1995, the Board began contacting previously identified and
new potential purchasers to determine whether there was any renewed interest in
acquiring the Company. By the end of October 1995, two companies submitted
non-binding expressions of interest in pursuing transactions with the Company,
one from DHT to acquire all of the outstanding Common Stock through a merger and
the other from a company within the same general industry (the "Other Company")
to acquire all of the assets and certain of the liabilities of the Company.
On November 2, 1995, the Board met to consider the proposals from DHT and
the Other Company. DHT proposed to acquire all of the NCS shares for an
aggregate purchase price of $300,000, or approximately $.01 per share, and the
shares held by the Minority Shareholders (including the ESOP) for approximately
$.02 per share, in addition to prepaying or assuming the remaining debt of the
Company to NCS, reaching an agreement with the Company's bank whereby the bank
would release NCS from its corporate guarantee of Company indebtedness, and
agreements pursuant to which DHT would assume commitments by NCS to service
customers of the Company, and release of NCS from certain lease commitments. The
Other Company proposed to acquire all of the assets of the Company and certain
liabilities, including those associated with NCS, with the result that,
according to then current assumptions regarding the Company's balance sheet, the
Company's shareholders would all receive less than $.01 per share. The Board
reviewed the background of both proposals, the viability and likelihood that the
proposals could be consummated and other factors related to DHT and the Other
Company, the proposals and the resulting impact on the Company's shareholders
and on-going business. Concern was expressed by the Board respecting both
proposals and representatives of the Company were directed to contact
representatives of DHT and the Other Company to further explore the proposals.
Between November 2 and November 21, 1995, representatives of the Company
communicated to the Other Company that the Directors were concerned that without
acquiring all of the liabilities, and following a liquidation of the Company
after a sale of all of the assets, there would be insufficient proceeds
available for any distributions to shareholders. As a result of such
negotiations, the Other Company increased its offer to guarantee that the
Minority Shareholders would receive $42,250 in the
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aggregate, or $.008 per share. The proposal contemplated that the Other Company
would manage the business pending the closing, that the Company would be
prohibited from discussing any further transactions with any other parties and
would be obligated to pay the Other Company $50,000 as a break-up fee if the
Company were to sell its business to another entity within the succeeding twelve
(12) months and required NCS to unconditionally agree to vote their shares in
favor of the transaction. The Board was concerned that the asset acquisition
structure in the proposal from the Other Company would result in excessive costs
following the transaction in winding up the business of the Company. Between
November 2 and November 21, 1995, representatives of the Company further
investigated the financial condition and background of DHT and encouraged both
parties to increase their proposed purchase prices.
On November 21, 1995, the Board met again to consider the two proposals.
Following review of both proposals, the Board decided to advise both entities
that they should make their best and final offer prior to the close of business
on November 22, 1995 and that the Board would meet again on November 24, 1995 to
consider such final proposals and decide which to accept.
At the end of the day on November 22, 1995, the Other Company verbally
indicated it would be willing to revise its proposal to reflect a merger
transaction rather than an acquisition of assets and to guarantee that the
Minority Shareholders would receive an aggregate $125,000, or $.025 per share
and that NCS would receive $230,000, or approximately $.008 per share. On
November 24, 1996, the Board considered the proposal from DHT and the Other
Company, expressed concern that DHT had not completed a pending recapitalization
financing which would be necessary to fund its proposal and observed that the
aggregate price paid the Minority Shareholders in the Other Company proposal was
higher than the price paid by DHT. As a result, the Board preliminarily
concluded that it would be more beneficial to the shareholders to accept the
proposal from the Other Company and requested that the Other Company provide a
written revision of its proposal. Subsequent to the meeting, representatives of
the Company communicated its conclusions to the Other Company and the Other
Company indicated it would submit a revised non-binding letter of intent.
On November 27, 1995, the Other Company furnished the Company a revised
non-binding letter of intent which reflected a merger transaction and included
conditions to consummation of the merger related to the minimum amount of assets
and maximum amount of liabilities of the Company, limitations on the amount of
expenses allowed in connection with the shareholder approval process, an
increase in the break-up fee from $50,000 to $100,000, a limited form of
fiduciary-out which would allow the Board to consider alternative offers which
might yield the shareholders more value for their stock and other terms which
representatives of the Company determined were unacceptable. Between November 27
and December 1, 1995, representatives of the Company negotiated with
representatives of the Other Company the terms of the non-binding letter of
intent without success in achieving terms which would have been deemed
acceptable to the Board. During this period, DHT indicated it would be willing
to revise its proposal to increase the consideration payable to Minority
Shareholders from $.02 per share to $.04 per share and retire the NCS debt at
closing and increase the cash payment to NCS from $300,000 to $355,000 (or
approximately $.013 per share). The Board also received confirmation from DHT's
investors that DHT was about to complete its proposed equity financing
transaction. On December 1, 1995, following negotiation with representatives of
the Company, the Other Company submitted its final proposal in the form of a
non-binding letter of intent which reflected an aggregate payment of $.025 to
Minority Shareholders, a $100,000 break-up fee, an exclusive dealing requirement
with a limited fiduciary-out for the Board and other provisions which had
previously been deemed unacceptable to the Board, although the condition with
respect to the required minimum amount of assets and maximum amount of
liabilities was eliminated.
On December 4, 1995, the Board met again to consider the final proposals
submitted by DHT and the Other Company and concluded that the proposal by DHT
was superior in terms of consideration to the shareholders and DHT's willingness
to execute a merger transaction with the maximum degree of probability that it
would be consummated. On December 5, 1995, the Board signed a letter of intent
with DHT on terms which provided for a merger between DHT and the Company
whereby NCS would
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receive an aggregate $355,000, or approximately $.013 per share, the Minority
Shareholders would receive approximately $195,000, or $.040 per share, and DHT
would deposit $50,000 to be applied against the aggregate purchase price. DHT
agreed to (i) pay to NCS the balance outstanding at the time of closing under a
promissory note between the Company and NCS, (ii) obtain the release of NCS from
its guarantee of the Company's bank indebtedness, (iii) assume guarantees of
performance under certain customer service contracts and (iv) obtain releases of
NCS from certain customer and bank lease commitments. The proposal did not
require a break-up fee and was subject to a number of conditions including Board
approval of a definitive agreement and, ultimately, shareholder approval of the
transaction.
Between December 6 and December 21, 1995, the Other Company expressed to
representatives of the Company its continuing desire to acquire the Company. On
December 11, 1995, the Other Company proposed a total cash payment of $700,000
($455,000 for the NCS shares and $245,000 for the minority shares).
Subsequently, on December 21, 1995, the Other Company proposed a total cash
payment of $745,000 ($360,000 for the NCS shares and $385,000 for the minority
shares). However, the communications were made in the form of non-binding
letters of intent and required additional due diligence investigation prior to
making a formal offer, notwithstanding repeated communications from
representatives of the Company that, given the executed letter of intent with
DHT and the prior unwillingness of the Other Company to revise its letter of
intent to reflect acceptable terms, the Company would not be in a position to
formally entertain any communication from the Other Company unless such
communication was in the form of a proposed definitive merger agreement. The
Board concluded that the price differential between the Other Company proposal
and the DHT proposal was not sufficiently large to justify pursuing the proposal
from the Other Company at the risk of jeopardizing the executed DHT agreement.
The Other Company did not submit a definitive merger agreement for consideration
by the Board.
BASIS AND REASONS FOR THE MERGER; RECOMMENDATION
The Board of Directors of the Company has unanimously approved the Merger
Agreement and believes that the Merger is in the best interests of the
shareholders of the Company. The Board of Directors unanimously recommends to
the shareholders that they vote FOR approval of the Merger Agreement. The Board
believes that the Company, its shareholders and employees will benefit from the
Merger.
In reaching these conclusions, the Board considered many factors including,
but not limited to, the following:
(i) the terms of the Merger Agreement, including the $.040 to be paid
per share to the Company's Minority Shareholders and the approximately $.013
to be paid per share to NCS and the fact that such shareholders will have
the opportunity to dispose of all Common Stock for cash, particularly given
the Board's observation that the market for trading the Common Stock is very
limited in its volume capacity and that it is unlikely that an active market
will develop;
(ii) the current and anticipated competitive environment and market
conditions in the Company's industry and product markets, including (a) the
trend in the Company's industry towards consolidation making it increasingly
difficult for the Company, which has limited product offerings, to remain
competitive, (b) the Company's continuing decline in revenues and its
inability to meet not only existing debt obligations but business expenses
in the ordinary course, (c) the Company's lack of cash resources to fund
necessary product upgrades and modifications to retain current market share,
and (d) the favorable response of the Company's customers to DHT, its
products offerings and its management team;
(iii) the Company's book value per common share, its historical earnings
and cash flow, its scheduled debt repayment obligations and its projected
inability to meet those obligations;
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(iv) the Company's persistently weak cash flow and its reliance on NCS
for indebtedness guarantees, customer service guarantees, trade credit and
corporate support and the stated historical position of NCS that it does not
intend to support the Company indefinitely;
(v) the alternatives to an acquisition of the Company that might be
available, including either attempting to remain as an independent company,
notwithstanding its financial obstacles, or filing for protection under the
federal bankruptcy laws;
(vi) the ability and willingness of DHT to consummate the Merger promptly
and the availability of sufficient cash to do so;
(vii) the ability of DHT to contribute to the future growth, viability
and success of the Company in a consolidating industry with customers
requiring greater depth and resources in order to enhance and service
products;
(viii) the inadequate nature of the non-binding indication of interest
expressed by the Other Company, which was the only other party to express
any firm interest in acquiring the Company following over two years of
search for a strategic partner or purchaser, combined with the requirement
of the Other Company that DMI commit to a $100,000 "bust-up" fee, which
would effectively prohibit consideration and acceptance of any other
proposals, including the DHT proposal;
(ix) the opinion of Kinnard with respect to the fairness of both the
aggregate consideration of $550,000 cash to be received for all outstanding
shares of common stock of the Company and the $.040 per share cash to be
received by the Minority Shareholders in connection with the Merger. See
"Opinion of Investment Banker," below; and
(x) the interests of the Company's employees, customers, and creditors.
The Board approval and recommendation of the Merger were conditioned upon
receipt of an opinion of an investment banker with respect to the fairness of
the aggregate $550,000 to be received by DMI's shareholders and, in particular,
the $.040 to be received by the Minority Shareholders in the Merger. DMI has
received the opinion of Kinnard that both the aggregate consideration of
$550,000 cash to be received for all outstanding shares of common stock of the
Company and the $.040 per share cash to be received by the Minority Shareholders
in connection with the Merger are fair to the Minority Shareholders from a
financial point of view. See "Opinion of Investment Banker," below.
In view of the wide variety of factors considered in connection with its
evaluation of the Merger, the Board did not find it practicable to assign
relative weights to the specific factors considered in reaching its decision.
TERMS OF THE MERGER AGREEMENT
The following description of certain terms of the Merger Agreement is only a
summary and does not purport to be complete. This discussion is qualified in its
entirety by reference to the complete text of the Merger Agreement set forth in
Appendix A hereto.
THE MERGER TRANSACTIONS. DHT incorporated Newco, a corporation in which DHT
holds all of the outstanding stock, solely for the purpose of effecting the
Merger. Newco is not currently engaged in any other business. Under the Merger
Agreement, Newco is to be merged with and into the Company, with Newco being the
surviving corporation. The Company will cease to exist. The Certificate of
Incorporation and By-Laws of Newco in effect at the time such merger becomes
effective shall become the Certificate of Incorporation and By-Laws of the
surviving corporation.
NCS, which owns approximately 85% of the outstanding shares of Common Stock,
has, pursuant to the Merger Agreement, agreed to vote all shares of Common Stock
held by it in favor of the approval of the Merger (unless such vote would cause
NCS to breach its fiduciary duties under applicable law). NCS has indicated it
intends to vote in favor of the Merger, and, if NCS votes in such manner,
approval of the Merger is assured.
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CONVERSION OF COMMON STOCK. Shares of DMI Common Stock shall continue to be
transferable until the Effective Date. Pursuant to and subject to the terms and
conditions of the Merger Agreement, on the Effective Date each outstanding share
of Common Stock held by Minority Shareholders, except those held by shareholders
who validly perfect Appraisal Rights, will be converted into the right to
receive $.040 in cash, without interest. Each outstanding share of Common Stock
owned by NCS will on the Effective Date be converted into the right to receive
approximately $.013 in cash, or $355,000 in the aggregate, without interest. See
"BUSINESS OF THE COMPANY." The aggregate consideration payable to DMI
shareholders pursuant to the Merger Agreement is approximately $550,000.
EFFECTIVE DATE. The Effective Date of the Merger, on which date the closing
of the Merger will occur and the conversion of the Common Stock will become
effective, will be the date set forth in the articles of merger as filed with
the Secretary of State of the States of Minnesota and Florida. This filing will
occur as soon as practicable following the approval of the Merger Agreement by
the shareholders of the Company and the satisfaction of other conditions under
the Merger Agreement. The Effective Date is currently expected to take place at
11:59 p.m., Minneapolis Time, on April 29, 1996. Consummation of the Merger is
subject to certain conditions. See "TERMINATION RIGHTS; CONDITIONS TO THE
MERGER," below.
REPRESENTATIONS; WARRANTIES. The Company and Newco have each made certain
representations and warranties in the Merger Agreement with respect to, among
other things, their organization and good standing, due authorization and
authority to enter into and perform their respective obligations under the
Merger Agreement. The Company has also made representations and warranties with
respect to many aspects of the Company's financial condition, properties and
operations. NCS makes representations and warranties with respect to its due
authorization and authority to enter into and perform its obligations under the
Merger Agreement and its good and marketable title to the shares of DMI Common
Stock it owns, free and clear of claims or encumbrances of any kind. NCS has
also represented and warranted that, to its knowledge, the representations and
warranties of the Company are true. NCS has agreed to indemnify Newco against
certain losses with respect to such representations and warranties.
TERMINATION RIGHTS; CONDITIONS TO THE MERGER. The Merger Agreement provides
that the Merger may be abandoned at any time prior to the Effective Date
(whether before or after approval thereof by the shareholders of the Company) by
mutual written consent of the parties, or by the Company, on one hand, or Newco,
on the other hand, for the reasons set forth below.
Either the Company, on the one hand, or Newco, on the other hand, may
terminate the Merger Agreement, in which event the Merger will not take place,
in the event that (i) there has been a material misrepresentation, material
breach of warranty or violation of any material covenant on the part of the
other party in the representations, warranties and covenants contained in the
Merger Agreement; (ii) the Merger has not been consummated by May 15, 1996
(provided that a failure of the party seeking to terminate the Agreement to
fulfill any of its obligations under the Merger Agreement shall not have been
the reason that the Merger has not yet been consummated); (iii) any law or
regulation makes consummation of the Merger illegal or otherwise prohibited or
any judgment, injunction, order or decree enjoining the Company or Newco from
consummating the Merger is entered and such judgment, injunction, order or
decree shall become final and nonappealable; or (iv) the vote of the Company's
shareholders fails to adopt and approve the Merger Agreement.
The parties' obligations to effect the Merger are subject to various
conditions, including (i) approval of the Merger Agreement by holders of a
majority of the Common Stock of DMI; and (ii) absence of any provision of any
applicable law or regulation, and of any judgment, injunction, order or decree,
prohibiting the consummation of the Merger.
Conditions precedent to the obligations of Newco to effect the Merger
include: (i) the accuracy of certain representations and warranties of DMI and
NCS made in the Merger Agreement and the
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performance of certain covenants of DMI and NCS contained in the Merger
Agreement; (ii) the receipt of certain certificates and legal opinions; and
(iii) the receipt of consents, approvals or waivers from third parties required
to consummate the Merger.
Conditions precedent to the obligations of DMI and NCS to effect the Merger
include: (i) the accuracy of the representations and warranties of Newco in the
Merger Agreement and performance of certain covenants of Newco contained in the
Merger Agreement; (ii) the receipt of certain certificates and legal opinions;
(iii) payment of the balance outstanding under that certain promissory note
dated March 31, 1995 from the Company to NCS; (iv) receipt of an agreement
between Newco and Norwest Bank Minnesota, N.A. (the "Bank") releasing NCS from
its guarantee of the line of credit between DMI and the Bank; and (v) release of
certain other guaranties as described under "Interests of Certain Persons in the
Merger and Related Transactions," below.
The foregoing conditions may be waived by the party or parties affected by
such waiver.
Pursuant to the Merger Agreement, the Company has agreed not to actively
solicit offers from other parties that would result in the sale of all or
substantially all of its assets, its capital stock, its merger with or into
another entity or any other business combination.
Upon successful consummation of all conditions, the Company and Newco will
file appropriate articles of merger with the respective Secretary of State in
the States of Minnesota and Florida.
AMENDMENTS. The Merger Agreement may be amended or modified at any time
prior to the Effective Date, whether before or after the Special Meeting, with
the approval of the parties to the Merger Agreement.
BUSINESS OF THE COMPANY PENDING THE MERGER. The Company has agreed, among
other things, that pending consummation of the Merger, unless Newco agrees
otherwise, the Company shall conduct its business in the ordinary course
consistent with past practice and will use its best efforts to maintain and
preserve its business organization and business relationships and to keep
available the services of its present officers and employees. The Company has
further agreed that, pending consummation of the Merger, it will (i) provide
Newco with weekly written or telephonic reports relating to the Company's
business operations and (ii) enter into joint marketing activities with Newco.
The Company has also agreed, among other things, to afford to
representatives of Newco access to its offices, properties, books and records,
and to furnish promptly to Newco and its representatives all information
reasonably required by them to become familiar with the operations of the
Company. Newco has agreed to maintain the confidentiality of such information.
ESCROW ARRANGEMENT. As a condition to entering into the Merger Agreement,
the Company required that DHT deposit $50,000 (the "Escrow Fund") with Gibraltar
Bank FSB, Miami, Florida (the "Escrow Agent"). Pursuant to the Letter of Intent
dated December 4, 1995, as modified on January 30, 1996, between DHT and the
Company, the Escrow Fund shall be payable to the Company in the event the Merger
Agreement is terminated, provided the Company is not in material breach of the
Merger Agreement.
OPINION OF INVESTMENT BANKER
GENERAL. After completing the majority of the negotiations of the Merger
Agreement but prior to execution of the Merger Agreement, the Board of Directors
of the Company retained Kinnard to render its opinion with respect to the
fairness from a financial point of view of the cash consideration to be received
by the Company's Minority Shareholders pursuant to the Merger Agreement. Kinnard
was first contacted by the Company on October 31, 1995, at which time it was
informed about the pending transaction and was asked to submit a proposed
engagement letter for purposes of providing a fairness opinion in connection
with the pending transaction. Kinnard did not determine the amount of the cash
consideration to be received by the shareholders of the Company in the Merger.
In requesting Kinnard's opinion, the Board of Directors of the Company did not
give any special instructions to or impose any limitations upon the scope of the
investigation which Kinnard might wish to
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conduct to enable it to give its opinion. Kinnard has delivered to the Company
its written opinions, respectively dated February 5, 1996 and the date of this
Proxy Statement, to the effect that, based upon and subject to the matters set
forth therein, as of those dates, both the aggregate consideration of $550,000
cash to be received for all outstanding shares of common stock of the Company
and the $.040 per share cash to be received by the Minority Shareholders in
connection with the Merger are fair to the Minority Shareholders from a
financial point of view.
In preparing its opinion as to the fairness of the consideration to be paid
pursuant to the Merger from a financial point of view, Kinnard has, among other
things, reviewed and studied publicly available information regarding DMI, the
Merger Agreement and various other information provided by management of DMI.
Representatives of Kinnard have visited DMI's facilities and have discussed the
current business environment and the business and financial outlook for DMI with
management of DMI. Kinnard has analyzed the historical market prices and
earnings of the Common Stock, as well as profitability, rates of return,
capitalization, dividends and other relevant factors. Kinnard has also reviewed
the terms of selected relevant mergers and acquisitions and has analyzed the
general economic outlook of companies involved in the health care information
systems and product industries. Kinnard has relied without independent
verification upon the accuracy and completeness of all the financial and other
information reviewed by Kinnard for purposes of their opinion. Kinnard has not
made an independent appraisal of DMI's assets and expressed no opinion regarding
the liquidation value of DMI. In connection with the opinion of Kinnard, DMI did
not impose any limitation on the scope of Kinnard's investigation with respect
to the business and financial condition of DMI.
Kinnard is an investment banking firm engaged, among other things, in the
valuation of businesses and their securities in connection with mergers and
acquisitions, underwriting and secondary distributions of securities, private
placements and valuation for estate, corporation and other purposes. The Board
of Directors selected Kinnard to provide the opinion because of Kinnard's
experience in providing investment banking and financial advisory services.
Other than providing this opinion, Kinnard has not provided any investment
banking services on behalf of DMI. However, Kinnard has in the past performed
valuations relating to DMI exclusively for NCS.
THE FULL TEXT OF THE OPINION OF KINNARD DATED THE DATE OF THIS PROXY
STATEMENT IS ATTACHED HERETO AS APPENDIX B. THE FOLLOWING SUMMARY OF THE KINNARD
OPINION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE
KINNARD OPINION. DMI SHAREHOLDERS ARE URGED TO READ THE OPINION IN ITS ENTIRETY
FOR A COMPLETE DESCRIPTION OF THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND
LIMITS OF THE REVIEW UNDERTAKEN. THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND
LIMITS OF THE REVIEW UNDERTAKEN CONTAINED IN THE OPINION DATED FEBRUARY 5, 1996
ARE SUBSTANTIALLY THE SAME AS THOSE CONTAINED IN THE OPINION DATED THE DATE OF
THIS PROXY STATEMENT AND ATTACHED HERETO AS APPENDIX B.
In arriving at its opinion, Kinnard reviewed, analyzed and relied upon
material that bears upon the financial and operating condition and prospects of
DMI and material prepared in connection with the Merger, and considered such
financial and other factors as it deemed appropriate under the circumstances,
including, among other things, the following: (i) a draft dated January 29, 1996
of the proposed Merger Agreement by and between DMI, DHT and Newco; (ii)
publicly available information on DMI, including annual and quarterly reports,
proxy statements, stock price and volume history and recent press releases;
(iii) financial projections prepared by DMI; (iv) the historical pricing and
trading activity for DMI; and (v) conducted such other studies, analyses and
inquiries as Kinnard deemed appropriate. Kinnard also held discussions with
senior management for DMI concerning its past and current business operations,
the background and rationale for the proposed Merger, the financial condition,
operating performance, balance sheet characteristics and prospects of the
business. In addition, in connection with rendering its opinion dated the date
of this Proxy Statement, Kinnard reviewed the executed Merger Agreement dated
February 5, 1996 and this Proxy Statement.
Kinnard believes that its analyses must be considered as a whole and that
selecting portions of its analyses without considering all factors and analyses
would create an incomplete view of the analyses and process underlying their
opinion. Any estimates contained therein are not necessarily indicative
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of actual values, which may be significantly more or less favorable than as set
forth therein. No company or transaction used as a comparison in the analyses is
identical to DMI or to the Merger. Because such estimates are inherently subject
to uncertainty, neither the DMI Board, Kinnard or any other person assumes
responsibility for the accuracy of such estimates.
In preparing its opinion, Kinnard indicated it did not perform a discounted
cash flow analysis in view of the significant uncertainty concerning the future
financial solvency of DMI (considering DMI's projected inability to make
scheduled payments on its promissory note due NCS and the absence of free cash
flow). Consequently, a discounted cash flow analysis was not considered
meaningful.
Kinnard reviewed the trading volume and trading price of the DMI Common
Stock on a daily and monthly basis since January 2, 1995. This analysis
indicated extremely sporadic and small trading volumes in the DMI Common Stock.
Throughout the period until the December 8, 1995 date of announcement of the
signing of a non-binding letter of intent with DHT relating to the proposed
Merger, the low trading price ranged from $.02 per share to $.10 per share and
the high trading price ranged from $.02 per share to $.12 per share, with an
average low of $.04 and an average high of $.04. Kinnard indicated that very
small shifts in price resulted in high percentage shifts, due to the low trading
values of the Company's Common Stock. Furthermore, given the lack of significant
volume and research coverage, Kinnard indicated the market was inefficient and
the price was not a good indicator of value. However, the analysis indicated
that the price paid Minority Shareholders was generally within the trading range
of the DMI Common Stock.
Kinnard reviewed selected transactions deemed relatively comparable to the
Merger, which were acquisitions of unprofitable businesses by publicly traded
companies where the transaction size was between $500,000 and $3,000,000. The
analysis of these 52 transactions included a comparison of the value of the
transaction (considered the payment for equity plus debt) as compared to the
target's sales (the "value/sales") and an analysis of the offering price (the
amount paid for the target's equity) as compared to the target's book value (the
"offering price/book value"). The analysis indicated a mean value/sales of
65.55% and a median value/sales of 42.25% and of a mean offering price/book
value of 2.2x and a median offering price/book value of 1.35x. The Merger
value/sales when considering the total offer to NCS and the Minority
Shareholders was 41.03% and the offering price/book value was 3.59x. When
considering the consideration paid to the Minority Shareholders, the value/sales
was 55.32%, well within the range of mean and median value/sales, and the
offering price/book value was 8.51x, well in excess of the mean and median
offering price/book value. Kinnard also screened for transactions in the health
care information industry, but determined that the transactions were not
relevant to the Merger because they either involved companies that were
significantly larger and financially stronger than DMI or were transactions
involving private companies where reliable financial information was not
available.
Kinnard also reviewed in connection with its analyses, various trends in the
industry which reflected a consolidating industry where customers were demanding
greater resources and services from suppliers and compared that trend to DMI's
declining sales, need for product upgrades, financial insecurity and the adverse
impact of limited product development and support. In connection with the
industry review, Kinnard also analyzed the financial performance and market
valuations for selected publicly traded companies which compete with the Company
in the health care information technology industry. All of theses companies are
significantly larger and financially stronger than the Company. Kinnard also
reviewed the process whereby DMI conducted a thorough search for a purchaser or
strategic partner which resulted in negotiations with two potential purchasers
and a final proposal which yielded the maximum consideration to the Minority
Shareholders available from potential acquirors. This process, combined with an
analysis of DMI's prospects without a sale or strategic partnering arrangement
(which indicated that a wind-down scenario of the Company's affairs as prepared
by DMI management would yield no consideration to the shareholders), was an
important justification for fairness, from a financial point of view, of the
Merger.
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<PAGE>
DMI has agreed to pay Kinnard a fee equal to $25,000, including $15,000
which has previously been paid and $10,000 being paid on the date of this Proxy
Statement. This fee was not contingent on the ability of Kinnard to render its
opinion relating to the Merger. DMI has agreed to reimburse Kinnard for its
reasonable out-of-pocket expenses. DMI has also agree to indemnify Kinnard
against certain liabilities to which Kinnard may become subject, including
liabilities under the federal securities laws.
INTERESTS OF CERTAIN PERSONS IN THE MERGER AND RELATED TRANSACTIONS
As of December 31, 1995, John P. Paumen, a member of the Board of Directors
of DMI, beneficially owned 62,361 shares, or 0.2% of all outstanding Common
Stock of the Company, excluding options (all of which have exercise prices in
excess of the per share cash consideration to be paid pursuant to the Merger
Agreement). Pursuant to the Merger Agreement, approximately $2,495 will be paid
with respect to the shares of Common Stock beneficially owned by Mr. Paumen.
Adrienne T. Tietz and Mark D. Holman, the only other directors of the Company,
do not beneficially own any shares of Common Stock. However, Ms. Tietz is an
executive officer of NCS, the Company's majority shareholder, and Mr. Holman is
an employee of NCS and provides the services of Chief Financial Officer to the
Company under a Services Agreement dated as of June 1, 1994, as amended, between
the Company and NCS. The directors will have no further association with DMI
after the Merger.
As of December 31, 1995, NCS held 27,653,441 shares of Common Stock in the
aggregate, or 85% of all outstanding shares, and, accordingly, has a significant
interest in the Merger. Pursuant to the Merger Agreement, NCS will receive an
aggregate $355,000, or approximately $.013 per share, for its shares of DMI
Common Stock. In connection with the Merger, Newco or DHT has agreed to (i) pay
to NCS the balance outstanding at the time of closing under a promissory note
between the Company and NCS (estimated to be $542,000), (ii) obtain the release
of NCS from its guarantee of the Company's bank indebtedness in the amount of
$500,000, (iii) assume guarantees provided by NCS of performance under certain
customer service contracts and (iv) obtain releases of NCS from certain customer
and bank lease commitments. In the event Newco or DHT is unable to secure the
release of NCS from such customer and bank lease commitments, Newco or DHT has
agreed to indemnify NCS against any losses relating to such commitments. See
"Employee Benefit Plans; Employment Agreements" below and "BENEFICIAL OWNERSHIP
OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT."
EMPLOYEE BENEFIT PLANS; EMPLOYMENT AGREEMENTS
All of the options granted under DMI's 1983 Employee Incentive Stock Option
Plan (the "1983 Plan") and DMI's 1987 Employee Incentive Stock Option Plan (the
"1987 Plan") and outstanding as of the Effective Date will be terminated as of
the Effective Date. At December 31, 1995, there were outstanding under the 1983
Plan and 1987 Plan options to purchase 186,750 and 49,500 shares of Common
Stock, respectively. The exercise prices of such options range from $.25 to $.34
per share. As of December 31, 1995, all executive officers and directors as a
group (3 persons) held incentive stock options to purchase 25,000 shares at an
average exercise price of $.30 per share.
Employees participating in the DMI Employee Stock Ownership Plan and Trust
(the "ESOP Plan") will also receive cash payments in connection with the Merger.
The total cash amount payable to all employees upon termination of the ESOP Plan
is estimated to be $65,067, including approximately $2,414 payable to executive
officers and directors as a group.
Except as described above and in "Interests of Certain Persons in the Merger
and Related Transactions.", no director or officer of DMI has any material
direct or indirect interest in the Merger. For additional information regarding
DMI stock options, see Note 5 to the Company's Financial Statements included in
the Company's Annual Report on Form 10-K which accompanies this Proxy Statement.
17
<PAGE>
SURRENDER OF STOCK CERTIFICATES
As soon as practicable after the Effective Date, Norwest Bank Minnesota,
N.A. (the "Paying Agent") will mail a transmittal form (a "Letter of
Transmittal") to each holder of DMI Common Stock of record at the close of
business on the Effective Date, advising such holder of the procedures for
surrendering to the Paying Agent any such certificates for exchange. If payment
is to be made to a person other than the person in whose name the certificate is
registered, the person requesting such payment shall pay any transfer or other
taxes required by reason of such payment in a name other than that of the
registered holder or must establish to the satisfaction of the Paying Agent that
such tax either has been paid or is not applicable.
The Paying Agent will not accept unsurrendered certificates formerly
representing Common Stock more than six months after the Effective Date.
Following such period, Newco, as the surviving corporation of the Merger, upon
proper surrender to it of any unsurrendered certificates and other required
documents, will pay to the record holder of such shares the consideration to be
paid in the Merger. If any certificates representing any such shares are not
surrendered prior to three years after the Effective Date (or immediately prior
to such earlier date on which any payment in respect thereof would otherwise
escheat to or become the property of any governmental unit or agency), the
payment in respect of such certificates shall, to the extent permitted by
applicable law, become the property of Newco, free and clear of all claims or
interest of any person previously entitled thereto.
No interest will accrue or be paid on the cash payable upon the surrender of
such certificates. From and after the Effective Date, the holders of
certificates evidencing ownership of shares of Common Stock will cease to have
any rights with respect to such shares, except the right to receive the
consideration to be paid in the Merger and any rights provided by law. See
"Appraisal Rights" below.
Upon the surrender and exchange of certificates by a shareholder, the holder
will be paid, without interest thereon, the amount of cash to which such holder
is entitled under the Merger Agreement, less only any amount required to be
withheld under applicable backup withholding federal income tax regulations. See
"Certain Federal Income Tax Consequences" below. CERTIFICATES SHOULD NOT BE
SURRENDERED UNTIL THE LETTER OF TRANSMITTAL IS RECEIVED.
DEREGISTRATION OF COMPANY COMMON STOCK
If the Merger is consummated, DMI Common Stock will no longer be traded on
the over-the-counter market. After the Effective Date, Newco on behalf of DMI
will undertake to deregister the Common Stock under the Securities Exchange Act
of 1934.
SOURCE OF FUNDS
The funds for the transaction will come from the cash resources of DHT. See
"BUSINESS OF DHT."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash by a DMI shareholder pursuant to the Merger or pursuant
to the exercise of Appraisal Rights will be a taxable transaction for such
shareholder for federal income tax purposes and may also be a taxable
transaction under applicable state, local and foreign tax laws. The following
summarizes the federal income tax consequences, under currently applicable law,
to a shareholder who is a citizen or resident of the United States or is
otherwise subject to United States federal income taxation on a net income basis
other than (i) a shareholder who acquired Common Stock pursuant to the exercise
of stock options or otherwise as compensation; (ii) shareholders who own Common
Stock under special circumstances, such as shareholders that hedge their
investment in Common Stock, pursuant to options in that stock or otherwise; and
(iii) shareholders subject to special tax rules, such as financial institutions,
tax-exempt organizations, insurance companies, dealers in stock or securities,
and foreign corporations and individuals who are not citizens or residents of
the United States.
A shareholder will recognize gain or loss equal to the difference, if any,
between the amount of cash to be received pursuant to the Merger or pursuant to
the exercise of Appraisal Rights and the
18
<PAGE>
adjusted tax basis of the shares of Common Stock exchanged. To the extent that
the shares of Common Stock exchanged are held as capital assets, any such gain
or loss will be characterized as a capital gain or loss for federal income tax
purposes. If the shares were held for more than one year, any such capital gain
or loss will be a long-term capital gain or loss. Any capital gains recognized
pursuant to the Merger will be subject to tax. Currently, the maximum federal
capital gains tax rate is 28% for individuals and 35% for corporations. Any
long-term capital losses recognized by a shareholder pursuant to the Merger will
be allowed to offset any long-term capital gains recognized by that shareholder
during the taxable year. Individual shareholders also may offset up to $3,000 of
their ordinary taxable income, if any, by any capital losses recognized during
the taxable year. Individual shareholders may carryover indefinitely any excess
capital losses incurred to future taxable years. Corporate shareholders may
carry any excess capital losses back to the three preceding taxable years and
forward to the five succeeding taxable years.
Under the backup withholding rules contained in the Internal Revenue Code
and its regulations, DMI or the Paying Agent may be required to withhold 20% of
the gross amount of any payments to certain shareholders. In order to avoid such
backup withholding, each shareholder (other than corporations and other persons
exempt from such backup withholding) should provide the Paying Agent with the
shareholder's taxpayer identification number (i.e., social security number or
employer identification number) in accordance with the instructions included in
the Letter of Transmittal.
THE ABOVE DISCUSSION WITH RESPECT TO THE FEDERAL INCOME TAX CONSEQUENCES OF
THE MERGER IS FOR GENERAL INFORMATIONAL PURPOSES ONLY. SHAREHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS IN DETERMINING THE TAX CONSEQUENCES THAT MAY BE
RELEVANT TO THEM IN CONNECTION WITH THE MERGER AND PURSUANT TO THE EXERCISE OF
APPRAISAL RIGHTS, AS WELL AS THE APPLICATION TO THEM OF ANY STATE, LOCAL,
FOREIGN, OR OTHER TAX LAWS.
APPRAISAL RIGHTS
Pursuant to Sections 302A.471 and 302A.473 (the "Sections") of the Minnesota
Business Corporation Act, holders of DMI Common Stock are entitled to assert
Appraisal Rights in connection with the Merger and obtain payment of the "fair
value" of their DMI Common Stock, provided that such shareholders comply with
the requirements of the Sections. The following is a summary of the statutory
procedures to be followed by holders of DMI Common Stock electing to exercise
their Appraisal Rights in order to perfect such right under the Sections and is
qualified in its entirety by reference to the Sections, the full text of which
is annexed to this Proxy Statement as Appendix C. The Sections should be
reviewed carefully by DMI shareholders who wish to assert their Appraisal Rights
or who wish to preserve the right do so, since failure to comply with those
procedures will result in the loss of such Appraisal Rights.
Holders of DMI Common Stock who elect to exercise Appraisal Rights must
satisfy each of the following conditions: (i) such holders must file with DMI
before the taking of the vote with respect to the Merger written notice of their
intention to demand payment of the fair value of their shares of DMI Common
Stock (this written notice must be in addition to and separate from any proxy or
vote against the Merger; neither voting against nor a failure to vote for the
Merger will constitute such a notice within the meaning of the Sections); and
(ii) such holders must not vote in favor of the Merger (a failure to vote will
satisfy this requirement, but a vote in favor of the Merger, by proxy or in
person, will constitute a waiver of such holder's Appraisal Rights and will
nullify any previously filed written notice of intent to demand payment). DMI
WILL CONSIDER A PROXY THAT IS RETURNED BY A DMI SHAREHOLDER WITHOUT INDICATING A
DIRECTION AS TO HOW IT SHOULD BE VOTED AS CONSTITUTING SUCH A WAIVER. Minority
Shareholders who fail to comply with either of these conditions will be entitled
to receive $.040 per share in cash as provided in the Merger Agreement, but will
have no Appraisal Rights with respect to their shares.
All written notices should be addressed to: Dimensional Medicine, Inc.,
10901 Bren Road East, Minnetonka, Minnesota 55343, Attention: Secretary, and
filed before the taking of the vote on the
19
<PAGE>
Merger at the Special Meeting and should be executed by, or with the consent of,
the holder of record. The notice must reasonably inform DMI of the identity of
the shareholder and the intention of such shareholder to demand Appraisal
Rights. In the notice the shareholder's name should be stated as it appears on
the stock certificates. A notice may be made by a beneficial owner of shares
only if a written consent of the shareholders of record is submitted to DMI at
the time of or prior to the assertion of the right to appraisal.
A shareholder may not assert Appraisal Rights as to less than all of the
shares of DMI Common Stock registered in such shareholders's name, unless such
shareholder asserts such rights with respect to all the shares of DMI Common
Stock beneficially owned by another person (or persons) and discloses the name
and address of such other person (or persons). In that event, such shareholder's
rights shall be determined as if the shares of DMI Common Stock as to which such
shareholder has asserted Appraisal Rights and his or her other shares of DMI
Common Stock were registered in the names of different shareholders.
Accordingly, if shares of DMI Common Stock are owned of record in fiduciary
capacity, such as by a trustee, guardian or custodian, execution of a notice of
intent to demand payment must be made for all shares of DMI Common Stock held of
record by the fiduciary unless the fiduciary executes the notice with respect to
all the shares of DMI Common Stock held on behalf of one or more of the
beneficiaries and discloses the name and address of each person for whom the
fiduciary is asserting Appraisal Rights.
Similarly, a record owner, such as a broker, who holds shares of DMI Common
Stock as a nominee for others, may exercise Appraisal Rights with respect to the
shares of DMI Common Stock held for one or more beneficial owners, while not
exercising such rights for other beneficial owners, so long as the nominee
exercises the Appraisal Rights with respect to all the shares of DMI Common
Stock held by the nominee on behalf of each beneficial owner for whom the
nominee has exercised the Appraisal Rights and discloses the name and address of
such beneficial owner for whom the Appraisal Rights have been asserted. If the
shares of DMI Common Stock are owned of record by more than one person, as in a
joint tenancy or tenancy in common, such demand should be executed by or for all
joint tenants.
After a vote approving the Merger, DMI will give written notice to each
shareholder who has filed a written notice of intent to demand appraisal and who
did not vote in favor of the Merger setting forth the address to which a demand
for payment and stock certificates must be sent by such shareholder in order to
obtain payment, the date by which they must be received and any restrictions on
transfer of uncertified shares that will apply after the demand for payment is
received. This notice shall also include a form for demanding payment to be
completed by the shareholder and a request for certification of the date on
which the shareholder (or the person on whose behalf the shareholder is
asserting Appraisal Rights) acquired beneficial ownership of the shares of DMI
Common Stock. Shareholders who fail to demand payment or deposit their stock
certificates as required by the notice within 30 days after the notice is given
will irrevocably forfeit their Appraisal Rights and will be bound by the terms
of the Merger.
If a demand for payment and deposit of stock certificates is duly made by a
shareholder with DMI as required by the notice, then upon the Effective Date or
the receipt of the demand, whichever is later, DMI will remit to the shareholder
an amount which DMI estimates to be the fair value of the shares of DMI Common
Stock, with interest, if any, accompanied by: (1) DMI's balance sheet and
statement of income for a fiscal year ending not more than 16 months before the
effective date of the Merger, together with the latest available interim
financial statements; (2) an estimate by DMI of the fair value of the shares and
a brief description of the method used to reach the estimate; and (3) a copy of
the Sections, and a brief description of the procedures to be followed in
demanding supplemental payment. For the purpose of a shareholder's Appraisal
Rights under the Sections, "fair value" means the value of the shares of DMI
Common Stock immediately before the Effective Date and "interest" means interest
commencing five days after the Effective Date up to and including the date of
payment at the rate of 5% per annum (the rate provided under Minnesota law for
interest on verdicts and judgments).
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<PAGE>
DMI may withhold such remittance with respect to shares of DMI Common Stock
for which the shareholder demanding payment (or person on whose behalf such
shareholder acts) was not the beneficial owner on December 8, 1995, the date of
the first public announcement of the Merger (the "Public Announcement Date").
Following the Effective Date, DMI shall mail to such shareholder the materials
described in the preceding paragraph, a statement of the reason for withholding
the remittance, and an offer to pay the amount listed in the materials, upon
receipt of such shareholder's agreement to accept that amount in full
satisfaction. If such shareholder believes that DMI's offer is for less than the
fair value of the shares of DMI Common Stock, with interest, if any, such
shareholder must give written notice to DMI of his or her own estimate of the
fair value of the shares of DMI Common Stock, with interest, if any, and demand
payment of this amount. This demand must be mailed to DMI within 30 days after
the mailing of DMI's offer. If the shareholder fails to make this demand within
the 30-day time period, such shareholder shall be entitled only to the amount
offered by DMI.
If a shareholder who became a beneficial owner of shares of DMI Common Stock
on or prior to the Public Announcement Date believes the payment received from
DMI is less than the fair value of the shares of DMI Common Stock, with
interest, if any, such shareholder must give written notice to DMI of his or her
own estimate of the fair value of the shares of DMI Common Stock, with interest,
if any, within 30 days after the date of DMI's remittance and demand payment of
the difference between his or her estimate and DMI's remittance. If the
shareholder fails to give written notice of such estimate to DMI within the
30-day time period, such shareholder will be entitled only to the amount
remitted by DMI.
If DMI and the shareholder (including both a shareholder who purchased
shares of DMI Common Stock prior to the Public Announcement Date and a
shareholder who purchased shares of DMI Common Stock after the Public
Announcement Date who have complied with their respective demand requirements)
cannot settle the shareholder's demand within 60 days after DMI receives the
shareholder's estimate of the fair value of his or her shares of DMI Common
Stock, then DMI shall file an action in a court of competent jurisdiction in
Hennepin County, Minnesota, requesting that the court determine the fair value
of DMI Common Stock with interest, if any. All shareholders whose demands are
not settled within the applicable 60-day settlement periods shall be made
parties to this proceeding.
After notice to the shareholder, the court shall institute proceedings to
determine the fair value of the shares of DMI Common Stock. The court may
appoint one or more persons as appraisers to receive evidence and make
recommendations to the court. Dissenting shareholders will be entitled to
discovery on the same basis as any other party to a civil action. The court
shall determine the fair value of the shares of DMI Common Stock, taking into
account any and all factors the court finds relevant, computed by any method or
combination of methods that the court, in its discretion, sees fit to use. The
fair value of the shares of DMI Common Stock as determined by the court is
binding on all shareholders. If the court determines that the fair value of the
shares of DMI Common Stock is in excess of DMI's estimate of the fair value of
the shares of DMI Common Stock, then the court will enter a judgment in favor of
the dissenting shareholders in an amount by which the value determined by the
court exceeds DMI's estimated value, plus interest.
Costs of the court proceeding shall be determined by the court and assessed
against DMI, except that part or all of these costs may be assessed against
shareholders whose actions in demanding supplemental payments are found by the
court to be arbitrary, vexatious or not in good faith.
If the court finds that DMI did not substantially comply with the Sections,
the court may assess the fees and expenses, if any, of attorneys or experts as
the court deems equitable against DMI. Such fees and expenses may also be
assessed against any party if the court finds that such party has acted
arbitrarily, vexatiously or not in good faith with respect to the rights
provided by the Sections. In addition, the court may award, in its discretion,
fees and expenses to attorneys for the dissenting shareholders out of the amount
awarded to such shareholders.
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<PAGE>
BENEFICIAL OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth, as of March 25, 1996 (except as otherwise
indicated), certain information regarding beneficial ownership of DMI Common
Stock by each person known to DMI to be the beneficial owner of more than 5% of
the outstanding Common Stock, by each director of DMI and by all directors and
officers as a group. Except as otherwise indicated, the shareholders listed in
the table have full voting and investment powers with respect to the shares
indicated.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY PERCENT OF
OR IDENTITY OF GROUP OWNED OUTSTANDING SHARES
---------------------------- ----------------- ---------------------
<S> <C> <C>
National Computer Systems, Inc. (1)............................. 27,653,441 85.0%
Dimensional Medicine, Inc. Employee Stock Ownership Plan and 5.0%
Trust (1)...................................................... 1,626,673(2)
John P. Paumen.................................................. 87,361(3) .3%
Adrienne T. Tietz (4)........................................... -- --
Mark D. Holman (5).............................................. -- --
All Directors and Executive Officers as a Group (3 persons)..... 87,361(6) .3%
</TABLE>
- ------------------------
(1) The address for National Computer Systems, Inc. is: 11000 Prairie Lakes
Drive, Eden Prairie, Minnesota 55344. The address for the Employee Stock
Ownership Plan is: c/o Dimensional Medicine, Inc., 10901 Bren Road East,
Minnetonka, MN 55343.
(2) Represents the total number of shares held by the ESOP Plan all of which
have been allocated to participants.
(3) Includes 60,361 shares allocated to Mr. Paumen under the ESOP Plan and
25,000 shares which may be purchased within sixty days from the date hereof
pursuant to the exercise of stock options.
(4) Excludes any shares held by NCS of which Ms. Tietz is an executive officer.
(5) Excludes any shares held by NCS of which Mr. Holman is an employee.
(6) Includes 60,361 shares allocated to directors and officers as a group under
the ESOP Plan and 25,000 shares which may be purchased by directors and
officers as a group within sixty days from the date hereof pursuant to the
exercise of stock options.
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<PAGE>
PRICE RANGE OF COMMON STOCK, TRADING VOLUME AND DIVIDENDS
The Common Stock of DMI is traded in the over-the-counter market under the
symbol "DIMM." The following table sets forth the average daily trading volume
and the high and low bid prices for the Common Stock for the periods indicated:
<TABLE>
<CAPTION>
BID PRICE RANGE
AVERAGE DAILY --------------------
TRADING VOLUME HIGH LOW
--------------- --------- ---------
<S> <C> <C> <C>
CALENDAR 1994
First Quarter............................................. 575 $ .063 $ .063
Second Quarter............................................ 525 .063 .063
Third Quarter............................................. 1,750 .063 .063
Fourth Quarter............................................ 1,150 .031 .031
CALENDAR 1995
First Quarter............................................. 782 .031 .010
Second Quarter............................................ 2,435 .030 .010
Third Quarter............................................. 1,080 .050 .010
Fourth Quarter............................................ 4,550 .050 .010
</TABLE>
On December 7, 1995, the day immediately prior to the public announcement of
the agreement between DMI and Newco, the closing bid price for the Common Stock
was $.03. On March 25, 1996, the closing bid price for the Common Stock was
$.020.
Based on the nominal trading in DMI Common Stock, the Company does not
believe that the market price accurately reflects the price of the shares for
more than a few shares traded in a single transaction. The last sale transaction
known to the Company occurred on February 1, 1996, and involved the sale of
17,500 shares of its Common Stock at a price of $.020 per share. The Board
believes, based on the very small volume of trading in the DMI Common Stock,
that the historical trading prices are not representative of the selling prices
which could be expected for sale of a large number of shares of DMI Common Stock
and expects that the anticipated selling price for a large number of shares,
independent of a transaction such as the Merger, would be much lower than the
historical prices.
DMI has never paid dividends on the Common Stock.
23
<PAGE>
CAPITALIZATION
The capitalization of DMI at December 31, 1995 was as follows:
<TABLE>
<S> <C>
Liabilities:
Current Liabilities................................................. $ 1,700,929
Note Payable to National Computer Systems, Inc...................... 601,831
Other note payable.................................................. 282,686
Capital lease obligations........................................... 31,602
Shareholders' equity (deficit):
Common Stock, $.15 par value per share; authorized 50,000,000
shares; issued and outstanding 32,533,460 shares................... 4,880,019
Additional paid-in capital.......................................... 8,633,407
Retained earnings deficit (deduction)............................... (13,360,070)
------------
Total shareholders' equity........................................ 153,356
------------
Total capitalization.............................................. $ 2,770,404
------------
------------
</TABLE>
This table should be read in conjunction with the financial statements and
notes thereto appearing in the Company's Annual Report on Form 10-K for the year
ended March 31, 1995, a copy of which accompanies this Proxy Statement.
BUSINESS OF THE COMPANY
The Company, incorporated in Minnesota in July 1982, is engaged in the
design, development and marketing of imaging workstations and information
systems marketed under the trade names Maxiview-Registered Trademark- and
Maxifile-Registered Trademark- to radiology departments of large hospitals and
independent diagnostic imaging centers.
The Maxiview-Registered Trademark- is the Company's imaging and graphics
workstation (the "Workstation") with two-and three- dimensional image processing
capabilities targeted at specific medical applications. The Workstation is
packaged as a stand-alone system with the main components of the latest model
consisting of a host computer, graphics memory, magnetic tape and hard disk
drives for mass storage devices and a high-resolution color CRT monitor. The
Workstation is designed to aid a physician in observing interrelationships of
soft tissue and bone, locating lesions and tumors more precisely, and performing
spatial, volumetric and surface measurements.
The Maxifile-Registered Trademark- radiology information system is the
Company's software system that was designed to automate the clerical and
administrative functions in the radiology department. The Maxifile-Registered
Trademark-system consists of modules and sub-systems that include, among others,
patient scheduling and processing, statistical reporting for management and
quality control, film management and patient billing.
The Company markets its products through a direct sales staff of two
full-time salespersons, and draws upon other Company personnel and resources as
necessary.
For more information concerning the Company, shareholders are urged to read
the Company's latest Annual Report on Form 10-K and latest Quarterly Report on
Form 10-Q which accompany this Proxy Statement and the documents of the Company
incorporated by reference in this Proxy Statement. See "AVAILABLE INFORMATION,"
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE," and "SELECTED FINANCIAL DATA
AND MANAGEMENT'S DISCUSSION."
SELECTED FINANCIAL DATA AND MANAGEMENT'S DISCUSSION
The Company's Annual Report on Form 10-K for the year ended March 31, 1995,
a copy of which accompanies this Proxy Statement, includes Selected Financial
Data for each of the five years in the period ended March 31, 1995 and
Management's Discussion and Analysis of Financial Condition and
24
<PAGE>
Results of Operations. Shareholders are referred to the Selected Financial Data
and Management's Discussion and Analysis of the Results of Operations and
Financial Condition which are specifically incorporated in this Proxy Statement
by reference.
DESCRIPTION OF CAPITAL STOCK
The Articles of Incorporation of DMI, as amended, authorize the issuance of
50,000,000 shares of Common Stock, $.15 par value per share, of which 32,533,460
shares were issued and outstanding as of March 25, 1996.
The holders of Common Stock currently are entitled to receive ratably such
dividends as may be declared by the Board of Directors out of funds legally
available therefor. No cash dividends have been paid on the Common Stock since
the Company's inception. On any liquidation of DMI, after payment of all
indebtedness, the assets of DMI will be distributed pro rata to the holders of
the Common Stock. If the shareholders of DMI approve the Merger Agreement, DMI
Minority Shareholders will no longer have such rights, but only the right to
receive $.040 in cash (approximately $.013 in the case of NCS). Holders of the
Common Stock have no preemptive rights and are entitled to one vote for each
share held on each matter submitted to a vote of shareholders. Cumulative voting
for the election of directors is not permitted. At March 25, 1996, DMI had 581
shareholders of record.
BUSINESS OF DHT
DHT, a publicly traded company (NASDAQ OTC: DHTI), develops, markets,
installs and services software products for the health care information systems
industry. DHT currently derives its revenues from application software licenses
(34%), software support and maintenance (49%), and computer system equipment
sales and support (17%).
Newco, which is 100% owned by DHT, was organized for purposes of the Merger
and has not conducted any business since its incorporation.
The principal executive offices of Newco and DHT are located at 101
Southhall Lane, Suite 210, Maitland, Florida 32751, and their telephone number
is (407) 875-9991.
EXPERTS
The financial statements appearing in the Annual Report on Form 10-K for the
year ended March 31, 1995 have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such financial statements are incorporated herein by
reference in reliance upon such reports given upon the authority of such firm as
experts in accounting and auditing. Representatives of Ernst & Young LLP are
expected to be present at the Special Meeting and will be available to respond
to appropriate questions and will have the opportunity to make a statement if so
desired.
SHAREHOLDER PROPOSALS
If the Merger is not approved, it is expected that the Common Stock of DMI
will continue to be registered under Section 12(g) of the Securities Exchange
Act of 1934. The rules of the Securities Exchange Commission permit shareholders
of a public company, after timely notice to the Company, to present proposals
for shareholder action in the Company's proxy statement where such proposals are
consistent with applicable law, pertain to matters appropriate for shareholder
action and are not properly omitted by company action in accordance with the
proxy rules. If the Merger is not consummated, DMI expects that its next Annual
Meeting of Shareholders will be held on or about May 15, 1997 and proxy
materials in connection with such meeting will be mailed on or about April 15,
1997. If the Merger is not consummated, shareholder proposals prepared in
accordance with the proxy rules must be received by DMI on or before December
16, 1996.
25
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APPENDIX A
CONFORMED COPY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MERGER AGREEMENT
BY AND AMONG
DMI ACQUISITION CORP.,
A FLORIDA CORPORATION ("NEWCO"),
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.,
A NEBRASKA CORPORATION ("DHT"),
NATIONAL COMPUTER SYSTEMS, INC.,
A MINNESOTA CORPORATION ("NCS")
AND
DIMENSIONAL MEDICINE INC.,
A MINNESOTA CORPORATION (THE "CORPORATION")
DATED FEBRUARY 5, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<S> <C> <C> <C>
ARTICLE 1
THE MERGER
1.1 The Merger........................................................ A-5
1.2 Dissenter Rights.................................................. A-5
ARTICLE 2
CLOSING
2.1 The Closing....................................................... A-6
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Corporation................. A-6
(a) Organization and Good Standing.............................. A-6
(b) Articles of Incorporation, Bylaws and Corporate Minutes..... A-6
(c) Capitalization of Corporation............................... A-6
(d) Authority................................................... A-6
(e) Insolvency Proceedings...................................... A-7
(f) Governmental Authorities.................................... A-7
(g) Balance Sheet and No Material Changes....................... A-7
(h) Accounts Receivable......................................... A-7
(i) Absence of Undisclosed Liabilities.......................... A-8
(j) Changes..................................................... A-8
(k) Title and Related Matters................................... A-9
(l) Patents and Trademarks...................................... A-9
(m) Tax Matters................................................. A-9
(n) Broker...................................................... A-10
(o) Disclosure.................................................. A-10
(p) Agreements; Action.......................................... A-10
(q) Litigation and Proceedings.................................. A-10
(r) Insurance................................................... A-11
(s) Illicit Activities.......................................... A-11
(t) Claims...................................................... A-11
(u) Reports..................................................... A-11
(v) Governmental Approvals...................................... A-11
(w) Employees and Employer Benefit Plans........................ A-12
(x) Labor Relations............................................. A-12
(y) Fees, Commissions and Royalties............................. A-12
(z) Environmental Matters....................................... A-12
(aa) FDA Regulation.............................................. A-12
(bb) Subsidiaries................................................ A-13
(cc) Software.................................................... A-13
3.2 Representations and Warranties of NCS............................. A-13
(a) Representations and Warranties of the Corporation........... A-13
(b) Authority................................................... A-13
(c) Share Ownership............................................. A-13
3.3 Representations and Warranties of Newco........................... A-14
(a) Organization and Good Standing.............................. A-14
(b) Authority................................................... A-14
(c) Disclosure.................................................. A-14
(d) No Brokerage................................................ A-14
</TABLE>
A-2
<PAGE>
<TABLE>
<S> <C> <C> <C>
ARTICLE 4
COVENANTS
4.1 Access............................................................ A-14
4.2 Conduct of Business............................................... A-14
4.3 Negative Covenants................................................ A-15
4.4 Satisfaction of Conditions........................................ A-15
4.5 Consents.......................................................... A-15
4.6 Voting............................................................ A-15
4.7 Tax Sharing Agreement............................................. A-15
4.8 Employee Benefit Plans............................................ A-15
4.9 Confidentiality................................................... A-16
4.10 No Solicitation................................................... A-16
4.11 Covenants of the Corporation...................................... A-16
ARTICLE 5
CONDITIONS PRECEDENT TO CLOSING
5.1 Conditions Precedent to the Obligations of Newco.................. A-16
(a) Representations True at Closing............................. A-16
(b) Compliance with Conditions of Agreement..................... A-16
(c) Lack of Material Adverse Change............................. A-17
(d) Compliance Certificate from Corporation..................... A-17
(e) Board and Shareholder Approval.............................. A-17
(f) Secretary's Certificate from Corporation.................... A-17
(g) Secretary's Certificate from NCS............................ A-17
(h) Compliance Certificate from NCS............................. A-17
(i) Opinion of Counsel.......................................... A-17
(j) Information................................................. A-17
(k) Employee Benefit Plans...................................... A-17
(l) Service Agreement........................................... A-17
(m) Security Interest........................................... A-17
(n) General Assignment.......................................... A-17
(o) Absence of Litigation or Claim.............................. A-17
(p) All Proceedings to be Satisfactory.......................... A-18
(q) Consents.................................................... A-18
5.2 Conditions Precedent to Obligations of Corporation and NCS........ A-18
(a) Representations True at Closing............................. A-18
(b) Compliance with Conditions of Agreement..................... A-18
(c) Norwest Bank................................................ A-18
(d) Lease Commitment............................................ A-18
(e) Promissory Note............................................. A-18
(f) Opinion of Counsel.......................................... A-18
(g) Customer Support Agreements................................. A-18
(h) Compliance Certificate from Newco........................... A-18
(i) Secretary's Certificate from Newco.......................... A-18
(j) Absence of Litigation or Claim.............................. A-19
(k) All Proceedings to be Satisfactory.......................... A-19
(l) Fairness Opinion and Shareholders Approval.................. A-19
</TABLE>
A-3
<PAGE>
<TABLE>
<S> <C> <C> <C>
ARTICLE 6
INDEMNIFICATION
6.1 Indemnification................................................... A-19
ARTICLE 7
MISCELLANEOUS PROVISIONS
7.1 Survival of Representations and Warranties........................ A-21
7.2 Notices........................................................... A-21
7.3 Notification of Certain Matters................................... A-22
7.4 Termination....................................................... A-22
7.5 Knowledge......................................................... A-22
7.6 No Assignment..................................................... A-22
7.7 Severability...................................................... A-23
7.8 Governing Law..................................................... A-23
7.9 Schedules......................................................... A-23
7.10 Incorporation and Amendment....................................... A-23
7.11 Remedies.......................................................... A-23
7.12 Waiver............................................................ A-23
7.13 Headings.......................................................... A-23
7.14 Further Action.................................................... A-23
7.15 Counterparts...................................................... A-23
7.16 Venue............................................................. A-23
7.17 Public Announcements.............................................. A-23
</TABLE>
A-4
<PAGE>
MERGER AGREEMENT
THIS AGREEMENT is made and entered into as of 5th February, 1996, by and
among DMI ACQUISITION CORP., a Florida corporation ("Newco"), DYNAMIC HEALTHCARE
TECHNOLOGIES, INC., a Nebraska corporation ("DHT"), NATIONAL COMPUTER SYSTEMS,
INC., a Minnesota corporation ("NCS") and DIMENSIONAL MEDICINE INC., a Minnesota
corporation (the "Corporation").
W I T N E S S E T H:
WHEREAS, the Corporation has 50,000,000 shares of common stock (the "Common
Stock"), $.15 par value per share, authorized, of which 32,533,460 shares are
issued and outstanding;
WHEREAS, NCS owns 27,653,441 shares of Common Stock constituting 85% of the
issued and outstanding Common Stock (the "Majority Shares");
WHEREAS, Newco is a newly formed Florida corporation and a wholly owned
subsidiary of DHT.
WHEREAS, the parties hereto each desire that the Corporation be merged with
and into Newco and that the holders of the Common Stock of the Corporation shall
receive in exchange for such shares the consideration set forth herein.
NOW, THEREFORE, in consideration of the foregoing, and the mutual
representations, warranties, covenants and agreements contained herein and for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions set forth herein, the
Corporation will be merged with and into Newco (the "Merger"), and in accordance
with the Florida Business Corporation Act ("FBCA") and the Minnesota Business
Corporation Act ("MBCA") the separate corporate existence of the Corporation
shall cease and Newco shall be the surviving corporation in the Merger. An
Agreement and Plan of Merger in accordance with the FBCA (the "Florida Agreement
of Merger"), in the form attached hereto as Exhibit "A," and an Agreement and
Plan of Merger in accordance with the MBCA (the "Minnesota Agreement of
Merger"), in the form attached hereto as Exhibit "B" (the Minnesota Agreement of
Merger and the Florida Agreement of Merger may be referred to herein
collectively, as the "Agreement of Merger") shall be executed and delivered
concurrently with the Closing. Pursuant to the terms contained in the Agreement
of Merger, the consideration paid for (a) the shares of the Corporation's Common
Stock owned by NCS shall be cash in the amount of $355,000; and (b) the
remaining 4,880,019 outstanding shares of the Corporation's Common Stock shall
be $.04 per share or an aggregate of $195,000. The Agreement of Merger provides
for the terms of the Merger, the mode of carrying the same into effect and the
manner of converting the Corporation's Common Stock into the consideration set
forth therein. The "Effective Date" shall be the date set forth as such in the
Florida Agreement of Merger and the Minnesota Agreement of Merger. On the
"Effective Date," each and every share of the Corporation's Common Stock and
other capital stock of the Corporation, if any, and any and all options,
warrants or other commitments to purchase or acquire shares of the capital stock
of the Corporation shall be cancelled, terminated and of no further force or
effect.
1.2 DISSENTER RIGHTS. In the event a shareholder of the Corporation
exercises such shareholder's right to dissent to the Merger, pursuant to
applicable state law, the Corporation shall promptly notify Newco in writing of
such exercise of dissenter's rights. The Corporation shall not settle,
compromise, or pay any dissenter rights without the prior written consent of
Newco and consultation therewith.
A-5
<PAGE>
ARTICLE 2
CLOSING
2.1 THE CLOSING. The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at Miami, Florida at 10:00 a.m. in
the offices of Cohen, Berke, Bernstein, Brodie, Kondell & Laszlo, P.A. at 2601
South Bayshore Drive, 19th Floor, Miami, Florida, or any other place agreed to
by the parties, within forty-eight (48) hours after the approval of the Merger
by the Corporation's shareholders and all other closing conditions are met. Such
shareholder approval will be sought at the earliest date practicable but in no
event later than May 15, 1996. Executed documents may be held in escrow, as the
parties agree, pending the satisfaction of any conditions to close. The date of
the Closing shall be referred to as the "Closing Date".
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation,
hereby makes the following representations and warranties to Newco:
(a) ORGANIZATION AND GOOD STANDING. The Corporation is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Minnesota; the Corporation has all requisite corporate power,
franchises, licenses and authority to own, lease and operate its business as
it is being conducted; and the Corporation is duly qualified to do business
in all states where the character of the property owned or leased by it or
the nature of its activities make 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
properties, operations, business or financial condition of the Corporation,
as set forth on Schedule 3.1(a) hereto;
(b) ARTICLES OF INCORPORATION, BYLAWS AND CORPORATE MINUTES. Copies of
the Articles of Incorporation and Bylaws of the Corporation and all
amendments and restatements thereto delivered to Newco are true, correct and
complete copies thereof and have not been amended since such delivery.
(c) CAPITALIZATION OF CORPORATION. (i) The authorized and outstanding
capital stock of the Corporation is as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES CLASS OF SHARES
AUTHORIZED STOCK PAR VALUE OUTSTANDING
- ----------------- ------------- ----------- -------------
<S> <C> <C> <C>
50,000,000 Common $ .15 32,533,460
</TABLE>
Except as described on Schedule 3.1(c) hereto, there are not currently
outstanding, any subscriptions, warrants, or options or other commitments
(including conversion or preemptive rights), with respect to the purchase or
acquisition from the Corporation of any shares of its capital stock. As of
the Effective Date all such subscriptions, warrants, options or other
commitments shall be cancelled, terminated and of no further force or
effect.
(d) AUTHORITY. The Corporation has all requisite legal and corporate
power necessary to execute, deliver and perform this Agreement and to carry
out the transactions contemplated hereby. The execution, delivery and
performance of this Agreement shall not (i) result in the breach or
violation of any term or provision of or constitute a default under or
conflict with any term or provision of the Corporation's Articles of
Incorporation, as amended, or By-Laws, as amended, or any material contract,
agreement, lease, commitment, license, franchise, permit, authorization or
concession to which the Corporation is a party or by which the Corporation
is bound, or constitute an event which with notice, lapse of time, or both,
would result in any such breach, violation or default, or (ii) result in the
violation by the Corporation of any statute, rule, regulation, ordinance,
code, order, judgment, writ, injunction, decree or award, or constitute an
event which with notice, lapse of time, or both, would result in any such
violation. The execution,
A-6
<PAGE>
delivery and performance of the obligations of Corporation under this
Agreement has been duly and effectively authorized by the Corporation's
Board of Directors and will be on the Closing Date duly and effectively
authorized by the Corporation's Board of Directors and shareholders, and no
further corporate authority therefor or approval thereof is required by law.
(e) INSOLVENCY PROCEEDINGS. No insolvency proceedings, including
bankruptcy, receivership, reorganization, composition or arrangement with
creditors, are pending or, to the Corporation knowledge and belief
threatened against Corporation except as disclosed herein. Furthermore, the
Corporation shall not institute any such action, in any form whatsoever,
prior to Closing, unless specifically consented to by Newco in writing.
(f) GOVERNMENTAL AUTHORITIES. Except as identified on Schedule 3.1(f),
the Corporation is not required to submit any notice, report or other filing
to any governmental or regulatory agency, nor is any notice or report
required to be obtained by the Corporation in connection with the execution
or delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(g) BALANCE SHEET AND NO MATERIAL CHANGES.
(1) Corporation has heretofore furnished Buyer with its Form 10-K for
the year ended March 31, 1995, containing the audited financial
statements of the Corporation including the Corporation's balance sheets
as of March 31, 1995 and March 31, 1994 (the "Balance Sheet"), and the
related statements of operations, shareholders' equity and cash flows,
for the period ended March 31, 1995, audited by Ernst & Young, LLP,
certified public accountants, and its Form 10-Q for the quarter ended
December 31, 1995, containing internally prepared unaudited balance
sheets and income statements dated as of December 31, 1995, copies of
which are attached hereto as Schedule 3.1(g)) (collectively, the
"Financial Statements"). The Financial Statements, including the
footnotes thereto to the extent appended, except as indicated therein,
have been prepared in accordance with generally accepted accounting
principles ("GAAP") consistently followed through the periods indicated.
The Financial Statements fairly represent the financial condition of
the Corporation as of the date thereof and, except as indicated therein,
reflects all claims against and all debts and liabilities of the
Corporation required to be reported under GAAP, fixed or contingent, as
of the respective date thereof and the related statements of income,
statements of cash flow, shareholders' equity and changes in financial
position fairly present the results of the operations of the Corporation
and the changes in the Corporation's financial position for the period
indicated. Since the Balance Sheet date, except as disclosed on any
schedule hereto there has been (i) no material adverse change in the
assets or liabilities, or in the business or condition of the
Corporation, financial or otherwise, or the result of operations of the
Corporation, whether as a result of any legislative or regulatory change,
revocation of any license or right to do business, casualty, labor, Act
of God or other public force or otherwise, and (ii) no change in the
assets or liabilities or in the business or condition of the Corporation,
financial or otherwise, or in the results of operations or prospects of
the Corporation, except in the ordinary course of business; and (iii) no
factor or condition exists or, to the Corporation's knowledge and belief,
is contemplated or threatened, which might cause such a change in the
future except as disclosed on any schedule hereto, and (iv) no dividends
or other distributions have been paid or made upon any shares of capital
stock of the Corporation nor have any shares of capital stock of the
Corporation been redeemed, retired, purchased or acquired for value by
the Corporation.
(h) ACCOUNTS RECEIVABLE. Except as otherwise set forth in Schedule
3.1(h), none of the accounts receivable of the Corporation are subject to
any stated claim of offset, recoupment, setoff or counterclaim, and the
Corporation has no knowledge of any facts or circumstances giving rise to
such claim. Furthermore, except as set forth on Schedule 3(h), no such
account receivable is contingent upon the performance by the Corporation of
any obligation or contract. Except as
A-7
<PAGE>
otherwise set forth in Schedule 3.1(h), no person has any lien on such
receivables or any part thereof, no agreement for deduction, free goods,
discount or other deferred price has been made with respect to any of such
accounts receivable.
(i) ABSENCE OF UNDISCLOSED LIABILITIES. The Corporation represents and
covenants that there are not presently, nor were there as of the dates of
the Financial Statements, any liabilities or commitments, accrued absolute,
contingent or otherwise, of the Corporation, except liabilities or
commitments (i) reflected on the Financial Statements; (ii) liabilities or
commitments incurred by the Corporation in the ordinary course of its
business since the date of the Financial Statements which in the aggregate
do not exceed $15,000; or (iii) liabilities and commitments identified in
this Agreement or any schedule or exhibit hereto.
(j) CHANGES. Since Balance Sheet date, except as disclosed in Schedule
3.1(j), there has not been:
(1) any change in the assets, liabilities, condition (financial or
otherwise), affairs, earnings, business, operations, or prospects of the
Corporation except for changes in the ordinary course of business which
have not been, either individually or in the aggregate, materially
adverse;
(2) any change in the liabilities or obligations of the Corporation,
contingent or otherwise, whether due or to become due, whether by way of
guaranty, endorsement, indemnity, warranty, or otherwise, except current
liabilities incurred in the ordinary course of business, none of which
materially and adversely affects the business, prospects, condition,
affairs, properties or assets of the Corporation;
(3) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, operation
or business of the Corporation;
(4) any waiver by the Corporation of a valuable right or of a
material debt owed to it;
(5) any loans made by the Corporation to its employees, officers, or
directors other than advances of expenses made in the ordinary course of
business;
(6) any declaration or payment of any dividend or other distribution
of the assets of the Corporation or any direct or indirect redemption,
purchase or acquisition of any securities of the Corporation;
(7) any labor organization activity or organized labor trouble;
(8) any sale, transfer, or lease of any of the Corporation's assets
except in the ordinary course of business or any mortgage or pledge of or
lien imposed upon any of the Corporation's assets;
(9) to the best of the Corporation's knowledge, any other event or
condition of any character which has materially and adversely affected
the business, prospects, condition, affairs, operations, properties or
assets of the Corporation;
(10) any increase in compensation of any of its existing officers, or
the rate of pay of its employees as a group, except as part of regular
compensation increases in the ordinary course of business;
(11) the resignation or termination of John Paumen, John McGibbon,
Valerie McGibbon, Clark Zumbach, Mark Blatzheim or Ken Waldbillig;
(12) any change in the accounting methods or practices followed by the
Corporation;
(13) any issuance of any stock, bonds, or other securities of the
Corporation or options, warrants, or rights or agreements or commitments
to purchase or issue such securities or grant such options, warrants or
rights; or
(14) any agreement by the Corporation to do or enter into any of the
foregoing.
A-8
<PAGE>
(k) TITLE AND RELATED MATTERS. Schedule 3.1(k) is a true and correct
listing of all categories and the net book value of all tangible property
(real and personal) owned or leased by the Corporation which are not set
forth on the Financial Statements. The Corporation has good and marketable
title to all of the assets free and clear of all mortgages, liens, pledges,
charges and encumbrances, easements, liabilities, or any other adverse
claims of every kind or character, except as so indicated on Schedule
3.1(k). All of the assets necessary for the operation of the Corporation's
business, including real and personal property and leasehold interests, of
the Corporation are in good and satisfactory working condition.
(l) PATENTS AND TRADEMARKS. Schedule 3.1(l) contains a true and
correct list of all registered patents, patent applications, trademarks,
trade names, copyrights, intellectual properties or service marks owned by
or registered in the name of the Corporation. Furthermore, except as shown
on Schedule 3.1(l), there are no material unregistered patents, patent
applications, trademarks, tradenames, copyrights, intellectual properties or
servicemarks owned by the Corporation. Except as shown on Schedule 3.1(l),
there are no outstanding claims, liens, encumbrances, options, licenses, or
agreements of any kind relating to the foregoing, nor is the Corporation
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. To its best knowledge and belief, the
Corporation has sufficient title and ownership of all patents, licenses,
trademarks, servicemarks, trade names, copyrights to conduct its business as
now operated without any conflict with or infringement of the rights of
others. To the knowledge and belief of the Corporation, the Corporation has
not infringed or violated in any way any valid patent, trademark, trade name
or copyright of others, nor has the Corporation received any notice, claim
or protest respecting any such violation or infringement. The Corporation is
not aware that any of its 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 the Corporation or that would
conflict with the Corporation's business as currently conducted. Neither the
execution nor delivery of this Agreement, nor the carrying on of the
Corporation's business by the employees of the Corporation, nor the conduct
of the Corporation's business as currently conducted, will, to the
Corporation's knowledge, 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.
The Corporation does not believe 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 the Corporation.
(m) TAX MATTERS. Except as set forth on Schedule 3.1(m), the
Corporation has filed or caused to be filed, within the times and within the
manner prescribed by law, all Federal, state, local and foreign tax returns
and reports heretofore required to be filed by it, and has no current
extensions for the filing of any such returns or reports, or delinquent
liabilities. To the Corporation's best knowledge and belief, such returns
and reports reflect accurately all tax liability of the Corporation for the
periods covered thereby. All Federal, state, local and foreign income,
profits, franchise, sales, use, occupancy, excise and other taxes and
assessments (including interest and penalties) payable by, or due from, the
Corporation (including for this purpose any subsidiary of the Corporation,
for such taxable period or periods in which such former subsidiary was an
affiliated group as defined in Section 1504(a) of the Internal Revenue Code
of 1986, as amended, of which the Corporation was a member) has been fully
paid or adequately disclosed and fully provided for in the books and
financial statements of the Corporation. No examination of any tax return of
the Corporation is currently in progress or has been noticed except as set
forth on Schedule 3.1(m). There are no outstanding agreements or waivers
extending the statutory period of limitation applicable to any tax return of
the Corporation.
A-9
<PAGE>
(n) BROKER. No agent, broker or other person acting pursuant to
authority of Corporation is entitled to any commission or finder's fee in
connection with the transactions contemplated by this Agreement, except as
disclosed on Schedule 3.1(n).
(o) DISCLOSURE. No representation, statement or information which has
been or shall be made or furnished by the Corporation to Newco, including
but not limited to those contained in this Agreement and the schedules
hereto and/or any other schedules, listings or other written information
furnished by Corporation, contains, or shall contain, any untrue statement
of material fact or omits or shall omit any material fact necessary to make
the information contained in such representation, or information, in light
of the circumstances under which they were made not misleading.
(p) AGREEMENTS; ACTION.
(1) Except as listed on Schedule 3.1(p) hereto, there are no
agreements, understandings, instruments, contracts, or proposed
transactions between the Corporation and the NCS.
(2) Except as listed on Schedule 3.1(p) hereto, there are no
agreements, understandings, instruments, contracts, proposed transactions
to which the Corporation is a party or by which it is bound which (a)
involve obligations (contingent or otherwise) of, or payments to the
Corporation in excess of, $15,000, (b) are material to the conduct and
operations of the Corporation's business or properties, including,
without limitation, the license of any patent, copyright, trade secret,
or other proprietary rights to or from the Corporation or provisions
restricting or affecting the development, manufacture, or distribution of
the Corporation's products or services, (c) involve any employment or
consulting arrangement, whether written or oral, between the Corporation
and any person or (d) provide for the grant to any person of a right to
cause the Corporation to register any securities of the Company for sale.
(3) Since the date of the Financial Statements, except as listed on
Schedule 3.1(p) hereto, the Corporation has not (a) declared or paid any
dividends, or authorized or made any distribution upon or with respect to
any class or series of its capital stock, (b) incurred any indebtedness
for money borrowed or any other liabilities individually in excess of
$15,000 or, in the case of indebtedness and/or liabilities individually
less than $15,000, in excess of $15,000 in the aggregate, (c) made any
loans or advances to any person, other than ordinary advances for travel
expenses, or (d) sold, exchanged, or otherwise disposed of any of its
assets or rights, other than the sale of its inventory in the ordinary
course of business.
(4) For the purposes of subsections (2) and (3) above, all
indebtedness, liabilities, agreements, understandings, instruments,
contracts, and proposed transactions involving the same person or entity
(including persons or entities the Corporation has reason to believe are
affiliated therewith) shall be aggregated for the purpose of meeting the
individual minimum dollar amounts of such subsections.
(5) The Corporation is not a party to any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
charter or corporate restriction which has a material adverse effect on
the Corporation or limits or restricts the ability of the Corporation to
carry out its obligations under this Agreement. The Corporation is not in
material default in any respect in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained
in any agreement or instrument material to its business to which it is a
party.
(q) LITIGATION AND PROCEEDINGS. There is no suit, arbitration or legal
proceeding or investigation pending or, to the Corporation's knowledge and
belief any threatened or contemplated suit, arbitration, legal proceeding or
investigation, either administrative or judicial, relating to
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the Corporation or its business, the contracts set forth on Schedule 3.1(p)
hereto or the transactions contemplated by this Agreement which if
determined or resolved adversely to the Corporation may reasonably be
expected to have a materially adverse effect on the properties, operations,
business or financial condition of the Corporation, except as set forth and
described in Schedule 3.1(q). The Corporation is not, to its best knowledge
and belief, the subject of any investigation or proceeding by any
governmental body relating to its business. The Corporation is not subject
to, nor in default of, any indictment, order or award of any court,
arbitrator or governmental body, domestic or foreign, relating to its
business.
(r) INSURANCE. The insurance policies owned by the Corporation are
valid and enforceable in accordance with their terms and are now
outstanding, duly in force, and provide adequate insurance for the
Corporation's business and the Corporation's assets. Schedule 3.1(r) sets
forth a list of all insurance policies owned by the Corporation, the
identity of the insurance company, the type and amount of coverage, the
expiration dates of the policies, the parties insured, and the amount of
premiums for the respective policies.
(s) ILLICIT ACTIVITIES. Neither Corporation nor, to the Corporation's
best knowledge and belief, any of the Corporation's directors, officers or
employees have, in connection with the operation of its business:
(i) Made any illegal political contributions from the Corporation's
assets; or
(ii) Been involved in the disbursement or receipt of corporate funds
outside the normal systems of accountability; or
(iii) Made or received payments, whether directly or indirectly, to or
from foreign or domestic governments, officials, employees or agents for
purposes other than the satisfaction of lawful obligations, or been
involved in any transaction that has as its intended effect the transfer
of the Corporation's assets in the manner described; or
(iv) Been involved in the improper or inaccurate recording of payments
and receipts on the books of the Corporation or any other matters of a
similar nature involving disbursements of the Corporation's assets.
(t) CLAIMS. Schedule 3.1(t) contains a true and complete list of all
claims in excess of Five Thousand Dollars ($5,000.00) which have been
asserted in respect of the Corporation's business since January 1, 1992,
with respect to any express or implied representation, warranty, agreement
or guarantee made (or claimed to have been made), or imposed, or asserted to
be imposed by operation of law, in connection with any product or service
provided by, or sold in the course of, the Corporation's business, and a
summary description of the status or disposition of each such claim. All of
such claims were and are covered under the professional liability insurance
policies, self-insurance programs or reserves of the Corporation.
(u) REPORTS. The Corporation has furnished an accurate and complete
copy of each registration statement, report and proxy statement filed by the
Corporation with the Securities and Exchange Commission (the "Commission")
since December 31, 1992 (collectively, the "SEC Reports"). None of such SEC
Reports contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Since December 31, 1992, the Corporation has filed all
required forms, reports and documents with the Commission required to be
filed by it pursuant to the Securities Act of 1933, as amended (the
"Securities Act") and the Exchange Act of 1934, as amended (the "Exchange
Act"), all of which complied at the time of filing in all material respects
with all applicable requirements of the Securities Act and the Exchange Act.
(v) GOVERNMENTAL APPROVALS. The Corporation has, to its best knowledge
and belief, taken all necessary actions to provide that in the conduct of
its business, the use and occupancy by the
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Corporation of all facilities and properties upon which the operations of
its business are conducted and the products developed or services provided
in the conduct of its business is and shall continue to be in compliance in
all respects with all Federal, state, county, local or other governmental
statutes and ordinances, and with all rules and regulations of all Federal,
state, county, local and other governmental agencies and bodies, applicable
to it, and to the conduct of its business where non-compliance may
reasonable be expected to have a material adverse effect on the properties,
operations, business or financial condition of the Corporation.
(w) EMPLOYEES AND EMPLOYER BENEFIT PLANS. The Corporation has no
employee benefit plan of any kind or nature except as set forth on Schedule
3.1(w).
(x) LABOR RELATIONS. There has not been, nor is there threatened, any
strike, slowdown, picketing or work stoppage by any union against the
Corporation's premises or products, any secondary boycott with respect to
the Corporation or its products, any lockout by the Corporation of any of
its employees or any other labor trouble or other occurrence, event or
condition of a similar character affecting, or which may affect, the
operations or conditions of the Corporation.
(y) FEES, COMMISSIONS AND ROYALTIES. Corporation has no relationship
with any distributor, agent, employee or other representative anywhere in
the world which is entitled to fees, commissions, royalties or any other
payments as a result of the sale of the Corporation's securities, products,
services, or pursuant to its on going business, except as disclosed in
Schedule 3.1(y);
(z) ENVIRONMENTAL MATTERS. The Corporation has, to its best knowledge
and belief, all governmental licenses and permits necessary in order to
conduct its business and where the failure to have such permit or license
would have a materially adverse effect on the properties, operations,
business or financial condition of the Corporation, including any such
licenses or permits required for the storage, treatment and disposal of any
materials defined as "hazardous substances" under the Federal Comprehensive
Environmental Response Compensation and Liability Act ("CERCLA") and similar
state laws: (i) to or at any location other than a site lawfully permitted
to receive such hazardous waste, hazardous substances or other material
which may constitute an environmental hazard for such purposes, (ii) to or
at any location designated for remedial action pursuant to CERCLA or any
similar state laws, or (iii) not in contravention of any environmental laws,
regulations, ordinances or rules. The Corporation has not discharged,
dumped, buried, spilled or otherwise released any hazardous substances, or
any other material which may constitute an environmental hazard, into or on
any property or facility which the Corporation owns, leases or operates,
including the soil, surface water and ground water, in violation of any
environmental laws, regulations, ordinances or rules. To the Corporation's
knowledge and belief, no inspection, audit, or other investigation has been
conducted as to the quality of the air, surface or sub-surface conditions at
any property or facility which the Corporation owns, leases or operates, by
any person, including governmental agencies. The Corporation has not
received (i) any notice that any person, including governmental agencies,
proposes to carry out an inspection, audit or other investigation of or at
any property or facility which the Corporation owns, leases or operates,
(ii) any notice that conditions at any such property or facility are in
violation of any environmental laws, regulations, ordinances or rules, or
(iii) any notice (including requests for information) from any person,
including governmental agencies, asserting that the Corporation is or may be
a "potentially responsible party" or otherwise liable with respect to a
remedial action or the payment of response costs at a waste storage,
treatment or disposal facility, pursuant to CERCLA or any similar state
laws.
(aa) FDA REGULATION. Except as provided in Schedule 3.1(aa), the
Corporation's business as presently conducted, 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
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condition of the Corporation. The Corporation has filed with and received
approval from the FDA with respect to 510(k) Reports relating to the
Corporation's products marketed under the name "Maxiview" "Maxfile" and
"Powerstation," respectively.
(bb) SUBSIDIARIES. Except as listed on Exhibit 3.1(bb) hereto, the
Corporation does not presently own or control directly or indirectly any
interest in any other corporation, association, or other business entity.
(cc) SOFTWARE. The Corporation has complete and exclusive right,
title, and interest in and to all tangible and intangible property rights
existing in the software listed on Schedule 3.1(cc) hereto (the "Software").
The Software has either been acquired or developed by the Corporation
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 3.1(cc). The Software does not infringe any patent,
copyright, or trade secret of any third party; the Software 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 (1) have been party to a for-hire relationship with the
Corporation that has accorded the Corporation full, effective, and exclusive
original ownership of all tangible and intangible property thereby arising
with respect to the Software, or (2) have executed appropriate instruments
of assignment in favor of the Corporation as assignee that have conveyed to
the Corporation 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 except as set forth on Schedule 3.1(cc).
3.2 REPRESENTATIONS AND WARRANTIES OF NCS. NCS makes the following
representations and warranties to Newco:
(a) REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. To NCS's
knowledge, the representations and warranties of the Corporation are true
and correct.
(b) AUTHORITY. NCS has all requisite legal and corporate power
necessary to execute, deliver and perform this Agreement and to carry out
the transactions contemplated hereby. The execution, delivery and
performance of this Agreement shall not (i) result in the breach or
violation of any term or provision of or constitute a default under or
conflict with any term or provision of NCS's Articles of Incorporation, as
amended, or By-Laws, as amended, or any material contract, agreement, lease,
commitment, license, franchise, permit, authorization or concession to which
NCS is a party or by which NCS is bound, or constitute an event which with
notice, lapse of time, or both, would result in any such breach, violation
or default, or (ii) result in the violation by NCS of any statute, rule,
regulation, ordinance, code, order, judgment, writ, injunction, decree or
award, or constitute an event which with notice, lapse of time, or both,
would result in any such violation. The execution, delivery and performance
of the obligations of NCS under this Agreement has been, and will be on the
Closing Date, duly and effectively authorized by NCS and no further
corporate authority therefor or approval thereof is required by law.
(c) SHARE OWNERSHIP. NCS is not a party or subject to any agreement or
understanding, and there is no agreement or understanding between any
persons and/or entities, which affects or relates to the voting or giving of
written consents with respect to the Majority Shares. NCS is the lawful
owner of, and has good and marketable title to the Majority Shares, free and
clear of any mortgages, pledges, claims, liens, charges or encumbrances of
any kind.
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3.3 REPRESENTATIONS AND WARRANTIES OF NEWCO. Newco makes the following
representations and warranties to the Corporation and NCS:
(a) ORGANIZATION AND GOOD STANDING. Newco is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Nebraska and is duly qualified to do business in all states where its
activities make such qualification necessary.
(b) AUTHORITY. Newco has full power and has taken all corporate action
necessary to execute, deliver and perform this Agreement and to carry out
the transactions contemplated hereby. The execution, delivery and
performance of this Agreement shall not (i) result in the breach or
violation of any term or provision of or constitute a default under or
conflict with any term or provision of its Articles of Incorporation, as
amended, or By-Laws, as amended, or any material contract, agreement, lease,
commitment, license, franchise, permit, authorization, or concession to
which it is a party or by which it is bound, or constitute an event which
with notice, lapse of time, or both, would result in any such breach,
violation or default, or (ii) result in the violation by it of any statute,
rule, regulation, ordinance, code, order, judgment, writ, injunction, decree
or award, or constitute an event which with notice, lapse of time, or both,
would result in any such violation. The execution, delivery and performance
of the obligations of Newco under this Agreement has been duly and
effectively authorized by Newco's Board of Directors and no further
corporate authority therefor or approval thereof is required by law. This
Agreement constitutes a valid and binding agreement of Newco.
(c) DISCLOSURE. No representation, statement or information which has
been or shall be made to Corporation or NCS in or pursuant to this Agreement
or in connection with preparation of materials for submission to the
Corporation's shareholders contains or shall contain any untrue statement of
a material fact or omits or shall omit to state a material fact necessary to
make the statements contained therein, in the light of the circumstances
under which they were made, not misleading.
(d) NO BROKERAGE. Newco has not employed any broker or finder or has
incurred or will incur any broker's, finder's or similar fees, commissions
or expenses in connection with the transactions contemplated by this
Agreement.
ARTICLE 4
COVENANTS
4.1 ACCESS. The Corporation shall give to Newco, from and after the date
of execution of the Agreement until the Closing, access to its premises during
normal business hours in order to enable Newco to inspect its business. The
Corporation shall make available for review all information in its possession
reasonably requested by Newco which is related to its business. The Corporation
shall also permit Newco to meet with and question their independent certified
public accountants and other advisors. The parties acknowledge that said
activities shall be conducted during normal business hours and shall not disrupt
or interfere with the conduct of the Corporation's business.
4.2 CONDUCT OF BUSINESS. From the date hereof, until Closing, the
Corporation shall: (a) provide Newco with weekly written or telephonic reports
relating to the Corporation's business operations and with such information as
Newco reasonably requests in writing, telephonically or at a meeting, (b) enter
into joint marketing activities with Newco in accordance with the terms of a
letter agreement attached hereto as Exhibit "E" pursuant to which Newco shall
receive thirty (30%) percent of all net licensing fees, (c) operate and conduct
its business in a reasonable diligent manner and in the ordinary course
consistent with past custom and practice; (d) use best efforts to maintain and
safeguard its properties; (c) use best efforts to preserve intact its
organization and personnel; (e) use best efforts to preserve intact its
relationships with vendors, customers and others having business relations with
them; (f) carry insurance, including liability insurance, in character and
amount in accordance with past custom and practice; (g) notify Newco of any
lawsuits, claims,
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proceedings or investigations that are instituted against them, their officers
or directors, or, to their knowledge, threatened against them, their officers or
directors; and (h) use reasonable best efforts to comply in all material
respects with all material laws, rules, regulations and governmental authorities
applicable to it and to the conduct of its business.
4.3 NEGATIVE COVENANTS. The Corporation covenants and agrees that, from
the date hereof until the Closing Date, it shall not without the prior written
consent of Newco or DHT, where such consent may be granted or withheld at the
sole discretion of Newco or DHT, (a) make any changes to its Articles of
Incorporation or By-Laws; (b) borrow money without the consent of Newco; (c)
sell, transfer, assign, mortgage, pledge, encumber, or permit the creation of
any lien or security interest with respect to, any assets or properties; (d)
make any material investment or expenditure of a capital nature greater than
$15,000; (e) enter into any material contracts or commitments for greater than
$15,000; (f) hire additional management personnel earning an annual salary
greater than $25,000 or terminate existing management employees as identified in
Section 3.1(j)(ii) herein; (g) enter into any joint venture, licensing,
partnership or other similar agreement with any party or modify, assign or
hypothecate any existing agreements; (h) declare any dividends or make other
distributions with respect to its capital stock; (i) authorize, issue, sell or
exchange any debt or equity securities, or any stock options or warrants; (j)
make loans, advances or prepayments or extend credit to any of its shareholders,
officers or directors except current credit agreements; or (k) sell, discount
for cash or factor accounts receivable or enter into similar transactions.
4.4 SATISFACTION OF CONDITIONS. The parties hereto shall use their best
efforts to satisfy all conditions precedent to the Closing on or prior to the
Closing Date.
4.5 CONSENTS. The parties shall obtain all material consents, assignments
or approvals of third parties which may be required to any and all of the
transactions contemplated hereby. The Corporation shall use its best efforts to
prepare, file with the U.S. Securities and Exchange and distribute to
shareholders a proxy statement, and all other documents relating thereto, and
hold a shareholders' meeting relating to the approval of the transaction
contemplated by this Agreement as soon as reasonably possible. All disclosure in
such documents relating to Newco and the transactions contemplated by this
Agreement shall be subject to Newco's approval. The Corporation shall use its
best efforts to obtain shareholder approval of the Merger.
4.6 VOTING. NCS shall vote the Majority Shares in favor of all
transactions necessary to accomplish the Merger between the Corporation and
Newco and the transactions contemplated by this Agreement, provided, however,
NCS shall not be obligated to vote in favor of the Merger if and only if NCS
reasonably determines, in good faith and after full and advised consideration,
that such vote in favor of the Merger would cause NCS to breach its fiduciary
duties under applicable law.
4.7 TAX SHARING AGREEMENT. Within forty-five (45) days after the Closing
Date, NCS shall deliver to Newco a final computation reflecting the amount owed
as of the Closing Date to the Corporation or to NCS pursuant to the Tax Sharing
Agreement, effective as of December 20, 1993. Newco shall have a period of ten
(10) days to agree or disagree with such computation. If Newco disagrees with
such computation, an independent third party mutually agreed upon by Newco and
NCS shall compute the amount owed and such determination shall be binding upon
NCS and Newco. The amount owed for the period ending January 31, 1996 shall be
paid within ten (10) days of determination. The remainder which is associated
with NCS's tax year ending January 31, 1997 shall be paid upon NCS's filing of
its tax return for the fiscal year ending January 31, 1997.
4.8 EMPLOYEE BENEFIT PLANS. Commencing on the Closing Date, the
Corporation's employees shall be entitled to participate in Newco's employee
benefit plans. For purposes of participating in such plans the Corporations
employees shall be deemed to have been employees of Newco as of their actual
employment commencement date with the Corporation, however, for purposes of this
Section 4.8, in no event shall such date be deemed to be less than one (1) year
prior to the Closing Date nor shall any employee be deemed to have been employed
by the Corporation for more than five (5) years.
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4.9 CONFIDENTIALITY. The parties to this Agreement will each hold, and
will use its best efforts to cause its respective officers, directors,
employees, consultants, advisors and agents to hold, in confidence, unless
compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning the
Corporation, Newco and DHT furnished in connection with the transactions
contemplated by this Agreement, except to the extent that such information can
be shown to have been (i) previously known on a nonconfidential basis by such
party, (ii) in the public domain through no fault of any party hereto, or (iii)
later lawfully acquired by a party hereto from sources other than a party
hereto, provided that any party hereto may disclose such information to its
officers, directors, employees, consultants, advisors and agents, lenders and
other investors in connection with the transactions contemplated by this
Agreement so long as such persons are informed by such party of the confidential
nature of such information and are directed by such party to treat such
information confidentially. The obligation of each party hereto to hold any such
information in confidence shall be satisfied if it exercises the same care with
respect to such information as it would take to preserve the confidentiality of
its own similar information. If this Agreement is terminated, such confidences
shall be maintained and each party hereto will, and will use its best efforts to
cause its officers, directors, employees, consultants, advisors and agents to,
destroy or deliver upon request, all documents and other materials, and all
copies thereof, obtained by such party or on its behalf from such other party
hereto in connection with this Agreement that are subject to such confidence.
4.10 NO SOLICITATION. In consideration of the efforts and expenses
incurred by Newco and DHT to effect the consummation of the transactions
contemplated herein, the Corporation covenants and agrees that from the date
hereof, it shall not initiate, solicit or seek, directly or indirectly, by any
means or in any form or manner whatsoever, to enter any transaction with a third
party which may result in the sale of all or substantially all of its assets,
the sale of its capital stock, its merger with or into another entity or any
business combination. Furthermore, the Corporation agrees that in the event, not
as a result of its solicitation or initiation, it engages discussions or
negotiations, oral or written, with a third party to engage in a transaction
which may result in the sale of all or substantially all of its assets, the sale
of its capital stock, its merger with or into another entity or any other
business combination, it shall immediately notify Newco and keep Newco apprised
of the progress of such discussions and/or negotiations, and shall promptly
provide Newco true, correct and complete copies of all correspondence and
documents related thereto.
4.11 COVENANTS OF THE CORPORATION. Sections 4.1, 4.2, 4.3 and 4.8 are
solely the responsibility of the Corporation.
ARTICLE 5
CONDITIONS PRECEDENT TO CLOSING
5.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF NEWCO. The obligation of
Newco to complete the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing of each of the following
conditions:
(a) REPRESENTATIONS TRUE AT CLOSING. The representations and
warranties of the Corporation and NCS contained in this Agreement and all
schedules attached hereto, shall be true and correct in all material
respects at and as of the date hereof and they shall be true and correct in
all material respects at and as of the Closing Date with the same force and
effect as though made at and as of that time.
(b) COMPLIANCE WITH CONDITIONS OF AGREEMENT. The Corporation and NCS
shall have performed and complied in all material respects with all material
obligations required by this Agreement as a condition precedent to Closing.
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(c) LACK OF MATERIAL ADVERSE CHANGE. There shall not have been any
material adverse change in the condition, financial or otherwise, of the
Corporations business or in the ability to continue to conduct the business
in the usual and ordinary course.
(d) COMPLIANCE CERTIFICATE FROM CORPORATION. The President of the
Corporation, shall deliver to Newco at the Closing a certificate confirming
the matters specified in Sections 5.1(a) and (b) as they relate to the
Corporation.
(e) BOARD AND SHAREHOLDER APPROVAL. The Board of Directors and
shareholders of the
Corporation shall have approved the Merger, Agreement of Merger, this
Agreement and the transactions contemplated hereby.
(f) SECRETARY'S CERTIFICATE FROM CORPORATION. A certificate, dated as
of the Closing Date, of the Secretary of the Corporation certifying that:
(i) attached is a true and correct copy of the Articles of Incorporation and
Bylaws of the Corporation as then in effect; (ii) attached is a true and
correct copy and the resolutions adopted by the Board of Directors and
shareholders of the Corporation approving the Merger, Merger Agreement, this
Agreement and the transactions contemplated hereby; and (iii) to the
incumbency and specimen signatures of each officer of the Corporation
executing this Agreement and the other agreements and certificates
contemplated thereby.
(g) SECRETARY'S CERTIFICATE FROM NCS. A certificate, dated as of the
Closing Date, of the Secretary of NCS certifying that (i) this Agreement and
the transactions contemplated hereby have been duly authorized by NCS and
(ii) to the incumbency and specimen signatures of each officer of NCS
executing this Agreement and the other agreements and certificates
contemplated hereby.
(h) COMPLIANCE CERTIFICATE FROM NCS. An officer of NCS shall deliver
to Newco at Closing a certificate confirming the matters specified in
Sections 5.1(a) and (b) as they relate to NCS.
(i) OPINION OF COUNSEL. Newco shall have received from Lindquist and
Vennum, PLLP, counsel for NCS and Corporation, an opinion, dated as of the
Closing, in the form attached hereto as Exhibit "C."
(j) INFORMATION. Newco shall have received all information reasonably
requested by it relating to the business of the Corporation.
(k) EMPLOYEE BENEFIT PLANS. The Corporation shall have arranged to
have terminated all employee benefit plans of any kind or nature, and any
and all rights or obligations relating thereto, simultaneous with the
Closing or as soon thereafter as practicable except with respect to the
Corporation's 401(K) plan and Employee Stock Ownership Plan in connection
with which all benefits thereunder shall be frozen prior to the Closing
Date.
(l) SERVICE AGREEMENT. The Service Agreement, effective June 1, 1994,
between the NCS and the Corporation, and all right and obligations relating
thereto, shall be terminated.
(m) SECURITY INTEREST. NCS shall have terminated all security
interests relating to the Corporation's assets, tangible or intangible, and
filed all appropriate termination statements with filing offices.
(n) GENERAL ASSIGNMENT. NCS shall deliver to Newco a general
assignment in a form reasonably satisfactory to Newco and NCS counsel with
respect to any interest it may have in the Corporation's patents, patent
applications, trademarks, tradenames, service marks or Software. The general
assignment shall not include any trademarks, tradenames or service marks
identifying or referring to NCS or its business.
(o) ABSENCE OF LITIGATION OR CLAIM. Neither Corporation or NCS shall
have become aware or received notice of any threatened, pending or commenced
litigation, arbitration, administrative hearing or investigation,
termination of any material contract, or other action seeking to
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prevent, or having a potential material detrimental effect upon Newco in
connection with, the consummation of the transactions contemplated by this
Agreement, nor shall such action(s) have been pending, commenced or
threatened.
(p) ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and other
proceedings to be taken by the Corporation in connection with the
transactions contemplate by this Agreement and all documents incident
thereto shall be reasonably satisfactory in form and substance to Newco and
its counsel, and Newco and its counsel shall have received all such
counterpart originals or certified or other copies of such documents as they
reasonably may request.
(q) CONSENTS. Corporation shall have obtained all material consents
required to be obtained by it in connection with the consummation of the
transactions contemplated by this Agreement.
5.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF CORPORATION AND NCS. The
obligation of Corporation and NCS to consummate the transactions contemplated
herein shall be subject to the fulfillment at or prior to the Closing of each of
the following conditions:
(a) REPRESENTATIONS TRUE AT CLOSING. The representations and
warranties of Newco contained in this Agreement shall be true and correct in
all material respects at and as of the date hereof, and they shall be true
and correct in all material respects at and as of the Closing Date with the
same force and effect as though made at and as of that time. Newco shall
have performed and complied with all of its obligations required by this
Agreement to be performed or complied with at or prior to the Closing.
(b) COMPLIANCE WITH CONDITIONS OF AGREEMENT. Newco shall have
performed and complied in all material respects with its obligations
required by this Agreement.
(c) NORWEST BANK. Newco or DHT shall have entered into an agreement
with Norwest Bank ("Bank") with respect to that certain Line of Credit
between the Corporation, as maker, and the Bank, as payee, upon terms
satisfactory to NCS, whereby the Bank shall release and hold harmless the
NCS under its guarantee of such Letter of Credit. Newco agrees to pay down
the amount outstanding under the Letter of Credit if necessary to release
and hold harmless the NCS from such guarantee.
(d) LEASE COMMITMENT. Newco or DHT shall have entered into agreements
with certain parties to assume the customer and bank lease commitments set
forth on Schedule 5.2(d), upon terms satisfactory to NCS, relating to
representations and warranties on agreements between the Corporation and its
customers and leasing company whereby NCS is currently the guarantor.
(e) PROMISSORY NOTE. Newco or DHT shall have paid to NCS the balance
outstanding at time of Closing, in satisfaction of all amounts due under
that certain promissory note dated March 31, 1995 by and between the
Corporation, as maker, and NCS, as payee.
(f) OPINION OF COUNSEL. Corporation and NCS shall have received from
Cohen, Berke, Bernstein, Brodie, Kondell & Laszlo, P.A., counsel for Newco,
an opinion, dated as of the Closing, in the form attached hereto as Exhibit
"D."
(g) CUSTOMER SUPPORT AGREEMENTS. Newco or DHT shall have used its best
efforts to assume the customer standby support agreements between NCS and
customers of the Corporation listed on Schedule 5.2(d) hereto.
(h) COMPLIANCE CERTIFICATE FROM NEWCO. The President of Newco shall
deliver to the Corporation and NCS at the Closing a certificate confirming
the matters specified in Sections 5.2(a) and (b).
(i) SECRETARY'S CERTIFICATE FROM NEWCO. A certificate, dated as of the
Closing Date, of the Secretary of Newco certifying that: (i) attached is a
true and correct copy of the Articles of Incorporation and Bylaws of Newco
as then in effect; (ii) attached is a true and correct copy and
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the resolutions adopted by the Board of Directors and shareholders of Newco
approving the Merger, Merger Agreement, this Agreement and the transactions
contemplated hereby; and (iii) to the incumbency and specimen signatures of
each officer of Newco, executing this Agreement and the other agreements and
certificates contemplated hereby.
(j) ABSENCE OF LITIGATION OR CLAIM. Newco shall not have become aware
or received notice of any threatened, pending or commenced litigation,
arbitration, administrative hearing or investigation, termination of any
material contract, or other action seeking to prevent, or having a potential
detrimental effect upon the Corporation or NCS in connection with, the
consummation of the transactions contemplated by this Agreement, nor shall
such action(s) have been pending, commenced or threatened.
(k) ALL PROCEEDINGS TO BE SATISFACTORY. All corporate and other
proceedings to be taken by Newco in connection with the transactions
contemplated by this Agreement and all documents incident thereto shall be
reasonably satisfactory in form and substance to the Corporation, NCS and
their respective counsel, and the Corporation, NCS and their respective
counsel shall have received all such counterpart originals or certified or
other copies of such documents as they reasonably may request.
(l) FAIRNESS OPINION AND SHAREHOLDERS APPROVAL. The fairness opinion
of John G. Kinnard and Company, Inc. shall be satisfactorily updated
concurrent with mailing the proxy material to the shareholders and the
shareholders of the Corporation shall have duly approved the Merger.
ARTICLE 6
INDEMNIFICATION
6.1 INDEMNIFICATION.
(a) Subject to subsection (d) below, NCS shall indemnify Newco and hold
it harmless against any loss, liability, damage, deficiency or expense
(including reasonable legal expenses and costs as incurred) (collectively,
"Losses") which Newco may suffer, sustain or become subject to, directly or
indirectly, as a result of or in connection with the breach or inaccuracy by
NCS of its representations or warranties contained in Section 3.2 of this
Agreement. With respect to claims for breaches of representations or
warranties contained in this Agreement, or in any agreement relating to or
contemplated hereby, NCS shall be liable with respect to any Losses
regardless of when finally ascertained, provided written notice is given by
Newco pursuant to Paragraph (d) below. Notwithstanding the foregoing, the
representations and warranties of NCS and the indemnification obligation of
NCS contained in this Agreement shall terminate and expire six (6) months
from the Closing Date. Furthermore, the maximum aggregate amount which NCS
may be liable for pursuant to its indemnification obligation contained in
this Agreement shall be $355,000.
(b) Subject to subsection (d) below, Newco shall indemnify the
Corporation and NCS and hold them harmless against any Losses which they may
suffer, sustain or become subject to, as the result of or in connection with
(i) the breach by Newco of any representation or warranty of Newco contained
in this Agreement, or in any agreement relating to or contemplated hereby,
or (ii) the breach by Newco of any covenant or agreement of Newco contained
in this Agreement or in any agreement relating to or contemplated hereby.
With respect to claims for breaches of representation and warranties
contained in this Agreement, or in any agreement relating to or contemplated
hereby, Newco will be liable with respect to any Losses, regardless of when
finally ascertained, if written notice of a claim for such breach is given
by Corporation or NCS to Newco pursuant to paragraph (c) below.
(c) Subject to subsection (d) below, Newco and DHT shall indemnify NCS
and hold it harmless against any Losses (including without limitation, any
cost or expenses associated with
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performance of standby support obligations) which it may suffer, sustain,
incur or become subject to, as a result of or in connection with, any claim,
demand or other requirement made or asserted against NCS from and after the
Closing Date, under, pursuant to or arising out of any standby support
agreement or other similar agreement between NCS and any customer of the
Corporation, as listed on Schedule 5.2(d) hereto, pursuant to which NCS
guarantees, agrees to provide for or agrees to perform in place of, the
performance of the Corporation, (collectively, "Standby Support
Agreements"). Notwithstanding subsection (d) below, NCS shall be entitled at
its option, but not obligated, to perform the requirements of any Standby
Support Agreement, upon customer demand until and unless Newco provides
performance which is satisfactory to the customer as confirmed by the
customer in writing, and all expense of such performance, if any, in
addition to any other Losses resulting from such claim, shall be subject to
the indemnity provided in this Section 6.1(c).
(d) Any party making a claim for indemnification under this Section 6.1
(an "Indemnitee") shall notify the indemnifying party (an "Indemnitor") of
the claim in writing promptly after discovering the claim or receiving
written notice of a claim against it (if by a third party), describing the
claim, the amount thereof (if known and quantifiable), and the basis
thereof. Any claim for indemnification under this Section 6.1 to the extent
such claim can be reasonably quantified, must be for a minimum amount of
$15,000 or when the amount of such claim is aggregated with other claims for
indemnification brought under this Section 6.1 equals or exceeds $15,000. An
Indemnitor shall be entitled to participate in the defense of such action at
its expense, and at its option (subject to the limitations set forth below)
shall be entitled to assume control of such defense with reputable counsel;
provided, that prior to Indemnitor assuming control of such defense it or
they shall first verify to the Indemnitee in writing that such Indemnitor
shall be fully responsible for such claim and that it will provide the full
indemnification required hereunder to Indemnitee with respect to such claim,
including payment thereof and performance thereunder; and provided further,
that:
(i) The Indemnitee shall be entitled to participate in the defense of
such claim and to employ counsel of its choice for such purpose, the fees
and expenses of such separate counsel which shall be borne by Indemnitee.
Notwithstanding the foregoing, the fees and expenses of such separate
counsel incurred prior to the date the Indemnitor's counsel effectively
assumes control of such defense shall be borne by the Indemnitor; and
(ii) The Indemnitee shall be entitled to assume control of such
defense and shall bear the fees and expenses of counsel retained by the
Indemnitor if, upon petition by Indemnitee, the appropriate court rules
that the Indemnitor failed or is failing to vigorously prosecute or
defend such claim; and
(iii) The Indemnitor shall not be entitled to control the defense of
any claim to the extent that the claim seeks an injunction or equitable
relief against Indemnitee which, if successful, could materially
interfere with the business of the Indemnitee. If the Indemnitor, with
the consent of the Indemnitee, shall control the defense of any such
claim, the Indemnitor shall obtain the prior written consent of the
Indemnitee (which shall not be unreasonably withheld) before entering
into any settlement of a claim or ceasing to defend such claim, if
pursuant to or as a result of such settlement or cessation, injunction or
other equitable relief will be imposed against the Indemnitee.
(iv) If the claim is the result of an asserted breach of any warranty,
representation or covenant, and such claim is material, then the costs of
defense of such claim shall be borne by the Indemnitor on a current basis
if so requested by Indemnitee.
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ARTICLE 7
MISCELLANEOUS PROVISIONS
7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Unless limited herein to
the contrary, all representations, warranties, covenants and other agreements
contained herein or appended hereto shall survive the execution and delivery of
this agreement and the Closing, irrespective of any
investigation made by or on behalf of either party.
7.2 NOTICES. All notices which are permitted or required under this
Agreement shall be in writing and delivered personally or by certified mail,
postage prepaid, addressed as follows, or to such other person or address as may
be designated by written notice by one party to another:
<TABLE>
<S> <C>
If to NEWCO: DMI ACQUISITION CORP.
101 Southhall Lane, Suite 210
Maitland, Florida 32751
Attn: Mitchel J. Laskey, President
With a copy to: Richard N. Bernstein, Esq.
Cohen, Berke, Bernstein,
Brodie, Kondell & Laszlo, P.A.
Terremark Centre, 19th Floor
2601 South Bayshore Drive
Miami, Florida 33133
If to DHT: Dynamic Healthcare Technologies, Inc.
101 Southhall Lane, Suite 210
Maitland, Florida 32751
Attn: Mitchel J. Laskey, President
With a copy to: Richard N. Bernstein, Esq.
Cohen, Berke, Bernstein,
Brodie, Kondell & Laszlo, P.A.
Terremark Centre, 19th Floor
2601 South Bayshore Drive
Miami, Florida 33133
If to CORPORATION: DIMENSIONAL MEDICINE, INC.
10901 Bren Road East
Minnesota, MN 55343
Attn: John Paumen, President
With a Copy to: John Houston, Esq.
Lindquist & Vennum, P.L.L.P.
4200 IDS Center
Minneapolis, MN 55402
If to NCS: NATIONAL COMPUTER SYSTEMS, INC.
11000 Prairie Lakes Drive
Eden Prairie, Minnesota 55354
Attn: Ms. Adrienne Tietz
With a Copy to: Mr. Michael C. Brewer, Esq.
National Computer Systems, Inc.
11000 Prairie Lakes Drive
Eden Prairie, Minnesota 55354
</TABLE>
Notices shall be deemed delivered when delivered personally or when mailed by
prepaid certified or registered mail with return receipt requested, or air
courier which provides for evidence of delivery.
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The addresses set forth above shall be conclusive for all purposes unless
and until written notice of a change of address shall be sent to the parties
herein.
7.3 NOTIFICATION OF CERTAIN MATTERS. Corporation and NCS shall give prompt
notice to Newco of:
(a) any notice of, or other written communication relating to, any
default or event which with notice or lapse of time or both, would become a
default, received by Corporation, NCS or any affiliate, subsequent to the
date of this Agreement and prior to the date of closing, under any contract,
agreement or instrument to which Corporation is a party;
(b) any notice or other communication from any third party alleging that
the consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement;
(c) any written communication from any third party, or any oral
communication from any third party which Corporation or NCS reasonably
believes is the precursor of a written communication challenging the
legality or fairness of this Agreement or threatening any action or
proceeding in respect to this Agreement with a view to preventing the
consummation of this transaction; and
(d) the occurrence of any event or the failure of any event to occur
that results in a breach of any representation or warranty of Corporation or
NCS or a failure of Corporation or NCS to comply with any covenant,
condition or agreement contained herein.
(e) Any notice of the exercise of dissenter's rights by any Corporation
stockholder.
7.4 TERMINATION. This Agreement may be terminated and the Merger may be
abandoned at anytime prior to the Closing (notwithstanding any approval of this
Agreement by the shareholders of the Corporation):
(a) by mutual written consent of the Corporation and Newco;
(b) by either the Corporation or Newco, if there has been a material
misrepresentation, material breach of warranty or violation of any material
covenant on the part of the other party in the representations, warranties
and covenants contained herein;
(c) by either the Corporation or Newco, if the Closing has not occurred
by May 15, 1996; provided that no party may terminate this Agreement
pursuant to this clause if such party's failure to fulfill any of its
obligations under this Agreement shall have been the reason the Closing
shall not have occurred on or before said date;
(d) by either the Corporation or Newco, if there shall be any law or
regulation that makes consummation of the Merger illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining the
Corporation or Newco from consummating the Merger is entered and such
judgment, injunction, order or decree shall become final and non-appealable;
(e) by either the Corporation and Newco, if the Corporation's
shareholders shall have voted on and failed to adopt and approve this
Agreement and the Merger.
7.5 KNOWLEDGE. In the context of this Agreement, where the standard of
knowledge is applied with respect to any representation or warranty on the part
of the Corporation, this shall mean the knowledge of John Paumen, Mark Holman or
Adrienne Tietz. In the context of this Agreement, where the standard of
knowledge is applied with respect to any representation or warranty on the part
of NCS, this shall mean the knowledge of Adrienne Tietz.
7.6 NO ASSIGNMENT. This Agreement may not be assigned by either party
without the prior written consent of the other party.
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7.7 SEVERABILITY. Any provision of this Agreement which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
7.8 GOVERNING LAW. This Agreement is deemed to have been made in the State
of Florida and its interpretations, its construction and the remedies for its
enforcement or breach are to be applied pursuant to, and in accordance with, the
laws of the State of Florida for contracts made and to be performed in that
State.
7.9 SCHEDULES. It is acknowledged and agreed that all schedules to this
Agreement are an integral part hereof and are incorporated, in total, by
reference fully as a part of this Agreement in all respects. Any schedule or
exhibit which is not attached hereto at the time of the execution of this
Agreement shall be exchanged at or prior to the time of Closing, and shall be
subject to review and approval by the parties hereto and agreed to by them.
7.10 INCORPORATION AND AMENDMENT. This writing constitutes the entire
agreement of the parties superseding and extinguishing all prior agreements or
understandings, representations or warranties, relating to the subject matter
hereof. This Agreement may not be modified, amended or terminated except by
written agreement specifically referring to this Agreement signed by the parties
hereto.
7.11 REMEDIES. Newco, and Corporation and NCS agree that any dispute
arising among the parties hereto shall be settled by a court of competent
jurisdiction in accordance with applicable law and that the parties shall be
free to petition the court for all appropriate legal and/or equitable remedies
inclusive of specific performance and injunctive relief.
7.12 WAIVER. No waiver of any breach or default hereunder shall be
considered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or default
of the same or similar nature.
7.13 HEADINGS. The paragraph headings contained herein are for the purpose
of convenience only and are not intended to define or limit the contents of said
paragraphs.
7.14 FURTHER ACTION. Each party hereto shall take such further action and
shall execute and deliver such further documents as may be reasonably requested
by the other party in order to carry out the provisions and purposes of this
Agreement.
7.15 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall be deemed one original.
7.16 VENUE. The parties hereto mutually agree that proper venue with
respect to any dispute arising hereunder, related hereto and connected herewith
shall be Seminole County, Florida.
7.17 PUBLIC ANNOUNCEMENTS. No party shall, without the prior written
consent from the other parties, issue any press release or furnish any written
statement to the Corporation's employees or to the public concerning the
transactions contemplated by this Agreement.
[THE BOTTOM OF THIS PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first written above.
<TABLE>
<S> <C> <C>
THE CORPORATION:
DIMENSIONAL MEDICINE INC.,
a Minnesota corporation
By: /s/ JOHN P. PAUMEN
----------------------------------------
John P. Paumen, PRESIDENT
NCS:
NATIONAL COMPUTER SYSTEMS, INC.,
a Minnesota corporation
By: /s/ ADRIENNE T. TIETZ
----------------------------------------
Adrienne T. Tietz, VICE PRESIDENT
NEWCO:
DMI ACQUISITION CORP.,
a Florida corporation
By: /s/ MITCHEL J. LASKEY
----------------------------------------
Mitchel J. Laskey, PRESIDENT
DHT:
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.,
a Nebraska corporation
By: /s/ MITCHEL J. LASKEY
--------------------------------------------
Mitchel J. Laskey, PRESIDENT
</TABLE>
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APPENDIX B
OPINION OF JOHN G. KINNARD & COMPANY, INCORPORATED
March 28, 1996
Board of Directors
Dimensional Medicine, Inc.
10901 Bren Road East
Minnetonka, Minnesota 55343
Dear Directors:
You have requested our opinion as to the fairness, from a financial point of
view, to the minority holders of the common stock of Dimensional Medicine, Inc.
("DMI" or the "Company") other than National Computer Systems, Inc. ("NCS") (the
"Minority Shareholders") of the consideration which is proposed to be paid to
such holders pursuant to a Merger Agreement (the "Merger Agreement") by and
among DMI, Dynamic Healthcare Technologies, Inc. ("DHT"), DMI Acquisition Corp.,
a wholly owned subsidiary of DHT ("Newco"), and NCS, the Company's principal
shareholder, pursuant to which the Company will be merged with and into Newco
(the "Merger"). Pursuant to the Merger Agreement, the total outstanding shares
of common stock of DMI will be converted into the right to receive, in
aggregate, $550,000 cash; of this $550,000 consideration, each share of DMI
common stock held by Minority Shareholders will be converted into the right to
receive $0.040 cash and each share of DMI common stock held by NCS will be
converted into the right to receive approximately $0.013 cash.
John G. Kinnard & Company, Incorporated ("Kinnard"), as part of its
investment banking activities, is accustomed to valuing virtually all types of
securities and to advising the directors, officers and shareholders of both
public and private companies with respect to the fairness of the terms of
investments, mergers and acquisitions. Kinnard is independent with respect to
the Merger and did not act as financial advisor to DMI regarding the terms of
the Merger.
In connection with this opinion we have reviewed and analyzed, among other
things, certain historical and projected financial information on the Company;
visited the corporate offices of the Company; and held discussions with senior
management and the directors of DMI regarding the past and current business
operations, financial condition, and future prospects for the Company. We
reviewed an executed copy of the Merger Agreement dated February 5, 1996 and the
Proxy Statement dated March 28, 1996 relating to the special meeting of
shareholders of DMI.
We reviewed the historical reported market prices and trading activity of
the common stock of DMI. We compared financial and stock market information on
DMI to similar information for certain publicly traded companies providing
health care information and imaging products. We reviewed, to the extent
publicly available, the terms of selected relevant merger and acquisition
transactions; analyzed the general economic outlook of companies in the health
care information technology industry; and performed other studies and analyses
as we considered appropriate.
In preparing our opinion, we relied upon the accuracy and completeness of
all information provided or otherwise made available to us by DMI, and we did
not independently verify such information. We did not make an independent
appraisal of the assets of DMI and we do not express an opinion regarding the
liquidation value of the Company.
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<PAGE>
Based upon the foregoing, and other matters that we consider relevant, it is
our opinion that, as of the date hereof, both the aggregate consideration of
$550,000 cash to be received for all outstanding common shares of DMI and the
per share consideration of $0.040 cash to be received by the Minority
Shareholders in connection with the Merger are fair to the Minority Shareholders
from a financial point of view.
Very truly yours,
/s/ John G. Kinnard & Company,
Incorporated
JOHN G. KINNARD & COMPANY,
INCORPORATED
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<PAGE>
APPENDIX C
PROVISIONS OF THE MINNESOTA BUSINESS CORPORATION ACT
RELATING TO RIGHTS OF DISSENTING SHAREHOLDERS
302A.471. RIGHTS OF DISSENTING SHAREHOLDERS
Subdivision 1. ACTIONS CREATING RIGHTS. A shareholder of a corporation may
dissent from, and obtain payment for the fair value of the shareholder's shares
in the event of, any of the following corporate actions:
(a) An amendment of the articles that materially and adversely affects the
rights or preferences of the shares of the dissenting shareholder in that it:
(1) alters or abolishes a preferential right of the shares;
(2) creates, alters, or abolishes a right in respect of the redemption
of the shares, including a provision respecting a sinking fund for the
redemption or repurchase of the shares;
(3) alters or abolishes a preemptive right of the holder of the shares
to acquire shares, securities other than shares, or rights to purchase
shares or securities other than shares;
(4) excludes or limits the right of a shareholder to vote on a matter,
or to cumulate votes, except as the right may be excluded or limited through
the authorization or issuance of securities of an existing or new class or
series with similar or different voting rights; except that an amendment to
the articles of an issuing public corporation that provides that section
302A.671 does not apply to a control share acquisition does not give rise to
the right to obtain payment under this section;
(b) A sale, lease, transfer, or other disposition of all or substantially
all of the property and assets of the corporation, but not including a
transaction permitted without shareholder approval in section 302A.661,
subdivision 1, or a disposition in dissolution described in section 302A.725,
subdivision 2, or a disposition pursuant to an order of a court, or a
disposition for cash on terms requiring that all or substantially all of the net
proceeds of disposition be distributed to the shareholders in accordance with
their respective interests within one year after the date of disposition;
(c) A plan of merger, whether under this chapter or under chapter 322B, to
which the corporation is a party, except as provided in subdivision 3;
(d) A plan of exchange, whether under this chapter or under chapter 322B, to
which the corporation is a party as the corporation whose shares will be
acquired by the acquiring corporation, if the shares of the shareholder are
entitled to be voted on the plan; or
(e) Any other corporate action taken pursuant to a shareholder vote with
respect to which the articles, the bylaws, or a resolution approved by the board
directs that dissenting shareholders may obtain payment for their shares.
Subd. 2. BENEFICIAL OWNERS. (a) A shareholder shall not assert dissenters'
rights as to less than all of the shares registered in the name of the
shareholder, unless the shareholder dissents with respect to all the shares that
are beneficially owned by another person but registered in the name of the
shareholder and discloses the name and address of each beneficial owner on whose
behalf the shareholder dissents. In that event, the rights of the dissenter
shall be determined as if the shares as to which the shareholder has dissented
and the other shares were registered in the names of different shareholders.
(b) The beneficial owner of shares who is not the shareholder may assert
dissenters' rights with respect to shares held on behalf of the beneficial
owner, and shall be treated as a dissenting shareholder under the terms of this
section and section 302A.473, if the beneficial owner submits to the corporation
at the time of or before the assertion of the rights a written consent of the
shareholder.
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Subd. 3. RIGHTS NOT TO APPLY. Unless the articles, the bylaws, or a
resolution approved by the board otherwise provide, the right to obtain payment
under this section does not apply to a shareholder of the surviving corporation
in a merger, if the shares of the shareholder are not entitled to be voted on
the merger.
Subd. 4. OTHER RIGHTS. The shareholders of a corporation who have a right
under this section to obtain payment for their shares do not have a right at law
or in equity to have a corporate action described in subdivision 1 set aside or
rescinded, except when the corporate action is fraudulent with regard to the
complaining shareholder or the corporation.
302A.473. PROCEDURES FOR ASSERTING DISSENTERS' RIGHTS
Subdivision 1. DEFINITIONS. (a) For purposes of this section, the terms
defined in this subdivision have the meanings given them.
(b) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action referred to in section 302A.471, subdivision 1 or the
successor by merger of that issuer.
(c) "Fair value of the shares" means the value of the shares of a
corporation immediately before the effective date of the corporate action
referred to in section 302A.471, subdivision 1.
(d) "Interest" means interest commencing five days after the effective date
of the corporate action referred to in section 302A.471, subdivision 1, up to
and including the date of payment, calculated at the rate provided in section
549.09 for interest on verdicts and judgments.
Subd. 2. NOTICE OF ACTION. If a corporation calls a shareholder meeting at
which any action described in section 302A.471, subdivision 1 is to be voted
upon, the notice of the meeting shall inform each shareholder of the right to
dissent and shall include a copy of section 302A.471 and this section and a
brief description of the procedure to be followed under these sections.
Subd. 3. NOTICE OF DISSENT. If the proposed action must be approved by the
shareholders, a shareholder who wishes to exercise dissenters' rights must file
with the corporation before the vote on the proposed action a written notice of
intent to demand the fair value of the shares owned by the shareholder and must
not vote the shares in favor of the proposed action.
Subd. 4. NOTICE OF PROCEDURE; DEPOSIT OF SHARES. (a) After the proposed
action has been approved by the board and, if necessary, the shareholders, the
corporation shall send to all shareholders who have complied with subdivision 3
and to all shareholders entitled to dissent if no shareholder vote was required,
a notice that contains:
(1) The address to which a demand for payment and certificates of
certificated shares must be sent in order to obtain payment and the date by
which they must be received;
(2) Any restrictions on transfer of uncertificated shares that will
apply after the demand for payment is received;
(3) A form to be used to certify the date on which the shareholder, or
the beneficial owner on whose behalf the shareholder dissents, acquired the
shares or an interest in them and to demand payment; and
(4) A copy of section 302A.471 and this section and a brief description
of the procedures to be followed under these sections.
(b) In order to receive the fair value of the shares, a dissenting
shareholder must demand payment and deposit certificated shares or comply
with any restrictions on transfer of uncertificated shares within 30 days
after the notice required by paragraph (a) was given, but the dissenter
retains all other rights of a shareholder until the proposed action takes
effect.
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Subd. 5. PAYMENT; RETURN OF SHARES. (a) After the corporate action takes
effect, or after the corporation receives a valid demand for payment, whichever
is later, the corporation shall remit to each dissenting shareholder who has
complied with subdivisions 3 and 4 the amount the corporation estimates to be
the fair value of the shares, plus interest, accompanied by:
(1) The corporation's closing balance sheet and statement of income for
a fiscal year ending not more than 16 months before the effective date of
the corporate action, together with the latest available interim financial
statements;
(2) An estimate by the corporation of the fair value of the shares and a
brief description of the method used to reach the estimate; and
(3) A copy of section 302A.471 and this section, and a brief description
of the procedure to be followed in demanding supplemental payment.
(b) The corporation may withhold the remittance described in paragraph (a)
from a person who was not a shareholder on the date the action dissented from
was first announced to the public or who is dissenting on behalf of a person who
was not a beneficial owner on that date. If the dissenter has complied with
subdivisions 3 and 4, the corporation shall forward to the dissenter the
materials described in paragraph (a), a statement of the reason for withholding
the remittance, and an offer to pay to the dissenter the amount listed in the
materials if the dissenter agrees to accept that amount in full satisfaction.
The dissenter may decline the offer and demand payment under subdivision 6.
Failure to do so entitles the dissenter only to the amount offered. If the
dissenter makes demand, subdivisions 7 and 8 apply.
(c) If the corporation fails to remit payment within 60 days of the deposit
of certificates or the imposition of transfer restrictions on uncertificated
shares, it shall return all deposited certificates and cancel all transfer
restrictions. However, the corporation may again give notice under subdivision 4
and require deposit or restrict transfer at a later time.
Subd. 6. SUPPLEMENTAL PAYMENT; DEMAND. If a dissenter believes that the
amount remitted under subdivision 5 is less than the fair value of the shares
plus interest, the dissenter may give written notice to the corporation of the
dissenter's own estimate of the fair value of the shares, plus interest, within
30 days after the corporation mails the remittance under subdivision 5, and
demand payment of the difference. Otherwise, a dissenter is entitled only to the
amount remitted by the corporation.
Subd. 7. PETITION; DETERMINATION. If the corporation receives a demand
under subdivision 6, it shall, within 60 days after receiving the demand, either
pay to the dissenter the amount demanded or agreed to by the dissenter after
discussion with the corporation or file in court a petition requesting that the
court determine the fair value of the shares, plus interest. The petition shall
be filed in the county in which the registered office of the corporation is
located, except that a surviving foreign corporation that receives a demand
relating to the shares of a constituent domestic corporation shall file the
petition in the county in this state in which the last registered office of the
constituent corporation was located. The petition shall name as parties all
dissenters who have demanded payment under subdivision 6 and who have not
reached agreement with the corporation. The corporation shall, after filing the
petition, serve all parties with a summons and copy of the petition under the
rules of civil procedure. Nonresidents of this state may be served by registered
or certified mail or by publication as provided by law. Except as otherwise
provided, the rules of civil procedure apply to this proceeding. The
jurisdiction of the court is plenary and exclusive. The court may appoint
appraisers, with powers and authorities the court deems proper, to receive
evidence on and recommend the amount of the fair value of the shares. The court
shall determine whether the shareholder or shareholders in question have fully
complied with the requirements of this section, and shall determine the fair
value of the shares, taking into account any and all factors the court finds
relevant, computed by any method or combination of methods that the court, in
its discretion, see fit to use, whether or not used by the corporation or by a
dissenter. The fair value of the shares as determined by
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the court is binding on all shareholders, wherever located. A dissenter is
entitled to judgment in cash for the amount by which the fair value of the
shares as determined by the court, plus interest, exceeds the amount, if any,
remitted under subdivision 5, but shall not be liable to the corporation for the
amount, if any, by which the amount, if any, remitted to the dissenter under
subdivision 5 exceeds the fair value of the shares as determined by the court,
plus interest.
Subd. 8. COSTS; FEES; EXPENSES. (a) The court shall determine the costs
and expenses of a proceeding under subdivision 7, including the reasonable
expenses and compensation of any appraisers appointed by the court, and shall
assess those costs and expenses against the corporation, except that the court
may assess part or all of those costs and expenses against a dissenter whose
action in demanding payment under subdivision 6 is found to be arbitrary,
vexatious, or not in good faith.
(b) If the court finds that the corporation has failed to comply
substantially with this section, the court may assess all fees and expenses of
any experts or attorneys as the court deems equitable. These fees and expenses
may also be assessed against a person who has acted arbitrarily, vexatiously, or
not in good faith in bringing the proceeding, and may be awarded to a party
injured by those actions.
(c) The court may award, in its discretion, fees and expenses to an attorney
for the dissenters out of the amount awarded to the dissenters, if any.
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PROXY
DIMENSIONAL MEDICINE, INC.
SPECIAL MEETING OF SHAREHOLDERS -- APRIL 29, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John P. Paumen and Mark D. Holman, or either
of them, as proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the shares of
stock of Dimensional Medicine, Inc. ("DMI") which the undersigned would be
entitled to vote at the Special Meeting of Shareholders to be held on April 29,
1996, or at any adjournment or adjournments thereof, hereby revoking all former
proxies.
(1) Proposal to approve the Merger Agreement with Dynamic Healthcare
Technologies, Inc. ("DHT") pursuant to which DMI will be merged with and
into DMI Acquisition Corp., a wholly owned subsidiary of DHT and shares of
DMI's common stock held by DMI's shareholders will be converted into the
right to receive an aggregate $550,000 in cash, of which an aggregate
$355,000, or approximately $.013 per share, will be paid to NCS, and
approximately $195,000, or $.040 per share, will be paid to the minority
shareholders, as set forth in the Merger Agreement and as described in the
Proxy Statement accompanying this Proxy.
/ / FOR / / AGAINST / / ABSTAIN
(2) In their discretion, on such other business as may properly come before the
Special Meeting or any adjournment or adjournments thereof.
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THIS PROXY WHEN PROPERLY EXECUTED AND RETURNED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THE
PROXY WILL BE VOTED "FOR" PROPOSAL (1).
Dated: ----------------------------------------
Signed:
----------------------------------------
(Signature of Shareholder)
----------------------------------------
(Signature of Shareholder)
Please vote, date and sign this proxy exactly as
your name is printed hereon. When signing as
attorney, executor, administrator, trustee,
guardian, etc. give full title as such. If the
stock is held jointly, each owner should sign. If
a corporation, please sign in full corporate name
by President or other authorized officer. If a
partnership, please sign in partnership name by
authorized person.
