UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------------------
8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
----------------------------------------------
Date of Report (Date of earliest event reported): July 6, 1999
MEDICAL INDUSTRIES OF AMERICA, INC.
(Exact name of registrant as specified in its Charter)
FLORIDA 0-20356 65-0158479
(State of other jurisdiction (Commission file no.) (IRS Employer ID
of incorporation) Number)
1903 S. CONGRESS AVENUE, SUITE 400, BOYNTON BEACH, FLORIDA 33426
(Address of principal executive offices)
Registrant's telephone number, including area code: 561-737-2227
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Inapplicable
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
The Company entered into a Stock Exchange Agreement with
CyberCare, Inc. ("CyberCare") on July 5, 1999 (the "Exchange Agreement").
The terms of the Exchange Agreement provide that the CyberCare
stockholders will receive one (1) share of the Company's common stock, par
value $.0025, for each share of stock they own in CyberCare. There are
presently Seven Million Two Hundred Fifty Thousand (7,250,000) shares of
capital stock of CyberCare issued and outstanding. The Company's common
stock was valued for purposes of this acquisition at One Dollar and 50/100
($1.50) per share (the "Fair Market Value"). Additional shares of the
Company's common stock will be issued to the CyberCare stockholders if the
average closing bid price (the "Valuation Price") of the Company's common
stock is less than the Fair Market Value for the 30 day period commencing
on the effective date of the registration statement described below. Such
additional shares will be calculated by subtracting the Valuation Price
from the Fair Market Value and then multiplying the remainder by
7,250,000. CyberCare also has outstanding warrants and options may be
converted to Nine Hundred Thirty Five Thousand (935,000) shares of its
common stock. These options and warrants will be replaced with like
warrants and options in the Company and are also subject to the Fair
Market Value formula.
The Company has granted the CyberCare stockholders certain
registration rights with respect to the shares of common stock of the
Company they will receive at closing as well as the shares underlying
their options and warrants. Specifically, the Company has granted
piggy-back registration rights to such stockholders, but if the Company
has not included such shares in a registration statement filed with the
Commission within five (5) months of the closing, the CyberCare
stockholders have the right to demand registration. Notwithstanding the
foregoing registration rights, the principals of CyberCare will be
restricted from selling their shares of the Company's common stock for a
period of one year from the effective date of the registration statement
registering such shares.
As part of this transaction, Mr. John Haines, the present
chief executive officer and president of CyberCare, has entered into a
three-year employment agreement with the Company. The Company has agreed
to pay Mr. Haines $175,000 per annum and has granted him 200,000 options
which will vest pro rata over the term of his employment.
The closing of the CyberCare transaction is conditioned upon
stockholder approval. If this condition is satisfied, it is anticipated
that the closing will occur as soon as reasonably possible following the
approval of this transaction by the Company's stockholders. This
transaction will be accounted
2
<PAGE>
for under the purchase method of accounting in accordance with generally
accepted accounting principles.
The acquisition of CyberCare has been deemed "significant."
Accordingly, historical and pro forma financial information are filed
herewith.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Inapplicable
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Inapplicable
ITEM 5. OTHER EVENTS
Inapplicable
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS
Inapplicable
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) CyberCare, Inc. - Report on Audit of Financial
Statements for the year ended December 31, 1998
Report of Independent Accountants
Financial Statements:
o Balance Sheet
o Statement of Operations
o Statement of Shareholders' Deficit
o Statement of Cash Flows
Notes to Financial Statements
(b) Pro forma financial information required pursuant to
Article II of Registration S-X:
(i) Pro Forma Condensed Combined Balance Sheet
as of December 31, 1998.
(ii) Pro Forma Condensed Combined Statement of
Operations for the year ended
December 31, 1998.
(iii) Pro Forma Condensed Combined Balance Sheet
as of March 31, 1999.
3
<PAGE>
(iv) Pro Forma Condensed Combining Statement of
Operations for the three months ended March
31, 1999.
ITEM 8. CHANGE IN FISCAL YEAR
Inapplicable
EXHIBIT NO.
2.1 Stock Exchange Agreement Between Medical Industries of
America, Inc. and CyberCare, Inc.
10.1 Employment Agreement By and Between Medical Industries of
America, Inc. and John E. Haines
10.2 Amendment #1 to Employment Agreement By and Between Medical
Industries of America, Inc. and John E. Haines
10.3 Registration Rights Agreement between Medical Industries of
America, Inc. and CyberCare, Inc.
10.4 Restricted Sale Agreement
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Medical Industries of America, Inc.
By: /s/ PAUL C. PERSHES
Paul C. Pershes, President & Director
(Duly Authorized Director & Officer of the
Registrant)
Dated: July 15, 1999
5
<PAGE>
CYBERCARE, INC.
(A DEVELOPMENT STAGE COMPANY)
REPORT ON AUDIT OF
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1998
<PAGE>
CYBERCARE, INC.
(A DEVELOPMENT STAGE COMPANY)
TABLE OF CONTENTS
PAGE #
------
Report of independent accountants 1
Financial statements:
Balance sheet 2
Statement of operations 3
Statement of shareholders' deficit 4
Statement of cash flows 5
Notes to financial statements 6-10
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders
CyberCare, Inc.
We have audited the accompanying balance sheet of CyberCare, Inc. (a Development
Stage Company) as of December 31, 1998, and the related statements of
operations, shareholders' deficit, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements referred to above present fairly, in
all material respects, the financial position of CyberCare, Inc. as of December
31, 1998, and the results of its operations and its cash flows for the year then
ended, in conformity with generally accepted accounting principles.
/S/ Templeton & Company, P.A.
Royal Palm Beach, Florida
June 16, 1999
<PAGE>
CYBERCARE, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
DECEMBER 31, 1998
ASSETS
Current assets:
Cash ......................................................... $ 30,854
Other current assets ......................................... 1,000
---------
Total current assets ....................................... 31,854
Property and equipment, net ..................................... 20,508
Total assets ........................................... $ 52,362
=========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable ............................................. $ 20,381
Licensing fees payable ....................................... 487,912
Accrued expenses ............................................. 20,013
---------
Total current liabilities .................................. 528,306
Commitments (Notes 4 and 6)
Shareholders' deficit:
Common stock, no par value; 24,000,000 shares
authorized; 5,086,663 shares issued and
outstanding ................................................ 365,000
Common stock subscribed (Note 4) ............................. 91,250
Deficit accumulated during the development stage ............. (932,194)
---------
Total shareholders' deficit .............................. (475,944)
Total liabilities and shareholders' deficit ............ $ 52,362
=========
See accompanying notes to financial statements.
2
<PAGE>
CYBERCARE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
Net sales ..................................................... $ --
---------
Research and development expenses:
Technology licensing fees .................................. 601,662
Compensation and related expenses .......................... 243,525
Professional fees .......................................... 29,414
Occupancy expenses ......................................... 15,223
Depreciation ............................................... 5,127
Other expenses ............................................. 37,243
---------
Total research and development expenses .................. 932,194
Loss before provision for income taxes ........................ (932,194)
Provision for income taxes .................................... --
Net loss incurred during the development stage ........... $(932,194)
=========
See accompanying notes to financial statements.
3
<PAGE>
CYBERCARE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Deficit
Common Accumulated
Common Stock Issued Stock During the
----------------------- Subscribed Development
No. Shares Amount (Note 4) Stage
----------- --------- ---------- -----------
<S> <C> <C> <C> <C>
Balance, January 1, 1998 ...... -- $ -- $ -- $ --
Issuance of 5,086,663
shares of common stock ..... 5,086,663 365,000 -- --
Common Stock Subscription
for 1,271,667 shares ....... -- -- 91,250 --
Net loss incurred during
the development stage ...... -- -- -- (932,194)
----------- --------- ---------- -----------
Balance, December 31, 1998 .... 5,086,663 $ 365,000 $ 91,250 $ (932,194)
=========== ========= ========== ===========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
CYBERCARE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1998
Cash flows from operating activities:
Net loss incurred during the development stage ............. $(932,194)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation ........................................... 5,127
Earnings charge for common stock subscribed ............ 91,250
Increase in accounts payable ........................... 20,381
Increase in licensing fees payable ..................... 487,912
Increase in accrued expenses ........................... 20,013
Increase in other current assets ....................... (1,000)
---------
Net cash used in operating activities ......................... (308,511)
---------
Cash flows from investing activities:
Purchases of property and equipment ........................ (25,635)
Cash flows from financing activities:
Proceeds from issuance of common stock ..................... 365,000
---------
Net increase in cash .......................................... 30,854
Cash, beginning of year ....................................... --
Cash, end of year ............................................. $ 30,854
=========
See accompanying notes to financial statements.
5
<PAGE>
CYBERCARE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND DESCRIPTION
CyberCare, Inc. (the Company) was formed in October 1997 to design, develop,
produce, and market a unique, user-friendly, multi-purpose system healthcare
providers can use to monitor chronically ill patients at remote locations using
internet and telecommunications technology (the System). The System's data
collection unit is designed to be placed at a patient's home to collect the
patient's vital medical data and transmit such data to the healthcare provider
over the internet using proprietary software. The Company initially expects to
market the System in the United States to healthcare providers including the
Veterans' Administration, United States Army, managed healthcare organizations,
nursing homes, assisted living facilities and others.
The System is based upon the technology developed by and acquired from certain
research institutions pursuant to technology licensing agreements (see Note 4).
The Company is in its development stage at December 31, 1998 as its activities
have related to planning, product development, market development, and raising
capital. Accordingly, the financial statements are prepared in accordance with
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 7, applicable to
development-stage companies.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies used in preparing the
accompanying financial statements follows:
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Depreciation is provided using
the accelerated methods over the estimated useful life of the assets,
which is five years.
CONCENTRATION OF CREDIT RISK
Financial instruments, which potentially subject the Company to
concentrations of credit risk, include temporary cash investments. The
Company places its cash with high credit quality financial institutions.
Such balances may exceed the FDIC insurance limit.
6
<PAGE>
CYBERCARE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses are charged to operations in the period
incurred.
STOCK-BASED COMPENSATION
The Company grants stock options for a fixed number of shares to employees
with an exercise price equal to the fair market value of the shares at the
date of grant. The Company has elected to follow Accounting Principles Board
(APB) Opinion Number 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES (APB 25),
and related Interpretations in accounting for its employee stock options
because the alternative fair value accounting provided for under Financial
Accounting Standards Board (FASB) Statement Number 123, ACCOUNTING FOR
STOCK-BASED COMPENSATION (FAS 123), requires use of option valuation models
that were not developed for use in valuing employee stock options. Under APB
25, because the exercise price of the Company's employee stock options
generally equals the exercise price of the underlying stock on the date of
grant, no compensation expense is recognized (see Note 8).
INCOME TAXES
Income Taxes are provided in accordance with the provisin of FASB Statement
Number 109, ACCOUNTING FOR INCOME TAXES (FAS 109).
MANAGEMENT ESTIMATES
Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosures.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31, 1998:
Office furniture, fixtures, and
equipment .................................. $ 25,635
Less accumulated depreciation ................. (5,127)
--------
$ 20,508
========
7
<PAGE>
CYBERCARE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOTE 4 - TECHNOLOGY LICENSING AGREEMENTS
The Company acquired the rights to certain technology under a licensing
agreement (the Agreement) with the Georgia Tech Research Center (GTRC) and the
Medical College of Georgia (MCG). Under the terms of the Agreement, the Company
is required to engage GTRC and MCG to provide additional research and
development services through May 2002 for total aggregate fees of $2,100,000, of
which $510,412 has been incurred through December 31, 1998. Licensing fees are
generally payable as the related services are performed; however, outstanding
amounts do not bear interest and there are no specified payment terms. The
Agreement entitles GTRC and MCG to each maintain a 10% equity position in the
Company until the total number of outstanding shares in the Company exceeds
8,000,000. For financial reporting purposes, the Company records a charge to
earnings for technology licensing fees and a related credit to common stock
subscribed as common stock is issued based on the underlying stock issuance
price. Such charges to earnings totaled $91,250 during 1998 relating to
1,271,667 shares subscribed. Subsequent to December 31, 1998, the Company
recorded charges to earnings of $144,998 relating to 178,333 shares subscribed.
During May 1999, the Company issued a combined total of 1,450,000 shares to GTRC
and MCG pursuant to this arrangement.
In addition, the Agreement requires the Company to pay an aggregate royalty fee
of 4% of gross sales of the System less any installation expenses and normal
trade discounts once sales of the System commence.
The Company is also obligated under a technology license agreement with
Footmark, Inc. (Footmark), a company owned by a shareholder, to pay a 6% royalty
on System sales which use Footmark's technology through 2000. The Company is
required to pay Footmark a termination fee of $55,000 if the Company elects not
to use Footmark's technology after that date.
NOTE 5 - INCOME TAXES
The Company reported a loss of $326,326 for federal income tax purposes for the
year ended December 31, 1998. Accordingly, no current provision for income taxes
is reflected in the accompanying financial statements. For federal income tax
purposes, the loss may be carried forward to offset future taxable income
through 2013.
Deferred income taxes are provided to reflect the tax consequences in future
years of temporary differences between the tax basis of assets and liabilities
and their financial reporting amounts and of tax loss carryforwards. A valuation
allowance is recorded when it is more likely than not that some portion or all
8
<PAGE>
CYBERCARE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOTE 5 - INCOME TAXES, CONTINUED
of the deferred tax assets will not be realized. Since the Company had not
commenced its planned principal operations as of December 31, 1998, a valuation
allowance was provided for all deferred tax assets recognized.
The following table presents the total deferred tax assets for all temporary
differences and the tax loss carryforward and the related valuation allowance at
December 31, 1998:
Net operating loss tax benefit ............... $ 122,699
Payables not recognized for tax
purposes .................................. 193,074
Net deferred tax asset .................... 315,773
Less: valuation allowance ................... (315,773)
---------
Net deferred tax .......................... $ --
=========
NOTE 6 - LEASE COMMITMENT
The Company leases its office space pursuant to a month-to-month leasing
arrangement. Rent expense totaled $12,509 in 1998.
NOTE 7 - STOCK WARRANTS
In connection with certain common stock sales during 1998, the Company granted
warrants to purchase up to 413,329 shares of common stock which may be exercised
at any time through 2000 and warrants to purchase up to 73,334 shares of common
stock which may be exercised through 2001. All such warrants are exercisable at
$.75 per share. No charges to earnings were recorded in connection with these
warrants.
NOTE 8 - SUBSEQUENT EVENTS
COMMON STOCK
Subsequent to December 31, 1998, the Company issued 713,332 shares of common
stock to certain individuals for cash proceeds of $580,000.
9
<PAGE>
CYBERCARE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOTE 8 - SUBSEQUENT EVENTS, CONTINUED
STOCK OPTIONS AND WARRANTS
Subsequent to December 31, 1998, the following stock options and warrants
were granted:
During January 1999, the Company's Board of Directors (the Board)
granted warrants to an individual to purchase up to 13,334 shares of
common stock at $.75 per share which are exercisable at any time through
January 2002.
During May 1999, the Board granted to certain key employees options to
purchase 300,000 shares of common stock at an exercise price of $.75 per
share (estimated fair value at the date of grant). These options are
exercisable at any time through May 2004.
In addition during May 1999, the Board granted options to purchase
80,000 shares of common stock at an exercise price of $.75 per share to
another employee which vest over a three-year period.
No charges to earnings will be recorded in connection with these
transactions.
LETTER OF INTENT
During June 1999, the Company entered into a letter of intent to merge with
Medical Industries of America, Inc., a publicly-traded company, (MIOA).
Under the terms of the letter of intent, the Company's shareholders will
receive one share of of MIOA's common stock for each share of the Company's
common stock. Additionally, any outstanding options and warrants for the
Company's common stock will be converted to options and warrants in MIOA
with comparable terms and discounts. Completion of the merger is subject to
the signing of a definitive agreement and approval by MIOA's shareholders.
10
<PAGE>
Medical Industries of America, Inc.
Pro Forma Condensed Combined Balance Sheet (Unaudited)
As of December 31, 1998
<TABLE>
<CAPTION>
Medical Air
Industries of Response Cybercare, Pro Forma Pro Forma
America, Inc. North, Inc. Inc. Adjustments Combined
------------ ------------ ------------ --------------- ------------
Assets
<S> <C> <C> <C> <C> <C>
Cash ............................................. $ 698,574 $ 149,947 $ 30,854 $ -- $ 879,375
Accounts Receivable .............................. 3,409,025 993,577 -- (b)(128,640) 4,273,962
Current portion of notes and mortgages
receivables .................................... 79,119 -- -- -- 79,119
Inventories ...................................... 125,525 -- -- -- 125,525
Medical equipment held for sale .................. 92,540 -- -- -- 92,540
802,731
Prepaid expenses and other current assets ........ 549,896 251,835 1,000 --
------------ ------------ ------------ --------------- ------------
Total current assets ......................... 4,954,679 1,395,359 31,854 (128,640) 6,253,252
Property and equipment, net ...................... 10,468,420 7,988,429 20,508 (a)2,233,368 20,610,725
(c)(100,000)
Notes and mortgages receivables, less
current maturity ............................... 97,580 -- -- -- 97,580
Intangible assets ................................ 8,338,972 -- -- (a) 845,490 19,049,212
(c)(34,000) --
(d) 10,418,750 --
(e) (520,000) --
Investment in equity securities .................. 2,863,840 -- -- 2,863,840
Other assets ..................................... 1,609,219 62,533 -- -- 1,671,752
------------ ------------ ------------ --------------- ------------
Total assets ................................. $ 28,332,710 $ 9,446,321 $ 52,362 $ 12,714,968 $ 50,546,361
============ ============ ============ =============== ============
Liabilities and Shareholders' Equity
Line of credit ................................... $ 1,789,827 $ -- $ -- $ -- $ 1,789,827
Current maturities of notes payable &
long-term debt ................................. 1,827,835 1,531,195 -- -- 3,359,030
Current maturities of capital lease
obligations .................................... 163,595 -- -- -- 163,595
Current maturities of convertible
subordinated debentures ........................ 125,000 -- -- -- 125,000
Accounts payable ................................. 2,117,079 1,915,728 20,381 (b)(128,640) 3,924,548
Accrued liabilities .............................. 1,009,564 83,000 20,013 -- 1,112,577
Licensing fees payable ........................... -- -- 487,912 -- 487,912
Net liabilities of discontinued operations ....... 418,243 -- -- -- 418,243
------------ ------------ ------------ --------------- ------------
Total current liabilities .................... 7,451,143 3,529,923 528,306 (128,640) 11,380,732
------------ ------------ ------------ --------------- ------------
Notes payable & long-term debt, net of
current maturities ............................. 6,184,737 5,965,256 -- -- 12,149,993
Convertible subordinated debentures .............. 3,367,500 -- -- -- 3,367,500
Capital lease obligations, net of current
maturities ..................................... 681,335 -- -- -- 681,335
Other liabilities ................................ -- 130,000 -- -- 130,000
Payable to officers .............................. 151,169 -- -- -- 151,169
------------ ------------ ------------ --------------- ------------
Total long-term liabilities ................ 10,384,741 6,095,256 -- -- 16,479,997
------------ ------------ ------------ --------------- ------------
(c)(134,000)
Shareholders' equity (deficit) ............. 10,496,826 (178,858) (475,944) (a)3,078,858 22,685,632
------------ ------------ ------------ ------------
(d)10,418,750
(e)(520,000)
---------------
Total liabilities and shareholders' equity . $ 28,332,710 $ 9,446,321 $ 52,362 $ 12,714,968 $ 50,546,361
============ ============ ============ =============== ============
</TABLE>
<PAGE>
Medical Industries of America, Inc.
Pro Forma Condensed Combined Statement of Operations (Unaudited)
For the year ended December 31, 1998
<TABLE>
<CAPTION>
Medical Air
Industries of Response Cybercare, Pro Forma Pro Forma
America, Inc. North, Inc. Inc. Adjustments Combined
------------ ------------ ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenue
Revenue from operations ....................... $ 14,448,523 $ 12,779,135 $ -- $ (b)(488,838) $ 26,738,820
Interest income ............................... 282,803 -- -- -- 282,803
------------ ------------ ------------ --------------- ------------
Total revenue ............................. 14,731,326 12,779,135 -- (488,838) 27,021,623
------------ ------------ ------------ --------------- ------------
Expenses
Cost of services .............................. 6,915,503 9,407,694 -- (b)(488,838) 15,834,359
General and administrative expenses ........... 8,425,420 1,840,005 325,405 -- 10,590,830
Technology licensing fee ...................... -- -- 601,662 -- 601,662
Depreciation and amortization ................. 1,458,595 562,465 5,127 (c)134,000 2,680,187
(e)520,000
Interest expense .............................. 1,120,106 653,769 -- -- 1,773,875
Interest - beneficial conversion
feature .................................... 1,109,163 -- -- -- 1,109,163
Other ......................................... 300,951 -- -- -- 300,951
------------ ------------ ------------ --------------- ------------
Total expenses ............................ 19,329,738 12,463,933 932,194 165,162 32,891,027
------------ ------------ ------------ --------------- ------------
Non-operating income ............................. -- 226,913 -- -- 226,913
------------ ------------ ------------ --------------- ------------
Income (Loss) from continuing
operations .................................... (4,598,412) 542,115 (932,194) (654,000) (5,642,491)
Loss from discontinued operations ................ (2,952,107) -- -- -- (2,952,107)
------------ ------------ ------------ --------------- ------------
Income (loss) before extraordinary
item and income taxes ......................... (7,550,519) 542,115 (932,194) (654,000) (8,594,598)
Extraordinary item ............................... 169,566 -- -- -- 169,566
------------ ------------ ------------ --------------- ------------
Income (loss) before income taxes ................ (7,380,953) 542,115 (932,194) (654,000) (8,425,032)
Income taxes ..................................... -- 214,000 -- -- 214,000
------------ ------------ ------------ --------------- ------------
Net income (loss) ................................ $ (7,380,953) $ 328,115 $ (932,194) $ (654,000) $ (8,639,032)
============ ============ ============ =============== ============
(Loss) Income per share .......................... $ (.39) $ 3,281 $ (.18) $ (.29)
============ ============ ============ ============
Weighted average common shares
outstanding ................................... 18,873,992 100 5,086,663 6,029,900 29,990,655
============ ============ ============ =============== ============
</TABLE>
<PAGE>
Medical Industries of America, Inc.
Notes to Pro Forma Condensed Combined Financial Statements (Unaudited)
As of December 31, 1998
(a) The following pro forma adjustments are made to reflect estimated fair value
adjustments at December 31, 1998 between Medical Industries and Air Response,
Inc.
Fair value adjustments
Goodwill ......................................... $ 845,490
Aircraft ......................................... 2,233,368
----------
Shareholders' equity ............................. $3,078,858
==========
(b) The following pro forma adjustments reflect Inter-company adjustments
between Medical Industries and Air Response, Inc.
Accounts receivable ............................ $128,640
========
Accounts payable ............................... $128,640
========
Revenue ........................................ $488,838
========
Cost of services ............................... $488,838
========
(c) Pro forma adjustments to reflect additional depreciation and amortization
based on fair market value adjustment.
(d) Pro forma adjustments are made to reflect estimated fair value adjustments
at December 31, 1998 between Medical Industries of America, Inc. and CyberCare,
Inc.
Intangible assets acquired.................. $10,418,750
===========
(e) Pro forma adjustments to reflect additional amortization of intangible
assets.
<PAGE>
Medical Industries of America, Inc.
Pro Forma Condensed Combined Balance Sheet (Unaudited)
As of March 31, 1999
<TABLE>
<CAPTION>
Medical
Industries of Pro Forma Pro Forma
America, Inc. Cybercare, Inc. Adjustments Combined
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Assets
Cash .................................................. $ 531,640 $ 3,618 $ -- $ 535,258
Accounts receivable ................................... 5,915,310 -- -- 5,915,310
Current portion of mortgages and notes
receivables ......................................... 71,802 -- -- 71,802
Inventories ........................................... 167,306 -- -- 167,306
Medical equipment held for sale ....................... 92,540 -- -- 92,540
Prepaid expenses and other current assets ............. 779,617 1,000 -- 780,617
---------------- ---------------- ---------------- ----------------
Total current assets .............................. 7,558,215 4,618 -- 7,562,833
Property and equipment, net ........................... 20,472,486 19,227 -- 20,491,713
Notes and mortgages receivables, less current
maturity ............................................ 308,844 -- -- 308,844
Goodwill .............................................. 8,938,630 -- (a)10,418,750 18,707,380
-- -- (b)(650,000) --
Investment in equity securities ....................... 2,924,578 -- -- 2,924,578
Other assets .......................................... 1,769,184 -- -- 1,769,184
---------------- ---------------- ---------------- ----------------
Total assets ...................................... $ 41,971,937 $ 23,845 $ 9,768,750 $ 51,764,532
================ ================ ================ ================
Liabilities and Shareholders' Equity
Line of credit ........................................ $ 2,253,053 $ -- $ -- $ 2,253,053
Current maturities of notes payable &
long-term debt ...................................... 3,354,030 -- -- 3,354,030
Current maturities of capital lease obligations ....... 162,171 -- -- 162,171
Current maturities of convertible subordinated
debentures .......................................... 75,000 -- -- 75,000
Accounts payable ...................................... 3,723,083 41,132 -- 3,764,215
Accrued liabilities ................................... 1,959,762 63,473 -- 2,023,235
Licensing fees payable ................................ -- 487,912 -- 487,912
---------------- ---------------- ---------------- ----------------
Total current liabilities ......................... 11,527,099 592,517 -- 12,119,616
---------------- ---------------- ---------------- ----------------
Notes payable & long-term debt, less current
maturities .......................................... 11,824,156 -- -- 11,824,156
Convertible subordinated debentures ................... 3,837,543 -- -- 3,837,543
Capital lease obligations, less current
maturities .......................................... 641,047 -- -- 641,047
Payable to officers ................................... 151,169 -- -- 151,169
---------------- ---------------- ---------------- ----------------
Total long-term liabilities ..................... 16,453,915 -- -- 16,453,915
---------------- ---------------- ---------------- ----------------
(b) (650,000)
Shareholders' equity ............................ 13,990,923 (568,672) (a) 10,418,750 23,191,001
---------------- ---------------- ---------------- ----------------
Total liabilities and shareholders'
equity ........................................ $ 41,971,937 $ 23,845 $ 9,768,750 $ 51,764,532
================ ================ ================ ================
</TABLE>
<PAGE>
Medical Industries of America, Inc.
Pro Forma Condensed Combining Statement of Operations (Unaudited)
For the three months ended March 31, 1999
<TABLE>
<CAPTION>
Medical
Industries of Pro Forma Pro Forma
America, Inc. Cybercare, Inc. Adjustments Combined
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Revenue .......................................... $ 7,910,994 $ -- $ -- $ 7,910,994
---------------- ---------------- ---------------- ----------------
Expenses
Cost of services ................................. 3,667,584 -- -- 3,667,584
General and administrative expenses .............. 3,005,246 101,447 -- 3,106,693
Technology licensing fees ........................ -- 2,500 -- 2,500
Depreciation and amortization .................... 555,630 1,281 (b) 130,000 686,911
Interest expense ................................. 559,271 -- -- 559,271
Interest-beneficial conversion feature ........... 236,468 -- -- 236,468
Other ............................................ (60,738) -- -- (60,738)
---------------- ---------------- ---------------- ----------------
Total expenses ............................... 7,963,461 105,228 130,000 8,198,689
---------------- ---------------- ---------------- ----------------
Net (loss) .......................................... $ (52,467) $ (105,228) $ (130,000) $ (287,695)
================ ================ ================ ================
(Loss) per share .................................... $ (--) $ (.02) -- $ (.01)
================ ================ ================ ================
Weighted average common shares outstanding .......... 24,906,947 5,099,997 2,150,003 32,156,947
================ ================ ================ ================
</TABLE>
<PAGE>
Medical Industries of America, Inc.
Notes to Pro Forma Condensed Combined Financial Statements (Unaudited)
As of March 31, 1999
(a) The following pro forma adjustments are made to reflect estimated fair value
adjustments at December 31, 1998 between Medical Industries of America, Inc. and
CyberCare, Inc.
Fair value adjustments
Intangible assets............................... $ 10,418,750
============
(b) Pro forma adjustments to reflect additional amortization based on fair
market value adjustment.
EXHIBIT 2.1
CONFIDENTIAL
STOCK EXCHANGE AGREEMENT
Between
MEDICAL INDUSTRIES OF AMERICA, INC.
And
CYBERCARE, INC.
<PAGE>
STOCK EXCHANGE AGREEMENT
This STOCK EXCHANGE AGREEMENT, dated as of the 6th day of July, 1999, is
by and between Medical Industries of America, Inc., a Florida Corporation
("MIOA"), and CyberCare, Inc., a Georgia corporation ("CCI")
In consideration of the mutual covenants and agreements contained in this
Agreement, and intending to be legally bound hereby, MIOA and CCI hereby agree
as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement:
"ACQUISITION" shall mean the acquisition of the CCI Stock by MIOA upon the
terms and subject to the conditions set forth in this Agreement.
"ACQUISITION PROPOSAL" shall have the meaning ascribed to it in Section
7.2 hereof.
"ACQUISITION SHARES" shall have the meaning ascribed to it in Section
3.1(a) hereof.
"ADVERSE CONSEQUENCES" shall have the meaning ascribed to it in Section
5.13 hereof.
"AFFILIATE" shall have the meaning ascribed to it in Section 7.6 hereof.
"AFFILIATED GROUP" shall have the meaning ascribed to it in Section 5.13
hereof.
"AGREEMENT" means this Stock Exchange Agreement, and all Schedules and
Exhibits hereto.
"ASSETS" means all of the assets of MIOA and its Subsidiaries, or CCI and
its Subsidiaries, as the case may be, of every kind and nature. Any
representations and warranties made by a party hereto with respect to the Assets
shall pertain only to those Assets which are owned, leased or otherwise
controlled by such party.
"AUTOMATIC TERMINATION DATE" shall have the meaning ascribed to it in
Section 10.1(e) hereof.
"BOARD APPROVAL" shall mean MIOA Board Approval or CCI Board Approval, as
applicable.
"BUSINESS DAY" shall mean any weekday, excluding any legal holiday
observed pursuant to the United States federal law or the laws of the State of
Florida.
"BUSINESS PLAN" shall have the meaning ascribed to it in Section 6.3
hereof.
"CCI" shall mean CyberCare, Inc., a Georgia corporation.
<PAGE>
"CCI ACQUISITION STOCKHOLDERS" shall have the meaning ascribed to it in
Section 7.7(a) hereof.
"CCI BOARD APPROVAL" shall mean that the Board of Directors of CCI, at a
meeting duly called and held, has in the exercise of its sole discretion (i)
determined that the Acquisition is advisable and in the best interest of CCI and
its stockholders and approved it, (ii) duly approved, authorized and ratified
the execution and delivery of this Agreement and the consummation of the
Transactions, (iii) recommended the approval of this Agreement, the Acquisition,
and each of the Closing Documents to which it is or will be a party, by the
holders of CCI Capital Stock (and any other class of stock of CCI entitled to
vote on the Acquisition) and directed that this Agreement, the Acquisition and
each of the Closing Documents to which it is or will be a party, be submitted
for consideration by the holders of CCI Capital Stock at a meeting to be held
for that purpose, and (iv) adopted a resolution to elect not to be subject, to
the extent permitted by applicable law, to any state takeover law that may
purport to be applicable to this Agreement, the Acquisition, and the other
Transactions.
"CCI BREACH SETTLEMENT" shall have the meaning ascribed to it in Section
7.7(a) hereof.
"CCI CAPITAL STOCK" shall mean the CCI Common Stock.
"CCI COMMON STOCK" shall mean the voting common stock, no par value, of
CCI.
"CCI DISSENTING SHARES" shall have the meaning ascribed to it in Section
3.5(b) hereof.
"CCI EMPLOYEES" shall have the meaning ascribed to it in Section 6.19(a)
hereof.
"CCI EMPLOYEE BENEFIT PLAN" shall have the meaning ascribed to it in
Section 6.19(a) hereof.
"CCI EQUITY INTERESTS" shall mean all capital stock of CCI and securities
convertible into capital stock of CCI.
"CCI ERISA AFFILIATE" shall have the meaning ascribed to it in Section
6.19(a) hereof.
"CCI FINAL REVISED SCHEDULES" shall have the meaning ascribed to it in
Section 9.9 hereof.
"CCI INTELLECTUAL PROPERTY" shall have the meaning ascribed to it in
Section 6.10 hereof.
"CCI RECEIVABLES" shall have the meaning ascribed to it in Section 6.22
hereof.
"CCI STOCK OPTION PLANS" shall have the meaning ascribed to it in Section
3.3 hereof.
"CCI STOCKHOLDER APPROVAL" means with respect to CCI, the requisite
approval by the holders of CCI Capital Stock of this Agreement and the
Acquisition.
"CERTIFICATE(S)" shall have the meaning ascribed to it in section 3.4
hereof.
<PAGE>
"CLOSING" and "CLOSING DATE" shall have the meanings ascribed to such
terms in Section 3.6 hereof.
"CLOSING DOCUMENTS" means this Agreement and all other documents to be
executed and delivered either simultaneously herewith or at Closing in
connection with the Transactions.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIALITY AGREEMENT" means that certain Nondisclosure and
Confidentiality Agreement, dated January 4, 1999, between CCI and MIOA.
"DOL" shall mean the United States Department of Labor.
"EFFECTIVE TIME" shall have the meaning ascribed to it in Section 2.2
hereof.
"EMPLOYMENT AGREEMENTS" shall have the meaning ascribed to it in Section
4.1 hereof.
"ENVIRONMENTAL LAWS" shall have the meaning ascribed to it in Section
5.6(b) hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" shall mean the Securities and Exchange Act of 1934, as
amended, and all regulations promulgated pursuant thereto.
"EXCHANGE AGENT" shall have the meaning set forth in Section 3.4(b)
hereof.
"EXCHANGE RATIO" shall have the meaning ascribed to it in Section 3.1(a)
hereof.
"FAIR MARKET VALUE" shall mean $1.50.
"FAIRNESS OPINION" shall mean an opinion (or opinions) from one or more
nationally recognized investment banking firm(s) addressed to CCI and/or to MIOA
(if a party determines that such opinion is needed) to the effect that, based
upon and subject to the assumptions, limitations and qualifications set forth
therein, the Exchange Ratio (which for purposes of the Fairness Option only is
separately defined therein) is fair to the stockholders of CCI and/or to the
stockholders of MIOA (if a party received such an opinion) from a financial
point of view.
"FINANCIAL STATEMENTS" shall have the meaning ascribed to it in Section
6.8(a) hereof.
"FLORIDA ACT" shall mean the Florida Business Corporation Act.
"FLORIDA DISSENTER'S STATUTES" mean Section 607.1301 ET SEQ. of the
Florida Act.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"GEORGIA CODE" shall mean the Georgia Business Corporation Code.
<PAGE>
"GEORGIA DISSENTER'S STATUTES" mean Article 13 ET SEQ. of the Georgia
Code.
"GOVERNMENTAL AUTHORITY" shall include any and all governmental or
quasi-governmental bodies, agencies, bureaus, departments, boards, commissions,
instrumentalities or other entities having or asserting jurisdiction over CCI,
MIOA, or any Subsidiary of either, as applicable.
"HAZARDOUS SUBSTANCE" shall have the meaning ascribed to it in Section
5.6(b) hereof.
"HISTORICAL FINANCIALS" shall have the meaning ascribed to it in Section
5.8(a) hereof.
"INTERIM FINANCIALS" shall have the meaning ascribed to it in Section
6.8(a) hereof.
"IRS" shall mean the Internal Revenue Service.
"LIABILITY" shall have the meaning ascribed to it in Section 5.13 hereof.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon, or in, or
circumstances likely to result in, a material adverse change in (i) the
business, assets, liabilities, prospects, operations, results of operations,
properties (including intangible properties), regulatory status or condition
(financial or otherwise) of MIOA or CCI, as the case may be, or any of such
parties' respective Subsidiaries taken as a whole, (ii) the legality, validity,
binding effect or enforceability of this Agreement, or (iii) the ability of MIOA
or CCI, as the case may be, or any of such parties' respective Subsidiaries to
perform their obligations under this Agreement.
"MIOA" shall mean Medical Industries of America, Inc., a Florida
corporation.
"MIOA BOARD APPROVAL" shall mean that the Board of Directors of MIOA, at a
meeting duly called and held, has (i) determined that the Acquisition is
advisable and in the best interest of MIOA and its stockholders and approved it,
(ii) duly approved, authorized and ratified the execution and delivery of this
Agreement and the consummation of the Transactions, (iii) recommended the
approval of this Agreement, the Acquisition, each of the Closing Documents to
which it is or will be a party by the holders of MIOA Capital Stock (and any
other class of stock of MIOA entitled to vote on the Acquisition) and directed
that this Agreement, the Acquisition, each of the Closing Documents to which it
is or will be a party be submitted for consideration by the holders of MIOA
Capital Stock, at a meeting to be held for that purpose, and (iv) adopted a
resolution to elect not to be subject, to the extent permitted by applicable
law, to any state takeover law that may purport to be applicable to this
Agreement, the Acquisition, and other Transactions.
"MIOA BREACH SETTLEMENT" shall have the meaning ascribed to it in Section
7.7(b) hereof.
"MIOA CAPITAL STOCK" shall mean, collectively, the MIOA Common Stock and
the MIOA Preferred Stock.
"MIOA COMMON STOCK" shall mean the common stock, $.0025 par value, of
MIOA.
"MIOA EMPLOYEES" shall have the meaning ascribed to it in Section 5.19(a)
hereof.
<PAGE>
"MIOA EMPLOYEE BENEFIT PLAN" shall have the meaning ascribed to it in
Section 5.19(a) hereof.
"MIOA EQUITY INTERESTS" shall mean all capital stock of MIOA and
securities convertible into capital stock of MIOA.
"MIOA ERISA AFFILIATE" shall have the meaning ascribed to it in Section
5.19(a) hereof.
"MIOA FINAL REVISED SCHEDULES" shall have the meaning ascribed to it in
Section 8.9 hereof.
"MIOA GROUP" shall have the meaning ascribed to it in Section 5.13(b)
hereof.
"MIOA INTELLECTUAL PROPERTY" shall have the meaning ascribed to it in
Section 5.10 hereof.
"MIOA PREFERRED STOCK" shall mean the Series B Preferred Stock, no par
value, of MIOA.
"MIOA RECEIVABLES" shall have the meaning ascribed to it in Section 5.22
hereof.
"MIOA SHAREHOLDER APPROVAL" means with respect to MIOA the requisite
approval by the holders of MIOA Capital Stock of this Agreement and the
Acquisition.
"MONTHLY FINANCIALS" shall have the meaning ascribed to it in Section 4.9
hereof.
"MOST RECENT FISCAL QUARTER END" shall have the meaning ascribed to it in
Section 5.8 hereof.
"NONDISCLOSURES/NONCOMPETE AGREEMENTS" shall have the meaning ascribed to
it in Section 4.1 hereof.
"OPTION/WARRANT SHARES" shall have the meaning ascribed to it in Section
3.3(b) hereof.
"OUT-OF-POCKET COSTS" shall mean, with respect to MIOA or CCI, as the case
may be, all fees, expenses, and other costs which are directly related to the
Transactions which such party has incurred through the date of termination of
this Agreement.
"PERMITTED EQUITY FINANCING" shall have the meaning ascribed to it in
Section 3.1(c) hereof.
"PERSON" means an individual, corporation, limited liability company,
limited liability partnership, limited partnership, trust, joint venture,
association or unincorporated organization or a Governmental Authority.
"PROSPECTUS" means the final prospectus relating to the registration of
the Acquisition Shares under the Securities Act.
<PAGE>
"PUBLIC REPORTS" shall have the meaning set forth in Section 5.6(c)
hereof.
"REGISTRATION RIGHTS AGREEMENT" shall have the meaning ascribed to it in
Section 3.1(d) hereof.
"SCHEDULE DELIVERY DATE" shall mean the date upon which each of MIOA and
CCI has delivered each and all of their respective Schedules and Exhibits to
each other, and, in the exercise of their respective sole discretion, each has
acknowledged in writing their satisfaction with the results of their respective
due diligence investigations of the other party hereto and their mutual consent
as to the contents of the Schedules and Exhibits to be attached hereto and the
incorporation of such Schedules and Exhibits into this Agreement, which date in
no event shall be later than June 30, 1999, unless otherwise agreed to in
writing by CCI and MIOA.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and
all regulations promulgated thereunder.
"SECURITIES FILINGS" shall mean the most recent Form 10-KSB filed by MIOA
with the SEC, as well as any and all filings made by MIOA thereafter pursuant to
the Exchange Act.
"SECURITY INTEREST" shall have the meaning ascribed to it in Section 5.13
hereof.
"SETTLEMENT CUT-OFF" shall have the meaning ascribed to it in Section 7.7
hereof.
"SPECIAL MEETING" shall have the meaning ascribed to it in Section 7.1
hereof.
"SUBSIDIARY" shall mean one of the business entitles identified as such on
SCHEDULE 5.1 hereto, as to MIOA, and on SCHEDULE 6.1, as to CCI.
"TAX" shall have the meaning ascribed to it in Section 5.13 hereof.
"TAX RETURN" shall have the meaning ascribed to it in Section 5.13 hereof.
"TRANSACTIONS" means the transactions contemplated by this Agreement,
including but not limited to the Acquisition.
ARTICLE 2
THE ACQUISITION
2.1 THE ACQUISITION. At the Effective Time and subject to and upon the
terms and conditions of this Agreement, the Georgia Code and the Florida Act,
MIOA shall acquire from the CCI Stockholders all the issued and outstanding CCI
Capital Stock. At such time, CCI will become a wholly-owned subsidiary of MIOA.
2.2 EFFECTIVE TIME. As promptly as practicable after the satisfaction or
waiver of the conditions set forth in Articles 8 and 9, the parties hereto shall
cause the Acquisition to be consummated (the "Effective Time"). At the Effective
Time, MIOA will irrevocably instruct its
<PAGE>
stock transfer agent to issue and deliver in the manner provided in Articles 2
and 3 hereof the certificates evidencing the Acquisition Shares to be issued in
the Acquisition.
2.3 ARTICLES OF INCORPORATION; BY-LAWS; DIRECTORS AND OFFICERS.
(a) At the Effective Time and as part of the Acquisition, the
Articles of Incorporation of MIOA shall be in the form attached hereto as
EXHIBIT 2.3(A), until thereafter amended as provided by law, the By-Laws of MIOA
and such Articles of Incorporation.
(b) At the Effective Time and as part of the Acquisition, the
By-Laws of MIOA shall be in the form attached hereto as EXHIBIT 2.3(B), until
thereafter amended as provided by law, the Articles of Incorporation and such
By-Laws.
(c) After the Effective Time, the Board of Directors of CCI will
consist of those individuals specified on EXHIBIT 2.3(C).
2.4 STOCKHOLDER APPROVAL. This Agreement is subject to, and it is a
condition to the consummation of the Acquisition, that CCI Stockholder and MIOA
Stockholder Approval be obtained.
2.5 TAX CONSEQUENCES. It is intended that this Transaction shall
constitute a reorganization within the meaning of Section 368 of the Code, and
that this Agreement shall constitute a "plan of reorganization" for purposes of
Section 368 of the Code.
ARTICLE 3
ACQUISITION CONSIDERATION
3.1 EXCHANGE OF CAPITAL STOCK. The manner and basis of exchanging shares
of CCI Capital Stock shall be as follows:
(a) Except as provided in Section 3.2, each share of CCI Capital
Stock which shall be outstanding immediately prior to the Effective Time shall
at the Effective Time, by virtue of the Acquisition, and without any action on
the part of the holder hereof, be exchanged into only the right to receive the
same number and type of shares of MIOA Common Stock computed as set forth on
EXHIBIT 3.1(A) (the "EXCHANGE RATIO"). The shares to be issued by MIOA with
respect to the CCI Capital Stock are collectively hereinafter referred to as
"ACQUISITION SHARES". The Exchange Ratio shall be subject to appropriate and
proportional adjustment in the event of any stock split, stock dividend or other
recapitalization of CCI Capital Stock or MIOA Capital Stock after the date
hereof but prior to Closing. After the Effective Time, CCI Capital Stock shall
be recognized or deemed to be issued only to MIOA and MIOA shall have all rights
in respect thereof and the CCI holders shall not have any rights other than as
set forth in Article 3.5.
(b) Each share of MIOA Capital Stock which shall be outstanding
immediately prior to the Effective Time shall at the Effective Time remain
outstanding. In no event shall the outstanding CCI Capital Stock outstanding, on
a fully diluted basis, at the Effective Time exceed 8,184,993 shares of CCI
Common Stock. Set forth in EXHIBIT 3.1(B) is a listing of each of the CCI
Stockholders with the number of shares CCI Capital Stock owned by each
Stockholder.
<PAGE>
(c) The parties hereto acknowledge that the other party may, prior
to the Closing and with the consent of the other party hereto, issue additional
shares of its capital stock (and/or securities convertible into shares of its
capital stock) in connection with (i) those offerings specifically identified on
EXHIBIT 3.1(C) so long as the conditions with respect to each such offering
contained in such Exhibit are satisfied, including but not limited to the
condition that any such offering is closed no later than the date which is ten
days prior to the earlier of the Special Meetings, or (ii) any offering of such
issuer's securities issued as consideration for the acquisition of assets or
equity interests of another entity if the securities issued in such offering
have an aggregate fair market value of less than $0.00 (each, a "Permitted
Equity Financing"), provided, that in either case, such offering must be made in
compliance with all applicable securities laws and structured so that it will
not be integrated with the offering of Acquisition Shares and/or Option/Warrant
Shares as contemplated herein, and if any such offering (or offerings taken as a
whole) would be deemed material so as to require amendment of the registration
statement described in subsection (d) below, such offering(s) shall be closed no
later than the day immediately prior to the filing of such registration
statement. In the event that either MIOA or CCI desires to issue additional
shares of its capital stock (and/or securities convertible into shares of its
capital stock) in an offering that does not constitute a Permitted Equity
Financing, then MIOA and CCI shall attempt in good faith to agree upon the terms
and conditions of the proposed offering and how the resulting percentage
ownership of MIOA will be allocated on a fully diluted basis (using the treasury
stock method) among the holders of CCI Equity Interest or the holders of MIOA
Equity, as the case may be, issued in connection with such offering.
(d) MIOA shall use its reasonable best efforts to effect a
registration with the Securities and Exchange Commission on Form S-3, or other
appropriate form (the "REGISTRATION STATEMENT"), of the Acquisition Shares to be
issued to the CCI stockholders in connection with the Acquisition in accordance
with the Registration Rights Agreement in the form attached hereto as EXHIBIT
3.1(D).
3.2 FRACTIONAL SHARES. No scrip or fractional shares of the capital stock
of MIOA shall be issued in the Acquisition, nor will any outstanding fractional
share interest entitle the owner thereof to vote, to receive dividends or to
exercise any other right as a stockholder of MIOA. All fractional shares of the
common stock to which a holder of multiple certificates of CCI Common Stock
immediately prior to the Effective Time would otherwise be entitled at the
Effective Time shall be aggregated. If a fractional share results from such
aggregation, the number of shares of the Acquisition Shares to which such
stockholder shall be entitled, after the Effective Time shall be rounded to the
nearest whole number of Acquisition Shares.
3.3 STOCK OPTIONS AND WARRANTS.
(a) All options for CCI Common Stock outstanding at the Effective
Time under CCI's option plans or otherwise as described in EXHIBIT 3.3(D) (the
"CCI STOCK OPTION PLANS") shall be exchanged at the Effective Time into options
for the common stock of MIOA. All warrants for CCI Common Stock outstanding at
the Effective Time as described in EXHIBIT 3.3(D) shall be exchanged for
warrants for common stock of MIOA. At the Effective Time, such options and
warrants shall, by virtue of the Acquisition and without any further action on
the part of CCI or the holder of any such option or warrant, be assumed by MIOA
and be substituted for options and warrants of MIOA on the same terms and
conditions as in effect at the Effective
<PAGE>
Time (and the terms and conditions of MIOA Stock Option Plans as applicable to
the options, if any), except that:
(i) each such option or warrant for CCI Common Stock shall be
exercisable:
(A) for that number of shares of the common stock (to
the nearest whole share) of MIOA equal to (x) the number of shares of CCI Common
Stock subject to such option or warrant immediately prior to the Effective Time
multiplied by (y) the applicable Exchange Ratio as described in EXHIBIT 3.1(A)
(provided that in the event of an increase or reduction in Acquisition Shares as
provided in Section 7.7, such Exchange Ratio as applied to such options and
warrants will be adjusted as described in EXHIBIT 3.1(A)); and
(B) at an exercise price per share of common stock of
MIOA (rounded to the nearest whole cent) equal to (x) the exercise price per
share of CCI Common Stock subject to such option or warrant in effect
immediately prior to the Effective Time divided by (y) the applicable Exchange
Ratio (subject to adjustment as provided in Section 7.7 as described above).
(ii) all actions to be taken under the CCI Stock Option Plans
by the Board of Directors of CCI or a committee thereof shall be taken by the
Board of Directors of MIOA or a committee thereof.
From and after the date of this Agreement, no additional options or warrants
shall be granted by CCI under the CCI Stock Option Plans or otherwise. All
incentive stock options, if any (as defined in Section 422 of the Code) shall be
converted in a manner consistent with the regulations promulgated under Section
422 of the Code.
(b) The assumed options and warrants of CCI, as set forth in this
Agreement, shall not give to any holder thereof any benefits in addition to
those which such holder had prior to the assumption of the option or warrant.
MIOA shall take all corporate action necessary to reserve for issuance a
sufficient number of shares of its common stock for delivery upon exercise of
such options and warrants after the Effective Time. MIOA shall with respect to
the shares of MIOA subject to such options and warrants (the "Option/Warrant
Shares") include such Option/Warrant Shares in the Registration Statement and
shall use its reasonable best efforts to maintain the effectiveness of such
Registration Statement for so long as MIOA shall be obligated to file reports
under the Exchange Act. In addition, MIOA will cause the Acquisition Shares and
the Option/Warrant Shares to be listed on the Nasdaq Market.
(c) Approval by the Board of Directors and Stockholders of MIOA and
the Board of Directors and Stockholders of CCI of this Agreement shall
constitute, without limitation, authorization and approval of any and all of the
actions described in Section 3.3(a) and (b).
(d) If any holders of such options or warrants exercise such options
or warrants and acquire shares of CCI Capital Stock prior to the Closing, and
pay in full the aggregate exercise price for such shares, then MIOA shall issue
and deliver to such stockholders Acquisition Shares in exchange for such shares
of CCI Capital Stock in accordance with this Article 3.
<PAGE>
(e) All options for MIOA Capital Stock outstanding at the Effective
Time under MIOA's Stock Option Plans or otherwise shall remain outstanding
following the Effective Time and no change to their terms shall be made in
connection with the Acquisition. All warrants for MIOA Capital Stock outstanding
at the Effective Time shall remain outstanding following the Effective Time and
no change to their terms shall be made in connection with the Acquisition.
3.4 DELIVERY OF ACQUISITION NOTE AND SHARES.
(a) Except as set forth in this Agreement, from and after the
Effective Time, each holder of a certificate or certificates that immediately
prior to the Effective Time represented outstanding shares of CCI Capital Stock
("Certificate(s)") shall be entitled to receive in exchange therefore, upon
surrender thereof to the Exchange Agent, the appropriate number and type of
Acquisition Shares (as described in EXHIBIT 3.1(A)) for each share of CCI
Capital Stock so represented by the Certificates(s) surrendered by such holder.
(b) At or simultaneous with the Closing, (1) MIOA will furnish to
MIOA's stock transfer agent (the "Exchange Agent") irrevocable instructions to
issue certificates to holders of CCI Capital Stock which represent that number
and type of Acquisition Shares to which each such holder of CCI Capital Stock is
entitled hereunder, and (2) MIOA will cause the Exchange Agent to mail a letter
of transmittal (with instructions for its use) to each record holder of
outstanding CCI Capital Stock for the holder to use in surrendering the
Certificate(s) that represented such holder's CCI Capital Stock in exchange for
a stock certificate representing the number and type of Acquisition Shares to
which the holder is entitled. Such letter of transmittal shall specify that
delivery shall be effected, and risk of loss and title to the Certificate(s)
shall pass, only upon proper delivery of the Certificate(s) for exchange
therefor. Upon surrender to the Exchange Agent of Certificate(s), together with
such letter of transmittal duly executed and completed in accordance with the
instructions thereon, and such other documents as may be reasonably requested by
the Exchange Agent, the Exchange Agent shall, pursuant to this Agreement,
promptly deliver the appropriate number and type of Acquisition Shares to the
person entitled to such Acquisition Shares for each share of CCI Capital Stock
so represented by the Certificate(s) surrendered by such holder thereof, and
such Certificate(s) shall forthwith be cancelled.
(c) If delivery of all or part of the Acquisition Shares is to be
made to a person other than the person in whose name a surrendered Certificate
is registered, it shall be a condition of such delivery or exchange that the
Certificate so surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the person requesting such delivery or
exchange shall have paid any transfer and other taxes required by reason of such
delivery or exchange in a name other than that of the registered holder of the
Certificate surrendered or shall have established to the reasonable satisfaction
of CCI that such tax either has been paid or is not payable.
(d) Until surrendered and exchanged in accordance with this Section
3.4 each such Certificate shall, after the Effective Time, represent solely the
right to receive the Acquisition Shares, in an amount and of the type determined
in accordance with Section 3.1 hereof, and shall have no ownership or other
rights. No interest shall accrue or be payable on any Acquisition Shares.
Neither MIOA or CCI shall be liable to any holder of CCI Capital Stock
<PAGE>
for any Acquisition Shares (or dividends or distributions with respect thereto)
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(e) From and after the Effective Time, no holder of Certificate(s)
shall be entitled to receive any interest, dividend or other distribution from
MIOA until proper surrender by such holder of such Certificate(s) for stock
certificate(s) representing Acquisition Shares. Upon such surrender, the holder
shall be paid the amount of any dividends or other distributions (without
interest) that theretofore became payable by MIOA after the Effective Time but
prior to such surrender, but were not paid by reason of the foregoing with
respect to the number and type of Acquisition Shares represented by the
certificate(s) issued upon such surrender. From and after the Effective Time,
MIOA shall, however, be entitled to treat such Certificate(s) that have not yet
been surrendered or exchanged as evidencing the ownership of the type and
aggregate number of Acquisition Shares into which the shares of CCI Capital
Stock represented by such Certificate(s) would have been exchanged,
notwithstanding any failure to surrender such Certificate(s).
(f) MIOA shall be responsible for the payment of all charges and
expenses of the Exchange Agent.
(g) If any Certificate shall have been lost, stolen or destroyed,
upon the receipt by MIOA of an indemnity agreement and the making of an
affidavit by the person claiming such Certificate to be lost, stolen or
destroyed and, if required by MIOA, the posting by such person of a bond in such
reasonable amount as MIOA may direct as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the number and type
of Acquisition Shares and any cash in lieu of fractional shares, and unpaid
dividends and distributions on the number and type of Acquisition Shares
deliverable in respect thereof pursuant to this Agreement.
3.5 DISSENTING SHARES. (a) Notwithstanding Section 3.1, no outstanding
shares of CCI Common Stock shall be converted into or represent a right to
receive any Acquisition Shares pursuant to Section 3.1 hereof if the holder
thereof has demanded and perfected his demand for payment of the fair value of
his CCI Capital Stock in accordance with the applicable provisions of Article 13
of the Georgia Code (the "GEORGIA DISSENTER'S STATUTES") and has not effectively
withdrawn or lost his right to such payment. All such shares of CCI Capital
Stock shall represent only the rights granted with respect to such shares
pursuant to the Georgia Dissenter's Statutes. CCI shall give notice to MIOA upon
receipt by CCI of any written demands for payment of the fair value of CCI
Common Stock and of withdrawals of such demands and any other written
communications provided in accordance with or pursuant to the Georgia
Dissenter's Statutes (any stockholder duly making such a demand being
hereinafter called a "CCI Dissenting Stockholder"). MIOA shall have the right to
participate in all negotiations and proceedings with respect to any CCI
Dissenting Stockholder. CCI agrees that it will not, except with the prior
consent of MIOA, make any determination of fair value or any payment with
respect to, or settle or offer to settle any matter arising out of, any dissent.
Each CCI Dissenting Stockholder, if any, who becomes entitled to payment for his
shares of CCI Capital Stock pursuant to the Georgia Dissenter's Statutes shall
receive payment therefore from MIOA (but only after the amount thereof shall
have been agreed upon or finally determined pursuant to the Georgia Dissenter's
Statutes and such dissenting shares of CCI Capital Stock shall be canceled and
shall not be entitled to receive any Acquisition Shares. If any holder of the
shares of CCI Capital Stock who demands payment of the fair value of his shares
under the Georgia Dissenter's
<PAGE>
Statute shall effectively withdraw or lose (through failure to perfect or
otherwise) his right to such payment at any time, the shares of CCI Capital
Stock of such holder shall be converted into a right to receive the Acquisition
Shares set forth in Section 3.1 hereof.
(b) Notwithstanding the foregoing, if CCI shareholders owning more
than 5 percent of the CCI Capital Stock become CCI Dissenting Stockholder(s)
then, in such event, MIOA shall have the right to rescind and terminate this
Agreement and the Transactions and thereafter all rights, duties and
responsibilities of the parties herein shall be immediately null and void, AB
INITIO.
3.6 CLOSING. The closing of the Transactions (the "CLOSING") shall take
place within five (5) days of the consent of the Transactions by the CCI
Stockholders and MIOA Stockholders but in no event later than August 1, 1999, at
the offices of MIOA in Boynton Beach, Florida, or another mutually agreed upon
location on the Business Day following compliance or waiver of the terms,
conditions and contingencies contained in this Agreement or such other date as
is mutually agreed upon by the parties hereto (such date to be herein referred
to as the "CLOSING DATE"). All computations, adjustments, and transfers for the
purposes hereof shall be effective as of the close of business on the Closing
Date. Each of the parties will take all such reasonable and lawful action as may
be necessary or appropriate in order to effectuate the Acquisition as promptly
as possible subject to the satisfaction of the closing conditions set forth in
Articles 8 and 9.
ARTICLE 4
ADDITIONAL COVENANTS
4.1 SUPPLEMENTAL AGREEMENTS. Concurrently with the Closing, Mr. John
Haines shall enter into the employment agreement with MIOA in the form of
EXHIBIT 4.1(A) hereof and each of the individuals listed in EXHIBIT 4.1 shall
enter into employment agreements with CCI in the form of EXHIBIT 4.1(A) hereof
(collectively the "EMPLOYMENT AGREEMENTS"), which shall replace such
individual's existing employment agreement with CCI. Each of such individuals
shall also enter into that certain Restricted Sale Agreement in the form of
EXHIBIT 4.1(B) hereof ((the "RESTRICTED SALE AGREEMENT").
4.2 CONDUCT OF BUSINESS BY CCI PENDING ACQUISITION. CCI covenants and
agrees that, unless MIOA shall otherwise consent in writing or except as
otherwise set forth in this Agreement, between the date of this Agreement and
the Closing, the business of CCI and its Subsidiaries shall be conducted only
in, and CCI shall take any action except in, the ordinary course of business and
in a manner consistent with past practice; and CCI will use its best efforts to
preserve intact its business organization, to keep available the services of its
present officers, employees and consultants and to preserve its present
relationships with customers, suppliers and other persons with which they have
significant business relations. Except as set forth on EXHIBIT 4.2, but without
otherwise limiting the foregoing, CCI covenants that neither it nor any of its
Subsidiaries shall, between the date of this Agreement and the Closing, directly
or indirectly, do any of the following with the prior written consent of MIOA;
(a) (i) issue, sell (other than upon exercise of outstanding options
or warrants, whose terms shall not be changed), pledge, dispose of, encumber,
authorize, or propose the issuance, sale, pledge, disposition, encumbrance or
authorization of any shares of capital stock of
<PAGE>
any class, or any options, warrants, convertible securities or other rights of
any kind to acquire any shares of capital stock of, or any other ownership
interest in CCI or any Subsidiary; PROVIDED, HOWEVER, that CCI shall have the
right to carry out any Permitted Equity Financing or other offering of its
securities that such parties have agreed to pursuant to Section 3.1(c) hereof;
(ii) amend or propose to amend the Articles of Incorporation as applicable, or
By-Laws of CCI, except as contemplated by this Agreement; (iii) split, combine
or reclassify any outstanding shares of its Capital Stock, or declare, set aside
or pay any dividend or distribution payable in cash, stock, property or
otherwise with respect to such capital stock; or (iv) authorize or propose or
enter into any contract, agreement, commitment or arrangement with respect to
any of the matters set forth in this Section 4.2(a):
(b) (i) acquire (by merger, consolidation, or acquisition of stock
or assets) directly or indirectly, any Person or any business owned by such
Person; (ii) except in the ordinary course of business and in a manner
consistent with past practices, sell, pledge, dispose of, or encumber or
authorize or propose the sale, pledge, disposition or encumbrance of any assets
of CCI or any Subsidiary; (iii) enter into any material contract or agreement,
except in the ordinary course of business; (iv) authorize any single capital
expenditure or commitment in excess of $50,000, except as otherwise set forth in
EXHIBIT 4.2(B)(IV); (v) authorize any capital expenditure or commitment outside
the ordinary course of business, except as otherwise set forth in EXHIBIT
4.2(B)(IV); or (vi) enter into or amend any contract, agreement, commitment or
arrangement with respect to any of the matters prohibited by Section 4.2(b);
(c) take any action other than in the ordinary course of business
and in a manner consistent with the past practices (none of which actions shall
be unreasonable or unusual) with respect to increasing compensation of any
officer, director, stockholder or employee or with respect to the grant of any
severance or termination pay (otherwise than pursuant to policies in effect on
the date hereof and fully disclosed to the other party prior to the date hereof)
or with respect to any increase of benefits payable under its severance or
termination pay policies in effect on the date hereof;
(d) make any payments except in the ordinary course of business and
in amounts and in a manner consistent with past practice (none of which payments
shall be unreasonable or unusual), under any employee benefit plan or otherwise
to any employee, independent contractor or consultant, enter into any employee
benefit plan, any employment or consulting agreement, grant or establish any new
awards under any such existing employee benefit plan or agreement, or adopt or
otherwise amend any of the foregoing;
(e) take any action in the ordinary course of business and in a
manner consistent with past practice or make any change in existing methods of
management, distribution, marketing, accounting or operating (or practices
relating to payment of trade accounts or to other payments);
(f) except in the ordinary course of business or as set forth on
EXHIBIT 4.2(F), incur or increase prior to Closing any indebtedness for borrowed
money from banks, financial institutions or other Persons or cancel, without
payment in full, any notes, loans or receivables;
(g) directly or indirectly loan or advance monies to any Person
(other than any of its own Subsidiaries) under any circumstances whatsoever
except for credit transactions with customers on terms consistent with past
practices; or
<PAGE>
(h) do any act or omit to do any act which might reasonably be
expected to cause a breach of any material contract, commitment or obligation.
4.3 EXPENSES. All of the expenses incurred by CCI in connection with
authorization, preparation, execution and performance of this Agreement and
other agreements referred to in this Agreement, including, without limitation,
all fees and expenses of agents, representatives, brokers, counsel and
accountants for CCI, shall be paid by CCI if the Transaction is not consummated,
and except as otherwise provided herein all of the expenses incurred by MIOA in
connection with the authorization, preparation, execution and performance of
this Agreement and other agreements referred to in this Agreement, including
without limitation, all reasonable fees and expenses of advisors, agents,
representatives, brokers, counsel and accountants, shall be paid by MIOA if the
Transaction is not consummated. After the Closing, such expenses of CCI, unless
otherwise agreed, shall be paid by CCI and such expenses of MIOA will be paid by
MIOA.
4.4 NOTIFICATION OF CERTAIN MATTERS.
(a) MIOA shall give prompt written notice to CCI of the following:
(i) the occurrence or nonoccurrence of any event whose occurrence or
nonoccurrence would be likely to cause either (A) any representation or warranty
of MIOA contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the Schedule Delivery Date to the Closing (assuming
that each representation and warranty was re-affirmed as of each day between the
Schedule Delivery Date and the Closing Date, inclusive), including but not
limited to those resulting from the consummation of any Permitted Equity
Financings, or (B) directly or indirectly, any Material Adverse Effect; or
(ii) any material failure of MIOA, any officer, director, employee
or agent thereof, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder.
(b) CCI shall give prompt written notice to MIOA of the following:
(i) the occurrence or nonoccurrence of any event whose occurrence or
nonoccurrence would be likely to cause either (A) any representation or warranty
of CCI contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the Schedule Delivery Date to the Closing (assuming
that each representation and warranty was re-affirmed as of each day between the
Schedule Delivery Date and the Closing Date, inclusive), including but not
limited those resulting from the consummation of any Permitted Equity
Financings; or (B) directly or indirectly, any Material Adverse Effect;
(ii) any material failure of CCI, any officer, director, employee or
agent thereof, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder.
(c) In the event that either MIOA or CCI is required to deliver a written
notice pursuant to subsection (a) or (b) above, respectively, such party shall,
within three (3) days after delivery of such notice, deliver to the other party
a revised Schedule updating such
<PAGE>
representation or warranty. The receiving party shall review the Schedule and
within five (5) days after its receipt, elect to either (i) approve the Schedule
for attachment to this Agreement and treat such Schedule, as if it had been
delivered and attached to this Agreement as of the Schedule Delivery Date, or
(ii) treat such Schedule and the events giving rise to such Schedule as a breach
of such related representation or warranty in accordance with the terms of this
Agreement, including but not limited to Section 7.7, 8.1 and 9.1, as applicable;
PROVIDED, however, that any events which are permitted to occur between the date
hereof and the Closing pursuant to the terms of this Agreement (such as a
Permitted Equity Financing) shall in no event be treated as a breach of a
representation or warranty hereunder.
(d) Notwithstanding the foregoing, the delivery of any notice pursuant to
this Section shall not waive or release MIOA or CCI, as the case may be, from
its representations, warranties, covenants or agreements under this Agreement,
except as they may be modified and approved in accordance with subsection (c)(i)
above.
4.5 PUBLIC ANNOUNCEMENTS.
(a) Except for and to the extent of any public announcement or disclosures
relating to the Transactions previously made by MIOA or CCI, as may be required
by law or as provided in this Section 4.5, MIOA and CCI agree that until the
consummation of the Transactions or the termination of this Agreement, as the
case may be, each party will not, and will direct its directors, officers,
employees, representatives and agents who have knowledge of the Transaction not
to, disclose to any Person who is not a participant in discussions concerning
the Transactions (other than Persons whose consent is required to be obtained
hereunder), any of the terms, conditions or other facts with respect to the
Transactions.
(b) MIOA shall obtain the prior written consent of CCI and CCI shall
obtain the prior written consent of MIOA, before issuing any press release or
otherwise making any public statement prior to receiving such consent, except in
the case where such disclosure is required by law and the party whose consent is
required has unreasonably refused to give such consent or is unable to consent
prior to such disclosure because of exigent circumstances. The disclosing party
shall be responsible for the accuracy and completeness of any such disclosure.
Subject to the foregoing, the parties acknowledge and agree that MIOA and CCI
expect to issue a press releases with respect to the Transactions immediately
after the execution of this Agreement, as well as after the Closing.
(c) This Section 4.5 shall not restrict either MIOA or CCI in any actions
by such parties which are necessary or appropriate to enforce their respective
rights under this Agreement.
4.6 CONFIDENTIALITY. In connection with this Agreement, the parties may
have access to information which is nonpublic, confidential or proprietary in
nature. All of such information, in whole or in part, together with any
analyses, compilations, studies or other documents prepared by any party, which
contain or otherwise reflect any such information is hereinafter referred to as
the "Information". Each party hereby agrees that the Information will be kept
confidential and shall not, without the prior mutual written consent of the
parties, be disclosed, in any manner whatsoever, in whole or in part, and shall
not be used by any party following the termination of this Agreement. Each party
agrees to transmit the Information only to its respective employees and
representatives who need to know the Information and who shall agree
<PAGE>
to be bound by the terms and conditions of this Agreement with respect to this
provision. In any event, each party shall be responsible for any breach of this
Agreement by its respective employees or representatives. If the transactions
contemplated hereunder are not consummated, the parties shall return the
Information to the other promptly upon request and no party shall retain any
copies. In the event any party becomes legally compelled to disclose any of the
Information, such party will provide to the other party prompt notice so that
each other party may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this Agreement. In the event that such
protective order or other remedy is not obtained, or compliance with the
provisions of this Agreement is waived, a party will furnish only that portion
of the Information which is legally required, and to the extent requested by the
other party, will exercise its best efforts to obtain a protective order or
other reliable assurance that confidential treatment will be accorded the
Information. The term "Information" does not include information which (i) was
known to any party about another party prior to its disclosure, provided that
such information was lawfully obtained or developed, (ii) becomes generally
available to the public other than as a result of a disclosure by a party in
violation of this Agreement, or (iii) becomes available from a source other than
a party to this Agreement, if the source is not bound by a confidentiality
agreement and such source lawfully obtained such information.
4.7 ACCESS AND INSPECTION. Subject to currently existing contractual and
legal restrictions applicable to MIOA or to CCI or any of their Subsidiaries,
each of MIOA and CCI shall, and shall cause each of its Subsidiaries to, afford
to the accountants, counsel, financial advisors and other representatives of the
other party hereto reasonable access to, and permit them to make such
inspections as they may reasonably require of, during normal business hours
during the period from the date of this Agreement through the Effective Time,
all their respective properties, books, contracts, commitments and records
(including, without limitation, the work papers of independent accountants, if
available and subject to the consent of such independent accountants) and,
during such period, MIOA and CCI shall, and shall cause each of its Subsidiaries
to, furnish promptly to the other (i) a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of federal or state securities laws and (ii) all
other information concerning its business, properties and personnel as the other
may reasonably request. No investigation pursuant to this Section 4.7 shall
affect any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto. All information obtained
by MIOA or CCI pursuant to this Section 4.7 shall be kept confidential in
accordance with Section 4.6 above.
4. 8 CERTAIN FILINGS, CONSENTS AND ARRANGEMENTS. Subject to compliance
with applicable law, CCI and MIOA will (a) cooperate with one another (i) in
promptly determining whether any filings are required to be made or consents,
approvals, permits or authorizations are required to be obtained under any
federal, state or foreign law or regulation and (ii) in promptly making any such
filings, furnishing information required in connection therewith and seeking
timely to obtain any such consents, approvals, permits or authorization and (b)
provide one another with copies of all filings made by such party with any
governmental authority in connection with this Agreement.
4.9 MONTHLY FINANCIAL STATEMENTS. From and after the date hereof until the
Closing, each of CCI and MIOA shall provide to the other party its monthly
internal unaudited financial statements (the "Monthly Financials") as soon as
reasonably practicable after their
<PAGE>
preparation, but in no event later than the 25th day of each month for the
immediately preceding month.
4.10 TERMINATION OF SHAREHOLDERS AGREEMENT. CCI shall take all necessary
action to terminate the Shareholders' Agreement dated ____________, by and among
CCI and certain shareholders of CCI.
4.11 PURCHASER REPRESENTATIVE QUESTIONNAIRE. CCI shall take all necessary
action to obtain fully executed purchaser representative questionnaires in
substantially the same form as attached hereto as EXHIBIT 4.11 (the "Purchaser
Representative Questionnaires") from qualified purchaser representatives as
defined in Regulation D, Section 230.501(h) with respect to each CCI Stockholder
who is deemed to be a non-accredited and non-sophisticated investor as defined
in Regulation D.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF MIOA
In order to induce CCI to enter into this Agreement and consummate the
Transactions, MIOA hereby represents and warrants the following to CCI as of the
Schedule Delivery Date (and not the date hereof), each of which representations
and warranties shall be material to and relied upon by CCI and shall be deemed
remade on and as of the date of the Closing:
5.1. ORGANIZATION AND AUTHORITY. MIOA is a corporation duly organized and
validly existing under the laws of the State of Florida and each of its
Subsidiaries is incorporated in the states identified on SCHEDULE 5.1. The
states in which MIOA and each Subsidiary are qualified to do business are set
forth on SCHEDULE 5.1. Neither MIOA nor any of its Subsidiaries is required to
be qualified as a foreign corporation in any other jurisdiction where its
failure to qualify would have a Material Adverse Effect. MIOA and its
Subsidiaries have all necessary corporate power and authority to own, lease and
operate their properties and conduct their business as it is currently being
conducted. Except for MIOA's ownership of its Subsidiaries, which is fully
described on SCHEDULE 5.1, and as otherwise set forth on SCHEDULE 5.1, neither
MIOA nor any of its Subsidiaries owns, directly or indirectly, any equity
interest in any corporation, partnership, joint venture, or other entity. The
list of MIOA's Subsidiaries contained in SCHEDULE 5.1 is a true, correct and
complete list of all entities in which MIOA has a direct or indirect equity
interest. SCHEDULE 5.1 identifies each owner of an equity interest, or right to
acquire any such interest, in each Subsidiary of MIOA.
5.2. CORPORATE POWER AND AUTHORITY; DUE AUTHORIZATION. The Board of
Directors of MIOA has, on or prior to the date of this Agreement at a meeting
duly called and held and not subsequently rescinded or modified in any way, (i)
unanimously adopted this Agreement in accordance with the Florida Act, and (ii)
taken all actions necessary to consummate the Agreement and the transactions
contemplated hereby.
Subject to MIOA Stockholder Approval, MIOA has all requisite corporate
power and authority to enter into this Agreement and, subject to the
Transactions contemplated hereby and the issuance of the Acquisition Shares in
connection with the Acquisition, to consummate the Transactions contemplated
hereby. The execution and delivery of this Agreement by MIOA and the
consummation by MIOA of the Transactions contemplated hereby have been duly
authorized
<PAGE>
by all necessary corporate action on the part of MIOA, subject to obtaining MIOA
Stockholder Approval and the filing of appropriate Acquisition documents, if
any, as required by the Florida Act. This Agreement has been duly executed and
delivered by MIOA and assuming MIOA Stockholder Approval, this Agreement
constitutes the valid and binding obligation of MIOA enforceable against it in
accordance with its terms except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency of other similar laws relating to the
enforcement of creditors' rights generally and the application of general rules
of equity. The Acquisition, the Acquisition Shares and the filing of the
Registration Statement with the SEC by MIOA under the Securities Act for the
purpose of registering the Acquisition Shares have been duly authorized by
MIOA's Board of Directors. The duly elected officers and directors of MIOA and
its Subsidiaries are set forth on SCHEDULE 5.2. Copies of the Articles of
Incorporation, the Bylaws and all minutes of MIOA and its Subsidiaries are
contained in the minute books of MIOA, or such Subsidiaries, respectively. True,
correct and complete copies of the minute books of MIOA and its Subsidiaries
have been made available to CCI.
5.3. SUFFICIENCY OF ASSETS. All material assets and rights relating to
MIOA's business and that of its Subsidiaries are held solely by, and all
agreements, obligations, expenses and transactions relating to the business of
MIOA and its Subsidiaries have been entered into, incurred and conducted solely
by, MIOA and its Subsidiaries. Except as described in SCHEDULE 5.3, the Assets
are all of the items necessary to provide all services required in connection
with the business of MIOA and its Subsidiaries, assuming competent personnel,
general office facilities, and adequate facilities are available.
5.4. NO CONFLICT; REQUIRED CONSENTS. Exclusive of MIOA Board Approval
which has been obtained and MIOA Stockholder Approval, SCHEDULE 5.4 lists all
material third-party consents or approvals required with respect to MIOA and its
Subsidiaries for consummation of the Transactions, which consents MIOA agrees to
use its best reasonable efforts to obtain. Assuming all such consents and
approvals have been obtained and assuming the appropriate filings and mailings
are made by CCI and MIOA to effectuate the Acquisition under the Florida Act,
the Georgia Code and under the Securities Act and the Exchange Act, the
execution and delivery by MIOA of this Agreement and the Closing Documents and
the consummation by MIOA of the Transactions do not and will not, except as set
forth on SCHEDULE 5.4, (a) require the consent, approval or action of, or any
filing or notice to, any corporation, firm, Person or other entity or any
public, governmental or judicial authority (except for such consents, approvals,
actions, filing or notices the failure of which to make or obtain will not in
the aggregate have a Material Adverse Effect); (b) violate in any material
respect the terms of any material instrument, document or agreement to which
MIOA or any of its Subsidiaries is a party, or by which MIOA or any of its
Subsidiaries or the property of MIOA or any of its Subsidiaries is bound, or be
in conflict in any material respect with, result in a material breach of or
constitute (upon the giving of notice or lapse of time or both) a material
default under any such instrument, document or agreement, or result in the
creation of any lien upon any of the property or assets of MIOA or any of its
Subsidiaries; (c) violate in any respect the terms of any instrument, document
or agreement to which MIOA or any of its Subsidiaries is a party, or by which
MIOA or any of its Subsidiaries or the property of MIOA or any of it
Subsidiaries is bound, or be in conflict in any respect with, result in a breach
of or constitute (upon the giving of notice or lapse of time or both) a default
under any such instrument, document or agreement, or result in the creation of
any lien upon any of the property or assets of MIOA or any of its Subsidiaries
if the aggregate effect of all such violations listed in this subsection (c)
results in a Material Adverse Effect on MIOA and its Subsidiaries taken as a
whole; (d) violate MIOA's Articles of Incorporation or
<PAGE>
Bylaws; or (e) violate any order, writ, injunction, decree, judgment, ruling,
law, rule or regulation of any federal, state, county, municipal, or foreign
court or governmental authority applicable to MIOA or any of its Subsidiaries,
or the business or assets of MIOA or any of its Subsidiaries. Neither MIOA nor
any of its Subsidiaries is subject to, or a party to, any mortgage, lien, lease,
agreement, contract, instrument, order, judgment or decree or any other material
restriction of any kind or character which would prevent or hinder the continued
operation of the business of MIOA and its Subsidiaries after the closing on
substantially the same basis as theretofore operated.
5.5. CAPITALIZATION. All of the authorized and outstanding MIOA capital
stock is set forth on SCHEDULE 5.5, and no shares of MIOA capital stock are held
in the treasury of MIOA. No shares or any class of capital stock or other equity
interests of MIOA, other than (i) MIOA Common Stock, (ii) options or warrants
for MIOA Common Stock, or (iii) those shares of MIOA Capital Stock identified in
SCHEDULE 5.5, shall be issued and outstanding at the Closing. All outstanding
MIOA capital stock has been duly authorized, and is validly issued, fully paid
and nonassessable. No preemptive (whether statutory or contractual) rights have
been violated. Current MIOA stock option plans, all previous forms of those
plans, and amendments, and all outstanding options and warrants, are identified
on SCHEDULE 5.5. Except as set forth on SCHEDULE 5.5, all options were granted
in accordance with the provisions of MIOA stock option plans. SCHEDULE 5.5 also
sets forth information as to options (if any) and warrants (if any) previously
granted which have terminated, expired or been exercised. Except for the
outstanding options, warrants and other commitments set forth in SCHEDULE 5.5,
MIOA has no convertible securities, options, warrants, or other contracts,
commitments, agreements, understandings, arrangements or restrictions by which
it is bound to issue any additional shares of MIOA Capital Stock or other
securities. Except as set forth on SCHEDULE 5.2, MIOA owns, directly or
indirectly, all of the equity in its Subsidiaries and no third party has a right
to acquire any such interest. All securities of MIOA and its Subsidiaries were
offered and sold in compliance with applicable federal and state securities
laws. SCHEDULE 5.5 identifies each stock option plan and outstanding option,
warrant, or other right, if any, to acquire the capital stock of any of its
Subsidiaries, full and complete copies of which have been provided to CCI. Each
and every dividend of MIOA and each Subsidiary, if any, whether paid in cash or
other property, has been declared and paid in compliance with applicable law,
and neither MIOA nor any of its Subsidiaries has any further obligation with
respect to such payment. SCHEDULE 5.5 also summarizes in detail all currently
effective registration rights which have been granted by MIOA to any other
person or entity and all currently effective shareholder agreements between any
shareholders of MIOA.
5.6. COMPLIANCE WITH LAWS; FILINGS WITH THE SEC. Except as set forth in
SCHEDULE 5.6, (a) to the best of MIOA's knowledge, MIOA and its Subsidiaries are
in compliance with, and MIOA and its Subsidiaries have operated any Persons or
businesses previously owned or operated by them in compliance with, all
applicable laws, orders, rules and regulations of all governmental bodies and
agencies, including applicable securities laws and regulations and environmental
laws and regulations, but excluding applicable laws and regulations related to
Medicare, Medicaid and other federally funded programs, except where such
noncompliance has and will have, in the aggregate, no Material Adverse Effect.
Neither MIOA, nor any of its Subsidiaries, has received notice of any
noncompliance with the foregoing.
(b) Without limiting the foregoing, MIOA and each of its
Subsidiaries and any other person or entity for whose conduct MIOA is legally
held responsible are in material
<PAGE>
compliance with all applicable federal, state, regional, local or provincial
laws, statutes, ordinances, judgments, rulings and regulations relating to any
matters of pollution, protection of the environment, health or safety, or
environmental regulation or control (collectively, "Environmental Laws").
Neither MIOA nor any of its Subsidiaries, nor any other person or entity for
whose conduct MIOA is legally responsible, has (i) received any notice, demand,
request for information, or administrative inquiry relating to any violation of
an Environmental Law or the institution of any suit, action, claim or proceeding
alleging such violation or investigation by any Governmental Authority or any
third party of any such violation, (ii) manufactured, generated, treated,
stored, handled, processed, released, transported or disposed of any Hazardous
Substance on, under, from or at any of MIOA's or any of its Subsidiaries'
properties or any other properties, (iii) become aware or received notice of the
release or disposal of any Hazardous Substances in violation of any applicable
Environmental Law, on, under or at any of MIOA's, or any of its Subsidiaries'
properties or any other properties, (iv) become aware or received notice of any
actual or potential material liability on the part of MIOA for the response to
or remediation of any Hazardous Substance at or arising from any of MIOA's or
any of its Subsidiaries' properties or any other properties owned or operated by
MIOA, any of its Subsidiaries or any other Person for whose conduct MIOA is
legally responsible, or (v) become aware of or received notice of any actual or
potential liability on the part of MIOA for the costs of response to or
remediation of Hazardous Substances at or arising from any of MIOA's or any of
its Subsidiaries' properties or any other properties owned or operated by MIOA,
any of its Subsidiaries or any other Person for whose conduct MIOA is or may be
held responsible. For purposes of this Agreement, the term "Hazardous Substance"
shall mean any toxic or hazardous materials or substances, including asbestos,
buried contaminants, chemicals, flammable explosives, radioactive materials or
petroleum and petroleum products and any substances defined as, or included in
the definition of, "hazardous substances," "hazardous wastes," "hazardous
materials" or "toxic substances" under any Environmental Law. No Environmental
Law imposes any obligation upon MIOA or its Subsidiaries arising out of or as a
condition to any transaction contemplated hereby, including, without limitation,
any requirement to modify or to transfer any permit or license, any requirement
to file any notice or other submission with any Governmental Authority, the
placement of any notice, acknowledgment, or covenant in any land records, or the
modification of or provision of notice under any agreement, consent order, or
consent decree. No lien has been placed upon any of MIOA's properties or its
Subsidiaries' properties under any Environmental Law.
(c) MIOA has filed all required documents, reports and schedules
with the SEC since December 31, 1997 (collectively, the "MIOA SEC DOCUMENTS").
As of their respective dates, the MIOA SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act, as the
case may be, and, at the respective times they were filed, none of the MIOA SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except as set forth in SCHEDULE 5.6, the consolidated financial
statements (including, in each case, any notes thereto) of MIOA included in the
MIOA SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with generally accepted accounting
principles (except as may be indicated therein or in the notes thereto) applied
on a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto) and fairly presented in all material respects
the consolidated financial position of MIOA and its consolidated Subsidiaries as
at the respective dates thereof and the consolidated results of
<PAGE>
their operations and their consolidated cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein). Except as set forth
in SCHEDULE 5.6, MIOA has not, since December 31, 1997, made any change in the
accounting practices or policies applied in the preparation of financial
statements.
5.7. LICENSES AND PERMITS. Except as set forth in SCHEDULE 5.7, neither
MIOA nor any of its Subsidiaries has received notice of any violations in
respect of any licenses, permits, concessions, grants, franchises, approvals or
authorizations necessary or required for the use or ownership of their assets
and the operation of their business. No proceeding is pending or, to the
knowledge of MIOA, threatened, which seeks revocation or limitation of any such
licenses, permits, concessions, grants, franchises, approvals or authorizations.
5.8. FINANCIAL INFORMATION.
(a) MIOA has filed a Quarterly Report on Form 10-QSB for the fiscal
quarter ended March 31, 1999 (the "Most Recent Fiscal Quarter End"), and an
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1998, copies
of which are attached hereto as EXHIBIT 5.8. The financial statements included
in or incorporated by reference into these Public Reports (including the related
notes and schedules - the "Historical Financials") have been, and MIOA's Monthly
Financials will be, prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby, present fairly the financial
condition of MIOA and its Subsidiaries as of the indicated dates and the results
of operations of MIOA and its Subsidiaries for the indicated periods, are
consistent with the books and records of MIOA and its Subsidiaries and, except
as discussed on SCHEDULE 5.8, do not contain any material item of special or
nonrecurring income not earned in the ordinary course of business; provided,
however, that the interim statements and such Monthly Financials are subject to
normal year-end adjustments that are not expected to be material in amount.
(b) Except as and to the extent specifically disclosed in this
Agreement, there are no liabilities or obligations of MIOA or any of its
Subsidiaries of any nature, whether liquidated, accrued, absolute, contingent or
otherwise except for those (i) that are specifically reflected or reserved
against as to amount in the latest balance sheet contained in the Historical
Financials, (ii) that arose thereafter in the ordinary course of business, or
(iii) that are specifically set forth on SCHEDULE 5.8; and at all times after
the execution of this Agreement until the Closing, there will be no liabilities
or obligations of MIOA or any of its Subsidiaries of any nature, whether
liquidated, unliquidated, accrued, absolute, contingent or otherwise, which are
material, individually or in the aggregate, except for those (A) that are
specifically reflected or reserved against as to amount in the latest balance
sheet contained in the Historical Financials, or (B) that arose after the date
of such balance sheet in the ordinary course of business (and are, individually
and in the aggregate, immaterial), (C) that are specifically set forth on
SCHEDULE 5.8, or (D) that are permitted as set forth on EXHIBITS 4.2,
4.2(B)(IV), or 4.2(F).
(c) MIOA and its Subsidiaries are not, nor have any of them been
during the twelve (12) months immediately preceding the execution of this
Agreement, insolvent within the meaning of 11 U.S.C. ss.101(31).
5.9. NO UNDISCLOSED LIABILITIES. Except as and to the extent specifically
disclosed in this Agreement and those that are specifically reflected or
reserved against as to amount in the
<PAGE>
latest balance sheet contained in the Historical Financials, neither MIOA nor
any of its Subsidiaries knows of any reasonable basis for the assertion against
MIOA or any of its Subsidiaries of any material liabilities or obligations of
any nature, whether absolute, accrued, contingent or otherwise and whether due
or to become due, including, without limitation, any liability for taxes and
interest, penalties and other charges payable with respect thereto. Except as
set forth in this Agreement, neither the execution and delivery of this
Agreement nor the consummation of the Acquisition will (a) result in any payment
(whether severance pay, unemployment compensation or otherwise) becoming due
from MIOA to any employee, director or officer or former employee, director or
officer of MIOA, (b) increase any benefits otherwise payable to any employee,
director or officer or former employee, director or officer of MIOA, or (c)
result in the acceleration of the time of payment or vesting of any such
benefits.
5.10. INTELLECTUAL PROPERTY. Except as described in SCHEDULE 5.10, to the
knowledge of MIOA and its Subsidiaries, no patent, formula, process, trade
secret, trademark, trade name, assumed name or copyright relating to MIOA's
business and that of its Subsidiaries, including all intellectual property used
in the operation of the business of MIOA and its Subsidiaries (collectively, the
"MIOA Intellectual Property"), infringes on any patent, copyright, trademark or
other intellectual property right of any Person, or violates the terms of any
agreements related thereto, nor to MIOA's knowledge have there been any claims
of infringement. Except as set forth in SCHEDULE 5.10, there are no pending or,
to MIOA's and its Subsidiaries' knowledge, threatened claims against MIOA or any
of its Subsidiaries contesting the validity of, or their right to use any of,
the MIOA Intellectual Property.
5.11. CONTRACTS AND COMMITMENTS. Except as disclosed on SCHEDULE 5.11:
(a) To MIOA's and its Subsidiaries knowledge, no aspect of MIOA's
and its Subsidiaries' business or operations or the Assets is of such character
as would restrict MIOA from carrying on the business of MIOA and its
Subsidiaries as it is presently being conducted.
(b) MIOA and its Subsidiaries have no consultants or independent
contractors who are officers or directors of MIOA or any of its Subsidiaries, or
who are affiliates of such officers or directors, to whom they are paying
compensation for services.
(c) Except with respect to its aircraft and mobile catherization
laboratories, neither MIOA nor any of its Subsidiaries has material contracts,
commitments, arrangements, or understandings relating to their business,
operations, financial condition, or prospects. For purposes of this Section
5.11(c), "material" means payment or performance of a contract, commitment,
arrangement or understanding entered into in the ordinary course of business
which is expected to (i) involve payments in excess of $100,000 per year, or
(ii) have a duration exceeding five (5) years with expected payments over its
duration exceeding $1,000,000 (in each case other than leases not required to be
disclosed pursuant to Section 5.17), or any contract, commitment, arrangement or
understanding entered into not in the ordinary course of business.
(d) To MIOA's and its Subsidiaries' knowledge, there are no
outstanding contracts, commitments or bids, or services, development or sales
proposals, that will result in any substantial loss to MIOA or any of its
Subsidiaries (and/or the Surviving Corporation) upon completion or performance
thereof, after allowance for normal direct employee expenses, licensing,
development, distribution expenses and other costs.
<PAGE>
(e) There are no outstanding material lease or purchase commitments
of MIOA or any of its Subsidiaries which are not consistent with MIOA's and its
Subsidiaries' past lease and purchase commitment practices.
5.12. ABSENCE OF CERTAIN CHANGES. Except as reflected on SCHEDULE 5.12, or
elsewhere in this Agreement or specifically identified on any Schedules hereto,
since March 31, 1999, MIOA and its Subsidiaries have not, and at the Closing
Date will not, have:
(a) Suffered a Material Adverse Effect, or become aware of any
circumstances which might reasonably be expected to result in such a Material
Adverse Effect; or suffered any material casualty loss to the Assets (whether or
not insured);
(b) Incurred any obligations specifically related to the Assets,
except in the ordinary course of business, consistent with past practices;
(c) Permitted or allowed any of the Assets to be mortgaged, pledged,
or subjected to any lien or encumbrance, except liens or encumbrances
specifically excepted by the provisions of Section 5.14;
(d) Written down the value of any inventory, contract or other
intangible asset, or written off as uncollectible any notes or accounts
receivable or any portion thereof, except for write-downs and write-offs in the
ordinary course of business, consistent with past practice and at a rate no
greater than during the latest complete fiscal year; cancelled any other debts
or claims, or waived any rights of substantial value, or sold or transferred any
of its material properties or assets, real, personal, or mixed, tangible or
intangible, except in the ordinary course of business and consistent with past
practice;
(e) Sold, licensed or transferred or agreed to sell, license or
transfer, any of the Assets, except in the ordinary course of business and
consistent with past practice;
(f) To MIOA's and its Subsidiaries' knowledge, received notice of
any pending or threatened adverse claim or an alleged infringement of
proprietary material, whether such claim or infringement is based on trademark,
copyright, patent, license, trade secret, contract or other restrictions on the
use or disclosure of proprietary materials;
(g) Incurred obligations to refund money to customers, except in the
ordinary course of business, all of which will have no Material Adverse Effect;
(h) Become aware of any event, condition or other circumstance
relating solely to the Assets (as opposed to any such event, condition, etc.,
which is, for example, national or industry-wide in nature) which might
reasonably be expected to have a Material Adverse Effect on the Assets;
(i) Made any capital expenditures or commitments, any one of which
is more than $1,000,000, for additions to property, plant, or equipment, unless
approved in writing by CCI or deemed approved by CCI pursuant to EXHIBIT
4.2(B)(IV) hereof;
(j) Made any material change in any method of accounting or
accounting practice;
<PAGE>
(k) Paid, loaned, guaranteed, or advanced any material amount to, or
sold, transferred, or leased any material properties or assets (real, personal,
or mixed, tangible or intangible) to, or entered into any agreement,
arrangement, or transaction with any of MIOA's or any Subsidiaries' officers or
directors, or any business or Person in which any officer or director of MIOA or
any of its Subsidiaries, or any affiliate or associate of any of such Persons
has any direct or indirect interest; or
(l) Agreed to take any action described in this Section 5.12.
5.13. TAXES.
(a) As used in this Agreement:
(i) "Adverse Consequences" means all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues, penalties,
fines, costs, amounts paid in settlement, liabilities, obligations, taxes,
liens, losses, expenses, and fees, including court costs and attorneys' fees and
expenses;
(ii) "Affiliated Group" means any affiliated group within the
meaning of Code ss.1504(a) (or any similar group defined under a similar
provision of state, local or foreign law);
(iii) "Liability" means any liability (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether due or to
become due), including, without limitation, any liability for Taxes;
(iv) "Security Interest" means any mortgage, lien, encumbrance
or other security including any "tax lien" (other than for current taxes not yet
due);
(v) "Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
ss.59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property personal
property, sales, use, transfer, registration, value added, alternative, or
added-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not;
(vi) "Tax Return" means any return, declaration, report, claim
for refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
(b) MIOA and its Subsidiaries have not been a member of an
Affiliated Group filing a consolidated federal income Tax Return other than a
group the common parent of which is MIOA. The Affiliated Group of which MIOA is
the common parent (the "MIOA Group") has filed all income Tax Returns that it
was required to file for each taxable period during which MIOA and its
Subsidiaries were a member of the MIOA Group. All such Tax Returns are
<PAGE>
correct and complete in all material respects. All income Taxes owed by the MIOA
Group (whether or not shown on any Tax Return) have been paid for each taxable
period during which MIOA and its Subsidiaries filed a consolidated federal
income Tax Return.
(c) The amounts booked as provisions for Taxes in the Historical
Financials are sufficient for payment of all unpaid Taxes of MIOA, its
Subsidiaries, and the MIOA Group through December 31, 1998. Copies of the MIOA
Group's federal and state income Tax Returns for calendar years 1995, 1996, and
1997 have been provided to CCI.
(d) No claim has ever been made by a Governmental Authority in a
jurisdiction where MIOA or a Subsidiary does not file Tax Returns that it is or
it may be subject to taxation by that jurisdiction. There are no Security
Interests on any of the assets of MIOA or any of its Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any Tax when due.
(e) MIOA, each MIOA Subsidiary, and the MIOA Group have withheld and
paid over to the proper governmental authorities all Taxes required to have been
withheld and paid over, and complied with all information reporting and back-up
withholding requirements, including maintenance of required records with respect
thereto, in connection with amounts paid to any employee, independent
contractor, creditor, or other third party.
(f) There is no dispute or claim concerning any Tax Liability of
MIOA, a Subsidiary or the MIOA Group either (i) claimed or raised by any
Governmental Authority in writing, or (ii) as to which any of MIOA or any of its
Subsidiaries (and employees responsible for Tax matters) has knowledge.
(g) MIOA, its Subsidiaries, and the MIOA Group have not waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
(h) MIOA and its Subsidiaries do not have any liability for the
Taxes of any Person other than MIOA or its Subsidiaries (i) as a transferee or
successor, (ii) by contract, or (iii) otherwise.
(i) MIOA and each Subsidiary currently utilize the accrual method of
accounting for income Tax purposes. MIOA has utilized the accrual method of
accounting for income Tax purposes since the date of its incorporation. Each
Subsidiary of MIOA has utilized the accrual method of accounting for income Tax
purposes since the date of its incorporation or acquisition by MIOA, as the case
may be. MIOA, its Subsidiaries, and the MIOA Group have not agreed to, and are
not and will not be required to, make any adjustments under Code Section 481(a)
as a result of a change in accounting methods.
(j) There are no contracts, agreements, plans or arrangements,
including but not limited to the provisions of this Agreement, covering any
employee or former employee of MIOA or its Subsidiaries that, individually or
collectively, could give rise to the payment of any amount (or portion thereof)
that would not be deductible pursuant to Sections 280G, 404 or 162 of the Code.
<PAGE>
(k) Deferred Taxes of MIOA and its Subsidiaries have been provided
for in accordance with generally accepted accounting principles, consistently
applied during the periods involved.
(l) There are no deferred intercompany gains, losses or other
intercompany items, or excess loss accounts, within the meaning of Treasury
Regulation Sections 1.1502-13 or 1.1502-19 (or any predecessor regulations or
any comparable items for state, local or foreign Tax purposes) with respect to
MIOA or any Subsidiary.
(m) Neither MIOA nor any Subsidiary has filed an election pursuant
to Section 341(f) of the Code to be a consenting corporation.
5.14. TITLE TO PROPERTIES; ENCUMBRANCES. Except as specifically identified
in the Schedules hereto and except for items leased or licensed by MIOA or any
of its Subsidiaries, or on SCHEDULE 5.14, MIOA or such Subsidiaries have good,
valid, and marketable title to all of the Assets. All of the Assets are in the
possession or under the control of MIOA or a Subsidiary, and none of the Assets
are subject to any mortgage, pledge, lien, security interest, conditional sale
agreement, encumbrance, or charge of any kind except as set forth on SCHEDULE
5.14 or as specifically disclosed on the other Schedules hereto and, except
minor imperfections or title and encumbrances, if any, that are not substantial
in amount, do not materially detract from the value or functional utility of the
property subject thereto, and do not in any way materially impair the value of
the Assets.
5.15. EQUIPMENT. Except with respect to its aircraft and mobile
catherization laboratories, all of the equipment owned or leased by MIOA and its
Subsidiaries which has (or had at the date of its acquisition or execution of
the related lease by MIOA or its Subsidiary) a fair market value of $200,000 or
greater is listed on SCHEDULE 5.15 attached hereto. All of the equipment owned
or leased by MIOA and its Subsidiaries is in adequate operating condition and
repair subject to normal wear and tear, except as set forth on SCHEDULE 5.15.
5.16. REAL PROPERTY. SCHEDULE 5.16 contains a list of all real property
owned by MIOA and its Subsidiaries, including, without limitation, the
improvements and structures located thereon. To MIOA's and its Subsidiaries'
knowledge, such improvements and structures are structurally sound with no known
defects and in good operating condition and repair subject to normal wear and
tear, and neither MIOA nor any of its Subsidiaries has received any written
notification that there is any violation of any building, zoning, or other law,
ordinance, or regulation in respect of such property, improvements, or
structures, and to the best of MIOA's and its Subsidiaries' knowledge, no such
violation exists.
5.17. LEASES. Except with respect to its aircraft and mobile catherization
laboratories, SCHEDULE 5.17 contains a list of all leases (including both
operating and capital leases) pursuant to which MIOA or any of its Subsidiaries
leases real or personal property and (i) which involve lease payments in excess
of $100,000 per year, (ii) which are between MIOA or any of its Subsidiaries, on
the one hand, and any of their Affiliates, on the other hand, or (iii) which
were not entered into in the ordinary course of business. Copies of all such
leases have been made available to CCI. All such leases are valid, binding, and
enforceable in accordance with their terms (except as the enforceability thereof
may be limited by applicable bankruptcy, insolvency or other similar laws
relating to the enforcement of creditors' rights generally and by the
application of general principles of equity), are in full force and effect and
except as set forth on
<PAGE>
SCHEDULE 5.17, no event has occurred which is a default or which with the
passage of time will constitute a default by MIOA or any of its Subsidiaries
thereunder, nor has any such event occurred to the knowledge of MIOA and its
Subsidiaries which is a default, or with the passage of time will constitute a
default, by any other party to such lease. All property leased by MIOA or any of
its Subsidiaries as lessee is in the possession of MIOA and its Subsidiaries.
Except as indicated in SCHEDULE 5.17, no consent of any lessor is required in
connection with the Transactions.
5.18. LITIGATION. Except as set forth in SCHEDULE 5.18, (i) there are no
pending (served) actions, proceedings or regulatory agency investigations
against MIOA or its Subsidiaries or, to MIOA or such Subsidiaries' knowledge,
threatened against MIOA or any of its Subsidiaries involving the Assets, and
(ii) no such action, proceeding, or regulatory agency investigation has been
pending (served) during the three-year period preceding the date of this
Agreement. No assertion has ever been made to MIOA or any of its Subsidiaries to
the effect that MIOA or any of its Subsidiaries has any liability as a successor
to a third party's business or product line, and neither MIOA nor any of its
Subsidiaries has knowledge of any basis for such an assertion.
5.19. EMPLOYEE BENEFIT PLANS; EMPLOYEES. (a) SCHEDULE 5.19 sets forth a
list of each material "employee benefit plan" (as defined by Section 3(e) of
ERISA) and any other material compensation, deferred compensation, fringe
benefit, severance, disability, sick leave, vacation, or other agreement,
policy, or arrangement (each such plan, agreement, policy, or arrangement is
referred to herein as a "MIOA Employee Benefit Plan," and, collectively, the
"MIOA Employee Benefit Plans") for the benefit of employees (and their
beneficiaries) of MIOA or any of its Subsidiaries (collectively, "MIOA
Employees") or with respect to which MIOA or any "MIOA ERISA Affiliate" (hereby
defined to include any trade or business, whether or not incorporated, other
than MIOA, which has employees who are treated pursuant to Section 4001(a)(14)
of ERISA and/or Section 414 of the Code as employees of a single employer which
includes MIOA).
(b) MIOA has, or will have prior to the Schedule Delivery
Date, delivered to CCI, with respect to each MIOA Employee Benefit Plan, copies
of the documents embodying the Plan, if any, and employee handbooks governing
the employment of MIOA Employees.
(c) Neither MIOA nor any Subsidiary has any obligation to
contribute to or provide benefits pursuant to, and has no other liability of any
kind with respect to, (i) a "multiple employer welfare arrangement" (within the
meaning of Section 3(40) of ERISA), (ii) a "plan maintained by more than one
employer" (within the meaning of Section 413(c) of the Code), (iii) a
"multi-employer plan" within the meaning of Section 3(37) of ERISA), or (iv) an
"employee pension benefit plan" (within the meaning of Section 3(2) of ERISA)
which is subject to Title IV of ERISA.
(d) To the knowledge of MIOA, neither MIOA nor any Subsidiary
is subject to any liens, or excise or other taxes under ERISA, the Code or other
applicable law relating to any MIOA Employee Benefit Plan.
(e) The consummation of the Transactions will not give rise to
any liability for any employee benefits to any MIOA Employee, including, without
limitation,
<PAGE>
liability for severance pay, unemployment compensation, termination pay or
withdrawal liability.
(f) No MIOA Employee Benefit Plan in any way provides for any
benefits of any kind whatsoever (other than under Section 4980B of the Code and
Part 6 of Subtitle B of Title I of ERISA, the Federal Social Security Act or any
MIOA Employee Benefit Plan qualified under Section 401(a) of the Code) to any
MIOA Employee who, at the time the benefit is to be provided, is a former
director or employee of, other provider of services to MIOA or an MIOA ERISA
Affiliate (or a beneficiary of any such person).
(g) Any contribution, insurance premium, excise tax, interest
charge or other liability or charge imposed or required with respect to any MIOA
Employee Benefit Plan which is attributable to any period or any portion of any
period prior to the Closing will be paid by MIOA or a Subsidiary or will be
reflected on the Historical Financials.
(h) Except as disclosed on SCHEDULE 5.19(H), to the knowledge
of MIOA, no claim, lawsuit, arbitration or other action has been asserted or
instituted or threatened in writing against any MIOA Employee Benefit Plan, any
trustee or fiduciaries thereof, MIOA, any of its Subsidiaries or any MIOA ERISA
Affiliate, any director, officer or employee thereof, or any of the assets of an
MIOA Employee Benefit Plan or any related trust.
(i) Except as disclosed on SCHEDULE 5.19(I), to the knowledge
of MIOA, no MIOA Employee Benefit Plan is under audit or investigation by the
IRS or the DOL or any other governmental authority and no such completed audit,
if any, has resulted in the imposition of any tax, interest or penalty.
(j) Since December 31, 1998 and through the date hereof, and
except as set forth on SCHEDULE 5.19(J), neither MIOA, any of its Subsidiaries
nor any MIOA ERISA Affiliate has, nor will it, (i) institute or agree to
institute any new MIOA Employee Benefit Plan or practice, (ii) make or agree to
make any change in any MIOA Employee Benefit Plan, (iii) make or agree to make
any increase in the compensation payable or to become payable by MIOA, any of
its Subsidiaries or any MIOA ERISA Affiliate to any MIOA Employee, except for
normal periodic salary increases consistent with past practices, or (iv) except
pursuant to this Agreement and except for contributions required to provide
benefits pursuant to the provisions of the MIOA Employee Benefit Plans, pay or
accrue or agree to pay or accrue any bonus, percentage of compensation, or other
like benefit to, or for the credit of, any MIOA Employee.
(k) There are no collective bargaining or other labor union
agreements to which MIOA or any of its Subsidiaries is a party or by which any
of them is bound.
5.20. ADVISORS FEES. Other than as set forth on SCHEDULE 5.20, neither
MIOA nor any of its Subsidiaries or any Affiliate thereof has retained or
utilized the services of any advisor, broker, finder or intermediary, or paid or
agreed to pay any fee or commission to any other Person or entity for or on
account of the Transactions, or had any communications with any Person or entity
which would obligate CCI to pay any such fees or commission.
5.21. NO EXISTING DISCUSSION FOR ACQUISITION PROPOSAL. Except as set forth
on SCHEDULE 5.21, as of the date hereof, MIOA is not engaged in any negotiations
with any other party with respect to an Acquisition Proposal.
<PAGE>
5.22. ACCOUNTS RECEIVABLE. Except as set forth on SCHEDULE 5.22 and as
otherwise may be specifically identified on the Historical Financials, all
accounts receivable (the "MIOA Receivables") of MIOA which are reflected in the
Historical Financials, and all MIOA Receivables acquired or generated since the
date of the Historical Financials, are in all material respects valid and BONA
FIDE MIOA Receivables arising from the furnishing of goods or services to
customers in the ordinary course of business.
5.23. INVENTORIES. Any and all inventories of MIOA which are reflected on
the Historical Financials, plus any replacements for such items acquired on or
before the Closing, and minus any such items sold by MIOA in the ordinary course
of business on or before the Closing, are properly valued at the lower of cost
(first-in, first-out) or market in accordance with generally accepted accounting
principles consistently applied and, except for obsolete and slow moving items
which have been fully written off or reserved for and except for items sold in
the ordinary course of business, consist of items of a quality and quantity
currently useable and saleable in the ordinary course of business without
markdown or discount.
5.24. SOFTWARE. Except as set forth on SCHEDULE 5.24, MIOA presently has
the right to use all computer software owned by it, and to the knowledge of
MIOA, the right to use all other computer software which is leased or licensed
to, or otherwise used by MIOA. To the knowledge of MIOA, neither MIOA nor any
Subsidiary is in violation of any license or other agreement related to its
software.
5.25 Y2K COMPLIANCE. Except as set forth on SCHEDULE 5.25, MIOA's
equipment, computers, software, hardware, aircraft, business and processes in
which date sensitive software is utilized are year 2000 compliant such that such
equipment, computers, software, hardware, aircraft, business and processes will
not experience failures, interruptions or malfunctions in a manner that will
have a material adverse effect on such equipment, computers, software, hardware,
aircraft, business and processes, MIOA and/or it Assets.
5.26. SHARES TO BE DELIVERED. The Acquisition Shares to be issued with
respect to previously outstanding CCI Common Stock when issued and delivered to
such CCI stockholders pursuant to this Agreement will be duly authorized,
validly issued, fully paid and nonassessable shares of voting common stock of
MIOA. Upon delivery of the Acquisition Shares after the Closing and assuming
that the former stockholders of CCI are receiving the Acquisition Shares in good
faith without notice of any adverse claims, such stockholders will receive good
and unencumbered title to the Acquisition Shares, free and clear of all liens,
restrictions, charges, encumbrances, and other security interests of any kind or
nature whatsoever, except for claims arising out of acts of or claims against
such stockholders, restrictions existing under applicable securities laws, and
the restrictions imposed hereby (as to Affiliates) and restrictions with respect
to the Registration Rights Agreement and Restricted Sale Agreement.
5.27. DISCLOSURE AND ALL DOCUMENTATION. No representation or warranty by
MIOA contained in this Agreement and no statement contained in any certificate
or schedule furnished to CCI pursuant to the provisions hereof contains or shall
contain any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements therein not misleading. To the
knowledge of MIOA and its Subsidiaries, there is no current event or condition
of any kind or character pertaining to MIOA or its Subsidiaries that may
reasonably be expected to have a Material Adverse Effect, except as disclosed in
this Agreement and except for
<PAGE>
those events and conditions which are national or industry-wide in nature.
Except as specifically indicated elsewhere in this Agreement, all documents
delivered by MIOA or its Subsidiaries to CCI in connection herewith have been
and will be complete originals, or exact copies thereof.
5.28. REGISTRATION STATEMENT. None of the information to be included by
MIOA for inclusion or incorporation by reference in the Registration Statement
or any other document filed with any other regulatory agency in connection
herewith will: (i) in the case of the Registration Statement, at the time it
becomes effective, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading; or, (ii) in the case of any other
filing required by any regulatory agency in connection herewith, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make statements therein, in light
of the circumstances under which they are made, not misleading. If, at any time
prior to the Effective Time, any event with respect to MIOA, its officers and
directors or any of its Subsidiaries shall occur which is required to be
described in the Registration Statement, such event shall be so described, and
an appropriate amendment or supplement shall be promptly filed with the SEC and,
as required by law, disseminated to the shareholders of MIOA and CCI. The
Registration Statement will comply as to form in all material respects with the
provisions of the Securities Act, as applicable.
5.29. SURVIVAL. The representations and warranties contained in this
Article 5 shall survive the Closing for one(1) year.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF CCI
In order to induce MIOA to enter into this Agreement and consummate the
Transactions, CCI hereby represents and warrants the following to MIOA as of the
Schedule Delivery Date (and not the date hereof), each of which representations
and warranties shall be material to and relied upon by MIOA and shall be deemed
remade on and as of the date of the Closing:
6.1. ORGANIZATION AND AUTHORITY. CCI is a corporation duly organized and
validly existing under the laws of the State of Georgia and each of its
Subsidiaries is incorporated in the states identified on SCHEDULE 6.1. The
states in which CCI and each Subsidiary are qualified to do business are set
forth on SCHEDULE 6.1. Neither CCI nor any of its Subsidiaries is required to be
qualified as a foreign corporation in any other jurisdiction where its failure
to qualify would have a Material Adverse Effect. CCI and its Subsidiaries have
all necessary corporate power and authority to own, lease and operate their
properties and conduct their business as it is currently being conducted. Except
for CCI's ownership of its Subsidiaries, which is fully described on SCHEDULE
6.1, and as otherwise set forth on SCHEDULE 6.1, neither CCI nor any of its
Subsidiaries owns, directly or indirectly, any equity interest in any
corporation, partnership, joint venture, or other entity. The list of CCI's
Subsidiaries contained in SCHEDULE 6.1 is a true, correct and complete list of
all entities in which CCI has a direct or indirect equity interest. SCHEDULE 6.1
identifies each owner of an equity interest, or right to acquire any such
interest, in each Subsidiary of CCI.
6.2. CORPORATE POWER AND AUTHORITY; DUE AUTHORIZATION. Subject to CCI
Board Approval which has been obtained, CCI has full corporate power and
authority to execute and
<PAGE>
deliver this Agreement and each of the Closing Documents to which CCI is or will
be a party, to amend its Articles of Incorporation in the manner set forth in
this Agreement, and to consummate the Transactions. No corporate proceeding is
necessary to approve the Transactions other than CCI Board Approval and CCI
Stockholder Approval. Assuming CCI Board Approval and that this Agreement and
each of the Closing Documents to which MIOA is a party constitutes a valid and
binding agreement of MIOA this Agreement and each of the Closing Documents to
which CCI is a party constitutes, or will constitute when executed and
delivered, a valid and binding agreement of CCI in each case enforceable in
accordance with its terms, except as the enforceability thereof may be limited
by applicable bankruptcy, insolvency or other similar laws relating to the
enforcement of creditors' rights generally and by the applicability of general
principles of equity. The duly elected officers and directors of CCI and its
Subsidiaries are set forth on SCHEDULE 6.2. Copies of the Articles of
Incorporation, the Bylaws and all minutes of CCI and its Subsidiaries are
contained in the minute books of CCI, or such Subsidiaries, respectively. True,
correct and complete copies of the minute books of CCI and its Subsidiaries have
been made available to MIOA.
6.3. SUFFICIENCY OF ASSETS. All material assets and rights relating to
CCI's business and that of its Subsidiaries are held solely by, and all
agreements, obligations, expenses and transactions relating to the business of
CCI and its Subsidiaries have been entered into, incurred and conducted solely
by, CCI and its Subsidiaries. Except as described in SCHEDULE 6.3, the Assets
are all of the items necessary to provide all services and products required in
connection with the business of CCI and its Subsidiaries as presently being
conducted and as anticipated being conducted in accordance with the Business
Plan and projections set forth in SCHEDULE 6.3, assuming competent personnel,
general office facilities, and adequate facilities are available.
6.4. NO CONFLICT; REQUIRED CONSENTS. Exclusive of CCI Board Approval and
CCI Stockholder Approval, SCHEDULE 6.4 lists all material third-party consents
or approvals required with respect to CCI and its Subsidiaries for consummation
of the Transactions, which consents CCI agrees to use its best reasonable
efforts to obtain. Assuming all such consents and approvals have been obtained
and assuming the appropriate filings and mailings are made by CCI to effectuate
the Acquisition under the Georgia Code, and under the Securities Act and the
Exchange Act, the execution and delivery by CCI of this Agreement and the
Closing Documents and the consummation by CCI of the Transactions do not and
will not, except as set forth on SCHEDULE 6.4, (a) require the consent, approval
or action of, or any filing or notice to, any corporation, firm, Person or other
entity or any public, governmental or judicial authority (except for such
consents, approvals, actions, filing or notices the failure of which to make or
obtain will not in the aggregate have a Material Adverse Effect); (b) violate in
any material respect the terms of any material instrument, document or agreement
to which CCI or any of its Subsidiaries is a party, or by which CCI or any of
its Subsidiaries or the property of CCI or any of its Subsidiaries is bound, or
be in conflict in any material respect with, result in a material breach of or
constitute (upon the giving of notice or lapse of time or both) a material
default under any such instrument, document or agreement, or result in the
creation of any lien upon any of the property or assets of CCI or any of its
Subsidiaries; (c) violate in any respect the terms of any instrument, document
or agreement to which CCI or any of its Subsidiaries is a party, or by which CCI
or any of its Subsidiaries or the property of CCI or any of its Subsidiaries is
bound, or be in conflict in any respect with, result in a breach of or
constitute (upon the giving of notice or lapse of time or both) a default under
any such instrument, document or agreement, or result in the creation of any
lien upon any of the property or assets of CCI or any of its Subsidiaries if the
aggregate effect of all such violations listed in this subsection (c) results in
a Material Adverse Effect on
<PAGE>
CCI and its Subsidiaries taken as a whole; (d) violate CCI's Articles of
Incorporation or Bylaws; or (e) violate any order, writ, injunction, decree,
judgment, ruling, law, rule or regulation of any federal, state, county,
municipal, or foreign court or governmental authority applicable to CCI or any
of its Subsidiaries, or the business or assets of CCI or any of its
Subsidiaries. Neither CCI nor any of its Subsidiaries is subject to, or a party
to, any mortgage, lien, lease, agreement, contract, instrument, order, judgment
or decree or any other material restriction of any kind or character which would
prevent or hinder the continued operation of the business of CCI and its
Subsidiaries after the closing on substantially the same basis as theretofore
operated.
6.5. CAPITALIZATION. All of the authorized and outstanding CCI capital
stock is set forth on SCHEDULE 6.5, and no shares of CCI capital stock are held
in the treasury of CCI. No shares or any class of capital stock or other equity
interests of CCI, other than (i) CCI Common Stock, (ii) options or warrants for
CCI Common Stock, or (iii) those shares of CCI Capital Stock identified in
SCHEDULE 6.5, shall be issued and outstanding at the Closing. All outstanding
CCI capital stock has been duly authorized, and is validly issued, fully paid
and nonassessable. No preemptive (whether statutory or contractual) rights have
been violated. Current CCI stock option plans, all previous forms of those
plans, and amendments, and all outstanding options and warrants, are identified
on SCHEDULE 6.5. Except as set forth on SCHEDULE 6.5, all options were granted
in accordance with the provisions of CCI stock option plans. SCHEDULE 6.5 also
sets forth information as to options (if any) and warrants (if any) previously
granted which have terminated, expired or been exercised. Except for the
outstanding options, warrants and other commitments set forth in SCHEDULE 6.5,
CCI has no convertible securities, options, warrants, or other contracts,
commitments, agreements, understandings, arrangements or restrictions by which
it is bound to issue any additional shares of CCI Capital Stock or other
securities. Except as set forth on SCHEDULE 6.2, CCI owns, directly or
indirectly, all of the equity in its Subsidiaries and no third party has a right
to acquire any such interest. All securities of CCI and its Subsidiaries were
offered and sold in compliance with applicable federal and state securities
laws. SCHEDULE 6.5 identifies each stock option plan and outstanding option,
warrant, or other right, if any, to acquire the capital stock of any of its
Subsidiaries, full and complete copies of which have been provided to MIOA. Each
and every dividend of CCI and each Subsidiary, if any, whether paid in cash or
other property, has been declared and paid in compliance with applicable law,
and neither CCI nor any of its Subsidiaries has any further obligation with
respect to such payment. SCHEDULE 6.5 also summarizes in detail all currently
effective registration rights which have been granted by CCI to any other person
or entity and all currently effective shareholder agreements between any
shareholders of CCI.
6.6. COMPLIANCE WITH LAWS. Except as set forth in SCHEDULE 6.6, (a) to the
best of CCI's knowledge, CCI and its Subsidiaries are in compliance with, and
CCI and its Subsidiaries have operated any Persons or businesses previously
owned or operated by them in compliance with, all applicable laws, orders, rules
and regulations of all governmental bodies and agencies, including applicable
securities laws and regulations and environmental laws and regulations, but
excluding applicable laws and regulations related to Medicare, Medicaid and
other federally funded programs, except where such noncompliance has and will
have, in the aggregate, no Material Adverse Effect. Neither CCI, nor any of its
Subsidiaries, has received notice of any noncompliance with the foregoing.
(b) Without limiting the foregoing, CCI and each of its Subsidiaries
and any other person or entity for whose conduct CCI is legally held responsible
are in material compliance with all applicable federal, state, regional, local
or provincial laws, statutes,
<PAGE>
ordinances, judgments, rulings and regulations relating to any matters of
pollution, protection of the environment, health or safety, or environmental
regulation or control (collectively, "Environmental Laws"). Neither CCI nor any
of its Subsidiaries, nor any other person or entity for whose conduct CCI is
legally responsible, has (i) received any notice, demand, request for
information, or administrative inquiry relating to any violation of an
Environmental Law or the institution of any suit, action, claim or proceeding
alleging such violation or investigation by any Governmental Authority or any
third party of any such violation, (ii) manufactured, generated, treated,
stored, handled, processed, released, transported or disposed of any Hazardous
Substance on, under, from or at any of CCI's or any of its Subsidiaries'
properties or any other properties, (iii) become aware or received notice of the
release or disposal of any Hazardous Substances in violation of any applicable
Environmental Law, on, under or at any of CCI's, or any of its Subsidiaries'
properties or any other properties, (iv) become aware or received notice of any
actual or potential material liability on the part of CCI for the response to or
remediation of any Hazardous Substance at or arising from any of CCI's or any of
its Subsidiaries' properties or any other properties owned or operated by CCI,
any of its Subsidiaries or any other Person for whose conduct CCI is legally
responsible, or (v) become aware of or received notice of any actual or
potential liability on the part of CCI for the costs of response to or
remediation of Hazardous Substances at or arising from any of CCI's or any of
its Subsidiaries' properties or any other properties owned or operated by CCI,
any of its Subsidiaries or any other Person for whose conduct CCI is or may be
held responsible. For purposes of this Agreement, the term "Hazardous Substance"
shall mean any toxic or hazardous materials or substances, including asbestos,
buried contaminants, chemicals, flammable explosives, radioactive materials or
petroleum and petroleum products and any substances defined as, or included in
the definition of, "hazardous substances," "hazardous wastes," "hazardous
materials" or "toxic substances" under any Environmental Law. No Environmental
Law imposes any obligation upon CCI or its Subsidiaries arising out of or as a
condition to any transaction contemplated hereby, including, without limitation,
any requirement to modify or to transfer any permit or license, any requirement
to file any notice or other submission with any Governmental Authority, the
placement of any notice, acknowledgment, or covenant in any land records, or the
modification of or provision of notice under any agreement, consent order, or
consent decree. No lien has been placed upon any of CCI's properties or its
Subsidiaries' properties under any Environmental Law.
6.7. LICENSES AND PERMITS. Except as set forth in SCHEDULE 6.7, neither
CCI nor any of its Subsidiaries has received notice of any violations in respect
of any licenses, permits, concessions, grants, franchises, approvals or
authorizations necessary or required for the use or ownership of their assets
and the operation of their business. No proceeding is pending or, to the
knowledge of CCI, threatened, which seeks revocation or limitation of any such
licenses, permits, concessions, grants, franchises, approvals or authorizations.
6.8. FINANCIAL INFORMATION.
(a) CCI has provided to MIOA or will provide to MIOA on or before
the Effective Time its interim financial statements for the period through April
30, 1999 ("Interim Financials") and an unaudited financial statement for the
most recent fiscal year-end December 31, 1998 ("Financial Statement"); together
with Interim Financials are herewith called (the "Financial Statements"), copies
of which are attached hereto as EXHIBIT 6.8. Except as disclosed in SCHEDULE 6.8
attached hereto, the Financial Statements have been and CCI's Monthly Financials
will be, prepared on the cash method of accounting applied on a consistent basis
<PAGE>
throughout the periods covered thereby, present fairly the financial condition
of CCI and its Subsidiaries as of the indicated dates and the results of
operations of CCI and its Subsidiaries for the indicated periods, are consistent
with the books and records of CCI and its Subsidiaries and, except as discussed
on SCHEDULE 6.8 do not contain any material item of special or nonrecurring
income not earned in the ordinary course of business; provided, however, that
the Interim Financials and such Monthly Financials are subject to normal
year-end adjustments that are not expected to be material in amount.
(b) Except as and to the extent specifically disclosed in this
Agreement, there are no liabilities or obligations of CCI or any of its
Subsidiaries of any nature, whether liquidated, accrued, absolute, contingent or
otherwise except for those (i) that are specifically reflected or reserved
against as to amount in the latest balance sheet contained in the Financial
Statements, (ii) that arose thereafter in the ordinary course of business, or
(iii) that are specifically set forth on SCHEDULE 6.8; and at all times after
the execution of this Agreement until the Closing, there will be no liabilities
or obligations of CCI or any of its Subsidiaries of any nature, whether
liquidated, unliquidated, accrued, absolute, contingent or otherwise, which are
material, individually or in the aggregate, except for those (A) that are
specifically reflected or reserved against as to amount in the latest balance
sheet contained in the Financial Statements, or (B) that arose after the date of
such balance sheet in the ordinary course of business (and are, individually and
in the aggregate, immaterial), (C) that are specifically set forth on SCHEDULE
6.8, or (D) that are permitted as set forth on EXHIBITS 4.2, 4.2(B)(IV), or
4.2(F).
(c) CCI and its Subsidiaries are not, nor have any of them been
during the twelve (12) months immediately preceding the execution of this
Agreement, insolvent within the meaning of 11 U.S.C. ss.101(31). CCI and its
Subsidiaries have paid and are paying their debts as they become due, except
with respect to certain debts owing to the Georgia Institute of Technology and
the Medical College of Georgia both of which MIOA is aware.
6.9. NO UNDISCLOSED LIABILITIES. Except as and to the extent specifically
disclosed in this Agreement and those that are specifically reflected or
reserved against as to amount in the latest balance sheet contained in the
Financial Statements, neither CCI nor any of its Subsidiaries knows of any
reasonable basis for the assertion against CCI or any of its Subsidiaries of any
material liabilities or obligations of any nature, whether absolute, accrued,
contingent or otherwise and whether due or to become due, including, without
limitation, any liability for taxes and interest, penalties and other charges
payable with respect thereto. Except as set forth in this Agreement, neither the
execution and delivery of this Agreement nor the consummation of the Acquisition
will (a) result in any payment (whether severance pay, unemployment compensation
or otherwise) becoming due from CCI to any employee, director or officer or
former employee, director or officer of CCI, (b) increase any benefits otherwise
payable to any employee, director or officer or former employee, director or
officer of CCI, or (c) result in the acceleration of the time of payment or
vesting of any such benefits.
6.10. INTELLECTUAL PROPERTY. SCHEDULE 6.10 lists all Trade Rights (as
defined below) in which CCI now has any interest, specifying whether such Trade
Rights are owned, controlled, used or held (under license or otherwise)
including, without limitation, the intelligent routing software and medication
management software (which is only in the development stage and for which no
source code has been written) by CCI, and also indicating which of such Trade
Rights are registered and patented. To the best of CCI's knowledge, all Trade
Rights shown as registered or patented in SCHEDULE 6.10 have been properly
registered, all pending registrations
<PAGE>
and applications have been properly made and filed and all annuity, maintenance,
renewal and other fees relating to registrations or applications are current.
Except as provided in SCHEDULE 6.10, in order to conduct the business of CCI, as
such is currently being conducted or proposed to be conducted in accordance with
its Business Plan and projections, CCI does not require any Trade Rights that it
does not already have in order to effectuate its Business Plan and meet its
projections. To the best of CCI's knowledge, the intelligent routing software
and medication management software are patentable processes or applications or,
if not, the failure to obtain letters patent with respect to the intelligent
routing process and/or medication management software will not materially
adversely affect CCI or its business as described in the Business Plan and
projections. To the best of CCI's and its shareholders' knowledge, CCI is not
infringing and has not infringed any Trade Rights of another in the operation of
the business of CCI, nor is any other person infringing the Trade Rights of the
CCI. CCI has not granted any license or made any assignment of any Trade Right
listed in SCHEDULE 6.10, nor does it pay any royalties or other consideration
for the right to use any Trade Rights of others other than as disclosed in
SCHEDULE 6.10. There is no Litigation pending or threatened to challenge CCI's
right, title and interest with respect to its continued use and right to
preclude others from using any Trade Rights of CCI. To the best of CCI's and its
shareholders' knowledge, all Trade Rights of CCI are valid, enforceable and in
good standing, and there are no equitable defenses to enforcement based on any
act or omission of CCI. The consummation of the transactions contemplated hereby
will not alter or impair any Trade Rights owned or used by CCI. As used herein,
the term "Trade Rights" shall mean and include: (i) all trademark rights,
business identifiers, trade dress, service marks, trade names and brand names,
all registrations thereof and applications therefor and all goodwill associated
with the foregoing; (ii) all copyrights, copyright registrations and copyright
applications, and all other rights associated with the foregoing and the
underlying works of authorship; (iii) all patents and patent applications, and
all international proprietary rights associated therewith; (iv) all contracts or
agreements granting any right, title, license or privilege under the
intellectual property rights of any third party; (v) all inventions,
applications, works-in-process, mask works and mask work registrations, software
programs and applications, know-how, discoveries, improvements, designs, trade
secrets, shop and royalty rights, employee covenants and agreements respecting
intellectual property and non-competition and all other types of intellectual
property; and (vi) all claims for infringement or breach of any of the
foregoing.
6.11. CONTRACTS AND COMMITMENTS. Except as disclosed on SCHEDULE 6.11:
(a) To CCI's and its Subsidiaries knowledge, no aspect of CCI's and
its Subsidiaries' business or operations or the Assets is of such character as
would restrict or prevent CCI or MIOA from carrying on the business of CCI and
its Subsidiaries as it is presently being conducted or anticipated being
conducted as disclosed in its Business Plan and projections.
(b) CCI and its Subsidiaries have no consultants or independent
contractors who are officers or directors of CCI or any of its Subsidiaries, or
who are affiliates of such officers or directors, to whom they are paying
compensation for services.
(c) Neither CCI nor any of its Subsidiaries has material contracts,
commitments, arrangements, or understandings relating to their business,
operations, financial condition, or prospects. For purposes of this Section
5.11(c), "material" means payment or performance of a contract, commitment,
arrangement or understanding entered into in the ordinary course of business
which is expected to (i) involve payments in excess of $50,000 per year, or (ii)
have a
<PAGE>
duration exceeding five (5) years with expected payments over its duration
exceeding $200,000 (in each case other than leases not required to be disclosed
pursuant to Section 5.17), or any contract, commitment, arrangement or
understanding entered into not in the ordinary course of business.
(d) To CCI's and its Subsidiaries' knowledge, there are no
outstanding contracts, commitments or bids, or services, development or sales
proposals, that will result in any substantial loss to CCI or any of its
Subsidiaries (and/or the Surviving Corporation) upon completion or performance
thereof, after allowance for normal direct employee expenses, licensing,
development, distribution expenses and other costs.
(e) There are no outstanding material lease or purchase commitments
of CCI or any of its Subsidiaries which are not consistent with CCI's and its
Subsidiaries' past lease and purchase commitment practices.
6.12. ABSENCE OF CERTAIN CHANGES. Except as reflected on SCHEDULE 6.12, or
elsewhere in this Agreement or specifically identified on any Schedules hereto,
since December 31, 1998, CCI and its Subsidiaries have not, and at the Closing
Date will not, have:
(a) Suffered a material Adverse Effect, or become aware of any
circumstances which might reasonably be expected to result in such a Material
Adverse Effect; or suffered any material casualty loss to the Assets (whether or
not insured);
(b) Incurred any obligations specifically related to the Assets,
except in the ordinary course of business, consistent with past practices;
(c) Permitted or allowed any of the Assets to be mortgaged, pledged,
or subjected to any lien or encumbrance, except liens or encumbrances
specifically excepted by the provisions of Section 6.14;
(d) Written down the value of any inventory, contract or other
intangible asset, or written off as uncollectible any notes or accounts
receivable or any portion thereof, except for write-downs and write-offs in the
ordinary course of business, consistent with past practice and at a rate no
greater than during the latest complete fiscal year; cancelled any other debts
or claims, or waived any rights of substantial value, or sold or transferred any
of its material properties or assets, real, personal, or mixed, tangible or
intangible, except in the ordinary course of business and consistent with past
practice;
(e) Sold, licensed or transferred or agreed to sell, license or
transfer, any of the Assets, except in the ordinary course of business and
consistent with past practice;
(f) To CCI's and its Subsidiaries' knowledge, received notice of any
pending or threatened adverse claim or an alleged infringement of proprietary
material, whether such claim or infringement is based on trademark, copyright,
patent, license, trade secret, contract or other restrictions on the use or
disclosure of proprietary materials;
(g) Incurred obligations to refund money to customers, except in the
ordinary course of business, all of which will have no Material Adverse Effect;
<PAGE>
(h) Become aware of any event, condition or other circumstance
relating solely to the Assets (as opposed to any such event, condition, etc.,
which is, for example, national or industry-wide in nature) which might
reasonably be expected to have a Material Adverse Effect on the Assets;
(i) Made any capital expenditures or commitments, any one of which
is more than $500,000, for additions to property, plant, or equipment, unless
approved in writing by MIOA or deemed approved by MIOA pursuant to EXHIBIT
4.2(B)(IV) hereof;
(j) Made any material change in any method of accounting or
accounting practice;
(k) Paid, loaned, guaranteed, or advanced any material amount to, or
sold, transferred, or leased any material properties or assets (real, personal,
or mixed, tangible or intangible) to, or entered into any agreement,
arrangement, or transaction with any of CCI's or any Subsidiaries' officers or
directors, or any business or Person in which any officer or director of CCI or
any of its Subsidiaries, or any affiliate or associate of any of such Persons
has any direct or indirect interest; or
(l) Agreed to take any action described in this Section 6.12.
6.13. TAXES.
(a) Except a set forth on SCHEDULE 6.13(A), CCI and each Subsidiary
of which CCI owns more than fifty percent (50%) of such Subsidiary's issued and
outstanding equity interests, have not been a member of an Affiliated Group
filing a consolidated federal income Tax Return other than a group the common
parent of which is CCI. All Tax Returns that CCI was required to file for each
taxable period has been filed. All such Tax Returns are correct and complete in
all material respects. All income Taxes owed by CCI (whether or not shown on any
Tax Return) have been paid for each taxable period during which CCI and its
Subsidiaries filed a consolidated federal income Tax Return.
(b) The amounts booked as provisions for Taxes on the Financial
Statements are sufficient for payment of all unpaid Taxes of CCI and its
Subsidiaries, and the CCI Group through December 31, 1998. Copies of the CCI
Group's federal and state income Tax Returns for calendar years 1997 and 1998
have been provided to MIOA.
(c) No claim has ever been made by a Governmental Authority in a
jurisdiction where CCI or a Subsidiary does not file Tax Returns that it is or
it may be subject to taxation by that jurisdiction. There are no Security
Interests on any of the assets of CCI or any of its Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any Tax when due.
(d) CCI and each CCI Subsidiary have withheld and paid over to the
proper governmental authorities all Taxes required to have been withheld and
paid over, and complied with all information reporting and back-up withholding
requirements, including maintenance of required records with respect thereto, in
connection with amounts paid to any employee, independent contractor, creditor,
or other third party.
<PAGE>
(e) There is no dispute or claim concerning any Tax Liability of CCI
or a Subsidiary either (i) claimed or raised by any Governmental Authority in
writing, or (ii) as to which any of CCI or any of its Subsidiaries (and
employees responsible for Tax matters) has knowledge.
(f) CCI and its Subsidiaries have not waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(g) CCI and its Subsidiaries do not have any liability of the Taxes
of any Person other than CCI or its Subsidiaries (i) as a transferee or
successor, (ii) by contract, or (iii) otherwise.
(h) CCI and each Subsidiary currently utilize the cash method of
accounting for income Tax purposes. CCI has utilized the cash method of
accounting for income Tax purposes since the date of its incorporation. CCI has
not agreed to, and are not and will not be required to, make any adjustments
under Code Section 481(a) as a result of a change in accounting methods.
(i) There are no contracts, agreements, plans or arrangements,
including but not limited to the provisions of this Agreement, covering any
employee or former employee of CCI or its Subsidiaries that, individually or
collectively, could give rise to the payment of any amount (or portion thereof)
that would not be deductible purchase to Sections 280G, 404 or 162 of the Code.
6.14. TITLE TO PROPERTIES; ENCUMBRANCES. Except as specifically identified
in the Schedules hereto and except for items leased or licensed by CCI or any of
its Subsidiaries, or on SCHEDULE 6.14, CCI or such Subsidiaries have good,
valid, and marketable title to all of the Assets. All of the Assets are in the
possession or under the control of CCI or a Subsidiary, and none of the Assets
are subject to any mortgage, pledge, lien, security interest, conditional sale
agreement, encumbrance, or charge of any kind except as set forth on SCHEDULE
6.14 or as specifically disclosed on the other Schedules hereto and, except
minor imperfections or title and encumbrances, if any, that are not substantial
in amount, do not materially detract from the value or functional utility of the
property subject thereto, and do not in any way materially impair the value of
the Assets.
6.15. EQUIPMENT. All of the equipment owned or leased by CCI and its
Subsidiaries which has (or had at the date of its acquisition or execution of
the related lease by CCI or its Subsidiary) a fair market value of $50,000 or
greater is listed on SCHEDULE 6.15 attached hereto. All of the equipment owned
or leased by CCI and its Subsidiaries is in adequate operating condition and
repair subject to normal wear and tear, except as set forth on SCHEDULE 6.15.
6.16. REAL PROPERTY. SCHEDULE 6.16 contains a list of all real property
owned by CCI and its Subsidiaries, including, without limitation, the
improvements and structures located thereon. To CCI's and its Subsidiaries'
knowledge, such improvements and structures are structurally sound with no known
defects and in good operating condition and repair subject to normal wear and
tear, and neither CCI nor any of its Subsidiaries has received any written
notification that there is any violation of any building, zoning, or other law,
ordinance, or regulation in respect of such property, improvements, or
structures, and to the best of CCI's and its Subsidiaries' knowledge, no such
violation exists.
<PAGE>
6.17. LEASES. SCHEDULE 6.17 contains a list of all leases (including both
operating and capital leases) pursuant to which CCI or any of its Subsidiaries
leases real or personal property and (i) which involve lease payments in excess
of $30,000 per year, (ii) which are between CCI or any of its Subsidiaries, on
the one hand, and any of their Affiliates, on the other hand, or (iii) which
were not entered into in the ordinary course of business. Copies of all such
leases have been delivered to MIOA. All such leases are valid, binding, and
enforceable in accordance with their terms (except as the enforceability thereof
may be limited by applicable bankruptcy, insolvency or other similar laws
relating to the enforcement of creditors' rights generally and by the
application of general principles of equity), are in full force and effect and
except as set forth on SCHEDULE 6.17, no event has occurred which is a default
or which with the passage of time will constitute a default by CCI or any of its
Subsidiaries thereunder, nor has any such event occurred to the knowledge of CCI
and its Subsidiaries which is a default, or with the passage of time will
constitute a default, by any other party to such lease. All property leased by
CCI or any of its Subsidiaries as lessee is in the possession of CCI and its
Subsidiaries. Except as indicated in SCHEDULE 6.17, no consent of any lessor is
required in connection with the Transactions.
6.18. LITIGATION. Except as set forth in SCHEDULE 6.18, (i) there are no
pending (served) actions, proceedings or regulatory agency investigations
against CCI or its Subsidiaries or, to CCI or such Subsidiaries' knowledge,
threatened against CCI or any of its Subsidiaries involving the Assets, and (ii)
no such action, proceeding, or regulatory agency investigation has been pending
(served) during the three-year period preceding the date of this Agreement. No
assertion has ever been made to CCI or any of its Subsidiaries to the effect
that CCI or any of its Subsidiaries has any liability as a successor to a third
party's business or product line, and neither CCI nor any of its Subsidiaries
has knowledge of any basis for such an assertion.
6.19. EMPLOYEE BENEFIT PLANS; EMPLOYEES.
(a) SCHEDULE 6.19 sets forth a list of each material "employee
benefit plan" (as defined by Section 3(e) of ERISA) and any other material
compensation, deferred compensation, fringe benefit, severance, disability, sick
leave, vacation, or other agreement, policy, or arrangement (each such plan,
agreement, policy, or arrangement is referred to herein as a "CCI Employee
Benefit Plan," and, collectively, the "CCI Employee Benefit Plans") for the
benefit of employees (and their beneficiaries) of CCI or any of its Subsidiaries
(collectively, "CCI Employees") or with respect to which CCI or any "CCI ERISA
Affiliate" (hereby defined to include any trade or business, whether or not
incorporated, other than CCI, which has employees who are treated pursuant to
Section 4001(a)(14) of ERISA and/or Section 414 of the Code as employees of a
single employer which includes CCI).
(b) CCI has, or will have prior to the Schedule Delivery Date,
delivered to CCI, with respect to each CCI Employee Benefit Plan, copies of the
documents embodying the Plan, if any, and employee handbooks governing the
employment of CCI Employees.
(c) Neither CCI nor any Subsidiary has any obligation to contribute
to or provide benefits pursuant to, and has no other liability of any kind with
respect to, (i) a "multiple employer welfare arrangement" (within the meaning of
Section 3(40) of ERISA), (ii) a "plan maintained by more than one employer"
(within the meaning of Section 413(c) of the Code), (iii) a "multi-employer
plan" within the meaning of Section 3(37) of ERISA), or (iv) an "employee
pension benefit plan" (within the meaning of Section 3(2) of ERISA) which is
subject to Title IV of ERISA.
<PAGE>
(d) To the knowledge of CCI, neither CCI nor any Subsidiary is
subject to any liens, or excise or other taxes under ERISA, the Code or other
applicable law relating to any CCI Employee Benefit Plan.
(e) The consummation of the Transactions will not give rise to any
liability for any employee benefits to any CCI Employee, including, without
limitation, liability for severance pay, unemployment compensation, termination
pay or withdrawal liability.
(f) No CCI Employee Benefit Plan in any way provides for any
benefits of any kind whatsoever (other than under Section 4980B of the Code and
Part 6 of Subtitle B of Title I of ERISA, the Federal Social Security Act or any
CCI Employee Benefit Plan qualified under Section 401(a) of the Code) to any CCI
Employee who, at the time the benefit is to be provided, is a former director or
employee of, other provider of services to CCI or an CCI ERISA Affiliate (or a
beneficiary of any such person).
(g) Any contribution, insurance premium, excise tax, interest charge
or other liability or charge imposed or required with respect to any CCI
Employee Benefit Plan which is attributable to any period or any portion of any
period prior to the Closing will be paid by MIOA or a Subsidiary or will be
reflected on the Historical Financials.
(h) Except as disclosed on SCHEDULE 6.19(H), to the knowledge of
CCI, no claim, lawsuit, arbitration or other action has been asserted or
instituted or threatened in writing against any CCI Employee Benefit Plan, any
trustee or fiduciaries thereof, CCI, any of its Subsidiaries or any CCI ERISA
Affiliate, any director, officer or employee thereof, or any of the assets of a
CCI Employee Benefit Plan or any related trust.
(i) Except as disclosed on SCHEDULE 6.19(I), to the knowledge of
CCI, no CCI Employee Benefit Plan is under audit or investigation by the IRS or
the DOL or any other governmental authority and no such completed audit, if any,
has resulted in the imposition of any tax, interest or penalty.
(j) Since December 31, 1998 and through the date hereof, and except
as set forth on SCHEDULE 6.19(J), neither CCI, any of its Subsidiaries nor any
CCI ERISA Affiliate has, nor will it, (i) institute or agree to institute any
new CCI Employee Benefit Plan or practice, (ii) make or agree to make any change
in any CCI Employee Benefit Plan, (iii) make or agree to make any increase in
the compensation payable or to become payable by CCI, any of its Subsidiaries or
any CCI ERISA Affiliate to any CCI Employee, except for normal periodic salary
increases consistent with past practices, or (iv) except pursuant to this
Agreement and except for contributions required to provide benefits pursuant to
the provisions of the CCI Employee Benefit Plans, pay or accrue or agree to pay
or accrue any bonus, percentage of compensation, or other like benefit to, or
for the credit of, any CCI Employee.
(k) There are no collective bargaining or other labor union
agreements to which CCI or any of its Subsidiaries is a party or by which any of
them is bound.
6.20. ADVISORS FEES. Other than as set forth on SCHEDULE 6.20, neither CCI
nor any of its Subsidiaries or any Affiliate thereof has retained or utilized
the services of any advisor, broker, finder or intermediary, or paid or agreed
to pay any fee or commission to any other
<PAGE>
Person or entity for or on account of the Transactions, or had any
communications with any Person or entity which would obligate MIOA to pay any
such fees or commission.
6.21. NO EXISTING DISCUSSION FOR ACQUISITION PROPOSAL. Except as set forth
on SCHEDULE 6.21, as of the date hereof, CCI is not engaged in any negotiations
with any other party with respect to an Acquisition Proposal.
6.22. ACCOUNTS RECEIVABLE. Except as set forth on SCHEDULE 6.22 and as
otherwise may be specifically identified on the Financial Statements, all
accounts receivable (the "CCI Receivables") of CCI which are reflected as
schedules to the Financial Statements, and all CCI Receivables acquired or
generated since the date of the Financial Statements, are in all material
respects valid and BONA FIDE CCI Receivables arising from the furnishing of
goods or services to customers in the ordinary course of business.
6.23. INVENTORIES. Any and all inventories of CCI which are reflected on
the schedules to the Financial Statements, plus any replacements for such items
acquired on or before the Closing, and minus any such items sold by CCI in the
ordinary course of business on or before the Closing, are properly valued at the
lower of cost (first-in, first-out) or market in accordance with generally
accepted accounting principles consistently applied and, except for obsolete and
slow moving items which have been fully written off or reserved for and except
for items sold in the ordinary course of business, consist of items of a quality
and quantity currently useable and saleable in the ordinary course of business
without markdown or discount.
6.24. SOFTWARE. Except as set forth on SCHEDULE 6.24, CCI presently has
the right to use all computer software owned by it, and to the knowledge of CCI,
the right to use all other computer software which is leased or licensed to, or
otherwise used by CCI. To the knowledge of CCI, neither CCI nor any Subsidiary
is in violation of any license or other agreement related to its software.
6.25. Y2K COMPLIANCE. Except as set forth in SCHEDULE 6.25, CCI's
equipment, computers, software, hardware, business and processes in which date
sensitive software is utilized are year 2000 compliant such that such equipment,
computers, software, hardware, business and processes will not experience
failures, interruptions or malfunctions in a manner that will have a material
adverse effect on such equipment, computers, software, hardware, business and
processes, CCI and/or it Assets.
6.26 LICENSES. SCHEDULE 6.26 contains a list of all licenses and other
material agreements pursuant to which CCI is a party. Copies of all such
licenses and other material agreements have been delivered to MIOA. All such
licenses and other material agreements are valid, binding, and enforceable in
accordance with their terms (except as the enforceability thereof may be limited
by applicable bankruptcy, insolvency or other similar laws relating to the
enforcement of creditors' rights generally and by the application of general
principles of equity), are in full force and effect and except as set forth on
SCHEDULE 6.26, no event has occurred which is a default or which with the
passage of time will constitute a default by CCI thereunder, nor has any such
event occurred to the knowledge of CCI which is a default, or with the passage
of time will constitute a default, by any other party to such license or
agreement. Except as indicated in SCHEDULE 6.26, no consent of any party to such
license or material agreement is required in connection with the Transactions.
In order to conduct the business of the CCI, as such is currently being
conducted or proposed to be conducted in accordance with its Business Plan and
<PAGE>
projections and except with respect to FDA, UL and FCC approval regarding the
portable care management system and a license for the multipoint software (all
of which to the best knowledge and belief of CCI will be obtained without undue
delay or material cost or expense), CCI does not require any licenses or other
material agreements that it does not already have in order to effectuate its
Business Plan and meet its projections. There is no Litigation pending or
threatened to challenge CCI's right, title and interest with respect to its
licenses and other material agreements. All licenses and other material
agreements are valid, enforceable and in good standing, and there are no
equitable defenses to enforcement based on any act or omission of CCI. The
consummation of the transactions contemplated hereby will not alter or impair
any such license and other material agreement.
6.27. DISCLOSURE AND ALL DOCUMENTATION. No representation or warranty by
CCI contained in this Agreement and no statement contained in any certificate or
schedule furnished to MIOA pursuant to the provisions hereof contains or shall
contain any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements therein not misleading. To the
knowledge of CCI and its Subsidiaries, there is no current event or condition of
any kind or character pertaining to CCI or its Subsidiaries that may reasonably
be expected to have a Material Adverse Effect, except as disclosed in this
Agreement and except for those events and conditions which are national or
industry-wide in nature. Except as specifically indicated elsewhere in this
Agreement, all documents delivered by CCI or its Subsidiaries to MIOA in
connection herewith have been and will be complete originals, or exact copies
thereof.
6.28. REGISTRATION STATEMENT. None of the information to be provided by
CCI or any of its officers, directors or employees (which were officers,
directors or employees prior to the Closing of this Agreement) for inclusion or
incorporation by reference in the Registration Statement or any other document
filed with any other regulatory agency in connection herewith will: (i) in the
case of the Registration Statement, at the time it becomes effective, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; or, (ii) in the case of any other filing required by any
regulatory agency in connection herewith, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make statements therein, in light of the circumstances
under which they are made, not misleading. If, at any time prior to the
Effective Time, any event with respect to CCI, its officers and directors shall
occur which is required to be described in the Registration Statement, such
event shall be so described, and an appropriate amendment or supplement shall be
promptly delivered to MIOA to be filed with the SEC.
6.29. SURVIVAL. The representations and warranties contained in this
Article 6 shall survive the Closing for one (1) year.
ARTICLE 7
CERTAIN ADDITIONAL COVENANTS
7.1. SPECIAL MEETING. Subject to Board Approval which has been obtained,
each of MIOA and CCI shall take all action necessary, in accordance with
applicable law and their respective Articles of Incorporation and Bylaws, to
convene a special meeting of their respective stockholders (each, a "SPECIAL
MEETING") on or before July 2, 1999 for CCI and July 31, 1999 for MIOA for the
purpose of considering and taking action upon this Agreement and the
<PAGE>
Transactions. The Board of Directors of CCI and MIOA will recommend, subject to
Section 7.4 hereof, that the CCI Stockholders and the MIOA Stockholders,
respectively, vote in favor of and approve the Acquisition and this Agreement at
the Special Meeting, as applicable.
7.2. NO SOLICITATION. Subject to the provisions of Section 7.4, in
consideration of the expenses to be incurred by MIOA in negotiating this
Agreement and in conducting their due diligence investigation, CCI shall not,
directly or indirectly, through any officer, director, employee, financial
advisor, representative or agent of such party: (i) solicit, initiate, or
encourage any inquiries or proposals that constitute, or could reasonably be
expected to lead to, a proposal or offer for a merger, consolidation, business
combination, sale or transfer of substantial assets, sale of any shares of
capital stock (including without limitation by way of tender offer) or similar
transaction involving CCI or any of its Subsidiaries, other than the
Transactions (any of the foregoing inquiries or proposals being referred to in
this Agreement as an "Acquisition Proposal"), or (ii) engage in negotiations or
discussions concerning, or provide any non-public information to any Person
relating to, any Acquisition Proposal, or agree to or recommend any Acquisition
Proposal.
7.3. NOTIFICATION OF ACQUISITION PROPOSAL. CCI shall notify MIOA within
three (3) Business Days after receipt by CCI (or its advisors) of any
Acquisition Proposal or any request for non-public information in connection
with an Acquisition Proposal or for access to its properties, books or records
by any person or entity that informs CCI that it is considering making, or has
made, an Acquisition Proposal. Such notice shall be made orally and in writing
and shall indicate in reasonable detail the identity of the offeror and the
terms and conditions of such proposal, inquiry or contact. Such party shall
continue to keep the other party informed, on a prompt and current basis, of the
status of any such discussions, negotiations and the terms being discussed or
negotiated.
7.4. FIDUCIARY OUT. Notwithstanding the provisions of Section 7.2 above,
nothing contained in this Agreement shall prevent CCI or its Board of Directors,
from (A) furnishing non-public information, or entering into discussions or
negotiations, with, any person or entity in connection with an unsolicited bona
fide written Acquisition Proposal by such person or entity or recommending an
unsolicited bona fide written Acquisition Proposal to its stockholders, if and
only to the extent that (1) the Board of Directors of CCI believes in good faith
(after consultation with its financial advisor) that such Acquisition Proposal
is reasonably capable of being completed on the terms proposed and, after taking
into account the strategic benefits anticipated to be derived from the
Acquisition and the long-term prospects of MIOA and CCI as a combined company,
such Acquisition Proposal would, if consummated, result in a transaction
significantly more favorable over the long term than the Transactions, and CCI's
Board of Directors determines in good faith after receipt of an opinion from
outside legal counsel to the effect that such action is likely necessary for the
Board of Directors to comply with its fiduciary duties to stockholders under
applicable law and (2) prior to furnishing such non-public information to, or
entering into discussions or negotiations with, such person or entity, the CCI
Board of Directors receives from such Person an executed confidentiality
agreement with terms no more favorable to such party than those contained in
this Agreement and in the Confidentiality Agreement. Without limiting Section
7.3 above, CCI shall give written notice to MIOA as soon as possible of any such
Acquisition Proposal that the CCI Board of Directors determines meets standards
set forth in this Agreement and whether CCI will exercise its right to use
Acquisition Proposal as a fiduciary out shall mean that this Agreement is
terminated and a termination fee is payable by CCI to MIOA pursuant to Section
7.5 hereof.
<PAGE>
7.5. BREAK-UP FEE. UPON OCCURRENCE OF FIDUCIARY OUT. CCI shall pay MIOA a
termination fee immediately upon the termination of this Agreement pursuant to
Section 7.4. The termination fee shall be the sum of (i) MIOA Out-Of-Pocket
Costs, and (ii) $800,000.00, but shall not in any event exceed $1,000,000.00.
The payment of a termination fee pursuant to this subsection, which is agreed to
be a fair estimate of the expenses and lost opportunity which would be suffered
by MIOA in such event, shall be the sole and exclusive remedy of MIOA against
CCI and any of its Subsidiaries and their respective directors, officers,
employees, attorneys, agents, advisors or other representatives, with respect to
the occurrences giving rise to such payment; provided that this limitation shall
not be applicable in the event of a willful breach of Sections 4.5 or 4.6 of
this Agreement by CCI or its representatives.
7.6. COMPLIANCE WITH THE SECURITIES ACT; REORGANIZATION. (a) Prior to the
Effective Time, CCI and MIOA shall cause to be delivered to the other party,
after consultation with its counsel, a certificate of their Chief Executive
Officer which identifies all persons who as of the Effective Time, are likely to
be considered "affiliates" of such party as that term is used in Paragraphs (c)
and (d) of Rule 145 under the Securities Act ("Affiliates"). CCI and MIOA shall
cause it Chief Executive Officers to deliver to the other party at the Closing a
second certificate updating such original certificate to the Effective Time.
(b) CCI and MIOA shall obtain a written agreement from each current
executive officer, director and stockholder who is identified as a possible
Affiliate in the certificates referred to in clause (a) above in substantially
the form attached hereto as EXHIBIT 7.6 which agreement will provide that such
person will not offer to sell, or otherwise dispose of any of the Acquisition
Shares issued to such person pursuant to the Acquisition, except in compliance
with Rule 145, another exemption from the registration requirements of the
Securities Act, or pursuant to an effective registration under the Securities
Act. CCI and MIOA shall deliver such written agreements to the other party on or
prior to the Closing.
7.7. BREACH PRIOR TO CLOSING. (a) If MIOA becomes aware of breach(es) by
CCI of any of its representations or warranties contained in this Agreement
after the Schedule Delivery Date but prior to the termination date for the
survival of the representations or warranties (the "Settlement Cut-Off Date") as
a result of its due diligence investigation of CCI and its Subsidiaries or
otherwise, it shall give written notice to CCI and the CCI Stockholders of the
nature and the amount of damages suffered as a result of such breach(es). If in
the exercise of its good faith business judgment MIOA alleges that such damages
exceed $250,000 in the aggregate, MIOA and CCI and its shareholders shall in
good faith negotiate a mutually acceptable dollar value settlement ( the "CCI
Breach Settlement") of the damages caused by such breach(es). If MIOA and the
CCI Stockholders agree on the CCI Breach Settlement prior to delivery of the
Acquisition Shares, they shall jointly instruct the Exchange Agent to decrease
the number of Acquisition Shares issuable to all holders of CCI Capital Stock
immediately prior to the Closing (collectively, the "CCI Acquisition
Stockholders") by an amount equal to the CCI Breach Settlement divided by the
Fair Market Value (i.e., $1.50). Such decrease in the number of Acquisition
Shares to be issued to the CCI Acquisition Stockholders shall be allocated among
the CCI Acquisition Stockholders pro rata based upon the ownership of the CCI
Capital Stock immediately prior to the Acquisition. If MIOA and the CCI
Stockholders agree on the CCI Breach Settlement subsequent to delivery of the
Acquisition Shares, they shall jointly instruct the CCI Acquisition Stockholders
to return to MIOA the number of Acquisition Shares issued to all such holders by
an amount equal to the CCI Breach Settlement divided by the Fair Market
<PAGE>
Value. Such decrease in the number of Acquisition Shares to be returned by the
CCI Acquisition Stockholders shall be allocated among the CCI Acquisition
Stockholders pro rata based upon the ownership of the CCI Capital Stock
immediately prior to the Acquisition, unless otherwise agreed by the CCI
Acquisition Stockholders. In the event that MIOA and the CCI Stockholders, in
the exercise of good faith efforts, cannot reach agreement on the CCI Breach
Settlement or the CCI Acquisition Stockholders fail to return the appropriate
number of Acquisition Shares, MIOA shall have the right to exercise each and
every remedy for which it may otherwise be entitled under the law and/or
terminate this Agreement. If such damages do not exceed $250,000 in the
aggregate, no decrease in the number of Acquisition Shares issuable to the CCI
Acquisition Stockholders shall be made.
(b) If CCI or the CCI Stockholders become aware of breach(es) by
MIOA of any of its representations or warranties contained in this Agreement
after the Schedule Delivery date but prior to the termination date for the
survival of the representations or warranties (the "Settlement Cut-Off Date") as
a result of its due diligence investigation of MIOA and its Subsidiaries or
otherwise, they shall give written notice to MIOA of the nature and the amount
of damages suffered as a result of such breach(es). If in the exercise of their
good faith business judgment the CCI Stockholders allege that such damages
exceed $250,000 in the aggregate, MIOA and the CCI Stockholders shall in good
faith negotiate a mutually acceptable dollar value settlement (the "MIOA Breach
Settlement") of the damages caused by such breach(es). If MIOA and the CCI
Stockholders agree on the MIOA Breach Settlement prior to delivery of the
Acquisition Shares, they shall jointly instruct the Exchange Agent to increase
the number of Acquisition Shares issuable to the CCI Stockholders by an amount
equal to the MIOA Breach Settlement divided by the Fair Market Value. Such
increase in the number of Acquisition Shares to be issued to the CCI Acquisition
Stockholders shall be allocated among the CCI Acquisition Stockholders pro rata
based upon the ownership of the CCI Capital Stock immediately prior to the
Acquisition. If MIOA and the CCI Stockholders agree on the MIOA Breach
Settlement subsequent to delivery of the Acquisition Shares, they shall jointly
instruct the Exchange Agent to issue additional Acquisition Shares to the CCI
Acquisition Stockholders by an amount equal to the MIOA Breach Settlement
divided by the Fair Market Value. Such increase in the number of Acquisition
Shares to be issued to the CCI Acquisition Stockholders shall be allocated among
the CCI Acquisition Stockholders pro rata based upon the ownership of the CCI
Capital Stock immediately prior to the Acquisition, unless otherwise agreed by
the CCI Acquisition Stockholders. In the event that MIOA and the CCI
Stockholders, in the exercise of good faith efforts, cannot reach agreement on
the MIOA Breach Settlement or MIOA fails to issue additional Acquisition Shares,
the CCI Acquisition Stockholders shall have the right to exercise each and every
remedy for which they may otherwise be entitled under the law. If such damages
do not exceed $250,000 in the aggregate, no increase in the number of
Acquisition Shares issuable to the CCI Acquisition Stockholders shall be made.
(c) If an adjustment has been agreed to under both subsection (a)
and (b) above, the adjustments made pursuant thereto shall be netted against
each other in order to determine the net adjustment to the number of Acquisition
Shares.
(d) Notwithstanding anything to the contrary in this Section 7.7, no
adjustment shall be made to the number of Acquisition Shares if the absolute
difference between the aggregate amount of CCI Breach Settlement(s) and the
aggregate amount of MIOA Breach Settlement(s) does not exceed $250,000.
<PAGE>
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF CCI TO CLOSE
Each and every obligation of CCI under this Agreement to be performed on or
prior to the Closing shall be subject to the fulfillment, on or prior to the
Closing, of each of the following conditions, which conditions MIOA agrees to
use its best efforts to satisfy:
8.1 REPRESENTATIONS AND WARRANTIES AT CLOSING. The representations and
warranties made by MIOA in or pursuant to this Agreement or given on its behalf
hereunder shall be true and correct on and as of the Closing Date, in each case
with the same effect as though such representations and warranties had been made
or given on and as of the Closing Date except for such representations and
warranties which if not true and correct on and as of the Closing Date, do not
result in damages suffered by CCI in excess of $250,000 in the aggregate.
8.2 OBLIGATIONS PERFORMED. MIOA shall have performed and complied with all
material agreements and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing.
8.3 CONSENTS AND STOCKHOLDER APPROVAL.
(a) MIOA shall have obtained and delivered to CCI the written
consents or approvals specified, or to be specified, in SCHEDULE 5.4 (except for
such consents or approvals as to which, in the aggregate, the failure to obtain
them shall not have a Material Adverse Effect) and all of such consents shall
remain in full force and effect at and as of the Closing.
(b) This Agreement and the Acquisition shall have received the
requisite MIOA Board Approval, MIOA Stockholder Approval, CCI Board Approval and
CCI Stockholder Approval, as applicable.
(c) CCI shall have received all consents to the consummation of the
Transaction that CCI deems necessary or appropriate from its lenders.
8.4. CLOSING DELIVERIES. MIOA shall have delivered to CCI each of the
following, together with any additional items which CCI may reasonably request
to effect the Transaction:
(a) a certificate of the President of MIOA certifying as to the
matters set forth in Sections 8.1, 8.2 and 8.3 (except for 8.3(c)) hereof and as
to the satisfaction of all other conditions set forth in this Article 8:
(b) Employment Agreements duly executed by MIOA or CCI, as the case
may be, and the individuals described in EXHIBIT 4.1 in the forms of EXHIBIT
4.1(A);
(c) Restricted Sale Agreement duly executed by MIOA and the
individuals described in EXHIBIT 4.1 the form of EXHIBIT 4.1 (B);
(d) the Registration Rights Agreement in the form attached hereto as
EXHIBIT 3.1(D); and
<PAGE>
(e) any other documents or agreements contemplated hereby and/or
necessary or appropriate to consummate the Transactions.
8.5. NO INVESTIGATIONS OF MIOA AND ITS SUBSIDIARIES OR THEIR BUSINESS. As
of the Closing Date, there shall be no, and neither MIOA nor any of its
Subsidiaries shall have any knowledge of any material pending or threatened
investigation by any municipal, state or federal government agency or regulatory
body with respect to MIOA or its Subsidiaries, the Assets or the business of
MIOA and its Subsidiaries, other than such as have been disclosed to CCI prior
to the date hereof.
8.6 NO MATERIAL ADVERSE EFFECT. Other than changes relating to, or
resulting from, the existence of, or the terms of, this Agreement and the
Transactions contemplated hereby, including any related loss of employees or
customers of MIOA or its Subsidiaries, MIOA shall not have suffered since March
31, 1999 any change that constitutes a Material Adverse Effect on MIOA.
8.7. SECURITIES LAWS. The parties shall have complied with all federal and
state securities laws applicable to the Transactions.
8.8. MINUTES. CCI shall have received at Closing copies of minutes of the
Stockholders and the Board of Directors of MIOA, certified by the corporate
secretary of MIOA, approving and authorizing the Acquisition and the
Transactions.
8.9. REVISED SCHEDULES. MIOA and its Subsidiaries shall have provided CCI
with revised Schedules dated as of the Closing Date (the "MIOA Final Revised
Schedules"), with all material changes through such date duly noted thereon,
including any modifications to and the MIOA Final Revised Schedules will not
contain any disclosures which (i) should have been but were not disclosed on the
Schedules in accordance with Section 4.4, or (ii) set forth changes which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect unless such disclosures are approved in writing by CCI.
8.10. LEGALITY. No federal or state statute, rule, regulation, executive
order, decree or injunction shall have been enacted, entered, promulgated or
enforced by any court or governmental authority which is in effect and has the
effect of making the Acquisition illegal or otherwise prohibiting the
consummation of the Acquisition.
8.11. REGULATORY MATTERS. All filings shall have been made and all
approvals shall have been obtained as may be legally required pursuant to
federal and state laws prior to the consummation of the Transactions and all
actions by or in respect of, or filings with, any governmental body, agency or
official or any other Person required to permit the consummation of the
Acquisition so that CCI shall be able to continue to carry on the business of
MIOA substantially in the manner now conducted by MIOA shall have been taken or
made.
8.12. AGREEMENT AS TO EXHIBITS AND SCHEDULES. The parties hereto shall
have mutually agreed in the exercise of their respective sole discretion to the
terms contained in each Schedule and Exhibit to this Agreement.
<PAGE>
8.13 ADDITIONAL CLOSING CONDITIONS. Each and every one of the additional
closing conditions, if any, required of MIOA set forth in SCHEDULE 8.13 attached
hereto shall have been completed or fulfilled, as the case may be.
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF MIOA TO CLOSE
Each and every obligation of MIOA under this Agreement to be performed on or
prior to the Closing shall be subject to the fulfillment, on or prior to the
Closing, of each of the following conditions, which conditions CCI agrees to use
its best efforts to satisfy:
9.1 REPRESENTATIONS AND WARRANTIES AT CLOSING. The representations and
warranties made by CCI in or pursuant to this Agreement or given on its behalf
hereunder shall be true and correct on and as of the Closing Date, in each case
with the same effect as though such representations and warranties had been made
or given on and as of the Closing Date except for such representation and
warranties which if not true and correct on and as of the Closing Date, do not
result in damages suffered by MIOA in excess of $250,000 in the aggregate.
9.2 OBLIGATIONS PERFORMED. CCI shall have performed and complied with all
material agreements and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing.
9.3 CONSENTS AND STOCKHOLDER APPROVAL.
(a) CCI shall have obtained and delivered to MIOA the written
consents or approvals specified, or to be specified, in SCHEDULE 6.4 (except for
such consents or approvals as to which, in the aggregate, the failure to obtain
them shall not have a Material Adverse Effect) and all of such consents shall
remain in full force and effect at and as of the Closing.
(b) This Agreement and the Acquisition shall have received the
requisite MIOA Board Approval, MIOA Stockholder Approval, CCI Board Approval and
CCI Stockholder Approval.
(c) MIOA shall have received all consents to the consummation of the
Transaction that MIOA deems necessary or appropriate from its lenders.
9.4. CLOSING DELIVERIES. CCI shall have delivered to MIOA each of the
following, together with any additional items which MIOA may reasonably request
to effect the Transaction:
(a) a certificate of the President of CCI certifying as to the
matters set forth in Sections 9.1, 9.2 and 9.3 (except for 9.3(c)) hereof and as
to the satisfaction of all other conditions set forth in this Article 9:
(b) Employment Agreements duly executed by the individuals described
in EXHIBIT 4.1 in the forms of EXHIBIT 4.1(A);
<PAGE>
(c) Restricted Sale Agreement duly executed by the individuals
described in EXHIBIT 4.1 the form of EXHIBIT 4.1(B);
(d) the Registration Rights Agreement in the form attached hereto as
EXHIBIT 3.1(D);
(e) the Conditional Termination Agreement in the form attached
hereto as EXHIBIT 9.4(E);
(f) the Purchaser Representative Questionnaires in substantially the
same form as attached hereto as EXHIBIT 4.11;
(g) the release from each of Messrs. Haines, Ratzel and Richey in
substantially the same form as attached hereto as EXHIBIT 9.4(G); and
(h) any other documents or agreements contemplated hereby and/or
necessary or appropriate to consummate the Transactions.
9.5 NO INVESTIGATIONS OF CCI AND ITS SUBSIDIARIES OR THEIR BUSINESS. As of
the Closing Date, there shall be no, and neither CCI nor any of its Subsidiaries
shall have any knowledge of any material pending or threatened investigation by
any municipal, state or federal government agency or regulatory body with
respect to CCI or its Subsidiaries, the Assets or the business of CCI and its
Subsidiaries, other than such as have been disclosed to MIOA prior to the date
hereof.
9.6 NO MATERIAL ADVERSE EFFECT. Other than changes relating to, or
resulting from, the existence of, or the terms of, this Agreement and the
transactions contemplated hereby, including any related loss of employees or
customers of CCI or its Subsidiaries, CCI shall not have suffered since March
31, 1999 any change that constitutes a Material Adverse Effect on CCI.
9.7 SECURITIES LAWS. The parties shall have complied with all federal and
state securities laws applicable to the Transactions.
9.8. MINUTES. MIOA shall have received at Closing copies of minutes of the
Stockholders and the Board of Directors of CCI, certified by the corporate
secretary of CCI, approving and authorizing the Acquisition and the
Transactions.
9.9. REVISED SCHEDULES. CCI and its Subsidiaries shall have provided MIOA
with revised Schedules dated as of the Closing Date (the "CCI Final Revised
Schedules"), with all material changes through such date duly noted thereon,
including any modifications to CCI's representations and warranties resulting
from the Permitted Equity Financings, and the CCI Final Revised Schedules will
not contain any disclosures which (i) should have been but were not disclosed on
the Schedules in accordance with Section 4.4, or (ii) set forth changes which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect unless such disclosures are approved in writing by MIOA.
9.10. LEGALITY. No federal or state statute, rule, regulation, executive
order, decree or injunction shall have been enacted, entered, promulgated or
enforced by any court
<PAGE>
or governmental authority which is in effect and has the effect of making the
Acquisition illegal or otherwise prohibiting the consummation of the
Acquisition.
9.11. REGULATORY MATTERS. All filings shall have been made and all
approvals shall have been obtained as may be legally required pursuant to
federal and state laws prior to the consummation of the Transactions and all
actions by or in respect of, or filings with, any governmental body, agency or
official or any other Person required to permit the consummation of the
Acquisition so that MIOA shall be able to continue to carry on the business of
CCI substantially in the manner now conducted by CCI shall have been taken or
made.
9.12. AGREEMENT AS TO EXHIBITS AND SCHEDULES. The parties hereto shall
have mutually agreed in the exercise of their respective sole discretion to the
terms contained in each Schedule and Exhibit to this Agreement.
9.13 ADDITIONAL CLOSING CONDITIONS. Each and every one of the additional
closing conditions, if any, required of CCI or its stockholders set forth in
SCHEDULE 9.13 attached hereto shall have been completed or fulfilled, as the
case may be.
ARTICLE 10
TERMINATION
10.1. TERMINATION. This Agreement may be terminated:
(a) by mutual written consent of CCI and MIOA at any time before the
Closing Date;
(b) by either CCI or MIOA if there occurs prior to Closing a
substantial loss, damage or diminution of the other party's Assets or other
event which taken singularly or in the aggregate caused a Material Adverse
Effect on the business of the other party and its Subsidiaries (taken as a
whole) arising from any cause, including but not limited to theft, fire, flood
or act of God;
(c) by either CCI or MIOA in the exercise of their respective sole
discretion at anytime prior to the Schedule Delivery Date.
(d) by either MIOA or CCI in writing, without liability, if there
shall be any order, writ, injunction or decree of any court or governmental or
regulatory agency binding on MIOA or CCI, which prohibits or restrains MIOA or
CCI from consummating the transactions contemplated hereby, provided that MIOA
and CCI shall have used their reasonable, good faith efforts to have any such
order, writ, injunction or decree lifted, and the same shall not have been
lifted within 30 days after entry, by any such court or governmental or
regulatory agency;
(e) by MIOA or CCI in the event that any conditions precedent to the
obligations of such party to consummate the transactions contemplated hereby
cannot be satisfied or fulfilled by August 15, 1999, other than as a result of
the breach of this Agreement by the party attempting to terminate this
Agreement;
<PAGE>
(f) by either CCI or MIOA if the Closing is not consummated on or
before August 15, 1999 (the "Automatic Termination Date"), unless the failure to
close by such date is attributable to actions or omissions of the party seeking
to terminate this Agreement under this subsection (g);
(g) by either MIOA or CCI pursuant to Section 7.4 (Fiduciary Out);
(h) by either CCI or MIOA if CCI Stockholder Approval has not been
obtained on or before the Automatic Termination Date;
(i) in accordance with Section 7.7 (a) or (b), as applicable; or
(j) by MIOA pursuant to Section 3.5(b).
10.2. EFFECT OF TERMINATION. In the event this Agreement is terminated
pursuant to Sections 10.1(a), 10.1(b), 10.1(c), 10.1(d), 10.1(e), 10.1(f),
10.1(h) or 10.1(j) above, no party shall have any obligations to the other
hereunder except for those obligations set forth in Section 4.3 (Expenses) and
those with respect to confidentiality and the return of confidential information
set forth below. If this Agreement is terminated pursuant to Section 10.1(g),
the remedies set forth in Section 7.5 shall apply. If this Agreement is
terminated, each party shall promptly return to the other party all copies of
the due diligence materials previously provided by such party to the other or
their representatives including, without limitation, each party's Intellectual
Property, and the obligations in respect of confidentiality set forth in this
Agreement and in the Confidentiality Agreement shall remain in effect.
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1 SEVERABILITY. If any provision of this Agreement is prohibited by the
laws of any jurisdiction as those laws apply to this Agreement, that provision
shall be ineffective to the extent of such prohibition and/or shall be modified
to conform with such laws, without invalidating the remaining provisions hereto.
11.2. MODIFICATION. This Agreement may not be changed or modified except
in writing specifically referring to this Agreement and signed by each of the
parties hereto.
11.3 ASSIGNMENT, SURVIVAL AND BINDING AGREEMENT. This Agreement and the
Closing Documents may not be assigned by CCI, without prior written consent of
MIOA, and may not be assigned by MIOA, without prior written consent of CCI. The
terms and conditions hereof shall survive the Closing as provided in this
Agreement and shall inure to the benefit of and be binding upon the parties
hereto and their respective heirs, personal representatives, successors and
assigns.
11.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE>
11.5 NOTICES. All notices, requests, demands, claims and other
communication hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
Business Days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid and addressed to the intended recipient as set forth
below:
If to MIOA Medical Industries of America, Inc.
1903 South Congress Avenue
Suite 400
Boynton Beach, Florida 33426
Attention: Michael F. Morrell
Telefax: (561) 737-5008
If to CCI CyberCare, Inc.
430 10th Street NW
Suite S-004
Atlanta, GA 30318
Attention: John Haines
Telefax:
or at such other address as any party hereto notifies the other parties hereof
in writing.
11.6 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement,
together with the Exhibits and Schedules attached hereto, constitutes the entire
agreement and supersedes any and all other prior agreements and undertakings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof and, except as otherwise expressly provided in this
Agreement, is not intended to confer upon any Person other than CCI and MIOA,
any rights or remedies hereunder. No provision of this Agreement shall be
construed against any party on the ground that such party drafted the provision
or caused it to be drafted or the provision contains a covenant of such party.
11.7 GOVERNING LAW; JURISDICTION AND VENUE. This Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Florida, excluding those relating to conflicts of laws. The parties
hereto expressly agree that the exclusive jurisdiction and venue for legal
proceedings under this Agreement shall be the state or applicable federal court
having jurisdiction over the defendant's domicile (or in the case of CCI and
MIOA, the location of its principal corporate office).
11.8. ATTORNEY'S FEES. In any action between the parties to enforce any of
the terms of this Agreement, the prevailing party shall be entitled to recover
reasonable expenses, including reasonable attorney's fees.
11.9. HEADINGS. The section headings contained in this Agreement and the
Schedules and Exhibits attached hereto are inserted for convenience only and
shall not affect in any way the meaning or interpretation of this Agreement.
<PAGE>
11.10. INCORPORATION OF EXHIBIT AND SCHEDULES. The Exhibits and Schedules
identified in this Agreement are incorporated in this Agreement by reference and
made a part hereof.
11.11. CONSTRUCTION. Within this Agreement, the singular shall include the
plural and the plural shall include the singular and any gender shall include
all other genders, all as the meaning and context of this Agreement shall
require. The parties hereto have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party hereto by virtue of the authorship of any of the
provisions of this Agreement.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
MEDICAL INDUSTRIES OF AMERICA, INC.
By:/s/ Michael F. Morrell
Its: CEO
CYBERCARE, INC.
By:/s/ John Haines
Its: President & CEO
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
BY AND BETWEEN
MEDICAL INDUSTRIES OF AMERICA, INC.
AND
JOHN E. HAINES
THIS EMPLOYMENT AGREEMENT (the "AGREEMENT") is executed by and between
Medical Industries of America, Inc., a Florida corporation (the "COMPANY") and
John E. Haines ("Employee") on July 9, 1999 to be effective as of the
effectiveness of that certain Stock Exchange Agreement by and between the
Company and CyberCare, Inc., a Georgia corporation ("CCI") (the "COMMENCEMENT
DATE").
WHEREAS, the Company and Employee have previously entered into an
oral agreement pursuant to which the Company proposed to engage Employee as its
Senior Vice President in charge of the Company's technology markets and
President of CCI; and
WHEREAS, the Company and Employee desire to enter into this
Agreement to memorialize their oral agreement and to set forth the respective
rights and duties of the parties hereto.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, terms and conditions set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and Employee agree as follows:
ARTICLE I
EMPLOYMENT
1.1 EMPLOYMENT AND TITLE. As of the Commencement Date, the Company
employs Employee, and Employee accepts such employment, as a Senior Vice
President of the Company in charge of the Company's technology markets,
divisions and subsidiaries, and as President of CCI, all upon the terms and
conditions set forth herein.
1.2 SERVICES. During the Initial Term and any and all Renewal Terms
(as hereinafter defined), Employee shall faithfully perform his duties in
accordance with this Agreement and the Bylaws of the Company and of CCI, serve
the Company and CCI faithfully and to the best of his ability and devote
substantially all of his business time and attention, knowledge, energy and
skills to the Company and CCI. Employee shall be responsible for the normal
day-to-day management, operation and maintenance of the technology markets
sector of the business and affairs of the Company in accordance with the
Company's annual business plan and the Company's budget, and the business and
affairs of CCI in accordance with CCI's annual business plan and budget. Subject
to the directions of and limitations imposed by the Board
1
<PAGE>
of Directors, the Chief Executive Officer and/or President of the Company, the
Employee shall be responsible for interpretation and executive implementation of
the corporate policies with respect to its technology markets, systems and
companies as set by the Board of Directors, the Chief Executive Officer and/or
President of the Company, and shall perform all the duties and have and exercise
all rights and powers usually pertaining and attributable, by law, custom, or
otherwise, with respect thereto. Subject to the directions of and limitations
imposed by the Board of Directors of CCI, Employee shall be responsible for
interpretation and executive implementation of the corporate policies with
respect to CCI as set by the Board of Directors of CCI, and shall perform all
the duties and have and exercise all rights and powers usually pertaining and
attributable, by law, custom, or otherwise, with respect thereto. Subject to the
directions of and limitations imposed by the Board of Directors, the Chief
Executive Officer and/or President of the Company, the Employee shall have the
authority to effectuate all business matters with respect to his
responsibilities and to execute such legal instruments as may be necessary to
carry out his duties in the name of the Company and on its behalf. Subject to
the directions of and limitations imposed by the Board of Directors of CCI,
Employee shall have the authority to effectuate all business matters with
respect to his responsibilities and to execute such legal instruments as may be
necessary to carry out his duties in the name of CCI and on its behalf. The
Employee shall, if requested, at each meeting of the Board of Directors of the
Company or CCI, as the case may be, present a report of the business and affairs
of the technology markets, systems, companies, business and affairs of the
Company and/or CCI. Employee shall coordinate and supervise the activities of
all employees of CCI and the Company which are under his control, have the power
to employ and terminate the employment of all such subordinate officers, agents,
clerks, and other employees and have the authority to fix and change, from time
to time, the compensation of all such officers, agents, clerks and other
employees, subject to Board approval.
Notwithstanding anything herein to the contrary, Employee shall be
entitled to engage in or otherwise participate in those activities set forth on
SCHEDULE 1.2 attached hereto so long as it does not interfere with his duties
and responsibilities to the Company and CCI.
1.3 LOCATION. The current principal place of employment and the
location of Employee's principal office shall be at the principal corporate
address of the Company which is presently: 1903 South Congress Ave., Suite 400,
Boynton Beach, Florida (the "Office"); provided, however, Employee shall, when
requested by the Chief Executive Officer and/or President of the Company, the
Board of Directors of CCI, or may, if he determines it to be reasonably
necessary, perform outside of the Office such services as are reasonably
required for the proper execution of his duties under this Agreement.
1.4 DIRECTORSHIP. During the term of this Agreement, Michael F.
Morrell and Paul C. Pershes, agree to vote their shares in the Company and
otherwise use their reasonable best efforts to elect Employee as a director of
the Company.
1.5 REPRESENTATIONS. Each party represents and warrants to the other
that he/it has full power and authority to enter into and perform this Agreement
and that his/its execution and performance of this Agreement shall not
constitute a default under or breach of any of the terms of any agreement to
which he/it is a party or under which he/it is bound. Other than as provided
herein, each party represents that no consent or approval of any third party is
required for his/its execution, delivery and performance of this Agreement or
that all consents or approvals of any third party required for his/its
execution, delivery and performance of this Agreement have been obtained.
ARTICLE II
TERM
2.1 TERM. The initial term (the "Initial Term") of Employee's
employment hereunder shall commence as of the Commencement Date and shall
continue through the third (3rd) anniversary of the Commencement Date (the
"Scheduled Termination Date"), unless renewed or earlier terminated pursuant to
the provisions of Article VII of this Agreement. This Agreement shall be renewed
automatically for successive one (1) year terms, after the Scheduled Termination
Date (each, a "RENEWAL TERM"), unless either party provides the other party with
written notice of his/its election not to renew at least thirty (30) days prior
to the Scheduled Termination Date or the last day of the Renewal Term, as
applicable, unless earlier terminated pursuant to Article VII of this Agreement.
The Initial Term and any and all Renewal Terms shall collectively
2
<PAGE>
comprise the Term of this Agreement (the "Term").
ARTICLE III
COMPENSATION
3.1 BASE SALARY. As compensation for the services to be rendered by
Employee, the Company shall pay Employee, during the Term, an annual base salary
of One Hundred Seventy-Five Thousand Dollars ($175,000.00). Such base salary
shall accrue monthly (prorated for periods less than a month) and shall be paid
every two (2) weeks, in arrears, or as otherwise established by the Company with
respect to all of its executive officers. The Company shall review Employee's
job performance annually to determine if the Employee shall be granted an annual
increase in the base salary.
3.2 INCENTIVE COMPENSATION. Employee shall be entitled to such
incentive compensation as approved by the Compensation Committee of the Board of
Directors of the Company.
3.3 NONQUALIFIED STOCK OPTIONS. Upon the execution of this
Agreement, the Company shall grant to Employee nonqualified options to acquire
two hundred thousand (200,000) shares of its common stock (the "Options"),
subject to the following terms and conditions:
(a) The exercise price per each of the Options shall be equal to the
fair market value of a share of Company common stock on the date of grant which,
for purposes of this Section 3.3, shall be the lesser of (i) the average of the
closing bid and asked prices per share of Company common stock on the business
day immediately preceding the Commencement Date; or (ii) One Dollar and 75/00
($1.75) per share.
(b) The Options shall vest in accordance with the following
schedule:
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NUMBER OF
DATE OPTIONS VESTED
---------------------------------------------------------------------
06/01/2000 66,666
---------------------------------------------------------------------
06/01/2001 66,667
---------------------------------------------------------------------
06/01/2002 66,667
---------------------------------------------------------------------
TOTAL 200,000
---------------------------------------------------------------------
(c) The right to exercise the Options shall expire (unless
previously exercised in accordance with the terms of this Section 3.3), on the
third anniversary date of the VESTING of such Options. Vested Options shall be
exercisable by Employee, in whole or in part, on or before such expiration by
payment in full, in cash, by check or any other consideration permitted by
applicable law and agreed to by the Company, to the Company of the aggregate
option price for the Options so acquired.
(d) All unvested Options shall be subject to immediate forfeiture
upon a termination For Cause (as such term is defined in Section 7.1 hereof).
(e) In the event of a termination Without Cause (as such term is
defined in Section 7.2 hereof), all unvested Options shall immediately vest in
full and may be exercised in accordance with the provisions of Section 3.3(c)
above.
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<PAGE>
(f) During the Term hereof and for a period of two (2) years
thereafter, Employee shall have the right with respect to any registration of
the Company's common stock (other than a registration inappropriate for the
registration of Options) to have his Options included in such registration.
Notwithstanding any other provision of this Section, if an underwriter advises
the Company in writing that, in such firm's opinion, marketing factors prohibit
or require a limitation of the number of shares to be underwritten, the
underwriter or the Company may exclude the Options in the same proportion, as
nearly as practicable to other selling shareholders of the Company who have
obtained option shares pursuant to an acquisition or otherwise or the
underwriter or the Company may limit the number of Options to be included in the
registration and underwriting to a specified percentage of the Options to be
distributed through the underwriting in the same proportion, as nearly as
practicable, to other selling shareholders of the Company who have obtained
option shares pursuant to an acquisition or otherwise. The Company shall so
advise Employee of the Options which would otherwise be registered and
underwritten under this subsection and the number of shares of Options that may
be included in the registration and underwriting shall be allocated
proportionately among all holders who hold securities. If Employee disapproves
of the terms of any such underwriting, he may elect to withdraw from such
underwriting by written notice to the Company.
3.4 BENEFITS. Employee shall be entitled, during the Term, to the
same medical, hospital, pension, profit sharing, dental, disability and life
insurance coverage, director and officer insurance and benefits as are available
to the Company's senior officers on the Commencement Date, together with the
following additional benefits:
(a) An automobile allowance of five hundred dollars ($500.00) per
month;
(b) The Company's normal vacation allowance in accordance with
Company policy for all employees who are executive officers of the Company, but
at least four (4) weeks annually; and
(c) The Employee will be entitled to participate in any
comprehensive employee benefit plan or program of the Company provided senior
vice presidents of the Company, including but not limited to personal leave,
holidays and all other fringe benefits and perquisites, which may currently be
in place or implemented in the future.
3.5 WITHHOLDING. Any and all amounts payable under this Agreement,
including, without limitation, amounts payable under this Article III, shall be
subject to and reduced by any applicable federal, state and local taxes imposed
by law.
ARTICLE IV
WORKING FACILITIES, EXPENSES AND INSURANCE
4.1 WORKING FACILITIES AND EXPENSES. Employee shall be furnished
with an office at the Office of the Company, or at such other location as agreed
to by Employee and the Company, and other working facilities and secretarial and
other assistance suitable to his position and reasonably required for the
performance of his duties hereunder. The Company shall reimburse Employee for
all of Employee's reasonable expenses incurred by Employee with respect to his
relocation to Southeast Florida as well as reasonable expenses incurred while
employed and performing his duties under and in accordance with the terms and
4
<PAGE>
conditions of this Agreement, subject to Employee's full and appropriate
documentation, including, without limitation, receipts for all such expenses in
the manner required pursuant to the Company's policies and procedures and the
Internal Revenue Code of 1986, as amended (the "Code") and applicable
regulations as are in effect from time to time.
4.2 INSURANCE. The Company may secure in its own name or otherwise,
and at its own expense, life, disability and other insurance covering Employee
or Employee and others, and Employee shall not have any right, title or interest
in or to such insurance other than as expressly provided herein. Employee agrees
to assist the Company in procuring such insurance by submitting to the usual and
customary medical and other examinations to be conducted by such physicians(s)
as the Company or such insurance company may designate and by signing such
applications and other written instruments as may be required by any insurance
company to which application is made for such insurance.
ARTICLE V
ILLNESS OR INCAPACITY
5.1 RIGHT TO TERMINATE. If, during the Term, Employee shall be
unable to perform the essential functions of his job, with or without reasonable
accommodation, for a period exceeding six (6) consecutive months by reason of
physical or mental illness or condition, this Agreement may be terminated by the
Company in its reasonable discretion pursuant to Section 7.2 hereof.
5.2 RIGHT TO REPLACE. If Employee's illness or condition, as defined
below, whether by physical or mental cause, renders him unable for a minimum
period of thirty (30) consecutive calendar days to perform the essential
functions of his job, with or without reasonable accommodation, the Company
shall have the right to designate a person to replace Employee temporarily in
the capacity described in Article I hereof; provided, however, that if Employee
returns to work from such illness or condition within the six (6) month period
following his inability due to such illness or condition, he shall be entitled
to be reinstated in the capacity described in Article I hereof with all rights,
duties and privileges attendant thereto.
5.3 RIGHTS PRIOR TO TERMINATION. Employee shall be entitled to his
full remuneration and benefits hereunder during such illness or condition unless
and until an election is made by the Company to terminate this Agreement in
accordance with the provisions of this Article.
5.4 DETERMINATION OF ILLNESS OR INCAPACITY. For purposes of this
Article V, the term "illness or condition" shall mean Employee's inability to
perform the essential functions of his job, with or without reasonable
accommodation, on a full-time basis due to physical or mental illness as
determined by a qualified, independent physician selected by and compensated by
the Company and approved by the Employee.
ARTICLE VI
CONFIDENTIALITY
5
<PAGE>
6.1 CONFIDENTIALITY. Employee shall not divulge, communicate, use to
the detriment of the Company or any of its subsidiaries, or for the benefit of
any other business, firm, person, partnership or corporation, during the Term
and for a period of two (2) years thereafter, any "Confidential Information",
pertaining to the Company or any of its subsidiaries including, without
limitation, all (i) data or trade secrets, including processes, formulas or
other technical data; (ii) production methods; (iii) customer lists; (iv)
personnel lists; (v) proprietary information; (vi) financial or corporate
records; (vii) operational, sales, promotional and marketing methods and
techniques; (viii) development ideas, acquisition strategies and plans; (ix)
financial information and records; (x) "know-how" and methods of doing business;
and (xi) computer programs, including source codes and/or object codes and other
proprietary, competition-sensitive or technical information or secrets developed
with or without the help of Employee. Employee acknowledges that any such
information or data he may have acquired was received in confidence and by
reason of his relationship to the Company and/or its subsidiaries. Confidential
Information, data or trade secrets shall not include any information which: (a)
at the time of disclosure is within the public domain; (b) after disclosure
becomes a part of the public domain or is generally known within the industry
through no fault, act or failure to act, error, effort or breach of this
Agreement by Employee; (c) is known to the recipient at the time of disclosure;
(d) is subsequently discovered by Employee independently of any disclosure by
the Company or its subsidiaries; (e) is required by order, statute or regulation
of any governmental authority to be disclosed to any federal or state agency,
court or other body; or (f) is obtained from a third party who has acquired a
legal right to possess and disclose such information.
6.2 NON-REMOVAL OF RECORDS. All documents, papers, materials, notes,
books, correspondence, drawings and other written and graphic records relating
to the business of the Company or any of its subsidiaries which Employee shall
prepare or use, or come into contact with, shall be and remain the sole property
of the Company and, effective immediately upon the termination of the Employee's
employment with the Company for any reason, shall be returned to the Company and
not be removed from the Company's premises without the Company's prior written
consent.
ARTICLE VII
TERMINATION
7.1 TERMINATION FOR CAUSE. This Agreement and the employment of
Employee may be terminated by the Company "For Cause" under any one of the
following circumstances:
(a) Employee commits any material act of fraud, misappropriation or
theft against the Company, CCI or any of its subsidiaries;
(b) Employee's default or breach of any material provision of this
Agreement; provided, that Employee shall not be in default or breach hereunder
unless he shall have failed to cure such default or breach within thirty (30)
days after receiving written notice thereof by the Company to Employee.
Notwithstanding the foregoing, Employee may be terminated pursuant to this
provision if he shall have received such written notice from the Company on at
least two (2) prior instances for the same or substantially similar breach or
default (whether or not incurred by Employee);
(c) Employee engages in gross negligence, malfeasance, or
intentional misconduct in the performance of his duties hereunder; provided,
that Employee shall not be in default hereunder unless he shall have failed to
cure such default within thirty (30) days after written notice thereof by the
Company to Employee. Employee may be terminated pursuant to this provision if he
shall have received such written notice
6
<PAGE>
on at least two prior instances for the same or substantially similar default
(whether or not cured by Employee);
(d) Employee is convicted of a felony offense other than traffic
offenses which do not result in an incarceration of Employee for a period
greater than 60 days;
(e) At the election of Employee; or
(f) Employee fails to operate the Company's technology divisions
and/or CCI in accordance with their annual business plans including, without
limitation, obtaining at least 80 percent of the projected revenues and net
profits, as defined in the annual business plans, and keeping costs and
expenses, as defined in the annual business plans, within such amounts so as not
to exceed the annual budget by 10 percent for costs and expenses of the
Company's technology divisions and/or CCI. Notwithstanding the foregoing, the
requirement of adherence to the budget with respect to projected revenues and
net profits as described above shall not apply to the first year of this
Agreement unless such failure results from gross negligence or intentional
misconduct of Employee.
A termination For Cause under this Section 7.1 shall be effective
(the "Effective Termination Date") as of the date set forth in a written notice
of termination as the last date of Employee employment, delivered in accordance
with the notice provisions of this Agreement.
7.2 TERMINATION WITHOUT CAUSE. This Agreement and the employment of
the Employee may be terminated "Without Cause" as follows:
(a) By mutual agreement of the parties hereto;
(b) At the election of the Company (by the Company giving not less
than thirty (30) days advance written notice to Employee) in the event of an
illness or condition described in Article V;
(c) Upon Employee's death;
(d) At the election of Employee in the event that the Company, and
any successor thereof, without Employee's consent, removes Employee from the
office of Senior Vice President of the Company or President of CCI, or in the
event there is a material diminution in Employee's duties and responsibilities
for the Company or CCI, or such duties and responsibilities are otherwise
diminished such that they no longer reflect the duties and responsibilities
customary for a Senior Vice President or President; or
(e) At the election of the Employee if the Company or CCI requires
Employee to relocate his residence outside of Southeast Florida.
In the event that the events or circumstances in 7.2(d) or (e) occur
or arise, the Company shall provide written notice to Employee of such events or
circumstances as soon as reasonably possible.
The Effective Termination Date for purposes of Section 7.2(a) hereof
shall be the date of mutual agreement. The Effective Termination Date for
purposes of Sections 7.2(b), (d) or (e) shall be the date set forth in the
written notice required hereunder and delivered in accordance with the notice
provisions of Article V. The Effective Termination Date for purposes of Section
7.2(c) hereof shall be the date the described event takes place.
7
<PAGE>
7.3 EFFECT OF TERMINATION FOR CAUSE. If Employee's employment is
terminated "For Cause":
(a) Employee shall be entitled to accrued base salary under Section
3.1 hereof through the Effective Termination Date.
(b) Employee shall be entitled to receive all benefits as would have
been available under Section 3.4 hereof through the Effective Termination Date,
and in accordance with the terms and provisions of any such plan or program
providing such benefits unless otherwise modified pursuant to this Agreement.
(c) Employee shall be entitled to reimbursement for expenses accrued
through the Effective Termination Date in accordance with the provisions of
Section 4.1 hereof.
(d) All unpaid incentive compensation and unvested stock options
under Sections 3.2 and 3.3 hereof, respectively, shall be forfeited except as
same may have been earned prior to the Effective Termination Date.
Except as provided in Article XI, this Agreement shall thereupon
terminate and cease to be of any further force or effect.
7.4 EFFECT OF TERMINATION WITHOUT CAUSE. If Employee's employment is
terminated "Without Cause":
(a) Employee shall be entitled to accrued base salary under Section
3.1 hereof through the Effective Termination Date.
(b) Employee shall be entitled to receive all benefits as would have
been available under Section 3.4 hereof through the date which is the earlier of
(i) one (1) year from the Effective Termination Date or (ii) the last day of the
remaining Initial Term or Renewal Term of this Agreement, as the case may be,
which benefits shall be available as and when the same would have been available
under the Agreement had it not been terminated.
(c) Employee shall be entitled to reimbursement for expenses accrued
through the Effective Termination Date in accordance with the provisions of
Section 4.1 hereof.
(d) Employee shall be entitled to receive all amounts of incentive
compensation as would have been payable under Section 3.2 and 3.3 hereof through
the Initial Term or Renewal Term of the Agreement, as the case may be, which
amounts shall be paid as and when the same would have been paid under the
Agreement had it not been terminated. Notwithstanding the foregoing, Employee,
in accordance with Section 3.3(e) of this Agreement, shall become fully vested
in all Options granted under Section 3.3.
(e) Employee shall be entitled to a lump sum severance payment in an
amount equal to One Hundred Seventy-Five thousand dollars ($175,000.00) or such
prorata portion thereof if the remaining Initial Term or Renewal Term of this
Agreement, as the case may be, is less than one (1) year.
Except as provided in Article XI, this Agreement shall thereupon
terminate and cease to be of any further force or effect.
8
<PAGE>
ARTICLE VIII
RESTRICTIVE COVENANTS
8.1 NONCOMPETITION; NONSOLICITATION. As an inducement to the Company to
execute this Agreement and in order to preserve the goodwill associated with the
business of the Company and in addition to and not in limitation of any
covenants contained in any agreements executed and delivered herewith, Employee
hereby covenants and agrees as follows:
(a) COVENANT NOT TO COMPETE. During the term of this Agreement and for a
period of two (2) years after the Effective Termination Date of a Termination
For Cause, Employee will not directly or indirectly, within the Territory, act
as an officer, manager, executive, consultant, advisor or agent or controlling
shareholder, partner or member to any business or otherwise engage in any
business in which his duties at or for such business or entity involve, in any
respect, such services, products or business which are competitive, either
directly or indirectly, with the Business, as defined herein, nor shall employee
become employed by such a business in a capacity which would require Employee to
carry out, in whole or in part, either directly or indirectly, the duties
Employee has performed or is expected to perform for the Company and/or CCI or
which are competitive in any respect with the Business or otherwise engage in
any practice the purpose of which is to evade the provisions of this covenant
not to compete or to commit any act which adversely affects the Company, CCI or
any subsidiary of the Company or their business. For purposes of this Article
VIII, the "Business" shall be defined as creating, designing, developing,
owning, leasing and/or operating e-commerce health care applications, processes,
methods, products and/or services. For purposes of this Article VIII, the
"Territory" shall be defined as the United States of America.
(b) NONSOLICITATION; EMPLOYEES. Employee agrees that during the Term of
this Agreement and for two (2) years after the Effective Termination Date of a
termination For Cause, Employee will not offer employment to any person who was
employed by the Company, CCI or any subsidiary of the Company as of the
Effective Termination Date of a termination For Cause without the prior written
consent of the Company.
(c) NONSOLICITATION; CUSTOMERS. Employee agrees that, during the Term of
this Agreement and for two (2) years after the Effective Termination Date of a
Termination For Cause, Employee will not solicit customers, clients or patients
of the Company, CCI or any subsidiary of the Company, with a view to interfering
or competing with the business of the Company, CCI or any of their subsidiaries
or providing any product or service that is provided by the Company, CCI or any
of their subsidiaries.
Notwithstanding the foregoing, the restrictive covenants shall not
prohibit the ownership of securities of corporations which are listed on a
national securities exchange or traded in the national over-the-counter market
in an amount which shall not exceed 5% of the outstanding shares of any such
corporation. The parties agree that the Company and CCI may sell, assign or
otherwise transfer this covenant not to compete, in whole or in part, to any
person, corporation, firm or entity that purchases all or substantially all of
the Company's or CCI's assets or stock. In the event a court of competent
jurisdiction determines that the provisions of the restrictive covenants are
excessively broad as to duration, geographical scope or activity, it is
expressly agreed that the restrictive covenants shall be construed so that the
remaining provisions shall not be affected, but shall remain in full force and
effect, and any such over broad provisions shall be deemed, without further
action on the part of any person, to be modified, amended and/or limited, but
only to the extent necessary to render the same valid and enforceable in such
jurisdiction.
9
<PAGE>
8.2. EQUITABLE RELIEF FOR VIOLATIONS. Employee agrees that the
provisions and restrictions contained in this Section are necessary to protect
the legitimate continuing interests of the Company and CCI and that any
violation or breach of these provisions will result in irreparable injury to the
Company and CCI for which a remedy at law would be inadequate and that, in
addition to any relief at law which may be available to the Company or CCI for
such violation or breach and regardless of any other provision contained in this
Agreement, the Company and CCI shall be entitled to injunctive and other
equitable relief as a court may grant after considering the intent of this
Section.
8.3 SEVERABILITY. If any covenant or provision contained in Article
VIII is determined to be void or unenforceable in whole or in part, it shall not
be deemed to affect or impair the validity of any other covenant or provision.
If, in any arbitration or judicial proceeding, a tribunal shall refuse to
enforce all of the separate covenants deemed included in this Article VIII, then
such unenforceable covenants shall be deemed eliminated from the provisions
hereof for the purpose of such proceedings to the extent necessary to permit the
remaining separate covenants to be enforced in such proceedings.
ARTICLE IX
MISCELLANEOUS
9.1 NO WAIVERS. The failure of either party to enforce any provision
of this Agreement shall not be construed as a waiver of any such provision, nor
prevent such party thereafter from enforcing such provision or any other
provision of this Agreement.
9.2 NOTICES. Any notice to be given to the Company and Employee
under the terms of this Agreement may be delivered personally, by telecopy,
telex or other form of written electronic transmission, or by registered or
certified mail, postage prepaid, and shall be addressed as follows:
IF TO THE COMPANY: Medical Industries of America, Inc.
1903 S. Congress Ave., #400
Boynton Beach, FL 33463
Attn: Paul C. Pershes, President
IF TO EMPLOYEE: John E. Haines
C/O CyberCare, Inc.
430 10th Street, N. W., #S-004
Atlanta, GA 30318
Either party may hereafter notify the other in writing of any change in
address. Any notice shall be deemed duly given (i) when personally delivered,
(ii) when telecopied, telexed or transmitted by other form of written electronic
transmission (upon confirmation of receipt) or (iii) on the third day after it
is mailed by registered or certified mail, postage prepaid, as provided herein.
9.3 SEVERABILITY. The provisions of this Agreement are severable and
if any provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provisions, or
enforceable parts thereof, shall not be affected thereby.
9.4 SUCCESSORS AND ASSIGNS. The rights and obligations of the
Company under this
10
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Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company, including the survivor upon any merger, consolidation,
share exchange or combination of the Company with any other entity. Employee
shall not have the right to assign, delegate or otherwise transfer any duty or
obligation to be performed by him hereunder to any person or entity provided,
however, that Employee's heirs shall be entitled to all benefits otherwise due
Employee pursuant to this Agreement in the event of a termination of this
Agreement for any reason whatsoever.
9.5 ENTIRE AGREEMENT. This Agreement supersedes all prior and
contemporaneous agreements and understandings regarding the subject matter of
this Agreement between the parties hereto, oral or written, and may not be
modified or terminated orally. No modification, termination or attempted waiver
shall be valid unless in writing, signed by the party against whom such
modification, termination or waiver is sought to be enforced. This Agreement was
the subject of negotiation by the parties hereto and their counsel. The parties
agree that no prior drafts of this Agreement shall be admissible as evidence
(whether in any arbitration or court of law) in any proceeding which involves
the interpretation of any provisions of this Agreement.
9.6 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Florida without reference
to the conflict of law principles thereof.
9.7 SECTION HEADINGS. The section headings contained herein are for
the purposes of convenience only and are not intended to define or limit the
contents of said sections.
9.8 FURTHER ASSURANCES. Each party hereto shall cooperate and 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.
9.9 GENDER. Whenever the pronouns "he" or "his" are used herein they
shall also be deemed to mean "he" or "his" or "it" or "its" whenever applicable.
Words in the singular shall be read and construed as though in the plural and
words in the plural shall be read and construed as though in the singular in all
cases where they would so apply.
9.10 COUNTERPARTS. This Agreement may be executed in counterparts, all of
which taken together shall be deemed one original.
ARTICLE X
INTELLECTUAL PROPERTY
10.1. IDEAS AND INVENTIONS. Employee agrees to assign to the Company
all Employee's right, title and interest in or to any and all ideas, concepts,
know-how, techniques, processes, methods, applications, inventions, discoveries,
developments, innovations and improvements ("Inventions") which relate in any
respect to the Company, CCI or any subsidiary of the Company or their businesses
as they now or hereafter exist which Employee conceives, creates, designs,
develops and/or makes, whether alone or with others, during Employee's
employment with the Company and/or CCI. Employee agrees to disclose all such
Inventions to the Company promptly, and to provide all assistance reasonably
requested by the Company in the preservation of its interests in the Inventions,
such as by executing documents, testifying, etc., such assistance to be provided
at the Company's expense but without any additional compensation to Employee,
11
<PAGE>
unless Employee is called upon to render such assistance after the termination
of this Agreement for any reason, at which time Employee shall be entitled to a
fair and reasonable rate of compensation for such assistance. Employee shall, at
the request and expense of the Company, assist the Company or its nominees to
obtain patents for such Inventions for which the Company, CCI or any subsidiary
of the Company has or obtains any right, title or interest in any countries
throughout the world. Such Inventions shall be the property of the Company or
its nominees, whether patented or not. Employee shall and does, without charge
to the Company, assign to the Company, all Employee's right, title, and interest
in and to such Inventions, including without limitation patents and patent
applications and reissues thereof. Employee agrees to execute, acknowledge, and
deliver any instruments confirming the complete ownership by the Company of such
Inventions. Such assignments shall include the right to sue for infringement.
10.2. COPYRIGHTS. Employee agrees that any Invention or other work
(collectively hereinafter called "Work") prepared, developed or produced by
Employee, whether alone or with others, and which relates in any respect to the
Company, CCI or any subsidiary of the Company or their businesses and for which
is eligible for copyright protection in the United States or elsewhere shall be
a work made for hire. If any such Work is deemed for any reason not to be a work
made for hire, Employee shall assign all right, title and interest in the
copyright in such Work, and all extensions and renewals thereof, to Company, and
agrees to provide all assistance reasonably requested by Company in the
establishment, preservation and enforcement of its copyright in such Work, such
assistance to be provided at Company's expense but without any additional
compensation to Employee, at which time Employee shall be entitled to a fair and
reasonable rate of compensation for such assistance. Employee agrees to waive
all moral rights relating to the Work developed or produced, including without
limitation any and all rights of identification of authorship and any and all
rights of approval, restriction or limitation on use or subsequent
modifications.
ARTICLE XI
SURVIVAL
11.1 SURVIVAL. The provisions of Articles VI, VII, VIII, and IX of
this Agreement shall survive the termination of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
MEDICAL INDUSTRIES OF AMERICA, INC.
a Florida corporation
By:________________________________
Title: ____________________________
EMPLOYEE
___________________________________
John E. Haines
CONSENT
The undersigned hereby agree and consent to be bound by the provisions of
Section 1.4 of this Agreement.
___________________________________
Michael F. Morrell
___________________________________
Paul C. Pershes
13
EXHIBIT 10.2
AMENDMENT #1 TO EMPLOYMENT AGREEMENT
BY AND BETWEEN
MEDICAL INDUSTRIES OF AMERICA, INC.
AND
JOHN E. HAINES
THIS AMENDMENT is entered into this __th day of July, 1999 with respect to
that certain Employment Agreement (the "AGREEMENT") as executed by and between
Medical Industries of America, Inc., a Florida corporation (the "COMPANY") and
John E. Haines ("EMPLOYEE") on July ___, 1999.
WHEREAS, the Company and Employee have entered into the Agreement to
engage Employee as its Senior Vice President in charge of the Company's
technology markets and President of CCI;
WHEREAS, the Agreement has a Commencement Date (the "COMMENCEMENT
DATE") as of the effectiveness of that certain Stock Exchange Agreement by and
between the Company and CyberCare, Inc. a Georgia corporation ("CCI").
WHEREAS, the two parties are desirous of accelerating the
Commencement Date of the Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, terms and conditions set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and Employee agree as follows:
ARTICLE I
COMMENCEMENT DATE
1.1 The meaning of Commencement Date as used in the Agreement shall
be that date on which Employee establishes permanent domicile in Palm Beach
County and presents himself for full time service and employment at the
principal place of business of the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
MEDICAL INDUSTRIES OF AMERICA, INC.
a Florida corporation
By:________________________________
Title: ____________________________
EMPLOYEE
___________________________________
John E. Haines
1
EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
FOR
CYBERCARE, INC.
Dated as of June ___, 1999
<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of June ___, 1999, (this
"Agreement"), between Medical Industries of America, Inc., a Florida corporation
(the "Company") and CyberCare, Inc., a Georgia corporation ("CCI").
WHEREAS, the Company and CCI have entered into Stock Exchange Agreement,
dated as of the date hereof, pursuant to which the CCI Stockholders will acquire
7,249,996 shares of the common stock, par value $.0025 per share, of the Company
(the `Securities"); and
WHEREAS, it is a condition precedent to consummation of the Agreement that
the Company provide certain registration rights to the CCI Stockholders with
respect to the Securities.
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the adequacy and receipt of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1.
DEFINITIONS
SECTION 1.1 DEFINITIONS. The following terms shall have the meanings
ascribed to them below:
"AGREEMENT" or "EXCHANGE AGREEMENT" means that certain Stock Exchange
Agreement by and between the Company and CCI of even date herewith, as amended,
modified or supplemented from time to time and all attachments hereto.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or a day on
which banking institutions in New York, New York are authorized or obligated by
law, executive order or government decree to be closed.
"CCI" has the meaning ascribed thereto in the introduction hereof.
"COMMISSION" means the United States Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"CONTROLLING PERSON" has the meaning ascribed thereto in Section 4.1.
"COMPULSORY REGISTRATION" has the meaning ascribed thereto in Section
2.1(b).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"HOLDER' means any Person who now holds or shall hereafter acquire and
hold Registrable Securities.
"INDEMNIFIED PARTY" means an Indemnified Party as defined in Section 4.3.
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"INDEMNIFYING PARTY" means an Indemnifying Party as defined in Section 4.3
"PERSON" means any individual, entity or group, including without
limitation, any corporation, limited liability company, limited or general
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
"PIGGY-BACK REGISTRATION" has the meaning ascribed thereto in Section
2.1(a).
"PROSPECTUS" means the prospectus included in any Registration Statement
(including with limitation, a prospectus that discloses information previously
omitted from a prospectus filed as part of an effective Registration Statement
in reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement with respect to the terms of the
offering of any portion of the securities covered by such Registration
Statement, and all other amendments and supplements to the prospectus, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such prospectus.
"REGISTRABLE SECURITIES" means (i) Securities, (ii) the maximum number of
shares of the securities issuable upon conversion of the Warrants and the
Options issued pursuant to the terms of the Agreement, and (iii) any other
shares of the Securities acquired as a result of stock splits, stock dividends,
reclassifications, recapitalizations, or similar events relating to the shares
described in clauses (i) and (ii) above, in each case until such time as (x) a
Registration Statement covering such shares of the Securities has been declared
effective by the Commission and such Securities have been disposed of pursuant
to such effective Registration Statement, or (y) such Securities would be
eligible for sale pursuant to Rule 144 under the Securities Act (or any similar
provisions then in force), without regard to the volume limitations set forth in
Rule 144(e) and not otherwise subject to transfer restrictions under agreements
with the Company, or (z) such Securities have been otherwise transferred and the
Company has delivered a new certificate or other evidence of ownership for such
Securities not bearing a restrictive legend and not subject to any stop transfer
or similar restrictive order and all of such Securities may be resold by the
Person receiving such certificate without complying with the registration
requirements of the Securities Act.
"REGISTRATION STATEMENT" means any registration statement of the Company
which covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such registration statement.
"SECURITIES" has the meaning ascribed thereto in the introduction hereof
as well as any additional shares of Company common stock or other securities
received pursuant to Agreement but excluding the options granted pursuant to the
Employment Agreements as defined in the Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"SELLING HOLDER' means a Holder who is or may be selling Registrable
Securities pursuant to a Registration Statement under the Securities Act.
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"SELLING HOLDERS COUNSEL" means the counsel selected to represent the
Selling Holders as set forth in Section 3.1(c).
"UNDERWRITER" means a securities dealer who purchases any Registrable
Securities as principal in an underwritten offering and not as part of such
dealer's market-making activities.
"UNDERWRITER'S CUTBACK" shall mean a reduction in the number of
Registrable Securities to be included in any underwritten offering as the result
of receipt of written notice from the representative of the Underwriters to the
effect that adverse marketing factors require a limitation on the number of
Registrable Securities to be underwritten.
ARTICLE 2.
REGISTRATION RIGHTS
SECTION 2.1. (a) PIGGY-BACK REGISTRATION. If at any time the Company
proposes to file a Registration Statement under the Securities Act with respect
to an offering by the Company for its own account or for the account of any of
its respective security holders other than (x) a Registration Statement on Form
S-4 or Form S-8 (or any substitute form that may be adopted by the Commission)
or on any other form inappropriate for an underwritten public offering or
related solely to securities to be issued in a merger, acquisition of the stock
or assets of another entity or in a similar transaction or (y) a Registration
Statement pursuant to a Compulsory Registration in accordance with Section
2.1(b) below, then the Company shall give written notice of such proposed filing
to the Holders as soon as practicable (but in no event less than 30 days before
the anticipated filing date), and such notice shall offer such Holders the
opportunity to register such number of Registrable Securities as each such
Holder may request (which request shall specify the number of shares and the
type of Registrable Securities intended to be disposed of by such Holder and
shall also state the firm intent of the Holder to offer Registrable Securities
for sale) (a "Piggy-Back Registration"). The Company shall use its reasonable
best efforts to cause the managing Underwriter or Underwriters of a proposed
underwritten offering to permit the Registrable Securities requested to be
included in a Piggy-Back Registration on the same terms and conditions as any
similar securities of the Company or any other security holder included therein
and to permit the sale or other disposition of such Registrable Securities in
accordance with the intended method of distribution thereof. Any Holder shall
have the right to withdraw its request for inclusion of its Registrable
Securities in any Registration Statement pursuant to this Section 2.2 by giving
written notice to the Company of its request to withdraw. The Company may
withdraw a Piggy-Back Registration at any time prior to the time it becomes
effective and such withdrawn Piggy-Back Registration shall not be counted for
purposes of Section 2.1(a) of this Agreement.
(b) COMPULSORY REGISTRATION. If a Piggy-back Registration Statement has
not been filed with the Commission or is not being diligently pursued by the
Company within five (5) months of the Closing of the Agreement, the Company
shall within thirty (30) days of demand by Holders owning more than 3,700,000
shares of the Securities file with the Commission a Registration Statement
seeking to register for sale all the Registrable Securities. Such demand may be
given at any time (but in no event sooner than five (5) months from the Closing
of the Exchange Agreement. The Holders shall be entitled to withdraw all or any
part of the Registrable Securities from a Registration Statement at any time
prior to the effective date of such Registration Statement.
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(c) Notwithstanding any other provision of this Section 2.1, if the
Underwriter advises the Company in writing that, in such firm's opinion,
marketing factors prohibit or require a limitation of the number of shares to be
underwritten, the Underwriter or the Company may exclude the Registrable
Securities in the same proportion, as nearly as practicable, to other selling
shareholders of the Company who have obtained shares pursuant to an acquisition
or otherwise or the Underwriter or the Company may limit the number of
Registrable Securities to be included in the underwriting to a specified
percentage of the Registrable Securities to be distributed through the
underwriting in the same proportion, as nearly as practicable, to other selling
shareholders of the Company who have obtained shares pursuant to an acquisition
or otherwise. The Company shall so advise all Holders of Registrable Securities
which would otherwise be underwritten under this subsection and the number of
shares of Registrable Securities that may be included in the underwriting shall
be allocated among all Holders who hold those securities in proportion, as
nearly as practicable, to the respective amounts of Registrable Securities
entitled to inclusion in the registration held by such Holders at the time the
registration statement is filed. Any Holder disapproving of the terms of any
such underwriting may elect to withdraw from it by written notice to the Company
and the Underwriter.
(d) Notwithstanding any other provision of this Agreement to the contrary,
the Company shall not be required to include any of the Registrable Securities
in a registration statement relating to an underwritten offering of the
Company's securities unless the Holders accept the terms of the underwriting as
agreed upon between the Company and the underwriters selected by it (provided
such terms are usual and customary for selling stockholders), including, without
limitation, any Underwriter's Cutback, and the Shareholders agree to promptly
execute and/or deliver such documents in connection with such registration as
the Company or the managing underwriter may reasonably request.
(e) Notwithstanding any other provision of this Agreement to the contrary,
if requested in writing by the Company and an Underwriter, the Holders shall
agree not to sell or otherwise transfer or dispose of any Registrable Securities
held by the Holders for a period set by the Underwriter following the effective
date of a registration statement of the Company filed under the Securities Act,
PROVIDED that officers and directors of the Company are subject to a similar
lock-up.
(f) Notwithstanding any other provision of this Agreement to the contrary,
a Compulsory Registration requested by a Holder pursuant to Section 2.1(b) shall
not be determined to have been effected (and therefore not demanded for the
purposes of Section 2.1(b)): (A) if it is withdrawn based upon material adverse
information relating to the Company that is different from the information (x)
known to Holders requesting registration at the time of their request for
registration, or (y) promptly disclosed by the Company to the Holders at the
time of their request for registration; (B) if, when effective it includes fewer
than ninety (90%) percent of the Registrable Securities which were the subject
matter of the request; (C) if after it has become effective, such registration
is interfered with by any stop order, injunction or other order or requirement
of the Commission or other governmental agency or court for any reason other
than a misrepresentation or an omission by such Holder and, as a result thereof,
less than ninety (90%) percent of the Registrable Securities requested can be
completely distributed in accordance with the plan of distribution set forth in
the related registration statement.
(g) Upon receipt of written notice from the Holders who make a demand
pursuant to Section 2.1(b) hereto, the Company shall, within five (5) days, give
prompt written notice to all other Holders of Registrable Securities of such
notice and its intent to effect the registration of Registrable Securities
pursuant to Section 2.1(b) of this Agreement. Such notice shall offer each
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such Holder the opportunity to include in such registration statement such
number of Registrable Securities as each such Holder may request.
ARTICLE 3.
REGISTRATION PROCEDURES
SECTION 3.1. FILINGS; INFORMATION. Whenever the Company is required to
effect or cause the registration of Registrable Securities pursuant to Section
2.1 hereof, the Company will use its reasonable best efforts to effect the
registration of such Registrable Securities in accordance with the intended
method(s) of disposition thereof as quickly as practicable, and in connection
with any such request:
(a) The Company will prepare and file with the Commission a Registration
Statement with respect to the offer and sale of such securities and use its
reasonable best efforts to cause such Registration Statement to become and
remain effective until the completion of the distribution contemplated thereby;
PROVIDED, HOWEVER, the Company shall not be required to keep such Registration
Statement effective for more than 12 months (or such shorter period which will
terminate when all Registrable Securities covered by such Registration have been
sold, but not prior to the expiration of the applicable period referred to in
Section 4(3) of the Securities Act and Rule 174 thereunder, if applicable).
(b) The Company will prepare and file with the Commission such amendments
and post-effective amendments to the Registration Statement as may be necessary
to keep such Registration Statements effective for as long as such registration
is required to remain effective pursuant to the terms hereof; cause the
Prospectus to be supplemented by any required Prospectus supplement, and, as so
supplemented, to be filed pursuant to Rule 424 under the Securities Act; and
comply with the provisions of the Securities Act applicable to it with respect
to the disposition of all Registrable Securities covered by such Registration
Statement during the applicable period in accordance with the intended methods
of disposition by the Selling Holders set forth in such Registration Statement
or supplement to the Prospectus.
(c) The Company, at least ten (10) Business Days prior to filing a
Registration Statement or a Prospectus or any amendment or supplement to such
Registration Statement or Prospectus, will furnish to (i) each Selling Holder,
(ii) not more than one counsel representing all Selling Holders ("Selling
Holders Counsel"), to be selected by a majority-in-interest of such Selling
Holders, and (iii) each Underwriter, if any, of the Registrable Securities
covered by such Registration Statement, copies of such Registration Statement as
proposed to be filed, together with exhibits thereto (whether or not
incorporated by reference in such Registration Statement), which documents will
be subject to review and approval by each of the foregoing within ten (10)
Business Days after delivery (except that such review and approval of any
Prospectus or any amendment or supplement to such Registration Statement or
Prospectus must be within five (5) Business Days after delivery), and
thereafter, furnish to such Selling Holders, Selling Holders' Counsel and
Underwriters, if any, at the Company's expense, such number of conformed copies
of such Registration Statement, each amendment and supplement thereto (in each
case including all exhibits thereto and documents incorporated by reference
therein), the Prospectus included in such Registration Statement (including each
preliminary Prospectus) and such other documents or information as such Selling
Holders, Selling Holders' Counsel or Underwriters may reasonably request in
order to facilitate the disposition of the Registrable Securities (it being
understood that the Company consents to the use of the Prospectus and any
amendment or supplement thereto by each Selling Holder and the Underwriters, if
any, in connection with the offering and sale of the
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Registrable Securities covered by such Prospectus or any amendment or supplement
thereto). The Company shall provide the Holders' counsel and each Underwriter,
if any, a copy of any and all transmittal letters or other correspondence to, or
received from, the Commission or any other governmental body having jurisdiction
relating to the offering.
(d) The Company will use its reasonable best efforts to prevent the entry
of any stop order or to remove it at the earliest possible moment if entered.
(e) [Section Reserved].
(f) The Company will promptly notify each Selling Holder, Selling Holders'
Counsel and any Underwriter in writing, (i) of any request by the Commission or
other regulatory body having jurisdiction over the Registration Statement for
any amendment or supplement to any Registration Statement or other document
relating to the offering and sale of the Registrable Securities (ii) when a
Prospectus or any Prospectus supplement or post-effective amendment has been
filed and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of a Registration
Statement or the initiation or threatening of any proceedings for that purpose,
(iv) of the happening of any event which makes any statements made in a
Registration Statement or related Prospectus or any document incorporated by
reference therein untrue in a material respect or which requires the making of
any changes in such Registration Statement, Prospectus or documents so that they
will not to the best of the Company's knowledge contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements in the Registration Statement and Prospectus
not misleading in light of the circumstances in which they were made; and, as
promptly as practicable thereafter, prepare and file with the Commission and
furnish a supplement or amendment to such Prospectus so that, as thereafter
deliverable to the buyers of such Registrable Securities, such Prospectus will
not to the best of the Company's knowledge contain any untrue statements of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, such amendment to be subject to the Holders' review under Section
3.1(c).
Each Selling Holder agrees that, upon receipt of any notice in
writing from the Company of the happening of any event of the kind described in
Section 3.1(f) hereof, such Selling Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the Registration Statement
covering such Registrable Securities until such Selling Holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 3.1(f)
hereof, and, if so directed by the Company, such Selling Holder will deliver to
the Company all copies, other than permanent file copies then in such Selling
Holder's possession, of the most recent Prospectus covering such Registrable
Securities at the time of receipt of such notice. In the event the Company shall
give such notice, the Company shall extend the period during which such
Registration Statement shall be maintained effective (including the period
referred to in Section 3.1(a) hereof) by the number of days during the period
from and including the date of the giving of notice pursuant to Section 3.1(f)
hereof to the date when the Company shall make available to the Selling Holders
covered by such Registration Statement a Prospectus supplemented or amended to
conform with the requirements of Section 3.1(f) hereof.
(g) The Company will make generally available an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act no later than
90 days after the end of the 12 month period beginning with the first day of the
Company's first fiscal quarter commencing after the effective date of a
Registration Statement, which earnings statement shall cover said 12 month
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period, and which requirement will be deemed to be satisfied if the Company
files complete and accurate information on Forms 10-QSB, 10-KSB and 8-K under
the Exchange Act in accordance with the applicable time periods and extensions
provided by the Exchange Act and otherwise complies with Rule 158 under the
Securities Act.
(h) The Company will enter into customary agreements (including, if
applicable, an underwriting agreement in customary form and which is reasonably
satisfactory to the Company) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of such Registrable
Securities.
(i) The Company, during the period when the Prospectus is required to be
delivered under the Securities Act, will file all documents required to be filed
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act.
(j) The Company will use its reasonable best efforts to cause all such
Registrable Securities to be listed on each securities exchange or quoted on any
automated quotation system on which similar securities of the Company are then
listed or quoted and enter into customary agreements, including a listing
application in customary form; provided that the applicable listing requirements
are satisfied, and to provide a transfer agent and register for such Registrable
Securities covered by the Registration Statement no later than the effective
date of such Registration Statement.
(k) The Company will make available for inspection by any Holder of
Registrable Securities covered by the Registration Statement, any Underwriter
participating in any disposition pursuant to such Registration Statement, and
any attorney, accountant, or other agent retained by any such Holder or
underwriter (collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of the Company as such Inspector
shall deem necessary or desirable in order to permit it to conduct a reasonable
investigation within the meaning of Section 11 of the Securities Act and cause
the Company's officers, directors and employees to supply all information and
respond to all inquiries reasonably requested by any such Inspector in
connection with such Registration Statement. The rights granted to the
Inspectors in this Section 3(k) shall be conditioned upon the Inspectors
agreeing to sign confidentiality agreements prior to receiving information or
documentation from the Company.
(1) The Company will, to the extent required in connection with an
underwritten offering, (i) use its reasonable best efforts to furnish an opinion
of counsel for the Company addressed to the Underwriter and each Selling Holder
and dated the date of the closing under the underwriting agreement (if any) (or
if such offering is not underwritten, dated the effective date of the
Registration Statement), and (ii) use its reasonable best efforts to furnish a
"cold comfort" letter addressed to each Selling Holder, if permissible under
applicable accounting practices, and signed by the independent public
accountants who have audited the Company's financial statements included in such
Registration Statement, in each such case covering substantially the same
matters with respect to such Registration Statement (and the Prospectus included
therein) as are customarily covered in opinions of issuer's counsel and in
accountants' letters delivered to underwriters in underwritten pubic offerings
of securities and such other matters as the Selling Holders may reasonably
request and, in the case of such accountants' letter, with respect to events
subsequent to the date of such financial statements.
(m) The Company will, not later than the effective date of the
Registration Statement, provide a CUSIP number for all Registrable Securities,
and provide the applicable transfer agents
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with printed certificates for the Registrable Securities, which are in a term
eligible for deposit with The Depository Trust Company.
SECTION 3.2. REGISTRATION EXPENSES. The Company shall pay all expenses in
connection with any Registration pursuant to Article 3 hereof or incident to the
Company's performance of or compliance with this Agreement including, without
limitation: (i) all registration and filing fees, (ii) the fees and expenses of
compliance with the securities or blue sky laws (including fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities), (iii) all printing, messenger and delivery expenses,
(iv) the Company's internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), (v) the fees and expenses incurred in connection with the
listing or quotation, as appropriate, of the Registrable Securities, (vi) the
fees and disbursements of counsel for the Company and the fees and expenses for
independent certified public accountants retained by the Company (including the
expenses of any special audit or cold comfort letter), (vii) the fees and
expenses of any special experts retained by the Company in connection with such
registration, and (viii) the fees and expenses of one(1) attorney for the
Selling Holders up to $5,000.00. Notwithstanding the foregoing, the Company
shall not be responsible for the payment of any brokerage commissions incurred
by the Selling Holders.
ARTICLE 4.
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1 INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify and hold harmless, to the fullest extent permitted by law, each
Selling Holder, its general partners, limited partners, managers, officers,
directors, employees, advisors and agents, and each Person, if any, who
controls, is controlled by or is under common control with such Selling Holder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, together with the general partners, limited partners, managers,
officers, directors, employees, advisors and agents of such controlling Person
(collectively the "Controlling Persons"), from and against any loss, claim,
damage, liability, attorneys' fees, cost or expense and costs and expenses of
investigating and defending any such claim (collectively, the "Damages") and any
action in respect thereof to which such Selling Holder, its general partners,
managing partners, managers, officers, directors, employees, advisors and
agents, and any such Controlling Person may become subject under the Securities
Act, the Exchange Act, state blue sky laws, common laws or otherwise, insofar as
such Damages (or proceedings in respect thereof) arise out of, or are based
upon, (x) any untrue statement of a material fact contained in any Registration
Statement or Prospectus, or any amendment or supplement thereto, or any
preliminary or summary Prospectus, or in any document incorporated by reference
in such Registration Statement or Prospectus, any amendment or supplement
thereto, or any preliminary or Summary Prospectus (y) any omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as the same are based upon
information furnished in writing to the Company by a Selling Holder for use
therein, or (z) any violation by the Company of any federal, state or common law
rule or regulation applicable to the Company and relating to action required of
or inaction by the Company in connection with any such registration, and the
Company shall reimburse each Selling Holder, its partners, officers, directors,
employees, advisors and agents, and each such Controlling Person for any legal
and other expenses reasonably incurred by that Selling Holder, its partner,
officers, directors, employees, advisors and agents, or any such Controlling
Person in investigating or defending or preparing to defend against any such
Damages or proceedings; PROVIDED, HOWEVER, that the Company shall not be liable
to any Selling Holder or other indemnitee to the extent that any such Damages
arise out of
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or are based upon an untrue statement or omission based solely upon
information provided in writing to the Company by the Selling Holder for
inclusion in such Prospectus or Registration Statement. The Company also agrees
to indemnify any Underwriters of the Registrable Securities, their officers and
directors and each Person who controls such Underwriters on substantially the
same basis as that of the indemnification of the Selling Holders provided in
this Section 4.1. This indemnity will survive the transfer of the Registrable
Securities by the Holder thereof.
SECTION 4.2. INDEMNIFICATION BY SELLING HOLDERS. Each Selling Shareholder
agrees, severally but not jointly to indemnify and hold harmless, the Company,
its officers, directors, employees, advisors and agents, and each Controlling
Person of the Company, if any, together with the partners, officers, directors,
employees, advisors and agents of such Controlling Person, from and against any
Damages and any action in respect thereof to which the Company and any such
Controlling Person may become subject under the Securities Act, the Exchange
Act, state blue sky laws, common laws or otherwise, insofar as such Damages (or
proceedings in respect thereof) arise out of, or are based upon, (x) any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus or any preliminary or summary Prospectus,
or (y) any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that such untrue statement of
material fact is contained in, or such material fact relating to the Selling
Holder is omitted from, information related to such Selling Holder, or its plan
of distribution, furnished in writing to the Company by such Selling Holder for
use in any Registration Statement or Prospectus, or any amendment or supplement
thereto, or any preliminary or summary Prospectus; PROVIDED, HOWEVER, that such
Selling Holder shall not be liable in any such case to the extent that prior to
the filing of any such Registration Statement or Prospectus or amendment or
supplement thereto, such Selling Holder has furnished in writing to the Company
information for use in such Registration Statement or Prospectus or any
amendment or supplement thereto which corrected or made not misleading
information previously furnished to the Company. The Selling Holder shall
reimburse the Company and each such Controlling Person for any legal and other
expenses reasonably incurred by the Company or any such Controlling Person in
investigating or defending or preparing to defend against any such Damages or
proceedings. In no event shall the liability of any Selling Holder be greater in
amount that the dollar amount of the proceeds received by such Selling Holder
upon the sale of the Registrable Securities giving rise to such indemnification
obligation. This indemnity will survive the transfer of the Registrable
Securities by the Holder thereof.
SECTION 4.3. CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after
receipt by any Person in respect of which indemnity may be sought pursuant to
Section 4.1 or 4.2 (an "Indemnified Party') of notice of any claim or the
commencement of any action, the Indemnified Party shall, if a claim in respect
thereof is to be made against the Person against whom such indemnity may be
sought (an "Indemnifying Party"), notify the Indemnifying Party in writing of
the claim or the commencement of such action; provided that the failure to
notify the Indemnifying Party shall not relieve it from any liability which it
may have to an Indemnified Party otherwise than under Section 4.1 or 4.2 except
to the extent of any actual prejudice resulting therefrom. If any such claim or
action shall be brought against an Indemnified Party, and it shall notify the
Indemnifying Party thereof, the Indemnifying Party shall be entitled to
participate therein, and, to the extent that it wishes, jointly with any other
similarly notified Indemnifying Party, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party. After notice from the
Indemnifying Party to the Indemnified Party of its election to assume the
defense of such claim or action, the Indemnifying Party shall not be liable to
the Indemnified Party for any legal or other expenses subsequently incurred by
the Indemnified Party
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in connection with the defense thereof other than reasonable costs of
investigation; provided that the Indemnified Party shall have the right to
employ separate counsel to represent the Indemnified Party and its Controlling
Persons who may be subject to liability arising out of any claim in respect to
which indemnity may be sought by the Indemnified Party against the Indemnifying
Party, but the fees and expenses of such counsel shall be for the account of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) in the
opinion of counsel to such Indemnified Party, representation of both parties by
the same counsel would be inappropriate due to actual or potential conflicts of
interest between them, it being understood, however, that the Indemnifying Party
shall not, in connection with any one such claim or action or separate but
substantially similar or related claims or actions in the same jurisdiction
arising out of the same allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (together with local
counsel) at any time for all Indemnified Parties. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any claim or pending or threatened proceeding in respect of which
the Indemnified Party is or could have been a party and indemnity could have
been sought hereunder by such Indemnified Party, and such settlement includes an
unconditional release of such Indemnified Party from all liability arising out
of such claim or proceeding. Whether or not the defense of any claim or action
is assumed by the Indemnifying Party, such Indemnifying Party will not be
subject to any liability for any settlements made without its consent, which
consent will not be unreasonably withheld. In all instances, the Indemnified
Party shall cooperate fully with the Indemnifying Party or its counsel in the
defense of each claim or action.
ARTICLE 5.
MISCELLANEOUS
SECTION 5.1. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any underwritten registration hereunder unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements, and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and these
registration rights.
SECTION 5.2. RULE 144. The Company covenants that it will use its
reasonable best efforts to file any reports required to be filed by it under the
Securities Act and the Exchange Act and that it will take such further action as
any Holder may reasonably request, all to the extent required from time to time
to enable Holders to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule 144
under the Securities Act, or (b) any other applicable exemption from the
registration requirements of the Securities Act adopted by the Commission. Upon
the request of any Holder, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.
SECTION 5.3. AMENDMENT AND MODIFICATION. Any provision of this Agreement
may be waived, provided that such waiver is set forth in a writing executed by
the party against whom the enforcement of such waiver is sought. This Agreement
may not be amended, modified or supplemented other than by a written instrument
signed by the holders of at least a majority of the Registrable Securities
(calculated on an as converted basis). No course of dealing between or among any
Persons having any interest in this Agreement will be deemed effect to modify,
amend
10
<PAGE>
or discharge any part of this Agreement or any rights or obligations of
any Person under or by reason of this Agreement.
SECTION 5.4. SUCCESSORS AND ASSIGNS; THIRD PARTY BENEFICIARIES. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto, each subsequent Holder and their respective
successors and assigns and executors, administrators and heirs. Holders are
intended third party beneficiaries of this Agreement and this Agreement may be
enforced by such Holders.
SECTION 5.5. ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement and understanding between the parties as to the subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them.
SECTION 5.6. HEADINGS. Subject headings are included for convenience only
and shall not affect the interpretation of any provisions of this Agreement.
SECTION 5.7. NOTICES. Any notice, demand, request, waiver, or other
communication under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if personally served or sent by
confirmed telecopy, on the Business Day after notice is delivered to a courier
or mailed by express mail if sent by courier delivery service or express mail
for next day delivery and on the third day after mailing if mailed to the party
to whom notice is to be given, by first class mail, registered, return receipt
requested, postage prepaid and addressed to the following:
If to the Company: Medical Industries of America, Inc.
1903 South Congress Avenue
Suite 400
Boynton Beach, Florida 33426
Attention: Michael F. Morrell
Telefax: (561) 265-2869
If to CCI CyberCare, Inc.
430 10th Street NW
Suite S-004
Atlanta, GA 30318
Attention: John Haines
Telefax:
SECTION 5.8. GOVERNING LAW: FORUM: PROCESS. This Agreement shall be
governed by and construed in accordance with the laws of the State of Florida,
without regard to any choice-of-law principles thereof.
SECTION 5.9. CONSENT TO JURISDICTION, WAIVER OF IMMUNITIES. The Company
and the Holders hereby irrevocably submit to the non-exclusive jurisdiction of
any court of the State of Florida or United States federal court sitting in Palm
Beach County, Florida, and any appellate court therefrom, in any action or
proceeding arising out of or relating to this Agreement and hereby irrevocably
agree that all claims in respect to such action or proceeding may be heard and
determined in such court. The Company and the Holders irrevocably waive, to the
fullest extent permitted by applicable law, the defense of an inconvenient forum
to the maintenance of such action or proceeding.
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SECTION 5.10 RECAPITALIZATION, ETC. In the event that any securities are
issued in respect of, in exchange for, or in substitution of, any Registrable
Securities by reason of any reorganization, reclassification, merger,
consolidation, spin-off, partial or complete liquidation, stock dividend, stock
split, sale of assets, distribution to stockholders or combination of the shares
of Registrable Securities or any other change in the Company's capital
structure, appropriate adjustments shall be made in the percentages specified
herein so as to fairly and equitably preserve as far as practicable, the
original rights and obligations of the parties hereto under this Agreement, all
in accordance with the terms and conditions set in the Agreement.
SECTION 5.11. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same agreement.
SECTION 5.12. SEVERABILITY. In the event that any one or more of the
immaterial provisions contained in this Agreement shall for any reason be held
to be invalid, illegal or unenforceable, the same shall not affect any other
provision of this Agreement, but this Agreement shall be construed in a manner
which, as nearly as possible, reflects the original intent of the parties.
SECTION 5.13. NO PREJUDICE. The terms of this Agreement shall not be
construed in favor of or against any party on account of its participation in
the preparation hereof.
SECTION 5.14. WORDS IN SINGULAR AND PLURAL FORM. Words used in the
singular form in this Agreement shall be deemed to import the plural, and vise
versa, as the sense may require.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth above.
MEDICAL INDUSTRIES OF AMERICA
a Florida corporation
By:____________________________________
Name:__________________________________
Title:_________________________________
CYBERCARE, INC.
a Georgia corporation
By:____________________________________
Name:__________________________________
Title:_________________________________
13
EXHIBIT 10.4
RESTRICTED SALE AGREEMENT
Medical Industries of America, Inc.
1903 South Congress Avenue
Suite 400
Boynton Beach, Florida 33426
Ladies and Gentlemen:
The undersigned holders of shares of common stock, no par value per share,
of CyberCare, Inc., a Georgia corporation ("CCI") are entitled to receive in
connection with that certain Stock Exchange Agreement (the "Stock Exchange
Agreement") between CCI and Medical Industries of America, Inc., a Florida
corporation ("MIOA") dated June ___, 1999 shares of MIOA common stock, par value
$.0025 per share ("MIOA Common Stock"). The undersigned understand that sales of
large blocks of MIOA Common Stock could negatively impact the trading price of
the MIOA Common Stock.
Accordingly, the undersigned in consideration of One Dollar ($1.00) and
other good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged and as a condition precedent to the closing of the Stock
Exchange Agreement hereby agree that for a period of one year after the date of
the effective date of the Registration Statement (the "Effective Date") for the
offer and sale of the MIOA Common Stock to be received in connection with the
Stock Exchange (the "Restricted Sale Period"), the undersigned will not, within
any 90 day period, offer to sell, contract to sell, hypothecate, negotiate,
pledge, assign, encumber, loan, pledge, grant any rights with respect to or
otherwise dispose of, directly or indirectly (collectively, a "Disposition"), a
number of shares of MIOA Common Stock or securities convertible into or
exchangeable or exercisable for any shares of MIOA Common Stock now owned or
hereafter acquired by the undersigned which exceeds 5 percent of the total
average weekly trading volume (which shall be calculated without the inclusion
of any Dispositions) of MIOA's common stock during the four (4) calendar weeks
preceding the date of any such Disposition, other than a Disposition (i) to
other holders of MIOA Common Stock who are bound by the terms of a Restricted
Sale Agreement containing the terms and restrictions described herein, (ii) to
any donees who receive such shares of MIOA Common Stock as a bona fide gift and
who are bound by the terms of a Restricted Sale Agreement containing the terms
and restrictions described herein, (iii) to any affiliate of the undersigned who
is bound by the terms of a Restricted Sale Agreement containing the terms and
restrictions described herein, (iv) with the prior written consent of MIOA or
(v) pursuant to proportionate co-sale rights with other officers and directors
of MIOA to the extent sales by such officers and directors exceed the
limitations imposed upon the undersigned as provided above (for which MIOA shall
be obligated to provide the undersigned with written notice). The term
"Disposition" shall not include the undersigned's exercise of (i) a stock option
issued or granted by MIOA and outstanding on the date hereof or issued after the
date hereof under any MIOA stock option or incentive plan or (ii)
<PAGE>
Medical Industries of America, Inc.
Page 2
other securities issued or granted by MIOA and outstanding on the date hereof
and convertible or exchangeable for shares of MIOA Common Stock.
The undersigned acknowledge and agree that the foregoing restriction also
expressly precludes the undersigned from engaging in any hedging or other
transaction which is designed to or reasonably expected to lead to or result in
a Disposition of shares of MIOA Common Stock during the Restricted Sale Period,
even if such shares of MIOA Common Stock would be disposed of by someone other
than the undersigned. Such prohibited hedging or other transactions would
include, without limitation, any short sale (whether or not against the box) or
any purchase, sale, show of any shares or grant of any right (including, without
limitation, any put or call option) with respect to any shares of MIOA Common
Stock or with respect to any security (other than a broad-based market basket or
index) that includes, relates to or derives any significant part of its value
from the MIOA Common Stock.
The undersigned agree to submit each certificate for the shares of MIOA
Common Stock now or hereafter owned by him to MIOA for imprinting of the
following legends thereon:
"The sale, transfer, hypothecation, negotiation, pledge,
assignment, encumbrance or other disposition of this share
certificate and the shareholdings represented hereby are subject to
all of the terms, conditions and provisions of a Restricted Sale
Agreement dated as of ______________, 1999, by and among the holder
of this certificate and Medical Industries of America, Inc., a copy
of which may be obtained from the Secretary of Medical Industries of
America, Inc."
In furtherance of the foregoing, MIOA and its transfer agent and registrar
are hereby authorized to decline to make any transfer of shares of MIOA Common
Stock if such transfer would constitute a violation or breach of this Restricted
Sale Agreement.
This Restricted Sale Agreement shall be binding on the undersigned and the
respective successors, heirs, personal representatives and assigns of the
undersigned.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Florida to the exclusion of the law of any other forum,
without regard to the jurisdiction in which any action or special proceeding may
be instituted. Each party hereto agrees to submit to the personal jurisdiction
and venue of the state and/or federal courts located in Palm Beach County,
Florida, for resolution of all disputes arising out of or in connection with or
by reason of the interpretation, construction and enforcement of this Agreement,
and hereby waives the claim or defense therein that such court constitutes in an
inconvenient form. As material inducement for this Agreement each party
specifically waives the right to trial by jury for any issues so trialable.
<PAGE>
Medical Industries of America, Inc.
Page 3
Very truly yours,
Date:____________________, 1999 ______________________________________
Signature
Name: John E. Haines
Title: President and Chief Executive
Officer
Date:____________________, 1999 ______________________________________
Signature
Name: Stephen R. Ratzel
Title: Chief Operating Officer
Date:____________________, 1999 ______________________________________
Signature
Name: J. David Richey
Title: Vice President
