EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger is entered into as of November 17, 1997
among INTERNATIONAL NURSING SERVICES, INC., a Colorado corporation
(collectively with its subsidiaries, the ACompany@), CYMEDIX LYNX CORPORATION,
a Colorado corporation wholly owned by the Company (the AMerger Sub@) and
CYMEDIX CORPORATION, a California corporation (ACymedix@).
PRELIMINARY STATEMENt
1. The Company and Cymedix are parties to a letter of intent dated
July 23, 1997 (the ALetter of Intent@) outlining the proposed terms and
conditions for the merger (the AMerger@) of Cymedix with and into the Merger
Sub and providing for a series of convertible loans (the ABridge Loans@) from
the Company to Cymedix pending implementation of the Merger. The Merger Sub
will be the surviving corporation in the Merger, and the operations of Cymedix
will be conducted through the Merger Sub following the Merger.
2. As a result of the Merger, (a) the outstanding capital stock of
Cymedix will be converted into common stock, $.001 par value, of the Company
(ACompany Common Stock@), (b) the outstanding stock options and convertible
debt of Cymedix will be exercisable for or convertible into Company Common
Stock and (c) the Merger Sub will succeed to all the assets and liabilities of
Cymedix. The Merger is intended to be treated as a reorganization under
section 368(a) of the Internal Revenue Code of 1986, as amended (the ACode@).
3. Pursuant to the Merger, a total of 6,980,000 shares of Company
Common Stock (the AMerger Shares@) will be issued in exchange for the capital
stock of Cymedix issued and outstanding at the time off the Merger or reserved
for issuance upon the exercise of outstanding stock options assumed in the
Merger. The total number of Merger Shares will not be affected by (a) any
exercise of those stock options before or after the Merger or (b) any
fluctuations in the market price of Company Common stock prior to the Merger.
4. The boards of directors of the Company (the ACompany Board@) and
the Merger Sub (the AMerger Sub Board@) have unanimously approved this
Agreement, and the Company has determined that no approval by its shareholders
is required for consummation of the Merger.
5. The board of directors of Cymedix (the ACymedix Board@) has
unanimously approved this Agreement and recommended its approval and adoption
by the shareholders of Cymedix, voting as separate classes, by written consent
to be solicited by the Cymedix Board as promptly as practicable after the date
hereof.
6. The Merger will be effected pursuant to separate certificates of
merger (the ACertificates of Merger@) reflecting the terms of the Merger
provided herein and all provisions required by applicable law.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants and conditions provided herein, the parties hereto agree
as follows:
ARTICLE I DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement and the Schedules hereto,
the following terms have the respective meanings set forth below:
Affiliate means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by or is under common control
with the Person in question.
Agreement means this Agreement and Plan of Merger, as amended from time
to time in accordance with Section 8.1.
Benefit Plans means Aemployee pension benefit plans,@ as defined in
section 3(2) of ERISA (APension Plans@), Aemployee welfare benefit plans,@ as
defined in section 3(1) of ERISA, bonus, stock option, stock purchase, phantom
stock and other equity, deferred compensation plans or arrangements and other
employee fringe benefit plans.
Bridge Loans means the convertible loans that the Company has advanced
and undertaken to advance to Cymedix during the Bridge Period in the aggregate
principal amount of up to $297,500 in accordance with Section 6.1.
Bridge Loan Commitment means the Company=s obligation to make the
Bridge Loans.
Bridge Loan Funding Schedule has the meaning set forth in Section
6.1(a).
Bridge Notes means the convertible promissory notes issued and to be
issued by Cymedix to evidence the Bridge Loans in the form annexed as Exhibit
A to the Letter of Intent.
Bridge Period means the period of up to 145 days from July 23, 1997
through the Effective Date, during which the Company has undertaken to provide
the Bridge Loans to Cymedix.
California Act means the California General Corporation Law, as
amended.
Certificates of Merger means the articles or certificates of merger
relating to the Merger, to be prepared and filed in accordance with the laws
of the States of Colorado and California.
Code means the Internal Revenue Code of 1986, as amended.
Closing has the meaning set forth in Section 2.1(b).
Colorado Act means the Colorado Business Corporation Act, as amended.
Common Exchange Rate has the meaning set forth in Section 2.2(b)(iii).
Company means International Nursing Services, Inc., a Colorado
corporation. Unless the context otherwise requires, all references to the
Company in this Agreement also include all of its Subsidiaries.
Company Board means the board of directors of the Company.
ACompany Balance Sheet@ means the consolidated balance sheet of the Company
set forth in its most recent SEC Document filed prior to the date hereof on
Form 10-KSB or Form 10-QSB.
Company Common Stock means the common stock, $.001 par value, of the
Company.
Company Contracts has the meaning set forth in Section 5.9.
Company Intellectual Property has the meaning set forth in Section 5.8.
Company Preferred Stock means preferred stock, $1.00 par value, of the
Company.
Company Termination Event has the meaning set forth in Section 8.2(a).
Competing Proposal means an unsolicited, bona fide written proposal to
the Cymedix Board, Cymedix or its shareholders that is not conditioned upon
obtaining financing and provides for greater value to the shareholders of
Cymedix than the consideration contemplated by the Merger.
Competing Transaction means any merger, sale of assets or similar
transaction involving Cymedix, other than the Merger, or other transaction the
consummation of which could be expected to impede, delay, interfere with,
prevent or dilute the benefits of the Merger to the Company.
Confidential Information means, with respect to each party, (a) all
information concerning the business and affairs of that party, including
financial information, business plans and strategies, technology, proprietary
information, know-how, formulae, products, methods and operational information
and techniques, (b) any information that the party is required by applicable
law to preserve in confidence and (c) any other information reasonably
identified by a party to the other party as confidential, but excluding (i)
information known by the other party or generally available to the healthcare
industry or in the public domain, (ii) information that was independently
developed by the other party without the use of the first party=s Confidential
Information and (iii) information rightfully provided by a third party without
continuing restrictions on its use.
Cymedix means Cymedix Corporation, a California corporation.
Cymedix Board means the board of directors of Cymedix.
Cymedix Budget means the Marketing Rollout Budget heretofore delivered
by Cymedix to the Company.
Cymedix Balance Sheet has the meaning set forth in Section 4.6(b).
Cymedix Common Stock means the common stock, no par value, of Cymedix.
Cymedix Contracts has the meaning set forth in Section 4.9.
Cymedix Intellectual Property has the meaning set forth in Section 4.8.
Cymedix Option Plans means the Nonqualified Stock Option Plans adopted
by Cymedix in 1996 and 1997.
Cymedix Preferred Stock means Cymedix Series A Preferred Stock and
Cymedix Series B Preferred Stock, collectively.
Cymedix Series A Preferred Stock means the series A preferred stock, no
par value, of Cymedix.
Cymedix Series B Preferred Stock means the series B preferred stock, no
par value, of Cymedix.
Cymedix Stock Options means stock options issued under the Cymedix
Option Plans and outstanding as of the date of this Agreement.
Cymedix Termination Event has the mean set forth in Section 8.2(b).
Diligence Period means the portion of the Bridge Period ending ten days
after the date of this Agreement.
Effective Date has the meaning set forth in Section 1.1.
Employment Agreements has the meaning set forth in Section 6.9.
Environmental Laws means any and all applicable treaties, laws,
regulations, enforceable requirements, binding determinations, orders,
decrees, judgments, injunctions, permits, approvals, authorizations, licenses,
variances, permissions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority relating to the environment,
including the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of
1986 (CERCLA), 42 U.S.C. 9601 et seq., the Federal Water Pollution
-- ----
Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. 1251 et
--
seq., Clean Air Act of 1970, as amended, 42 U.S.C. 7401 et seq., the Toxic
--- -- ----
Substances Control Act of 1976, 15 U.S.C. 2601 et seq., the Occupational
-- ----
Safety and Health Act of 1970, as amended, 29 U.S.C. 651 et seq., the
-- ----
Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. 11001
et seq., and any similar or implementing state or local law, and all
-- ----
amendments or regulations promulgated thereunder. As used in this Agreement,
-- ----
the term AHazardous Materials@ means all materials or chemicals regulated
pursuant to any Environmental Law.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Exchange Agent means American Stock Transfer & Trust Company, Inc., a
Colorado banking corporation that also serves as transfer agent for the
Company Common Stock.
Global Note means the convertible promissory note in the principal
amount of $250,000 issued by Cymedix to Global Med Technologies, Inc.
Governmental Authority means any federal, state, local or foreign
government or any court of competent jurisdiction, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign.
Holders has the meaning set forth in Section 6.10(a).
Letter of Intent means the letter from the Company to the Cymedix Board
dated July 23, 1997 setting forth the Company=s proposal for the Merger and
the Bridge Loans.
Management Options has the meaning set forth in Section 6.9.
Material Adverse Effect means a material adverse effect on the
business, assets, condition (financial or otherwise), results of operations or
prospects of a party to this Agreement or the ability of the party to
consummate the transactions contemplated by this Agreement.
Merger means the merger of Cymedix with and into the Merger Sub on the
terms and conditions provided in this Agreement.
Merger Share Market Price means $.375, representing the average closing
price of Company Common Stock during the five trading days immediately
preceding the date hereof.
Merger Shares means a total of 6,980,000 shares of Company Common Stock
to be issued pursuant to the Merger in exchange for the capital stock of
Cymedix (a) outstanding on the Effective Date and (b) reserved for issuance
upon the exercise of Cymedix Stock Options assumed in the Merger.
Merger Sub means Cymedix Lynx Corporation, a Colorado corporation
wholly owned by the Company and organized for the purpose of effectuating the
Merger.
Merger Sub Board means the board of directors of the Merger Sub.
Old Stock Certificate has the meaning set forth in Section 3.3(a).
Optionees has the meaning set forth in Section 6.9.
Permitted Liens has the meaning set forth in Section 4.7 with respect
to Cymedix and Section 5.7 with respect to the Company.
Person means an individual, any form of business enterprise, including
a corporation, limited liability company, partnership or limited partnership,
and any other juridical entity or its representative, including a trust,
trustee, estate, custodian, administrator, personal representative, nominee or
any other entity acting on its own behalf or in a representative capacity.
Predecessor Entity means a Person to which another Person is a
successor issuer for purposes of Rule 12g-3 under the Exchange Act.
Registration Statement has the meaning set forth in Section 6.10(a).
Reserved Merger Shares has the meaning set forth in Section 2.2(c).
SEC means the United States Securities and Exchange Commission.
SEC Documents has the means set forth in Section 5.6.
Securities Act means the Securities Act of 1933, as amended.
Series A Preferred Exchange Rate has the meaning set forth in Section
2.2(b)(i).
Series B Preferred Exchange Rate has the meaning set forth in Section
2.2(b)(ii).
Subsidiary means each Person of which (a) a majority of the voting
power of the voting equity securities or equity interest is owned, directly or
indirectly, by another Person.
Tax or Taxes means all federal, state, local and foreign taxes and
assessments, including all interest, penalties and additions imposed with
respect thereto.
1.2 CONSTRUCTION. Whenever the context requires, the gender of all
words used in this Agreement includes the masculine, feminine and neuter.
Unless otherwise expressly provided herein, all references to Articles,
Sections and Schedules refer to articles, sections and schedules of or to this
Agreement. All Schedules are hereby incorporated in and made a part of this
Agreement as if set forth in full herein. The headings and captions in this
Agreement and the Schedules are for convenience and identification only and
are in no way intended to define, limit or expand the scope and intent of this
Agreement or any provision hereof.
ARTICLE II C THE MERGER
2.1 FILING OF CERTIFICATES OF MERGER AND CLOSING. (a) The Merger
will become effective on the date the Certificates of Merger are filed with
the Secretaries of State of the States of Colorado and California in
accordance with applicable law or any subsequent date specified in the
Certificates of Merger as the effective date of the Merger (the Effective
Date). The Certificates of Merger will be filed as promptly as practicable
after the receipt of the requisite consents by the shareholders of Cymedix,
provided that the conditions set forth in Article VII have been satisfied or
waived where permitted.
(b) The closing of the transactions contemplated by this Agreement
(the Closing) will be held at the offices of the Company, 000 Xxxxx Xxxxxxxx
Xxxxxx - Xxxxx 000, Xxxxxx, Xxxxxxxx 00000-0000, or at any alternative
location designated by the parties hereto.
2.2 THE MERGER. (a) On the Effective Date, Cymedix will merge with
and into the Merger Sub, and the separate existence of Cymedix will cease.
The Merger Sub will be the surviving entity in the Merger and will continue to
be governed by the laws of the State of Colorado. The Certificate of
Incorporation and Bylaws of the Merger Sub in effect as of the Effective Date
will not be affected by the Merger and will be the Certificate of
Incorporation and Bylaws of the surviving corporation.
(b) On the Effective Date, without any action on the part of the
holders thereof, the capital stock of Cymedix issued and outstanding
immediately prior to the Effective Date will be converted into the right to
receive Company Common Stock as follows:
(i) Series A Preferred Exchange Rate. Each share of Cymedix Series A
--------------------------------
Preferred Stock will be converted into 15,200 Merger Shares (the Series A
Preferred Exchange Rate). The Series A Preferred Exchange Rate was
determined by dividing (A) $5,700.00, representing the estimated liquidation
value of each share of Cymedix Series A Preferred Stock on the Effective Date,
by (B) the Merger Share Market Price.
(ii) Series B Preferred Exchange Rate. Each share of Cymedix Series
--------------------------------
B Preferred Stock will be converted into 6.0267 Merger Shares (the Series B
Preferred Exchange Rate). The Series B Preferred Exchange Rate was
determined by dividing (A) $2.26, representing the estimated liquidation value
of each share of Cymedix Series B Preferred Stock on the Effective Date, by
(B) the Merger Share Market Price.
(iii) Common Exchange Rate. Each share of Cymedix Common Stock will
--------------------
be converted into the number of Merger Shares (the Common Exchange Ratio) to
be determined as of the Effective Date by dividing (A) the number of Merger
Shares remaining after deducting therefrom the Merger Shares issuable in the
Merger in exchange for the Cymedix Series A Preferred Stock and Cymedix Series
B Preferred Stock issued and outstanding at the Effective Date by (B) the
total number of shares of Cymedix Common Stock outstanding on the Effective
Date and issuable upon exercise of Cymedix Stock Options outstanding on the
Effective Date.
(c) After the Effective Date, any Cymedix Stock Options that remain
unexercised on the Effective Date will be exercisable for Merger Shares (the
Reserved Merger Shares) based on the Common Exchange Rate, as provided in
Section 6.7(a). Insofar as (i) the Global Note to be assumed in the Merger is
not convertible into Cymedix Common Stock in the absence of a payment default
thereon and (ii) the Company cannot convert the Bridge Notes if the Merger is
consummated, the shares of Cymedix Common Stock issuable upon conversion of
those instruments are not included in the Reserved Merger Shares.
(d) The shareholders of Cymedix will not be entitled to fractional
Merger Shares as a result of the Merger, and the holders of Cymedix Stock
Options that remain unexercised on the Effective Date will not be entitled to
any fractional Reserved Merger Shares upon exercise thereof. Any fractional
share of Company Common Stock that may result from the application of the
exchange rates in Section 2.2(b) shall be rounded up or down to the nearest
whole Merger Share, and any fractional share of Company Common Stock that may
result from the application of the exchange rates in Section 2.2(c) shall be
rounded up or down to the nearest whole Reserved Merger Share.
(e) The Merger shall have all the other effects provided by the
Colorado Act and the California Act.
2.3 CHANGE IN STRUCTURE OF MERGER. If the parties determine after
the date hereof that a change in the structure of the Merger is necessary or
desirable to make the transaction tax free to shareholders of Cymedix or to
comply with applicable law, the parties shall cooperate in making those
changes in this Agreement, the Certificates of Merger and other documents
contemplated hereby and in taking any other actions required to effectuate
those changes, subject to the requirements of Section 8.1.
2.4 DISSENTERS' RIGHTS. Shareholders of Cymedix who object to the Merger
will have the dissenters= rights provided in the California Act, subject to
the Company=s right to abandon the Merger under Section 8.2(a)(i) in the event
any dissenting shareholder of Cymedix seeks to perfect their dissenters=
rights.
ARTICLE III EXCHANGE OF CERTIFICATES
3.1 CONVERSION AGENT. Prior to the Effective Date, Cymedix will
continue to act as conversion agent for the Cymedix Preferred Stock, and the
holders shall retain their right to convert their Cymedix Preferred Stock into
Cymedix Common Stock until the Effective Date. After the Effective Date,
those conversion rights will terminate, and holders of Cymedix Preferred Stock
who have not timely exercised their conversion rights will be entitled to
receive Merger Shares based solely on the Series A Preferred Exchange Rate or
Series B Preferred Exchange Rate, as applicable.
3.2 EXCHANGE AGENT On or before the Effective Date, the Company will
deposit with the Exchange Agent, for the benefit of the shareholders of
Cymedix, certificates representing the Merger Shares issuable to them in the
Merger.
3.3 EXCHANGE PROCEDURES. (a) After the Effective Date, each holder
of a certificate that represented Cymedix Common Stock or Cymedix Preferred
Stock prior to the Effective Date (each, an Old Stock Certificate), upon
surrender of the Old Stock Certificate to the Exchange Agent, will be entitled
to receive in exchange therefor one or more certificates representing the
number of Merger Shares that the holder has the right to receive in the
Merger.
(b) Old Stock Certificates surrendered for exchange shall be
cancelled upon receipt by the Exchange Agent. Until surrendered and
exchanged, each Old Stock Certificate shall be deemed for all purposes after
the Effective Date to evidence ownership of the number of Merger Shares into
which the shares of Cymedix Common Stock or Cymedix Preferred Stock
represented by the Old Stock Certificate have been converted under Section
2.2(b). All Merger Shares into which the Cymedix Common Stock or Cymedix
Preferred Stock have been converted in the Merger shall be deemed for all
purposes to have been issued by the Company on the Effective Date.
(c) If a certificate representing Merger Shares is to be issued in a
name other than the name of the registered holder of the Old Stock Certificate
surrendered in exchange therefor, it will be a condition to the issuance
thereof that the surrendered Old Stock Certificate be properly endorsed and
that the holder requesting the exchange pay the Exchange Agent any transfer or
other taxes required by reason thereof or establish to the satisfaction of the
Exchange Agent that those taxes have been paid or are not payable.
(d) After the Effective Date, there shall be no further registration
of transfers of Cymedix Common Stock or Cymedix Preferred Stock. Old Stock
Certificates presented for transfer after the Effective Date shall be deemed
to be submitted for exchange in accordance with this Article III and transfer
in accordance with the transfer instructions therefor.
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF CYMEDIX
Cymedix hereby represents and warrants to the Company as follows:
4.1 ORGANIZATION AND STANDING. Cymedix (a) was duly incorporated in
the State of California under the name MedSoft OnLine, Inc. in November 1995,
(b) is validly existing and in good standing as a corporation under the laws
of the State of California, (c) has full corporate power and authority and
possesses all governmental franchises, licenses, permits, authorizations and
approvals necessary to enable it to own, lease or otherwise hold its
properties and assets and to carry on its business as presently conducted and
(d) is duly qualified and in good standing to do business as a foreign
corporation in each jurisdiction in which the conduct or nature of its
business or the ownership, leasing or holding of its properties makes such
qualification necessary, except jurisdictions where the failure to be so
qualified or in good standing, individually or in the aggregate, would not
have a Material Adverse Effect. Cymedix has no Subsidiaries or Predecessor
Entities.
4.2 AUTHORITY. Cymedix has all requisite corporate power and
authority to enter into this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby. All corporate acts
and other proceedings required to be taken by Cymedix to authorize the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly and properly taken. This
Agreement has been duly executed and delivered by Cymedix and constitutes the
legal, valid and binding obligation of Cymedix, enforceable against Cymedix in
accordance with its terms.
4.3 NO CONFLICTS; CONSENTS. Except as set forth in Schedule 4.3, the
------------
execution and delivery of this Agreement by Cymedix does not, and the
consummation of the transactions contemplated hereby and compliance with the
terms hereof will not conflict with or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation, repurchase, redemption or acceleration of
any obligation or to loss of a material benefit to Cymedix under, or to any
increased, additional, accelerated or guaranteed rights or entitlements of any
Person other than Cymedix under, or result in the creation of any lien, claim,
encumbrance, security interest, option, charge or restriction of any kind upon
any of the properties or assets of Cymedix under any provision of (a) the
Certificate of Incorporation or Bylaws of Cymedix, (b) any note, bond,
mortgage, indenture, deed of trust, license, lease, contract, commitment,
agreement or arrangement to which Cymedix is a party or by which any of its
properties or assets is bound or (c) any judgment, order or decree, or
statute, law, ordinance, rule or regulation applicable to Cymedix or its
properties or assets. Except for the filing of the Certificates of Merger in
the offices of the Secretaries of State of the States of Colorado and
California, no consent, approval, license, permit, order or authorization of,
or registration, declaration or filing with, any Governmental Authority is
required to be obtained or made by or with respect to Cymedix in connection
with (i) the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby or (ii) the operations of
the Merger Sub following the Effective Date as conducted on the date hereof,
other than filings under Section 13 of the Exchange Act.
4.4 BOOKS AND RECORDS. Cymedix has heretofore delivered to the
Company true and complete copies of its Certificate of Incorporation and
Bylaws, each as amended to date, and minute books, including its stock
certificate ledger and stock transfer books.
4.5 CAPITAL STOCK. The authorized capital stock of Cymedix consists
of 5,000,000 shares of Cymedix Common Stock, of which 853,285 shares are
issued and outstanding on the date hereof, and 500,000 shares of Cymedix
Preferred Stock, of which (a) 50 shares of Cymedix Series A Preferred Stock
and 138,711 shares of Cymedix Series B Preferred Stock are issued and
outstanding on the date hereof and (b) 361,239 undesignated shares are
authorized and unissued on the date hereof. All the outstanding shares of
capital stock of Cymedix have been duly authorized and validly issued and are
fully paid and nonassessable. Neither any Cymedix Common Stock nor any
Cymedix Preferred Stock has been issued in violation of or is subject to any
purchase option, call, right of first refusal, preemptive, subscription or
similar rights under any provision of applicable law, the Certificate of
Incorporation or Bylaws of Cymedix or any contract, agreement or instrument to
which Cymedix is subject, bound or a party or otherwise. Except as set forth
in Schedule 4.5, there are no outstanding warrants, options, rights, phantom
------------
stock rights, agreements, convertible or exchangeable securities or other
instruments or commitments (i) pursuant to which Cymedix is or may become
obligated to issue, sell, purchase, return or redeem any shares of its capital
stock or other securities or (ii) that give any Person the right to receive
any benefits or rights similar to any rights enjoyed by or accruing to the
holders of shares of capital stock or other interests of Cymedix. There are
no outstanding bonds, debentures, notes or other indebtedness having the right
to vote on any matters on which shareholders of Cymedix may vote. Cymedix
acknowledges its obligation under Section 6.2(b) to update its representations
in this Section 4.5 and Schedule 4.5 from time to time as required to account
------------
for any exercise or conversion of its outstanding securities that are
exercisable for or convertible into shares of Cymedix Common Stock prior to
the Effective Date.
4.6 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. (a) The
unaudited financial statements of Cymedix for the year ended December 31, 1996
and the six months ended June 30, 1997 heretofore delivered to the Company
comply as to form in all material respects with applicable accounting
requirements, were prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto) and fairly present the financial
position of Cymedix as of the dates thereof and its results of operations for
the periods then ended (subject, in the case of interim statements, to normal
year-end adjustments).
(b) Cymedix does not have any material liabilities or obligations of
any nature (whether accrued, absolute, contingent, unasserted or otherwise),
except (i) as disclosed, reflected or fully reserved against in its balance
sheet as of June 30, 1997 (the Cymedix Balance Sheet) and the notes thereto,
(ii) for items set forth in Schedule 4.6, (iii) for liabilities and
-------------
obligations incurred in the ordinary course of business consistent with past
practice since the date of the Balance Sheet and not in violation of this
Agreement and (iv) for Taxes.
(c) Except as set forth in Schedule 4.6, (i) Cymedix and any
------------
affiliated group, within the meaning of Code section 1504, of which Cymedix is
or has been a member, has filed or caused to be filed in a timely manner
(within any applicable extension periods) all material Tax returns, reports
and forms required to be filed by the Code or by applicable state, local or
foreign tax laws, (ii) all Taxes required to be paid by Cymedix have been
timely paid in full and all Taxes for current periods are adequately provided
for, and (iii) no tax liens have been filed and no material claims are being
asserted in writing with respect to any Taxes. The federal income tax returns
filed by Cymedix have never been examined by the Internal Revenue Service.
(d) Except as set forth in Schedule 4.6, there are no outstanding
------------
agreements or waivers extending the statutory period of limitation applicable
to any material Tax returns required to be filed with respect to Cymedix, and
neither Cymedix nor any affiliated group, within the meaning of Code section
1504, of which Cymedix is or has been a member has requested any extension of
time within which to file any material Tax return that remains unfiled as of
the date hereof.
(e) Cymedix is not a United States real property holding corporation
within the meaning of Code section 897.
4.7 ASSETS. (a) Cymedix has good and valid title to all assets
reflected on the Cymedix Balance Sheet or thereafter acquired, except those
sold or otherwise disposed of for fair value since the date of the Cymedix
Balance Sheet in the ordinary course of business consistent with past practice
and not in violation of this Agreement, in each case free and clear of all
mortgages, liens, security interests or encumbrances of any kind except (i) as
set forth in Schedule 4.7, (ii) mechanics, materialmens, carriers, workmens,
------------
repairmens or other like liens arising or incurred in the ordinary course of
business, liens arising under original purchase price conditional sales
contracts and equipment leases with third parties entered into in the ordinary
course of business and liens for Taxes that are not due and payable or that
may be paid without penalty, (iii) mortgages, liens, security interests and
encumbrances that secure debt reflected as a liability on the Cymedix Balance
Sheet and the existence of which is indicated in the notes thereto and (iv)
other imperfections of title or encumbrances, if any, that do not,
individually or in the aggregate, materially impair the continued use and
operation of the assets to which they relate in the business of Cymedix as
presently conducted (the mortgages, liens, security interests, encumbrances
and imperfections of title described in clauses (ii), (iii) and (iv) above are
hereinafter referred to in this Article IV as Permitted Liens).
(b) All the material tangible personal property of Cymedix has been
maintained in all material respects in accordance with good commercial
practices. Each item of material tangible personal property of Cymedix is in
all material respects in good operating condition and repair, ordinary wear
and tear excepted. All leased personal property of Cymedix is in all material
respects in the condition required by the terms of the applicable lease during
the term of the lease and upon the expiration thereof.
4.8 INTELLECTUAL PROPERTY. Schedule 4.8 sets forth a true and
------------
complete list of (a) all patents and patent applications, including the
status, registration or application numbers thereof, (b) all trademarks
(registered or unregistered), including a list of all jurisdictions in which
they are registered or applied for and all registration and application
numbers thereof, (c) all service marks and copyrights and applications
therefor and (d) all other material intellectual property and proprietary
rights, whether or not subject to statutory registration or protection
(collectively, Cymedix Intellectual Property), owned, used, filed by or
licensed to Cymedix. Except as set forth in Schedule 4.8, Cymedix owns and
------------
has the right to use, execute, reproduce, display, perform, modify, enhance,
distribute, prepare derivative works of and sublicense, without payment to any
other person, all Cymedix Intellectual Property, and the consummation of the
transactions contemplated hereby will not conflict with, alter or impair any
of those rights. Cymedix has not granted any options, licenses or agreements
of any kind relating to the Cymedix Intellectual Property or the marketing or
distribution thereof, except for nonexclusive licenses to end users in the
ordinary course of business or as otherwise indicated in Schedule 4.8. Except
------------
as set forth in Schedule 4.8, Cymedix is not bound by or a party to any
-------------
options, licenses or agreements of any kind relating to the Cymedix
Intellectual Property. Subject to the rights of third parties set forth in
Schedule 4.8, all Cymedix Intellectual Property is free and clear of any third
----------
party claims and all liens, security interests and encumbrances whatsoever,
other than Permitted Liens. The conduct of the business of Cymedix as
presently conducted does not violate, conflict with or infringe the
intellectual property rights of any other Person. Except as set forth in
Schedule 4.8, (i) no claims are pending or, to the knowledge of Cymedix,
---------
threatened, against Cymedix by any Person with respect to the ownership,
-
validity, enforceability, effectiveness or use of any Cymedix Intellectual
-
Property and (ii) since its inception, Cymedix has not received any
communications alleging that it has violated any rights relating thereto.
4.9 CONTRACTS. (a) Except as set forth in Schedule 4.9, Cymedix is
------------
not a party to or bound by any of the following:
(i) employment or consulting agreement that has an aggregate future
liability in excess of $10,000 and is not terminable by Cymedix upon notice of
not more than 60 days for a cost of less than $5,000;
(ii) employee collective bargaining agreement or other contract with
any labor union;
(iii) covenant of Cymedix not to compete or otherwise restricting the
operations of Cymedix;
(iv) agreement, contract or other arrangement with any current or
former officer, director or employee of Cymedix or any Affiliate of Cymedix
other than employment and consulting agreements covered by clause (i) above;
(v) lease or similar agreement with any person under which (A)
Cymedix is lessee of or holds or uses any machinery, equipment, vehicle or
other tangible personal property owned by any other Person or (B) Cymedix is a
lessor or sublessor of, or makes available for use by any other Person, any
tangible personal property owned or leased by Cymedix, which in any case or in
the aggregate have a total future liability or receivable, as the case may be,
in excess of $10,000 and are not terminable by Cymedix upon notice of not more
than 60 days for a cost of less than $10,000;
(vi) (A) continuing contract for the future purchase of materials,
supplies or equipment, (B) management, service, consulting or other similar
type of contract or (C) advertising agreement or arrangement, which in any
case or in the aggregate have a total future liability in excess of $10,000
and are not terminable by Cymedix upon notice of not more than 60 days for a
cost of less than $10,000;
(vii) material license, option or other agreement relating in whole
or in part to (A) the Cymedix Intellectual Property, including any license or
other agreement under which Cymedix is licensee or licensor thereof, or (B)
trade secrets, confidential information or other proprietary rights and
processes of Cymedix;
(viii) agreement, contract or other instrument under which Cymedix has
borrowed any money from, or issued any note, bond, debenture or other evidence
of indebtedness to, any other Person that in any individual case is in excess
of $5,000;
(ix) agreement, contract or other instrument under which (A) any
Person has directly or indirectly guaranteed indebtedness, liabilities or
obligations of Cymedix or (B) Cymedix has directly or indirectly guaranteed
indebtedness, liabilities or obligations of any other Person that in any
individual case is in excess of $5,000;
(x) agreement, contract or other instrument under which Cymedix has,
directly or indirectly, made any advance, loan, extension of credit or capital
contribution to, or other investment in, any other Person that in any
individual case is in excess of $5,000;
(xi) agreement, contract or other instrument providing for
indemnification of any Person with respect to liabilities relating to any
current or former business of Cymedix; or
(xii) other agreement, contract or other instrument to which Cymedix
is a party or by or to which it or any of its assets or business is bound or
subject that has an aggregate future liability to any other Person in excess
of $10,000 and is not terminable by Cymedix upon notice of not more than 60
days for a cost of less than $10,000.
(b) Except as set forth in Schedule 4.9, all agreements, contracts or
------------
other instruments of Cymedix listed or required to be listed in the Schedules
hereto (collectively, the Cymedix Contracts) are valid, binding and in full
force and effect and are enforceable by Cymedix in accordance with its terms.
Except as set forth in Schedule 4.9, Cymedix has performed all material
-------------
obligations required to be performed by it to date under the Cymedix Contracts
and it is not in breach or default in any material respect thereunder (with or
without the lapse of time or the giving of notice, or both) nor has any other
party to any of the Cymedix Contracts notified Cymedix of that party=s belief
that Cymedix is or is likely to become in breach or default in any material
respect thereunder or of that party=s intention to accelerate or modify in a
manner adverse to Cymedix any of its obligations or rights thereunder and, to
the knowledge of Cymedix, no other party to any of the Cymedix Contracts is in
breach or default in any material respect thereunder (with or without the
lapse of time or the giving of notice, or both).
4.10 LITIGATION. Schedule 4.10 sets forth a list of all pending
--------------
lawsuits or claims against or affecting Cymedix or any of its properties,
assets, operations or business and which (a) relate to or involve more than
$5,000, (b) seek any material injunctive relief or (c) relate to the
transactions contemplated by this Agreement. Except as set forth in Schedule
--------
4.10, (i) none of the lawsuits or claims listed therein as to which there is
----
at least a reasonable possibility of adverse determination could have, if so
determined, individually or in the aggregate, a Material Adverse Effect, (ii)
Cymedix is not a party or subject to or in default under any judgment, order,
injunction or decree of any Governmental Authority or arbitration tribunal
applicable to it or any of its properties, assets, operations or business,
(iii) there is no lawsuit or claim by Cymedix pending, or which Cymedix
intends to initiate, against any other Person and (iv) to the knowledge of
Cymedix, there is no pending or threatened investigation of or affecting
Cymedix by any Governmental Authority.
4.11 INSURANCE. Cymedix maintains policies of fire and casualty,
liability and other forms of insurance in amounts, with deductibles and
against risks and losses that are, in its judgment, reasonable for the
business and assets of Cymedix. The insurance policies maintained with
respect to Cymedix and its assets and properties are listed in Schedule 4.11.
-------------
Except as set forth in Schedule 4.11, all of the policies listed therein are
-------------
in full force and effect, all premiums due and payable thereon have been paid
(other than retroactive or retrospective premium adjustments that are not yet,
but may be, required to be paid with respect to any period ending prior to the
Effective Date under comprehensive general liability and workmen=s
compensation insurance policies), and no notice of cancellation or termination
has been received with respect thereto. To the knowledge of Cymedix, its
activities and operations have been conducted in a manner conforming in all
material respects to all applicable provisions of its insurance policies.
4.12 BENEFIT PLANS. (a) Schedule 4.12 sets forth a list and brief
--------------
description of all Benefit Plans maintained or contributed to by Cymedix for
the benefit of any of its officers or other employees. Cymedix has heretofore
delivered to the Company true, complete and correct copies of (i) each Benefit
Plan, (ii) the most recent annual report on Form 5500 filed with the Internal
Revenue Service with respect to each Benefit Plan (if required), (iii) the
most recent summary plan description for each Benefit Plan for which a summary
plan description is required and (iv) each trust agreement, group annuity
contract and other financing and funding arrangement relating to any Benefit
Plan.
(b) Each Benefit Plan maintained or contributed to by Cymedix has
been administered in all material respects in accordance with its terms.
Cymedix and all of its Benefit Plans are in compliance in all material
respects with the applicable provisions of ERISA and the Code. All material
reports, returns and similar documents with respect to the Benefit Plans
required to be filed with any Governmental Authority or distributed to any
Benefit Plan participant have been duly and timely filed or distributed.
There are no lawsuits, actions, termination proceedings or other proceedings
pending or, to the knowledge of Cymedix, threatened against or involving any
of its Benefit Plans and, to the knowledge of Cymedix, there are no
investigations by any Governmental Authority or other claims (except claims
for benefits payable in the normal operation of the Benefit Plans) pending or
threatened against or involving any of its Benefit Plans or asserting any
rights to benefits under any Benefit Plan that individually or in the
aggregate would have a Material Adverse Effect. To the knowledge of Cymedix,
there are no unasserted claims pending or threatened that if asserted would
have at least a reasonable possibility of an adverse determination.
(c) With respect to all Benefit Plans maintained or contributed to by
Cymedix, (i) all contributions to and payments from the Benefit Plans required
thereby or by ERISA section 302 or Code section 412 have been timely made,
(ii) there has been no application for or waiver of the minimum funding
standards imposed by Code section 412 and (iii) no Pension Plan has an
Aaccumulated funding deficiency@ within the meaning of Code section 412(a) as
of the most recent plan year.
(d) No prohibited transaction, as defined in Code section 4975 or
ERISA section 406, has occurred that involves the assets of any Benefit Plan
and that could subject Cymedix or any of its employees or, to the knowledge
of Cymedix, a trustee, administrator or other fiduciary of any trusts created
under any of its Benefit Plans to the tax or penalty on prohibited
transactions imposed by ERISA section 4975 or the sanctions imposed under
Title I of ERISA. No Pension Plan maintained by Cymedix has been terminated,
nor has there been any reportable event, as defined in ERISA section 4043
and the regulations thereunder, with respect thereto. Neither Cymedix nor any
trustee, administrator or other fiduciary of any of its Benefit Plans nor any
agent of any of the foregoing has engaged in any transaction or acted or
failed to act in a manner that could subject Cymedix to any liability for
breach of fiduciary duty under ERISA or any other applicable law.
(e) At no time since its inception has Cymedix (i) been required to
contribute to any Amultiemployer plan,@ as defined in ERISA section
4001(a)(3), for the benefit of any of its officers or other employees of
Cymedix, (ii) incurred any withdrawal liability, within the meaning of ERISA
section 4201, with respect to any that multiemployer plan, which liability has
not been fully paid as of the date hereof, or (iii) announced an intention to
withdraw, but not yet completed such withdrawal, from that multiemployer plan.
If Cymedix were to make a complete withdrawal from any multiemployer plan,
within the meaning of ERISA section 4203, the withdrawal liability would not
exceed $10,000 in the aggregate.
(f) With respect to any Benefit Plan of Cymedix that is an employee
welfare benefit plan, except as disclosed in Schedule 4.12, (i) it is not
-------------
unfunded or funded through a welfare benefits fund, as defined in Code section
419(e), (ii) it organized as a group health plan, as defined in Code section
5000(b)(1), it complies in all material respects with the applicable
requirements of Code section 4980B(f) and (iii) it may be amended or
terminated without material liability to Cymedix.
(g) Cymedix has no current or projected liability or contingent
obligation in respect of medical or other benefits for its retired or former
employees.
(h) Except as set forth in Schedule 4.12, (i) no employee or former
-------------
employee of Cymedix will become entitled to any bonus, retirement, severance,
job security or similar benefit or any enhanced benefit solely as a result of
the transactions contemplated hereby, alone or in conjunction with any other
events or occurrences, and (ii) no amount payable to any employee under any
Benefit Plan or other arrangement of Cymedix will fail to be deductible by
reason of Code section 280G.
(i) Cymedix has not (i) engaged in a transaction described in ERISA
section 4069 that could subject it to liability at any time after the date
hereof or (ii) engaged in any act or omission that could result in fines,
penalties, taxes or related charges under ERISA.
(j) No compensation payable by Cymedix to any of its employees under
any existing contract, Benefit Plan or other employment arrangement or
understanding (including by reason of the transactions contemplated hereby)
would be subject to disallowance under Code section 162(m).
4.13 ABSENCE OF CHANGES OR EVENTS. Except as set forth in Schedule
--------
4.13, (i) since the date of the Cymedix Balance Sheet, there has not occurred
any event or events or arisen any change of affairs that, individually or in
the aggregate, has had or could have a Material Adverse Effect, (ii) since the
date of the Cymedix Balance Sheet, the business of Cymedix has been conducted
in the ordinary course and in substantially the same manner as previously
conducted, (iii) Cymedix has made all reasonable efforts consistent with past
practices to adhere to the Cymedix Budget and preserve its relationships with
customers, suppliers and others with whom it deals, and (iv) from the date of
the Cymedix Balance Sheet, Cymedix has not taken any action that, if taken
after the date of this Agreement, would constitute a breach of any of its
covenants set forth herein.
4.14 COMPLIANCE WITH APPLICABLE LAWS. (a) Except as set forth on
Schedule 4.14, Cymedix is in compliance in all material respects with all
---------
applicable statutes, laws, ordinances, rules, orders and regulations of any
Governmental Authority applicable to its business and operations, including
those relating to occupational health and safety (for purposes of this Section
4.14, Applicable Laws). Except as set forth in Schedule 4.14, Cymedix has
-------------
not received any communication since its inception from a Governmental
Authority that alleges its failure to comply in any material respect with any
Applicable Laws.
(b) Cymedix has provided the Company with all environmental reports
relating to the facilities and operations of Cymedix identified in Schedule
--------
4.14 (for purposes of this Section 4.14, Environmental Reports). Cymedix
--
has not received any oral or written communication from a Governmental
Authority that alleges its failure to comply with any Environmental Laws in
any manner that has not been finally resolved. Cymedix holds and is in
compliance with all permits, licenses and governmental authorizations required
to conduct its business under Environmental Laws. Except as set forth in
Schedule 4.14, Cymedix is in compliance with all Environmental Laws and is not
---------
subject to any judgment, decree or order relating to compliance with any
Environmental Law or to investigation or cleanup of Hazardous Materials under
any Environmental Law. Cymedix has no contingent liabilities in respect of
its business in connection with any Hazardous Materials that, individually or
in the aggregate, would have a Material Adverse Effect. Except as set forth
in Schedule 4.14, there are no aboveground or underground storage tanks on any
-------------
property of Cymedix, and all former underground storage tanks have been closed
or removed in accordance with all Environmental Laws.
4.15 EMPLOYEE AND LABOR MATTERS. Except as set forth in Schedule 4.15,
-------------
(a) there is, and since the inception of Cymedix there has been, no labor
strike, dispute, work stoppage or lockout pending or, to its knowledge,
threatened against or affecting Cymedix, (b) to its knowledge, no union
organizational campaign is in progress with respect to the employees of
Cymedix and no question exists concerning representation of its employees, (c)
Cymedix is not engaged in any unfair labor practice, (d) there is no unfair
labor practice charge or complaint pending or, to its knowledge, threatened
against Cymedix before the National Labor Relations Board, (e) there are no
pending or, to its knowledge, threatened union grievances against Cymedix that
would have a Material Adverse Effect if determined against Cymedix, (f) there
are no pending or, to its knowledge, threatened charges against Cymedix or any
current or former employee of Cymedix before the Equal Employment Opportunity
Commission or any state or local agency responsible for the prevention of
unlawful employment practices and (g) Cymedix has not received notice during
the past two years of the intent of any Governmental Authority responsible for
the enforcement of labor or employment laws to conduct an investigation of or
affecting Cymedix and, to its knowledge, no such investigation is in progress.
4.16 LICENSES; PERMITS. Cymedix has obtained all material licenses,
permits and authorizations from Governmental Authorities that are necessary or
desirable for the conduct of its business. Except as set forth in Schedule
--------
4.16, (a) all required licenses, permits and authorizations are validly held
--
by Cymedix, (b) Cymedix has complied in all material respects with all terms
and conditions thereof and (c) the same will not be subject to suspension,
modification, revocation or nonrenewal as a result of the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby.
4.17 DISCLOSURE. No representation or warranty of Cymedix contained in
this Agreement, no statement contained in any document, certificate or
Schedule and no data provided in connection with the due diligence
investigation contemplated by Section 6(a) furnished or to be furnished by or
on behalf of Cymedix to the Company or any of its representatives pursuant to
this Agreement contains or will contain any untrue statement of a material
fact or omits or will omit to state any material fact necessary, in light of
the circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading or necessary to fully and fairly
provide the information required to be provided therein. The financial
projections and other information relating to Cymedix in the Cymedix Budget
delivered to the Company were prepared on the basis of assumptions Cymedix
reasonably believed in good faith at the time of preparation to be reasonable,
and Cymedix has no knowledge of any fact or information that would lead it to
believe that those assumptions are incorrect or misleading in any material
respect.
ARTICLE V REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
The Company hereby represents and warrants to Cymedix as follows:
5.1 ORGANIZATION AND STANDING. Each of the Company and its
Subsidiaries is a corporation, limited partnership or general partnership duly
organized or formed, validly existing and in good standing under the laws of
its jurisdiction of incorporation, organization or formation, which
jurisdiction is set forth in Schedule 5.1. Each of the Company and its
-------------
Subsidiaries has full corporate or partnership power and authority and
possesses all governmental franchises, licenses, permits, authorizations and
approvals necessary to enable it to own, lease or otherwise hold its
properties and assets and to carry on its business as presently conducted.
Each of the Company and its Subsidiaries is duly qualified and in good
standing to do business as a foreign corporation or limited or general
partnership in each jurisdiction in which the conduct or nature of its
business or the ownership, leasing or holding of its properties makes that
qualification necessary, except jurisdictions where the failure to be so
qualified or in good standing, individually or in the aggregate, would not
have a Material Adverse Effect. A list of the Company=s Subsidiaries, and of
the jurisdictions in which the Company and the Subsidiaries are so qualified
is set forth in Schedule 5.1.
-------------
5.2 AUTHORITY. (a) The Company has all requisite corporate power
and authority to enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. All
corporate acts and other proceedings required to be taken by the Company to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
properly taken. This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
(b) The Merger Shares have been duly authorized by all requisite
corporate action of the Company and shall, upon issuance, be validly issued,
fully paid and nonassessable. Upon delivery to the shareholders of Cymedix of
certificates representing the Merger Shares in exchange for their Old Stock
Certificates, they will acquire good and valid title to their Merger Shares,
free and clear of any liens, claims, encumbrances, security interests,
options, charges and restrictions of any kind, other than those arising from
their own acts or omissions. Other than this Agreement, the Merger Shares are
not subject to any agreement, arrangement, commitment or understanding,
including any restriction relating to the voting, dividend rights or
disposition of the Merger Shares. No stock transfer taxes will be due in the
State of Colorado as a result of the issuance of the Merger Shares.
(c) The Company has reserved or shall reserve by the Effective Date
and shall keep reserved for issuance and delivery, out of its authorized and
unissued shares of Company Common Stock, all Reserved Merger Shares issuable
from time to time upon exercise of Cymedix Stock Options assumed in the
Merger, free and clear of any and all liens. Upon delivery to option holders
of certificates representing the Reserved Merger Shares, they will acquire
good and valid title to their Reserved Merger Shares, free and clear of any
liens, claims, encumbrances, security interests, options, charges and
restrictions of any kind, other than those arising from their own acts. The
Reserved Merger Shares are not subject to any agreement, arrangement,
commitment or understanding restricting or otherwise relating to the voting,
dividend rights or disposition of the Reserved Merger Shares, other than this
Agreement, the Cymedix Option Plans and the outstanding option agreements
thereunder. No stock transfer taxes will be due in the State of Colorado as a
result of the issuance of the Reserved Merger Shares.
(d) The Company Board has taken or shall take by the Effective Date
all action necessary to approve the issuance of the Merger Shares pursuant to
the Merger. No anti-takeover or similar statute or regulation applies or
purports to apply to the transactions contemplated by this Agreement.
5.3 NO CONFLICTS; CONSENTS. Except as set forth in Schedule 5.3, the
------------
execution and delivery of this Agreement by the Company does not, and the
consummation of the transactions contemplated hereby and compliance with the
terms hereof will not conflict with or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation, repurchase, redemption or acceleration of
any obligation or to loss of a material benefit to the Company under, or to
any increased, additional, accelerated or guaranteed rights or entitlements of
any person other than the Company under, or result in the creation of any
lien, claim, encumbrance, security interest, option, charge or restriction of
any kind upon any of the properties or assets of the Company under any
provision of (a) the Certificate of Incorporation or Bylaws of the Company,
(b) any note, bond, mortgage, indenture, deed of trust, license, lease,
contract, commitment, agreement or arrangement to which the Company is a party
or by which any of its properties or assets is bound or (c) any judgment,
order or decree, or statute, law, ordinance, rule or regulation applicable to
the Company or its properties or assets. Except for the filing of the
Certificates of Merger in the offices of the Secretaries of State of the
States of Colorado and California, no consent, approval, license, permit,
order or authorization of, or registration, declaration or filing with, any
Governmental Authority is required to be obtained or made by or with respect
to the Company in connection with (i) the execution, delivery and performance
of this Agreement or the consummation of the transactions contemplated hereby
or (ii) the operations of the Company following the Effective Date as
conducted on the date hereof, other than filings under Section 13 of the
Exchange Act.
5.4 BOOKS AND RECORDS. The Company has heretofore delivered to
Cymedix true and complete copies of its Certificate of Incorporation and
Bylaws, each as amended to date, and minute books covering all periods since
January 1, 1995.
5.5 CAPITAL STOCK. The authorized capital stock of the Company
consists of (a) 25,000,000 shares of Company Common Stock, of which 12,256,272
shares are issued and outstanding on the date hereof, (b) 488 shares of
Company Preferred Stock designated as 1996 Convertible Preferred Stock, of
which 27.5 shares are issued and outstanding on the date hereof, and (c) 300
shares of Company Preferred Stock designated as 1997 Convertible Preferred
Stock, of which 108.9 shares are issued and outstanding on the date hereof.
All the outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable. Neither
any of the Company Common Stock nor Company Preferred Stock has been issued in
violation of or is subject to any purchase option, call, right of first
refusal, preemptive, subscription or similar rights under any provision of
applicable law, the Certificate of Incorporation or Bylaws of the Company or
any contract, agreement or instrument to which the Company is subject, bound
or a party or otherwise. Except as set forth in Schedule 5.5, there are no
------------
outstanding warrants, options, rights, Aphantom@ stock rights, agreements,
convertible or exchangeable securities or other instruments or commitments (i)
pursuant to which the Company is or may become obligated to issue, sell,
purchase, return or redeem any shares of its capital stock or other securities
or (ii) that give any Person the right to receive any benefits or rights
similar to any rights enjoyed by or accruing to the holders of shares of
capital stock or other interests of the Company. There are no outstanding
bonds, debentures, notes or other indebtedness having the right to vote on any
matters on which shareholders of the Company may vote. The Company
acknowledges its obligation under Section 6.2(b) to update Schedule 5.5 from
------------
time to time as required to account for any exercise or conversion of its
outstanding securities that are convertible or exercisable for shares of
Company Common Stock prior to the Effective Date.
5.6 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. (a) The Company
and any Predecessor Entity has filed all required reports, schedules, forms,
statements and other documents with the SEC since December 31, 1992 (the SEC
Documents). As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, applicable thereto, and none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company and each Predecessor
Entity included in the SEC Documents comply 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, in the case of unaudited
statements, as permitted for use on Form 10-QSB) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present the consolidated financial position of the Company and its
Subsidiaries and of each Predecessor Entity and its Subsidiaries, as the case
may be, as of the dates thereof and the consolidated results of operations of
the Company and the Subsidiaries and of each Predecessor Entity and its
subsidiaries, as the case may be, for the periods then ended (subject, in the
case of any unaudited statements, to normal year-end adjustments).
(b) The Company and its Subsidiaries do not have any material
liabilities or obligations of any nature (whether accrued, absolute,
contingent, unasserted or otherwise), except (i) as disclosed, reflected or
fully reserved against in the Company Balance Sheet and the notes thereto,
(ii) for items set forth in Schedule 5.6, (iii) for liabilities and
-------------
obligations incurred in the ordinary course of business consistent with past
practice since the date of the Company Balance Sheet and (iv) for Taxes.
(c) Except as set forth in Schedule 5.6, (i) the Company and any
------------
affiliated group, within the meaning of Code section 1504, of which the
Company is or has been a member, has filed or caused to be filed in a timely
manner (within any applicable extension periods) all material Tax returns,
reports and forms required to be filed by the Code or by applicable state,
local or foreign tax laws, (ii) all Taxes required to be paid by the Company
have been timely paid in full and all Taxes for current periods are adequately
provided for, and (iii) no tax liens have been filed and no material claims
are being asserted in writing with respect to any Taxes. Except as set forth
in Schedule 5.6, the federal income tax returns filed by the Company have
-------------
never been examined by the Internal Revenue Service.
-
(d) Except as set forth in Schedule 5.6, there are no outstanding
------------
agreements or waivers extending the statutory period of limitation applicable
to any material Tax returns required to be filed with respect to the Company,
and neither the Company nor any affiliated group, within the meaning of Code
section 1504, of which the Company is or has been a member has requested any
extension of time within which to file any material Tax return that remains
unfiled as of the date hereof.
(e) The Company is not a United States real property holding
corporation within the meaning of Code section 897.
5.7 ASSETS. (a) The Company has good and valid title to all assets
reflected on the Company Balance Sheet or thereafter acquired, except those
sold or otherwise disposed of for fair value since the date of the Company
Balance Sheet in the ordinary course of business consistent with past
practice, in each case free and clear of all mortgages, liens, security
interests or encumbrances of any kind except (i) as set forth in Schedule 5.7,
------------
(ii) mechanics, materialmens, carriers, workmens, repairmens or other like
liens arising or incurred in the ordinary course of business, liens arising
under original purchase price conditional sales contracts and equipment leases
with third parties entered into in the ordinary course of business and liens
for Taxes that are not due and payable or that may be paid without penalty,
(iii) mortgages, liens, security interests and encumbrances that secure debt
reflected as a liability on the Company Balance Sheet and the existence of
which is indicated in the notes thereto and (iv) other imperfections of title
or encumbrances, if any, that do not, individually or in the aggregate,
materially impair the continued use and operation of the assets to which they
relate in the business of the Company as presently conducted (the mortgages,
liens, security interests, encumbrances and imperfections of title described
in clauses (ii), (iii) and (iv) above are hereinafter referred to in this
Article V as Permitted Liens).
(b) All the material tangible personal property of the Company has
been maintained in all material respects in accordance with good commercial
practices. Each item of material tangible personal property of the Company is
in all material respects in good operating condition and repair, ordinary wear
and tear excepted. All leased personal property of the Company is in all
material respects in the condition required by the terms of the applicable
lease during the term of the lease and upon the expiration thereof.
5.8 INTELLECTUAL PROPERTY. Schedule 5.8 sets forth a true and
------------
complete list of (a) all patents and patent applications, including the
status, registration or application numbers thereof, (b) all trademarks
(registered or unregistered), including a list of all jurisdictions in which
they are registered or applied for and all registration and application
numbers thereof, (c) all service marks and copyrights and applications
therefor and (d) all other material intellectual property and proprietary
rights, whether or not subject to statutory registration or protection
(collectively, Company Intellectual Property), owned, used, filed by or
licensed to the Company. Except as set forth in Schedule 5.8, the Company
------------
owns and has the right to use, execute, reproduce, display, perform, modify,
enhance, distribute, prepare derivative works of and sublicense, without
payment to any other person, all Company Intellectual Property, and the
consummation of the transactions contemplated hereby will not conflict with,
alter or impair any of those rights. The Company has not granted any options,
licenses or agreements of any kind relating to the Company Intellectual
Property or the marketing or distribution thereof, except for nonexclusive
licenses to end users in the ordinary course of business or as otherwise
indicated in Schedule 5.8. Except as set forth in Schedule 5.8, the Company
------------ ------------
is not bound by or a party to any options, licenses or agreements of any kind
relating to the Company Intellectual Property. Subject to the rights of third
parties set forth in Schedule 5.8, all Company Intellectual Property is free
------------
and clear of any third party claims and all liens, security interests and
encumbrances whatsoever, other than Permitted Liens. The conduct of the
business of the Company as presently conducted does not violate, conflict with
or infringe the intellectual property rights of any other Person. Except as
set forth in Schedule 5.8, (i) no claims are pending or, to the knowledge of
------------
the Company, threatened, against the Company by any Person with respect to the
ownership, validity, enforceability, effectiveness or use of any Company
Intellectual Property and (ii) during the last five years, the Company has not
received any communications alleging that it has violated any rights relating
thereto.
5.9 CONTRACTS. (a) Except as set forth in Schedule 5.9, the Company
------------
is not a party to or bound by any of the following:
(i) employment or consulting agreement that has an aggregate future
liability in excess of $100,000 and is not terminable by the Company upon
notice of not more than 60 days for a cost of less than $100,000;
(ii) employee collective bargaining agreement or other contract with
any labor union;
(iii) covenant of the Company not to compete or otherwise restricting
the operations of the Company;
(iv) agreement, contract or other arrangement with any current or
former officer, director or employee of the Company or any Affiliate of the
Company other than employment agreements covered by clause (i) above;
(v) lease or similar agreement with any person under which (A) the
Company is lessee of or holds or uses any machinery, equipment, vehicle or
other tangible personal property owned by any other Person or (B) the Company
is a lessor or sublessor of, or makes available for use by any other Person,
any tangible personal property owned or leased by the Company, which in any
case or in the aggregate have a total future liability or receivable, as the
case may be, in excess of $100,000 and are not terminable by the Company upon
notice of not more than 60 days for a cost of less than $100,000;
(vi) (A) continuing contract for the future purchase of materials,
supplies or equipment, (B) management, service, consulting or other similar
type of contract or (C) advertising agreement or arrangement, which in any
case or in the aggregate have a total future liability in excess of $100,000
and are not terminable by the Company upon notice of not more than 60 days for
a cost of less than $100,000;
(vii) material license, option or other agreement relating in whole
or in part to (A) the Company Intellectual Property, including any license or
other agreement under which the Company is licensee or licensor thereof, or
(B) trade secrets, confidential information or other proprietary rights and
processes of the Company;
(viii) agreement, contract or other instrument under which the Company
has borrowed any money from, or issued any note, bond, debenture or other
evidence of indebtedness to any other Person that in any individual case is in
excess of $50,000;
(ix) agreement, contract or other instrument under which (A) any
Person has directly or indirectly guaranteed indebtedness, liabilities or
obligations of the Company or (B) the Company has directly or indirectly
guaranteed indebtedness, liabilities or obligations of any other Person that
in any individual case is in excess of $50,000;
(x) agreement, contract or other instrument under which the Company
has, directly or indirectly, made any advance, loan, extension of credit or
capital contribution to, or other investment in, any other Person that in any
individual case is in excess of $50,000;
(xi) agreement, contract or other instrument providing for
indemnification of any Person with respect to liabilities relating to any
current or former business of the Company; or
(xii) other agreement, contract or other instrument to which the
Company is a party or by or to which it or any of its assets or business is
bound or subject that has an aggregate future liability to any other Person in
excess of $100,000 and is not terminable by the Company upon notice of not
more than 60 days for a cost of less than $100,000.
(b) Except as set forth in Schedule 5.9, all agreements, contracts or
------------
other instruments of the Company listed or required to be listed in the
Schedules hereto (collectively, the Company Contracts) are valid, binding
and in full force and effect and are enforceable by the Company in accordance
with its terms. Except as set forth in Schedule 5.9, the Company has
------------
performed all material obligations required to be performed by it to date
under the Company Contracts and it is not in breach or default in any material
respect thereunder (with or without the lapse of time or the giving of notice,
or both) nor has any other party to any of the Company Contracts notified the
Company of that party=s belief that the Company or is likely to become in
breach or default in any material respect thereunder or of that party=s
intention to accelerate or modify in a manner adverse to the Company any of
its obligations or rights thereunder and, to the knowledge of the Company, no
other party to any of the Company Contracts is in breach or default in any
material respect thereunder (with or without the lapse of time or the giving
of notice, or both).
5.10 LITIGATION. Schedule 5.10 sets forth a list of all pending
--------------
lawsuits or claims against or affecting the Company or any of its properties,
assets, operations or business and which (a) relate to or involve more than
$50,000, (b) seek any material injunctive relief or (c) relate to the
transactions contemplated by this Agreement. Except as set forth in Schedule
--------
5.10, none of the lawsuits or claims listed therein as to which there is at
----
least a reasonable possibility of adverse determination could have, if so
--
determined, individually or in the aggregate, a Material Adverse Effect.
--
Except as set forth in Schedule 5.10, (i) the Company is not a party or
--
subject to or in default under any judgment, order, injunction or decree of
--
any Governmental Authority or arbitration tribunal applicable to it or any of
--
its properties, assets, operations or business, (ii) there is no lawsuit or
claim by the Company pending, or which the Company intends to initiate,
against any other Person, and (iii) to the knowledge of the Company, there is
no pending or threatened investigation of or affecting the Company by any
Governmental Authority.
5.11 INSURANCE. The Company maintains policies of fire and casualty,
liability and other forms of insurance in amounts, with deductibles and
against risks and losses that are, in its judgment, reasonable for the
business and assets of the Company. The insurance policies maintained with
respect to the Company and its assets and properties are listed in Schedule
--------
5.11. Except as set forth in Schedule 5.11, all of the policies listed
-- -------------
therein are in full force and effect, all premiums due and payable thereon
--
have been paid (other than retroactive or retrospective premium adjustments
-
that are not yet, but may be, required to be paid with respect to any period
ending prior to the Effective Date under comprehensive general liability and
workmen=s compensation insurance policies), and no notice of cancellation or
termination has been received with respect thereto. To the knowledge of the
Company, its activities and operations have been conducted in a manner
conforming in all material respects to all applicable provisions of its
insurance policies.
5.12 BENEFIT PLANS. (a) Schedule 5.12 sets forth a list and brief
-------------
description of all Benefit Plans maintained or contributed to by the Company
for the benefit of any of its officers or other employees. The Company has
heretofore delivered to Cymedix true, complete and correct copies of (i) each
Benefit Plan, (ii) the most recent annual report on Form 5500 filed with the
Internal Revenue Service with respect to each Benefit Plan (if required),
(iii) the most recent summary plan description for each Benefit Plan for which
a summary plan description is required and (iv) each trust agreement, group
annuity contract and other financing and funding arrangement relating to any
Benefit Plan.
(b) Each Benefit Plan maintained or contributed to by the Company has
been administered in all material respects in accordance with its terms. The
Company and all of its Benefit Plans are in compliance in all material
respects with the applicable provisions of ERISA and the Code. All material
reports, returns and similar documents with respect to the Benefit Plans
required to be filed with any Governmental Authority or distributed to any
Benefit Plan participant have been duly and timely filed or distributed.
There are no lawsuits, actions, termination proceedings or other proceedings
pending or, to the knowledge of the Company, threatened against or involving
any of its Benefit Plans and, to the knowledge of the Company, there are no
investigations by any Governmental Authority or other claims (except claims
for benefits payable in the normal operation of the Benefit Plans) pending or
threatened against or involving any of its Benefit Plans or asserting any
rights to benefits under any Benefit Plan that individually or in the
aggregate would have a Material Adverse Effect. To the knowledge of the
Company, there are no unasserted claims pending or threatened that if asserted
would have at least a reasonable possibility of an adverse determination.
(c) With respect to all Benefit Plans maintained or contributed to by
the Company, (i) all contributions to and payments from the Benefit Plans
required thereby or by ERISA section 302 or Code section 512 have been timely
made, (ii) there has been no application for or waiver of the minimum funding
standards imposed by Code section 512 and (iii) no Pension Plan has an
Aaccumulated funding deficiency@ within the meaning of Code section 412(a) as
of the most recent plan year.
(d) No Aprohibited transaction,@ as defined in Code section 4975 or
ERISA section 406, has occurred that involves the assets of any Benefit Plan
and that could subject the Company or any of its employees or, to the
knowledge of the Company, a trustee, administrator or other fiduciary of any
trusts created under any of its Benefit Plans to the tax or penalty on
prohibited transactions imposed by ERISA section 4975 or the sanctions imposed
under Title I of ERISA. No Pension Plan maintained by the Company has been
terminated, nor has there been any Areportable event,@ as defined in ERISA
section 4043 and the regulations thereunder, with respect thereto. Neither
the Company nor any trustee, administrator or other fiduciary of any of its
Benefit Plans nor any agent of any of the foregoing has engaged in any
transaction or acted or failed to act in a manner that could subject the
Company to any liability for breach of fiduciary duty under ERISA or any other
applicable law.
(e) At no time during the last five years has the Company (i) been
required to contribute to any multiemployer plan, as defined in ERISA
section 4001(a)(3), for the benefit of any of its officers or other employees
of the Company, (ii) incurred any withdrawal liability, within the meaning of
ERISA section 4201, with respect to any that multiemployer plan, which
liability has not been fully paid as of the date hereof, or (iii) announced an
intention to withdraw, but not yet completed such withdrawal, from that
multiemployer plan. If the Company were to make a complete withdrawal from
any multiemployer plan, within the meaning of ERISA section 4203, the
withdrawal liability would not exceed $50,000 in the aggregate.
(f) With respect to any Benefit Plan of the Company that is an
employee welfare benefit plan, except as disclosed in Schedule 5.12, (i) it is
-------------
not unfunded or funded through a welfare benefits fund, as defined in Code
section 419(e), (ii) it organized as a group health plan, as defined in Code
section 5000(b)(1), it complies in all material respects with the applicable
requirements of Code section 4980B(f) and (iii) it may be amended or
terminated without material liability to the Company.
(g) The Company has no current or projected liability or contingent
obligation in respect of medical or other benefits for its retired or former
employees.
(h) Except as set forth in Schedule 5.12, (i) no employee or former
-------------
employee of the Company will become entitled to any bonus, retirement,
severance, job security or similar benefit or any enhanced benefit solely as a
result of the transactions contemplated hereby, alone or in conjunction with
any other events or occurrences, and (ii) no amount payable to any employee
under any Benefit Plan or other arrangement of the Company will fail to be
deductible by reason of Code section 280G.
(i) The Company has not (i) engaged in a transaction described in
ERISA section 4069 that could subject it to liability at any time after the
date hereof or (ii) engaged in any act or omission that could result in fines,
penalties, taxes or related charges under ERISA.
(j) No compensation payable by the Company to any of its employees
under any existing contract, Benefit Plan or other employment arrangement or
understanding (including by reason of the transactions contemplated hereby)
would be subject to disallowance under Code section 162(m).
5.13 ABSENCE OF CHANGES OR EVENTS. Except as set forth in Schedule
--------
5.13, (i) since the date of the Company Balance Sheet, there has not occurred
any event or events or arisen any change of affairs that, individually or in
the aggregate, has had or could have a Material Adverse Effect, (ii) since the
date of the Company Balance Sheet, the business of the Company has been
conducted in the ordinary course and in substantially the same manner as
previously conducted, (iii) the Company has made all reasonable efforts
consistent with past practices to preserve its relationships with customers,
suppliers and others with whom it deals, and (iv) from the date of the Company
Balance Sheet, the Company has not taken any action that, if taken after the
date of this Agreement, would constitute a breach of any of its covenants set
forth herein.
5.14 COMPLIANCE WITH APPLICABLE LAWS. (a) Except as set forth on
Schedule 5.14, (i) the Company is in compliance in all material respects with
---------
all applicable statutes, laws, ordinances, rules, orders and regulations of
any Governmental Authority applicable to its business and operations,
including those relating to occupational health and safety (for purposes of
this Section 5.14, AApplicable Laws@), and (ii) the Company has not received
any communication since its inception from a Governmental Authority that
alleges its failure to comply in any material respect with any Applicable
Laws.
(b) The Company has provided Cymedix with all environmental reports
relating to the facilities and operations of the Company identified in
Schedule 5.14 (for purposes of this Section 5.14, Environmental Reports).
-------
The Company has not received any oral or written communication from a
Governmental Authority that alleges its failure to comply with any
Environmental Laws in any manner that has not been finally resolved. The
Company holds and is in compliance with all permits, licenses and governmental
authorizations required to conduct its business under Environmental Laws.
Except as set forth in Schedule 5.14, the Company is in compliance with all
-------------
Environmental Laws and is not subject to any judgment, decree or order
relating to compliance with any Environmental Law or to investigation or
cleanup of Hazardous Materials under any Environmental Law. The Company has
no contingent liabilities in respect of its business in connection with any
Hazardous Materials that, individually or in the aggregate, would have a
Material Adverse Effect. Except as set forth in Schedule 5.14, there are no
-------------
aboveground or underground storage tanks on any property of the Company, and
all former underground storage tanks have been closed or removed in accordance
with all Environmental Laws.
5.15 EMPLOYEE AND LABOR MATTERS. Except as set forth in Schedule 5.15,
-------------
(a) there is, and during the last five years there has been, no labor strike,
dispute, work stoppage or lockout pending or, to its knowledge, threatened
against or affecting the Company, (b) to its knowledge, no union
organizational campaign is in progress with respect to the employees of the
Company and no question exists concerning representation of its employees, (c)
the Company is not engaged in any unfair labor practice, (d) there is no
unfair labor practice charge or complaint pending or, to its knowledge,
threatened against the Company before the National Labor Relations Board, (e)
there are no pending or, to its knowledge, threatened union grievances against
the Company that would have a Material Adverse Effect if determined against
the Company, (f) there are no pending or, to its knowledge, threatened
charges against the Company or any current or former employee of the Company
before the Equal Employment Opportunity Commission or any state or local
agency responsible for the prevention of unlawful employment practices and (g)
the Company has not received notice during the past two years of the intent of
any Governmental Authority responsible for the enforcement of labor or
employment laws to conduct an investigation of or affecting the Company and,
to its knowledge, no such investigation is in progress.
5.16 LICENSES; PERMITS. The Company has obtained all material licenses,
permits and authorizations from Governmental Authorities that are necessary or
desirable for the conduct of its business. Except as set forth in Schedule
--------
5.16, (a) all required licenses, permits and authorizations are validly held
--
by the Company, (b) the Company has complied in all material respects with all
terms and conditions thereof and (c) the same will not be subject to
suspension, modification, revocation or nonrenewal as a result of the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
5.17 DISCLOSURE. No representation or warranty of the Company contained
in this Agreement, no statement contained in any document, certificate or
Schedule and no data in connection with the due diligence investigation
contemplated by Section 6.2(a) furnished or to be furnished by or on behalf of
the Company to Cymedix or any of its representatives pursuant to this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading or necessary to fully and fairly
provide the information required to be provided therein.
ARTICLE VI COVENANTS
6.1 BRIDGE LOANS. (a) The Company has received Bridge Loans
aggregating $227,500 as of the date of this Agreement. During the balance of
the Bridge Period, the Company will continue to make semi-monthly Bridge Loans
to Cymedix in the following amounts on the dates (the Bridge Loan Funding
Schedule) set forth below:
DATE OF BRIDGE LOAN AMOUNT OF BRIDGE LOAN
---------------------- ------------------------
November 28, 1997 $35,000
December 15, 1997 35,000
(b) The Bridge Loan Funding Schedule is subject to the following
modifications:
(i) Prior to the Company=s receipt of net sale proceeds exceeding
$200,000 from a recent asset sale, it will have the right, to the extent its
working capital is inadequate to timely adhere to the Bridge Loan Funding
Schedule, to (A) fund each semi-monthly Bridge Loan in installments and (B)
delay funding any full semi-monthly Bridge Loan for up to six business days
after the date specified in the Bridge Loan Funding Schedule
(ii) After the Company=s receipt of net sale proceeds exceeding
$200,000 from a recent asset sale, Cymedix will have the right, to the extent
its working capital is inadequate to meet its current obligations, to request
the Company to make additional loan=s to enable Cymedix to satisfy those
obligations. The Company will have sole discretion over the funding, timing
and amount of any additional loans. If made by the Company, the additional
loans will be advanced on the same terms as the Bridge Loans.
(iii) The Bridge Loan Commitment will end (A) on the Effective Date
if the Merger is completed before the end of the Bridge Period or (B) upon any
declaration of a Company Termination Event under Section 8.2.
(c) Each Bridge Loan and any additional loan under Section 6.1(b)(ii)
will be evidenced by a Bridge Note to be executed and delivered by Cymedix
upon receipt thereof. Cymedix acknowledges that it has heretofore granted the
Company, as collateral security for the Bridge Loans, a security interest in
all of its assets, subject to the existing security interest granted by
Cymedix to Global Med Technologies, Inc. as collateral security for the Global
Note.
(d) Cymedix will continue to apply proceeds from the Bridge Loans
substantially as set forth in the Cymedix Budget.
6.2 ACCESS; SUPPLEMENTAL DISCLOSURE. (a) During the balance of the
Diligence Period, each party shall continue to give the other party and its
representatives, employees, consultants, counsel and accountants (for purposes
of this Section 6.2, Representatives), upon request, access to its
personnel, properties, offices, books and records and promptly provide the
other party and its Representatives all available financial and operating
data and other information and assistance with respect to its business and
properties as it may request from time to time. Without limiting the
foregoing, Cymedix shall cooperate with the Company=s auditors in their review
of the business and operations of Cymedix and permit them to discuss the
procedures and review the work papers used by Cymedix and its accountants in
the preparation of its financial statements since its inception.
(b) Until the earlier of the Effective Date or the end of the Bridge
Period, each party shall have the continuing obligation to supplement or
amend its Schedules with respect to any matter hereafter arising or discovered
that, if existing or known on the date of this Agreement, would have been
required to be set forth or described in its Schedules.
(c) Each party shall promptly notify the other party of, and furnish
any information the other party may reasonably request with respect to, the
occurrence of any event or condition or the existence to its knowledge of any
fact that would cause any of the conditions to the other party=s obligation to
consummate the Merger under Article VII to be unfulfilled.
6.3 CONDUCT OF BUSINESS PENDING THE MERGER. (a) During the balance
of the Bridge Period, Company will conduct its operations in the ordinary
course of business in a manner consistent with past practices.
(b) During the balance of the Bridge Period, Cymedix will not (i)
amend its Certificate of Incorporation or Bylaws, (ii) declare or pay any
dividend or make any other distribution to its shareholders upon any shares of
its capital stock, (iii) redeem or otherwise acquire any shares of its capital
stock or issue or amend any capital stock or any option, warrant or right
relating thereto or any securities convertible into or exchangeable for any
shares of capital stock, (iv) adopt or amend in any respect any Benefit Plan
or collective bargaining agreement, except as required by law after providing
written notice to the Company, (v) grant to any executive officer or employee
any increase in compensation or benefits, except as may be required under
existing agreements or approved by the Company, (vi) except for the Bridge
Loans, incur or assume any liabilities, obligations or indebtedness, in each
case for borrowed money, or guarantee any liabilities, obligations or
indebtedness, (vii) permit, allow or suffer any of its assets to become
subject to any mortgage, lien, security interest, encumbrance or other similar
restriction of any nature, (viii) waive any claims or rights of value, (ix)
pay, loan or advance any amount to, or sell, transfer or lease any of its
assets to, or enter into any agreement or arrangement with, any of its
Affiliates, (x) make any change in any method of accounting or accounting
practice or policy, (xi) acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other means, any
business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire any assets for an
aggregate purchase price in excess of $5,000, (xii) make or incur any capital
expenditure that individually or in the aggregate are in excess of $5,000,
(xiii) sell, lease, license or otherwise dispose of any of its assets except
as provided in Section 6.3(c), (xiv) enter into any lease of real property,
except any renewals of existing leases on market terms in the ordinary course
of business, (xv) enter into or amend or supplement any material Contract or
(xvi) or agree, whether in writing or otherwise, to do any of the foregoing.
On the Effective Date, Cymedix will not have any liabilities in excess of
$120,000 other than the Bridge Loans, the Global Note and liabilities for
attorneys' fees incurred by Cymedix in connection with the Merger (the
Liability Cap), provided that the Liability Cap shall be increased by the
principal amount of any Bridge Loans or portions thereof that have not been
funded by the Effective Date in accordance with the Bridge Loan Funding
Schedule.
(c) During the balance of the Bridge Period, Cymedix will use its
best efforts to enter into license agreements for installation and sponsorship
of its LYNX-MC software product with managed care organizations and medical
centers.
6.4 OTHER TRANSACTIONS. During the Diligence Period, except as
otherwise provided herein, Cymedix and if its officers, directors,
shareholders or representatives shall neither initiate or solicit any proposal
or offer from any Person regarding any Competing Transaction nor encourage or
facilitate a Competing Transaction by providing nonpublic information or
conducting any discussions or negotiations or entering into any agreement or
understanding for a Competing Transaction. These restriction shall terminate
if (i) any Bridge Loan payable after the date of this Agreement is not made in
accordance with Section 6.1, (ii) not apply to any negotiations or Competing
Transaction with Shared Medical Systems Corporation if Cymedix shall have
received a Competing Offer from that Person prior to September 23, 1997 and
(iii) not prevent Cymedix from entering into negotiations or completing a
Competing Transaction if and to the extent that (A) the Cymedix Board
determines in good faith that pursuing the Competing Proposal is necessary for
compliance with its fiduciary duties to shareholders under applicable law, (B)
prior to entering into negotiations Cymedix shall have provided written notice
to the Company that includes the terms of the Competing Proposal, the identity
of the Person making the Competing Proposal and the fact that clause (A) above
has been satisfied and (C) the instrument memorializing the Competing Proposal
provides for the Company to receive a break-up fee in the amount of $75,000
from Cymedix or its successor within five days after completion of the
Competing Transaction contemplated thereby.
6.5 CONSENT OF CYMEDIX SHAREHOLDERS. As soon as practicable after
the execution of this Agreement, Cymedix will use its best efforts to solicit
from its shareholders written consents in lieu of a meeting to approve this
Agreement in accordance with the applicable provisions of the California Act.
The solicitation materials prepared by Cymedix for that purpose shall contain
(a) a copy of the unaudited financial statements of Cymedix referred to in
Section 4.6(a), (b) a summary of the material provisions of this Agreement,
including paragraphs (b) and (c) of Section 6.10, (c) a copy of this
Agreement, and (d) of copy of (i) the Company=s Annual Report on Form 10-KSB
for the year ended December 31, 1996, (ii) the Company=s Proxy Statement for
its 1996 annual meeting of shareholders and (iii) its Quarterly Report on Form
10-QSB for the quarter ended June 30, 1997 or, if available at the time the
solicitation materials are mailed, its Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1997. If the Company=s Quarterly Report on Form
10-QSB for the quarter ended September 30, 1997 is unavailable at the time
solicitation materials are mailed by Cymedix, it shall be mailed separately to
shareholders of Cymedix when available before the Closing.
6.6 CERTIFICATES OF MERGER. Upon satisfaction or waiver, where
permitted, of the conditions set forth in Article VII, Cymedix and the Company
shall execute and file the Merger Certificates in accordance with Section 1.2.
6.7 ASSUMPTION OF STOCK OPTIONS AND DEBT. (a) On the Effective
Date, the Company shall assume all outstanding Cymedix Stock Options, which
will thereafter become exercisable for the number of Reserved Merger Shares
that the option holders would have received in the Merger at the Common
Exchange Rate in exchange for the shares of Cymedix Common Stock issuable upon
exercise thereof prior to the Effective Date, on the same terms and conditions
in effect immediately prior to the Merger. As soon as practicable after the
Effective Date, the Company shall execute and deliver option agreements
reflecting the foregoing to holders of outstanding Cymedix Stock Options.
(b) On the Effective Date, the indebtedness evidenced by the Global
Note shall be assumed by the Merger Sub and guaranteed by the Company, and the
Global Note will become convertible, following any payment default, into
Company Common Stock based on the Common Exchange Rate.
(c) On the Effective Date, all outstanding accounts payable of
Cymedix shall be assumed by the Merger Sub and guaranteed by the Company, and
the assumed obligations shall be timely paid by the Merger Sub or the Company,
provided that the account payable to Xxxxx & Xxxxxxxxxxx, counsel to Cymedix,
shall be paid $10,000 at the Closing and the balance in monthly installments
of not less than $5,000 commencing in the first month after the Closing.
6.8 BOARD REPRESENTATION. (a) Contemporaneously with the execution
of this Agreement, Cymedix shall take all action necessary to increase the
size of the Cymedix Board to consist of five directors and to fill the
resulting vacancy with a designee of the Company. On the Effective Date, the
Cymedix Board will be disbanded in accordance with the California Act, and the
former members thereof shall have no right to membership on the Merger Sub
Board or the Company Board except as provided in Section 6.8(b).
(b) On the Effective Date, the Company shall take all action
necessary to increase the size of the Company Board to consist of four
directors and to fill the resulting vacancy with a designee of Cymedix. If
the Merger is consummated, the Company shall include one designee of Xxxxx
Xxxxxx for election to the Company Board at each meeting of the Company=s
shareholders where directors of the Company are elected during the three years
following the Effective Date.
6.9 EMPLOYMENT AGREEMENTS AND RELATED MATTERS. (a) On the Effective
Date, the Merger Sub shall enter into mutually acceptable employment
agreements on customary industry terms (the AEmployment Agreements@) with
Xxxxx Xxxxxx and Xxxxxxx Xxxxxx and shall offer employment to other current
employees of Cymedix designated by Xx. Xxxxxx upon notice to the Company not
less than five days prior to the Closing (collectively, Cymedix Management).
The obligations of the Merger Sub under the Employment Agreements shall be
guaranteed by the Company. The Employment Agreement with Xx. Xxxxxx will
provide for his appointment as President of the Merger Sub.
(b) At the Closing, the members of Cymedix Management or their
designees (the Optionees) will be entitled to receive options to purchase an
aggregate of 1.2 million shares of Company Common Stock at the closing price
of the Company Common Stock on the business day immediately preceding the
Effective Date, vesting in one-third cumulative annual installments commencing
on the first anniversary of the Effective Date (the Management Options).
The number of Management Options issuable to each Optionee will be determined
by Xx. Xxxxxx upon notice to the Company not less than five days prior to the
Closing.
6.10 REGISTRATION OF MERGER SHARES. (a) If the Merger is consummated,
the Company shall (i) file a registration statement on Form S-3 under the
Securities Act (the Registration Statement) on or before April 20, 1998,
covering the resale of the Merger Shares (including the Reserved Merger
Shares) by the beneficial owners thereof (collectively, the Holders) in
accordance with Rule 415 under the Securities Act, (ii) use its best efforts
to cause the Registration Statement to be declared effective as soon as
practicable thereafter, (iii) keep the Registration Statement current in
accordance with the applicable provisions of the Securities Act until the
first anniversary of the Effective Date, (iv) file documents required for
state securities or Ablue sky@ clearance in jurisdictions specified in writing
by the Holders and use its best efforts to cause the Merger Shares so
registered to be and remain qualified thereunder where qualifications are
required to permit the public sale thereof and (vii) bear all expenses in
connection with the procedures described in this Section 6.10, other than
selling commissions and fees and expenses of counsel or other advisers, if
any, to the Holders.
(b) By acceptance of the Merger Shares, each Holder will be deemed to
represent and warrant to the Company that the Holder (i) either (A) is an
Aaccredited investor,@ as defined in Rule 501 under the Securities Act, or (B)
has such knowledge and experience in financial and business matters that he is
capable of evaluating the merits and risks of the Merger, (ii) has received,
reviewed and considered all information deemed relevant in making an informed
decision about the Merger, (iii) is acquiring Merger Shares for investment and
with no present intention of distributing or reselling them except as provided
in the Registration Statement and (iv) is aware that the Merger Shares (A)
have not been registered with the SEC or any state securities commission, (B)
will be deemed to be Arestricted securities@ for purposes of the Securities
Act and (C) may not be sold or otherwise transferred in the absence of an
exemption from the registration requirements of the Securities Act and
applicable state securities laws or as otherwise contemplated by the
Registration Statement.
(c) By acceptance of Merger Shares, each Holder will be deemed to
agree to (i) refrain from publicly selling or offering for sale any Merger
Shares until the Registration Statement is effective, (ii) refrain from
effecting any disposition of Merger Shares that would constitute a sale within
the meaning of the Securities Act except as contemplated in the Registration
Statement and (iii) limit sales in each month during the period from the
effectiveness of the Registration Statement until the first anniversary of the
Effective Date to 5% of the Merger Shares received by that Holder in the
Merger. The Company will be entitled to place stop orders with the transfer
agent for the Company Common Stock to implement this restriction.
(d) At the time the Registration Statement is declared effective, the
Company shall furnish to the Holders copies of the prospectus included in the
Registration Statement in conformity with the requirements of the Securities
Act, together with any other documents the Holders may reasonably request to
facilitate the public sale or other disposition of the Merger Shares.
(e) The Company agrees to indemnify and hold harmless each Holder
(and each person who controls a Holder within the meaning of Section 15 of the
Securities Act) from and against any losses, claims, damages or liabilities to
which the Holder may become subject (under the Securities Act or otherwise)
insofar as those losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon any untrue
statement of a material fact contained or incorporated by reference in the
Registration Statement or arise out of any failure by the Company to fulfill
any undertaking included in the Registration Statement, and the Company will
reimburse the Holder for any legal or other expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim; provided, however, that the Company shall not be liable in any case to
the extent that the loss, claim, damage or liability arises out of or is based
upon an untrue statement made in the Registration Statement in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of the Holder specifically for use in preparation of the Registration
Statement The term Auntrue statement@ shall include any untrue statement or
alleged untrue statement, or any omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
6.11 CONFIDENTIALITY. The parties (a) acknowledge that the transactions
contemplated by this proposal will require them to share Confidential
Information and (b) agree that, during the Bridge Period and, if the Merger
is not consummated, at all times thereafter, each party will (i) hold the
other party's Confidential Information in strict confidence, (ii) not copy the
other party's Confidential Information or disclose any portion thereof to any
third party without the prior written consent of the other party, (iii) not
make any use of the other party=s Confidential Information except for the sole
purpose of performing its due diligence review hereunder and (iv) immediately
return to the other party or destroy, as the other party may direct, all
tangible records embodying the other party=s Confidential Information in its
possession, custody or control upon any termination of this Agreement.
6.12 PUBLICITY. Cymedix and the Company agree that, from the date
hereof through the Effective Date, no public release or announcement
concerning the transactions contemplated hereby shall be issued by either
party without the prior consent of the other party (which consent shall not be
unreasonably withheld), except any release or announcement that may be
required by law or the rules or regulations of any national securities
exchange or association, in which case the party required to make the release
or announcement shall allow the other party reasonable time to comment thereon
in advance of its issuance; provided, however, that each party may make
internal announcements to its employees that are consistent with the parties=
prior public disclosures regarding the transactions contemplated hereby after
reasonable prior notice to and consultation with the other party.
6.13 FURTHER COOPERATION. At the request of any party hereto either
before or after the Effective
Date, each party shall take all actions and deliver all documents reasonably
necessary or appropriate to carry out the terms and provisions of this
Agreement. Each of the parties will use all reasonable efforts to obtain any
necessary waivers, consents and approvals, effect all necessary filings and
take all actions necessary or appropriate to consummate the transactions
contemplated by this Agreement.
ARTICLE VII CONDITIONS PRECEDENT
7.1 CONDITIONS TO THE COMPANY=S OBLIGATIONS. The obligation of the
Company to effect the transactions contemplated hereby are subject to the
satisfaction or, subject to the provisions of Section 7.3, the waiver of the
following conditions:
(a) This Agreement shall have been approved and adopted by the
holders of a majority of the Cymedix Common Stock, Cymedix Series A Preferred
Stock and Cymedix Series B Preferred Stock, voting as separate classes, and
none of the shareholders of Cymedix shall have sought to perfect their
dissenters= rights under the California Act.
(b) No statute, rule, regulation, executive order, decree, temporary
restraining order, preliminary or permanent injunction or other order enacted,
entered, promulgated, enforced or issued by any Governmental Authority or
other legal restraint or prohibition preventing the Merger shall be in effect.
(c) There shall not be pending or threatened by any Governmental
Authority any suit, action or proceeding challenging or seeking to restrain or
prohibit the Merger or seeking to obtain any material damages from the Company
or any of its Affiliates in connection with the Merger or seeking to prohibit
the Company from effectively controlling in any material respect the business
or operations of Cymedix.
(d) The Company shall have received an opinion dated as of the
Effective Date from Xxxxx & Xxxxxxxxxxx, counsel to Cymedix, substantially in
the form of Exhibit A.
----------
(e) Xxxxx Xxxxxx shall have executed and delivered an Employment
Agreement.
(f) Cymedix shall have performed or complied in all material respects
with all obligations and covenants required by this Agreement to be performed
or complied with by Cymedix.
(g) The representations and warranties of Cymedix made in this
Agreement shall be true and correct in all material respects as of the
Effective Date as though made as of that time, except to the extent they
expressly relate to an earlier date, in which case they shall be true and
correct in all material respects on and as of that earlier date.
(h) Cymedix shall have delivered to the Company a certificate dated
as of the Effective Date and signed by an authorized officer of Cymedix (i)
confirming that the conditions set forth in paragraphs (e) and (f) of this
Section 7.1 have been satisfied, (ii) providing a true and correct listing, as
of the Effective Date, of the holders of Cymedix Common Stock, Cymedix
Preferred Stock and Cymedix Stock Options, setting forth for each holder (A)
the name and residence address of the holder, (B) the number and class of
shares or options held by the holder and (C) the number of Merger Shares
issuable to the holder in the Merger or the number of Reserved Merger Shares
issuable to the holder upon exercise of Cymedix Stock Options assumed in the
Merger, and (iii) confirming whether Cymedix had reasonable grounds to believe
that each holder listed under clause (ii) of this Section 7.1(h) was an
Aaccredited investor@ as defined in the Securities Act at the time shares or
options were issued to the holder.
(i) The Company shall not have concluded in its reasonable discretion
based on its due diligence investigation that (i) the unaudited financial
statements of Cymedix for the year ended December 31, 1996 do not fairly
present the financial position of Cymedix as of the date thereof and the
results of its operations for the period then ended, (ii) Cymedix has material
liabilities or obligations other than (A) as disclosed, reflected or fully
reserved against in the Cymedix Balance Sheet and the notes incorporated
therein, (B) items set forth in the Schedules delivered by Cymedix pursuant to
Article IV, (C) liabilities and obligations incurred in the ordinary course of
business consistent with past practice since the date of the Cymedix Balance
Sheet and (4) Taxes, (iii) Cymedix shall have failed to adhere to the Cymedix
Budget and the failure materially reduces the benefits of the Merger to the
Company or (iv) an event has occurred, including the commencement of
litigation against Cymedix by or on behalf of one or more of its shareholders,
that can reasonably be expected to have a Material Adverse Effect.
7.2 CONDITIONS TO THE OBLIGATIONS OF CYMEDIX. The obligation of
Cymedix to effect the transactions contemplated hereby are subject to the
satisfaction or, subject to the provisions of Section 7.3, the waiver of the
following conditions:
(a) The Company shall have taken all actions required to ensure that
the Merger Shares shall have been approved for inclusion on the Nasdaq Small
Cap Market.
(b) The Company shall have made all Bridge Loans in accordance with
Section 6.1.
(c) Cymedix shall have received an opinion dated as of the Effective
Date from Xxxx X. Xxxxxxx, P.C., counsel to the Company, substantially in the
form of Exhibit B.
----------
(d) The Merger Sub shall have entered into Employment Agreements with
Xxxxx Xxxxxx and Xxxxxxx Xxxxxx, and the Company shall have issued the
Management Options to the Optionees and guaranteed the Merger Sub=s
obligations under the Employment Agreements.
(e) The Merger Sub and the Company shall have performed or complied
in all material respects with all obligations and covenants required by this
Agreement to be performed or complied with by the Merger Sub and the Company.
The Company shall have delivered to Cymedix a certificate dated as of the
Effective Date and signed by an authorized officer of the Company confirming
the foregoing.
(f) The representations and warranties of the Company made in this
Agreement shall be true and correct in all material respects as of the
Effective Date as though made as of that time, except to the extent they
expressly relate to an earlier date, in which case they shall be true and
correct in all material respects on and as of that earlier date.
(g) The Company shall have delivered to Cymedix a certificate dated
as of the Effective Date and signed by an authorized officer of the Company
confirming that the conditions set forth in paragraphs (e) and (f) of this
Section 7.2 have been satisfied.
(h) Cymedix shall not have concluded in its reasonable discretion
based on its due diligence investigation that (i) any documents filed by the
Company under the Exchange Act within the last two years contained an untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, (ii)
the Company=s unaudited financial statements for the six months ended June 30,
1997 do not fairly present the consolidated financial position of the Company
as of the date thereof and the results of its operations for the period then
ended (subject to normal adjustments) or (iii) the Company has material
liabilities or obligations other than (A) as disclosed, reflected or fully
reserved against in the Company Balance Sheet and the notes incorporated
therein, (B) items set forth in the Schedules delivered by the Company
pursuant to Article V, (C) liabilities and obligations incurred in the
ordinary course of business consistent with past practice since the date of
the Company Balance Sheet and (4) Taxes or (iv) an event has occurred,
including the commencement of litigation against the Company by or on behalf
of one or more of its shareholders, that can reasonably be expected to have a
Material Adverse Effect.
7.3 FRUSTRATION OF CLOSING CONDITIONS. Neither the Company nor
Cymedix may rely on the failure of any condition set forth in Section 7.1 or
7.2, respectively, to be satisfied if the failure was caused by that party=s
failure to act in good faith or to use all reasonable efforts to cause the
Merger to occur.
7.4 WAIVER OF CERTAIN CONDITIONS. The conditions described in
Sections 7.1(a), 7.1(c), 7.2(a) and 7.2(i) cannot be waived.
ARTICLE VIII MODIFICATION OR TERMINATION
8.1 MODIFICATION. If any event shall occur or any matter be brought
to the attention of the Company that, in its sole judgment, materially and
adversely affects its ability to consummate the Merger, this Agreement may be
modified or amended with the consent of Cymedix to take the event or matter
into account. In that event, the shareholders of Cymedix shall be notified
and given an opportunity, during a period of not less than 20 days, to revoke
their consents to the approval and adoption of this Agreement.
8.2 TERMINATION. (a) Company Termination Event. This Agreement may be
-------------------------
terminated by the Company and the transactions contemplated hereby abandoned
at any time prior to the filing of the Merger Certificates if any of the
following events (each a Company Termination Event) shall have occurred:
(i) Cymedix shall have failed to satisfy any of the conditions set
forth in Sections 7.1(a) through 7.1(e) or any of those conditions shall have
become incapable of fulfillment and shall not have been waived by the Company;
(ii) Cymedix shall have failed to satisfy any of the conditions set
forth in Sections 7.1(f) through 7.1(i) or any of those conditions shall have
become incapable of fulfillment and the failure or nonfulfillment materially
reduces the benefits of the Merger to the Company; provided, however, that (A)
Schedule 4.5 may be amended from time to time by Cymedix to reflect the
exercise of outstanding stock options or the conversion of outstanding
convertible securities or instruments without giving rise to any claim for
breach of its representations and warranties in Section 4.5 and (B) if the
Company shall not have asserted a Company Termination Event for failure to
satisfy the condition set forth in Section 7.1(f) or clauses (i) or (ii) of
Section 7.1(h) on or prior to the close of business on the tenth business day
after the date all Schedules are delivered to the Company pursuant to Article
IV, it shall not have the right to thereafter assert a Company Termination
Event as a result of that failure; or
(iii) Cymedix shall have entered into a definitive agreement for a
Competing Transaction.
(b) Cymedix Termination Event. This Agreement may be terminated by
-------------------------
Cymedix and the transactions contemplated hereby abandoned at any time prior
to the filing of the Merger Certificates if any of the following events (each
a Cymedix Termination Event) shall have occurred:
(i) The Company shall have failed to satisfy any of the conditions
set forth in Sections 7.2(a) through 7.2(d) or any of those conditions shall
have become incapable of fulfillment and shall not have been waived by
Cymedix; or
(ii) The Company shall have failed to satisfy any of the conditions
set forth in Sections 7.2(e) through 7.2(i) or any of those conditions shall
have become incapable of fulfillment and the failure or nonfulfillment
materially reduces the benefits of the Merger to Cymedix; provided, however,
that (A) Schedule 5.5 may be amended from time to time by the Company to
-------------
reflect the exercise of outstanding stock options or the conversion of
outstanding convertible securities or instruments without giving rise to any
claim for breach of its representations and warranties in Section 5.5 and (B)
if Cymedix shall not have asserted a Cymedix Termination Event for failure to
satisfy the condition set forth in Section 7.2(f) or clauses (i) or (ii) of
Section 7.2(h) on or prior to the close of business on the tenth business day
after the date all Schedules are delivered to Cymedix pursuant to Article V,
it shall not have the right to thereafter assert a Cymedix Termination Event
as a result of that failure.
(c) This Agreement may be terminated and the transactions
contemplated hereby abandoned by either party hereto, if the Closing does not
occur on or prior to December 31, 1997, provided that the party seeking
termination pursuant to this Section 8.2(c) is not in breach in any material
respect of any of its material representations, warranties, covenants or
agreements contained in this Agreement.
8.3 NOTICE OF TERMINATION. In the event a party seeks to terminate
this Agreement pursuant to Section 8.2, written notice thereof shall forthwith
be given to the other party, setting forth in reasonable detail the grounds
for termination, whereupon the transactions contemplated by this Agreement
shall be terminated, without further action by either party, subject to the
provisions of Section 8.4.
8.4 EFFECTS OF TERMINATION. (a) Except as otherwise provided in
this Section 8.4, if this Agreement is terminated and the transactions
contemplated hereby are abandoned as provided in this Article VIII, this
Agreement shall become void and of no further force or effect.
(b) Following any Company Termination Event, in any election of
directors of Cymedix during the period when any Bridge Loan remains
outstanding, Cymedix will include one designee of the Company as a nominee for
election to the Cymedix Board, provided that this undertaking will terminate
upon the completion of any Competing Transaction.
(c) If the Company exercises its right to terminate this Agreement
pursuant to Section 8.2(a)(iii), it shall be entitled to (i) receive a
break-up fee in the amount of $75,000 from Cymedix or its successor within
five days after completion of the Competing Transaction referred to therein
and (ii) accelerate the maturity of the Bridge Loans to a date not less than
30 days after completion of the Competing Transaction.
(d) Within ten days following any Cymedix Termination Event that is
not waived by Cymedix, the Company will pay a break-up fee of $50,000 to
Cymedix.
(e) If this Agreement is terminated by either party, each party shall
return all documents and other material received from or on behalf of the
other party in connection with the transactions contemplated hereby, whether
so obtained before or after the execution hereof. All Confidential
Information received by a party with respect to the business of the other
party shall be treated in accordance with the restrictions set forth herein,
which shall remain in full force and effect notwithstanding the termination of
this Agreement.
(f) Nothing in this Article VIII shall be deemed to impair the right
of either party to compel specific performance by the other party of its
continuing obligations under this Agreement, including the obligations of
Cymedix under the Bridge Notes, and no termination of this Agreement shall
relieve either party of its obligations for expenses under Section 9.2.
.
ARTICLE IX C MISCELLANEOUS PROVISIONS
9.1 SURVIVAL OF REPRESENTATIONS. The representations and warranties
in this Agreement and in any certificate delivered pursuant hereto shall not
survive the Merger.
9.2 EXPENSES. Whether or not the transactions contemplated hereby
are consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring those costs or expenses, provided that the Company shall bear 50% of
the attorneys= fees and disbursements incurred by Cymedix in connection with
the Merger in the event this Agreement is terminated for any reason.
9.3 FEES. Each party hereto hereby represents and warrants that no
brokers, finders or investment bankers that may be entitled to any brokerage
fee, finder=s fee, commission or investment banking fee have acted for that
party in connection with this Agreement or the transactions contemplated
hereby other than EBM, Inc., which has been engaged to act as financial
advisor to the Company, and the Company shall bear all fees payable to that
firm.
9.4 AMENDMENTS. No amendment or modification of this Agreement or
waiver of any provision hereof shall be effective unless it shall be in
writing, signed by both parties hereto and implemented in accordance with
Section 8.1.
9.5 NOTICES. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand, sent by confirmed fax or delivered, postage prepaid, by registered,
certified or express mail or reputable overnight courier service and shall be
deemed given when so delivered by hand, confirmed faxed or if mailed, three
days after mailing (one business day in the case of express mail or overnight
courier service), as follows:
(i) if to the Company,
International Nursing Services, Inc.
000 X. Xxxxxxxx Xxxxxx - Xxxxx 000
Xxxxxx, XX 00000-0000
Tel. (000) 000-0000
Fax (000) 000-0000
Attention: Xx. Xxxx X. Xxxxx
with a copy to
Xxxx X. Xxxxxxx, P.C.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Tel. (000) 000-0000
Fax (000) 000-0000
(ii) if to Cymedix,
Cymedix Corporation
000 Xxxxxxxx Xxxx Xxxx. - Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax (000)000-0000
Attention: Xx. Xxxxx Xxxxxx
with a copy to:
Xxxxx & Xxxxxxxxxxx
000 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, XX 00000
Tel.: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxx, Esq.
9.6 REMEDIES. Except as expressly provided herein, this Agreement is
not intended to confer upon any Person any rights or remedies hereunder.
9.7 ASSIGNMENT. This Agreement may not be assigned by operation of
law or otherwise without the consent of both parties hereto.
9.8 ENTIRE AGREEMENT. This Agreement contains the entire agreement
and understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating
thereto. Neither party shall be liable or bound to any other Person in any
manner by any representations, warranties or covenants relating to that
subject matter except as specifically set forth herein.
9.9 SEVERABILITY. If any provision of this Agreement (or any portion
thereof) or the application of that provision (or any portion thereof) to any
Person or circumstance shall be held invalid, illegal or unenforceable in any
respect by a court of competent jurisdiction, the invalidity, illegality or
unenforceability shall not affect any other provision hereof (or the remaining
portion thereof) or the application of that provision to any other Persons or
circumstances.
9.10 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Colorado
applicable to agreements made and to be performed entirely within that State
without regard to the conflicts of law principles of that State.
9.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
INTERNATIONAL NURSING SERVICES, INC.
By:/s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx,
Chairman and Chief Executive Officer
CYMEDIX LYNX CORPORATION
By:/s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx,
Chairman and Chief Executive Officer
CYMEDIX CORPORATION
By:/s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx, President
