EXHIBIT 10(e)
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made effective as
of February 27, 1995, by and between Pegasus Tax and Financial Planning
Services, Inc., a Nevada corporation ("Pegasus"), Xxxxx Xxxx ("Xxxx") and
Xxxxxxx Xxxxxxxxx ("Xxxxxxxxx") (and collectively, the "Pegasus Parties") on the
one hand and Clinicor, Inc., a Texas corporation ("Clinicor") and Xxxxxx X.
X'Xxxxxxx ("X'Xxxxxxx") and Xxxxxx X. Xxxxxx ("Xxxxxx") (and collectively, the
"Clinicor Parties") on the other.
RECITALS
WHEREAS, the Board of Directors of Pegasus (the "Pegasus Board") and the
Board of Directors of Clinicor (the "Clinicor Board"), respectively, believe it
is in the long-term strategic interests of Pegasus and its shareholders and of
Clinicor and its shareholders that Pegasus and Clinicor effect the transactions
contemplated hereby; and
WHEREAS, Pegasus and Clinicor desire to adopt a plan of reorganization
pursuant to the provisions of Section 368(a)(1)(A) of the Internal Revenue Code
of 1986, as amended (the "Code"), providing for the merger of Clinicor with and
into Pegasus (the "Merger") pursuant to which all of the issued and outstanding
shares of Common Stock, without par value, of Clinicor ("Clinicor Common Stock")
will be converted into and exchanged for shares of Common Stock, $0.001 par
value, of Pegasus ("Pegasus Common Stock"), all pursuant to the plan of
reorganization set forth herein; and
WHEREAS, the Pegasus Board and all of the Pegasus Shareholders and the
Clinicor Board and all of the Clinicor Shareholders have each approved this
Agreement, the Merger and the other transactions contemplated hereby; and
WHEREAS, Pegasus and Clinicor desire to effect the Merger and the other
transactions contemplated hereby; and
WHEREAS, the parties hereto desire to set forth certain representations,
warranties, covenants and agreements made by each to the other as an inducement
to the consummation of the Merger and the other transactions contemplated
hereby:
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreement contained herein, the
parties hereto hereby agree as follows:
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I. CONTEMPLATED BUSINESS COMBINATION
In accordance with the terms and subject to the conditions of this
Agreement, Pegasus and Clinicor shall effect the Merger as follows:
1.1 THE MERGER. At the Effective Time (as defined in Section 1.3), in
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accordance with this Agreement, the General Corporation Law of the State of
Nevada (the "Nevada Law") and the General Corporation Law of the State of Texas
(the "Texas Law"), Clinicor shall be merged with and into Pegasus, the separate
existence of Clinicor shall cease, Pegasus shall continue as the surviving
corporation and shall be governed by the laws of the State of Nevada, and
Pegasus shall change its corporate name to "Clinicor, Inc.". Pegasus is herein
sometimes referred to as the "Surviving Corporation".
1.2 EFFECT OF THE MERGER. At the Effective Time:
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(A) The title to all real estate and other property owned by each of
Pegasus and Clinicor (collectively, the "Constituent Corporations") is
vested in the Surviving Corporation without reversion or impairment;
(B) The Surviving Corporation has all of the liabilities of each of
the Constituent Corporations;
(C) A proceeding pending against any of the Constituent Corporations
may be continued as if the Merger did not occur or the Surviving
Corporation may be substituted in the proceeding for Clinicor;
(D) Article I of the articles of incorporation of the Surviving
Corporation is amended to the extent provided in the Articles of Merger;
and
(E) The shares of each of the Constituent Corporations that are to be
converted into shares, obligations or other securities of the Surviving
Corporation are converted, and the former holders of the shares are
entitled only to the rights provided in the Articles of Merger to be filed
as provided in Section 1.3 hereof or to their rights under Sections 78.471
to 78.502 of the Nevada Law;
all in accordance with Section 78.459 of the Nevada Law and Section 5.01 of the
Texas Law.
1.3 CONSUMMATION OF THE MERGER. As soon as is practicable on the Closing
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Date (as defined in Section 1.4) after all conditions to the consummation of the
Merger set forth herein have been satisfied or duly waived, the parties hereto
shall cause the Merger to be consummated by filing (a) with the Secretary of
State of the State of Nevada, Articles of Merger in such form as is required by,
and executed, acknowledged and certified in accordance with, the relevant
provisions of the Nevada
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Law, and (b) with the Secretary of State of Texas, Articles of Merger in such
form as is required by, and executed, acknowledged and certified in accordance
with, the relevant provisions of the Texas Law (the later of the time of such
filings or the effective time of the Articles of Merger issued by the Nevada
Secretary of State pursuant to Section 5.04 of the Texas Law is herein referred
to as the "Effective Time").
1.4 CLOSING. The closing of the Merger (the "Closing") shall take place
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(a) at the offices of Pezzola & Xxxxxx, 0000 Xxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxxxx 00000, at 10:00 a.m., San Francisco time, on the business
day following (i) the date of the last to occur of compliance with the
conditions to the Closing set forth in this Agreement or (b) at such other time
and place or on such other date as Pegasus and Clinicor shall mutually agree
(the "Closing Date").
1.5 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Articles of
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Incorporation of Pegasus (the "Articles") and the By-Laws of Pegasus (the "By-
Laws"), as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation and By-Laws of the Surviving Corporation and
thereafter shall continue to be its Articles of Incorporation and By-Laws until
amended as provided therein and in accordance with the Nevada Law.
1.6 CONVERSION OF SECURITIES. In accordance with the terms and subject to
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the conditions of this Agreement, at the Effective Time, by virtue of the Merger
and without any action on the part of Pegasus, Clinicor or the holder of any of
the following securities:
(A) Each share of Pegasus Common Stock outstanding immediately prior
to the Effective Time shall remain outstanding as a share of Pegasus Common
Stock (the "Common Stock of the Surviving Corporation"), and shall not be
converted into any other securities or cash pursuant to the Merger.
(B) Each share of Clinicor Common Stock outstanding immediately prior
to the Effective Time shall be automatically converted into one hundred
sixty-six point four (166.4) fully paid and nonassessable shares of Common
Stock of the Surviving Corporation (the "Exchange Ratio").
The Exchange Ratio shall be adjusted to reflect fully the effect of any
stock split, reverse split, stock dividend (including any dividend or
distribution of securities convertible into Pegasus Common Stock or
Clinicor Common Stock), exchange of shares, reclassification,
reorganization, recapitalization or other similar change with respect to
the Pegasus Common Stock or the Clinicor Common Stock occurring after the
date hereof and prior to the Effective Time. After the Effective Time, each
record holder of a certificate or certificates that immediately prior
thereto represented outstanding shares of Clinicor Common Stock shall be
entitled, upon surrender thereof to the Surviving Corporation or the
exchange or transfer agent (the "Exchange Agent") for the Common Stock of
the Surviving Corporation, promptly to receive in exchange therefor a
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certificate or certificates representing the number of whole shares of
Common Stock of the Surviving Corporation into which such shares of
Clinicor Common Stock shall have been converted pursuant to this Section
1.6, in such denominations and registered in such names as such holder may
request, and, in addition, each such holder who would otherwise be entitled
to a fraction of a share of Common Stock of the Surviving Corporation shall
be entitled, upon such surrender of a certificate or certificates to the
Surviving Corporation or the Exchange Agent, promptly to be paid cash in
accordance with Section 1.6(e). Until so surrendered, each certificate that
immediately prior to the Effective Time represented outstanding shares of
Clinicor Common Stock shall be deemed from and after the Effective Time,
for all corporate purposes other than the payment of dividends or other
distributions, to evidence the ownership of the number of whole shares of
Common Stock of the Surviving Corporation into which such shares of
Clinicor Common Stock shall have been so converted and the right to be paid
in cash, without interest thereon, in lieu of the issuance of any factional
share of Common Stock of the Surviving Corporation in accordance with
Section 1.6(e). Unless and until any such certificate that immediately
prior to the Effective Time represented outstanding shares of Clinicor
Common Stock shall be so surrendered, no dividends or other distributions
payable to the holders of Common Stock of the Surviving Corporation, as of
the Effective Time or any time thereafter, shall be paid to the holder of
such certificate; provided however, that, upon surrender of such
certificate that immediately prior to the Effective Time represented
outstanding shares of Clinicor Common Stock, there will be promptly paid to
the record holder of the certificate or certificates issued in exchange
therefor the amount, without interest thereon, of dividends and other
distributions, if any, that theretofore became payable with respect to the
number of whole shares of Common Stock of the Surviving Corporation issued
to such holder.
(C) All shares of Common Stock of the Surviving Corporation (and, in
certain circumstances, the right to be paid cash in certain amounts) into
which shares of Clinicor Common Stock shall have been converted pursuant to
this Section 1.6 shall be issued (and cash paid) in full satisfaction of
all rights pertaining to such converted shares.
(D) If any certificate for shares of Common Stock of the Surviving
Corporation is to be issued in a name other than that of the record holder
of the certificate surrendered in exchange therefor, it will be a condition
of the issuance thereof that the certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer and that the
person requesting such issuance shall have paid to the Surviving
Corporation or any agent designated by it any transfer or other taxes
required by reason of the issuance of a certificate for shares of Common
Stock of the Surviving Corporation in any name other than that of the
record holder of the certificate surrendered, or established to the
satisfaction of the Surviving Corporation or any agent designated by it
that such tax has been paid or is not payable.
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(E) No fraction of a share of Common Stock of the Surviving
Corporation shall be issued, but in lieu thereof each record holder of
shares of Clinicor Common Stock who would otherwise be entitled to a
fraction of a share of Common Stock of the Surviving Corporation shall be
entitled, upon surrender to the Surviving Corporation or the Exchange Agent
of a certificate or certificates that immediately prior to the Effective
Time represented outstanding shares of Clinicor Common Stock, promptly to
be paid in cash an amount equal to the value of such fraction of a share
based upon the Exchange Ratio in effect at the Effective Time. For
purposes of this Merger, such value shall be deemed to be $1.00 per share.
No interest shall be paid on any such amount.
(F) All shares of Clinicor Common Stock held by a record holder shall
be aggregated for the purposes of computations of the number of shares of
Common Stock of the Surviving Corporation issuable and cash to be paid in
lieu of fractional shares hereunder.
1.7 LETTERS OF TRANSMITTAL. Promptly after the Effective Time, the
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Surviving Corporation shall, or shall cause the Exchange Agent to, mail, to each
record holder of a certificate or certificates that immediately prior to the
Effective Time represented outstanding shares of Clinicor Common Stock a letter
of transmittal and reasonable instructions for such holder's use in effecting
the surrender of such certificate or certificates in exchange for a certificate
or certificates representing shares of Common Stock of the Surviving
Corporation.
1.8 LOST, STOLEN OR DESTROYED CERTIFICATE. In the event that any
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certificate evidencing shares of Clinicor Common Stock shall be alleged to have
been lost, stolen or destroyed, the Exchange Agent shall issue in exchange for
such alleged lost, stolen or destroyed certificate, upon the making of an
affidavit of such allegation by the record holder thereof, a certificate for
such shares of Common Stock of the Surviving Corporation and such record holder
shall be entitled to any cash payments required pursuant to Section 1.6;
provided however, that the Surviving Corporation may, in its discretion and as a
condition precedent to the issuance thereof, require such holder of such alleged
lost, stolen or destroyed certificate to deliver a bond in such sum as the
Surviving Corporation may reasonably direct as indemnity against any claim that
may be made against the Surviving Corporation and/or the Exchange Agent with
respect to the certificate alleged to have been lost, stolen or destroyed.
1.9 FURTHER ACTION. Each of Pegasus and Clinicor shall take all such
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reasonable and lawful action as may be necessary or appropriate in order to
effectuate the Merger as promptly as possible. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Constituent Corporations, the directors and officers of
each of the Constituent Corporations are fully authorized and empowered in the
name and on behalf of their respective corporation or otherwise to take, and
shall take, all such further action.
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1.10 CERTAIN AGREEMENTS. The Surviving Corporation, from and after the
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Effective Time, agrees that it may be served with process in the State of Texas
in any proceeding for the enforcement of any obligation of Clinicor.
II. REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF PEGASUS. Except as set forth on
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Schedule II attached hereto and incorporated herein by reference, the Pegasus
Parties, jointly and severally, hereby each represent and warrant to Clinicor
that:
(A) ORGANIZATION AND COMPLIANCE WITH LAW. Pegasus is a corporation
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duly organized, validly existing and in good standing under the laws of the
State of Nevada and has all requisite corporate power and corporate
authority and all requisite governmental and other authorizations to own,
lease and operate its assets and properties and to carry on its business as
now being conducted, except such governmental and other authorizations (if
any) where the failure to have such authorizations does not and would not,
either individually or in the aggregate, have a material adverse effect on
the financial condition, results of operations or business of Pegasus.
Pegasus is duly qualified as a foreign corporation to do business and is in
good standing in the State of Texas. Except as disclosed in Schedule II,
Pegasus possesses all permits, licenses, authorizations, certificates,
franchises, orders, consents or other indicia of authority required by any
governmental, administrative or regulatory authority or agency and is in
compliance with all applicable laws, judgments, orders, decrees, rules and
regulations. Pegasus has heretofore delivered to Clinicor true and complete
copies of the Articles of Incorporation and the By-Laws of Pegasus as in
existence on the date hereof.
(B) CAPITALIZATION.
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(I) The authorized capital stock of Pegasus consists of
75,000,000 shares of Pegasus Common Stock, $0.001 par value per share.
Immediately prior to the Effective Time, there are issued and
outstanding 1,421,000 shares of Pegasus Common Stock, all of which are
validly issued, fully paid and nonassessable and were issued in
compliance with all applicable federal and state securities laws.
Immediately prior to the Effective Time, there are also reserved for
issuance 2,000,000 shares of Pegasus Common Stock issuable under
Pegasus' 1995 Employee and Consultant Stock Option Plan (the "Option
Plan"). All outstanding shares of Pegasus capital stock are validly
issued, fully paid and nonassessable, and no holder thereof is
entitled to any preemptive rights. All shares of Common Stock of the
Surviving Corporation issued in accordance with this Agreement, when
issued, will be validly issued, fully paid and nonassessable, and,
except as provided in Section 6.1(i), will not have any preemptive
rights. Pegasus is not a party to, nor is Pegasus aware of, any voting
agreement, voting trust or similar agreement, arrangement or
understanding relating to any class of capital stock of, or any
agreement, arrangement or understanding providing for registration
rights with respect to any class of capital stock or other securities
of, Pegasus.
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(II) Other than as disclosed or as contemplated by this
Agreement, the Pegasus Option Plan, and any shares of capital stock of
Pegasus issued pursuant to any of the foregoing, there are not now,
and at the Effective Time there will not be, any (A) outstanding
shares of capital stock or other equity securities of Pegasus, or (B)
outstanding options, warrants, scrip, rights to subscribe for, calls
or commitments of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of any class of
capital stock of Pegasus, or contracts, agreements, arrangements or
understandings to which Pegasus is a party, or by which it is or may
be bound, to issue additional shares of any class of its capital stock
or options, warrants, scrip or rights to subscribe for, calls or
commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, any additional shares of
any class of capital stock of Pegasus.
(C) AUTHORIZATION AND VALIDITY OF AGREEMENTS. Pegasus has all
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requisite corporate power and corporate authority to enter into this
Agreement and to perform its obligations hereunder, and the execution and
delivery by Pegasus of this Agreement and the consummation by it of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action. This Agreement has been duly executed and delivered by
Pegasus and is the valid and binding obligation of Pegasus, enforceable
against Pegasus in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, moratorium or similar
laws affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to certain equitable defenses and to the discretion of the court
before which any proceedings therefor may be brought.
(D) NO NOTICES OR APPROVALS REQUIRED AND NO CONFLICTS. None of the
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execution and delivery of this Agreement by Pegasus, the performance by
Pegasus of its obligations hereunder or the consummation by Pegasus of the
transactions contemplated hereby will:
(I) conflict with the Articles of Incorporation or the By-
Laws of Pegasus;
(II) assuming satisfaction of the requirements set forth in
Clause (iii) (A) and (B) below, violate any provision of law
applicable to Pegasus;
(III) require any consent or approval of, or filing with or
notice to, any public body or authority, domestic or foreign, under
any provision of law applicable to Pegasus except for (A) requirements
of Federal and state securities laws, and (B) the filing of this
Agreement or Articles of Merger in accordance with the Nevada Law and
the filing of Articles of Merger and the issuance of a Certificate of
Merger in accordance with the Texas Law; or
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(IV) require any consent, approval or notice under, or violate,
breach, be in conflict with or constitute a default (or an event that,
with notice or lapse of time or both, would constitute a default)
under, or permit the termination of, or result in the creation or
imposition of any lien upon any assets, properties or business of
Pegasus under, any note, bond, indenture, mortgage, deed of trust,
lease, franchise, permit, authorization, license, contract, instrument
or other agreement or commitment, order, judgment or decree to which
Pegasus is a party or by which Pegasus or any of the assets or
properties thereof is bound or encumbered.
(E) PEGASUS AGREEMENTS AND FINANCIAL STATEMENTS.
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(I) All material contacts, agreements, arrangements and
understanding of Pegasus have been disclosed in Schedule II except for
those contracts, agreements, arrangements and understandings that have
already been fully performed and as to which there are not contingent
liabilities on the part of Pegasus.
(II) Pegasus has delivered to Clinicor copies of its audited
financial statements (balance sheet and income statement) at February
28, 1994 (the "Pegasus Financial Statements"). The Pegasus Financial
Statements are complete and correct in all material respects and have
been prepared in accordance with generally accepted accounting
principals applied on a consistent basis throughout the periods
indicated, except that such statements may not contain all footnotes
required by generally accepted accounting principals. The Pegasus
Financial Statements accurately set out and describe the financial
position and operating results of Pegasus as of the dates, and for the
periods, indicated therein, subject to normal year-end adjustments.
(III) Except as set forth in Schedule II, to the best knowledge
of all Pegasus Parties, Pegasus does not have any debt, liability or
obligation of any nature, whether accrued, absolute or contingent, and
whether due or to become due, that is not reflected or reserved
against in the Pegasus Financial Statements.
(F) CONDUCT OF BUSINESS IN THE ORDINARY COURSE AND ABSENCE OF CERTAIN
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CHANGES AND EVENTS.
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(I) Since February 28, 1994, Pegasus has taken no action of
the type referred to in Section 4.1 and there has not been any
material adverse change in the financial condition, results of
operations or business of Pegasus and there has not been any
condition, event or development that is reasonably expected by Pegasus
to result in a material adverse change in the financial condition,
results of operations or business of Pegasus and that would be
required to be disclosed in the Pegasus Financial Statements or the
notes thereto under generally
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accepted accounting principles. Pegasus is not a party to any
collective bargaining agreements and believes that its relations with
its employees are generally satisfactory. Since February 28, 1994, no
significant labor dispute with any employees of Pegasus or union
organizing effort has existed or, to the knowledge of Pegasus, is
imminent or threatened.
(II) Pegasus is not in violation of its Articles of
Incorporation or Bylaws or in default in the performance of, and no
event has occurred that, with no notice or lapse of time or both,
would constitute a default in the performance of, any note, bond,
indenture, mortgage, deed of trust, leases, franchise, permit,
authorization, license, contract, instrument or other agreement or
commitment, order, judgment or decree to which Pegasus is a party or
by which Pegasus or any of the assets or properties thereof is bound
or encumbered.
(G) CERTAIN FEES. Neither Pegasus or any of its directors, officers,
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employees, agents or representatives, on behalf of Pegasus or its board of
directors, or any committee thereof, has employed any financial advisor,
actuary, broker or finder or incurred any liability for any financial
advisory, actuarial, brokerage or finders' fees or commissions in
connection with the transactions contemplated hereby.
(H) LITIGATION. There are no claims, actions, suits, investigations
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or proceedings pending or, to the knowledge of Pegasus, threatened against
or affecting Pegasus or any of its assets or properties, at law or in
equity, before or by any Federal, state, municipal or other governmental
agency or authority, foreign or domestic, or before any arbitration board
or panel, wherever located.
(I) EMPLOYEE BENEFIT PLANS. There are no "employee pension plans",
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as defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), maintained by Pegasus for the benefit of its
employees.
(J) TAXES.
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(I) All returns and reports, including without limitation
information and withholding returns and reports (collectively, "Tax
Returns") of or relating to any foreign, Federal, state, local or
other income, premium, property, sales, excise and other taxes of any
nature whatsoever, including any interest, penalties and additions to
tax in respect thereof ("Tax" or "Taxes") heretofore required to be
filed by Pegasus have been duly filed on a timely basis. To the best
knowledge of all Pegasus Parties, all such Tax Returns were complete
and accurate in all material respects. To the best knowledge of all
Pegasus Parties, Pegasus has paid or has made adequate provision for
the payment of all Taxes.
(II) As of the date of this Agreement there are no audits or
administrative proceedings, court proceedings or claims pending
against
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Pegasus with respect to any Taxes, no assessment, deficiency or
adjustment has been asserted or, to the knowledge of Pegasus, proposed
with respect to any Tax Return of or with respect to Pegasus and there
are no liens for Taxes upon the assets or properties of Pegasus except
liens for Taxes not yet delinquent.
(III) There are not in force any waivers or agreements,
arrangements or understandings by or with respect to Pegasus or for an
extension of time for the assessment or payment of any Taxes. Pegasus
has not received a written ruling of a taxing authority relating to
Taxes or entered into a written and legally binding agreement with a
taxing authority relating to Taxes that would have a continuing
material adverse effect after the Closing Date. Pegasus is not
required to include in income any adjustment pursuant to Section
481(a) of the Code by reason of a voluntary change in accounting
method initiated by Pegasus and to the best knowledge of Pegasus the
IRS has not proposed any such adjustment or change in accounting
method.
(IV) Pegasus has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, creditor, independent contractor or other third party.
(K) BOOKS AND RECORDS. The financial records and books of
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account of Pegasus are complete and correct, and have been maintained in
accordance with good business practices and are fairly reflected in the
Financial Statements. Copies of the minute books of Pegasus as delivered to
counsel for Clinicor contain all minutes and other records of the board of
directors (including committees of the board) and shareholders of Pegasus,
are accurate records of all meetings and corporate action of the
shareholders, the board of directors and all directors' committees of
Pegasus since its formation, and correctly reflect all issuances of stock
of any kind by Pegasus. The stock records of Pegasus accurately reflect all
transfers of record ownership of said stock from the date of organization
of Pegasus until the date hereof.
(L) DISCLOSURE. Neither this Agreement, nor any of the schedules,
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attachments, exhibits, written statements, documents, certificates or other
materials prepared or supplied by Pegasus with respect to the transactions
contemplated hereby contain any untrue statements of a material fact or
omit a material fact necessary to make the statements contained herein or
therein not misleading. The Pegasus Parties, jointly and severally,
represent and warrant that to their knowledge there is no fact which
Pegasus has not disclosed to the Clinicor Parties, in writing, which
involves a claim or loss in excess of $5,000, individually, or in the
aggregate, or which could reasonably be anticipated to have a material
adverse effect upon the existing or expected financial condition, operating
results, assets, customer relations, employee relations or business
prospects of Pegasus.
(M) DISSENTING SHAREHOLDER RIGHTS. No holders of outstanding shares
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of Pegasus Common Stock shall be, or have the right to become, entitled to
dissenting shareholder/appraisal rights pursuant to Nevada Law arising out
of or in connection with this Merger.
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2.2 REPRESENTATIONS AND WARRANTIES OF CLINICOR. Except as set forth on
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Schedule II attached hereto and incorporated herein by reference, the Clinicor
Parties, jointly and severally, each hereby represent and warrant to Pegasus
that:
(A) ORGANIZATION AND COMPLIANCE WITH LAW. Clinicor is a corporation
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duly organized, validly existing and in good standing under the laws of the
State of Texas and has all requisite corporate power and corporate
authority and all requisite governmental and other authorizations to own,
lease and operate its assets and properties and to carry on its business as
now being conducted, except such governmental and other authorizations (if
any) where the failure to have such authorizations does not and would not,
either individually or in the aggregate, have a material adverse effect on
the financial condition, results of operations or business of Clinicor.
Clinicor is duly qualified as a foreign corporation to do business and is
in good standing in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification necessary. Clinicor possesses all permits, license,
authorizations, certificates, franchises, orders, consents or other indicia
of authority required by any governmental, administrative or regulatory
authority or agency and is in compliance with all applicable laws,
judgments, orders, decrees, rules and regulations. Clinicor has heretofore
delivered to Pegasus true and complete copies of its Articles of
Incorporation and Bylaws as in existence on the date hereof.
(B) CAPITALIZATION.
(I) The authorized capital stock of Clinicor consists of
1,000,000 shares of Clinicor Common Stock with no par value.
Immediately prior to the Effective Time, there are issued and
outstanding 12,500 shares of Clinicor Common Stock. Immediately prior
to the Effective Time, Clinicor had six (6) record shareholders. All
outstanding shares of Clinicor Common Stock are validly issued, fully
paid and nonassessable and were issued in compliance with all
applicable federal and state securities laws, and no holder thereof is
entitled to any preemptive rights. Clinicor is not a party to, nor is
Clinicor aware of, any voting agreement, voting trust or similar
agreement, arrangement or understanding relating to any class of
capital stock of, or any agreement, arrangement or understanding
providing for registration rights with respect to any class of capital
stock or other securities of, Clinicor.
(II) There are not now, and at the Effective Time there will
not be, any (A) outstanding shares of capital stock or other equity
securities of Clinicor, or (B) outstanding options, warrants, scrip,
rights to subscribe for, calls or commitments of, any character
whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of any class of capital stock of Clinicor, or
contracts, agreements, arrangements or understandings to which
Clinicor is a party, or by which it is or may be bound, to issue
additional shares of any class of its capital stock or options,
warrants, scrip or rights to subscribe for, calls or commitments
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of any character whatsoever relating, or securities or rights
convertible into or exchangeable for, any additional shares of any
class of capital stock of Clinicor.
(C) AUTHORIZATION AND VALIDITY OF AGREEMENTS. Clinicor has all
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requisite corporate power and corporate authority to enter into this
Agreement and to perform its obligations hereunder, and the execution and
delivery by Clinicor of this Agreement and the consummation by it of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action. This Agreement has been duly executed and delivered by
Clinicor and is the valid and binding obligation of Clinicor, enforceable
against Clinicor in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, moratorium or similar
laws affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to certain equitable defenses and to the discretion of the court
before which any proceedings therefor may be brought.
(D) NO NOTICES OR APPROVALS REQUIRED AND NO CONFLICTS. None of the
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execution and delivery of this Agreement by Clinicor, the performance by
Clinicor of its obligations hereunder or the consummation by Clinicor of
the transactions contemplated hereby will:
(I) conflict with the Articles of Incorporation or Bylaws of
Clinicor;
(II) assuming satisfaction of the requirements set forth in
Clause (iii) (A) and (B) below, violate any provision of law
applicable to Clinicor;
(III) require any consent or approval of, or filing with or
notice to, any public body or authority, domestic or foreign, under
any provision of law applicable to Clinicor, except for (A)
requirements of Federal and state securities laws, (B) the filing of
Articles of Merger and the issuance of a Certificate of Merger in
accordance with the Nevada Law; or
(IV) require any consent, approval or notice under, or violate,
breach, be in conflict with or constitute a default (or an event that,
with notice or lapse of time or both, would constitute a default)
under, or permit the termination of, or result in the creation or
imposition of any lien upon any assets, properties or business of
Clinicor under any note, bond, indenture, mortgage, deed of trust,
lease, franchise, permit, authorization, license, contract, instrument
or other agreement or commitment, order, judgment or decree to which
Clinicor is a party or by which Clinicor or any of the assets or
properties thereof is bound or encumbered, except those disclosed in
Schedule II.
(E) CLINICOR AGREEMENTS AND FINANCIAL STATEMENTS.
--------------------------------------------
(I) All material contracts, agreements, arrangements and
understandings of Clinicor have been disclosed in Schedule II except
for
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those contracts, agreements, arrangements and understandings that
have already been fully performed and as to which there are no
contingent liabilities on the part of Clinicor.
(II) Clinicor has delivered to Clinicor copies of its unaudited
financial statements (balance sheet and income statement) at December
31, 1993 and unaudited financial statements for the year ended
December 31, 1994 (collectively, the "Clinicor Financial Statements").
The Clinicor Financial Statements are complete and correct in all
material respects and have been prepared in accordance with generally
accepted accounting principals applied on a consistent basis
throughout the periods indicated, except that such statements may not
contain all footnotes required by generally accepted accounting
principals. The Clinicor Financial Statements accurately set out and
describe the financial position and operating results of Clinicor as
of the dates, and for the periods, indicated therein, subject to
normal year-end adjustments.
(III) Schedule II sets forth the outstanding balance and
amortization rate of all debt and amount and aging of all trade
payables which are individually in excess of $5,000 of Clinicor as of
December 31, 1994. Except as set forth in Schedule II, Clinicor does
not have any debt, liability or obligation of any nature, whether
accrued, absolute or contingent, and whether due or to become due,
that is not reflected or reserved against in the Clinicor Financial
Statements, except for those that (a) may have been incurred after the
date of the Clinicor Financial Statements or (b) are not required by
generally accepted accounting principles to be included in the
Clinicor Financial Statements, all of which debts, liabilities and
obligations to the best knowledge of all Clinicor Parties are not in
the aggregate in excess of $25,000 and were incurred in the ordinary
course of business and are usual and normal in amount, both
individually and in the aggregate. For purposes of this subsection
(e)(iii), all indebtedness, liabilities, agreements, understandings,
instruments, and contracts involving the same person or entity
(including persons or entities Clinicor has reason to believe are
affiliated therewith) shall be aggregated for the purpose of meeting
the individual minimum dollar amounts of such subsection.
(F) CONDUCT OF BUSINESS IN THE ORDINARY COURSE AND ABSENCE OF CERTAIN
-----------------------------------------------------------------
CHANGES AND EVENTS.
------------------
(I) Except as contemplated by this Agreement since December
31, 1994, Clinicor has taken no action of the type referred to in
Section 3.1 and there has not been any material adverse change in the
financial condition, results of operations or businesses of Clinicor
and there has not been any condition, event or development that is
reasonably expected by Clinicor to result in a material adverse change
in the financial condition, results of operations or business of
Clinicor and that would be required to be disclosed in the Clinicor's
Financial Statements or the notes thereto under generally accepted
accounting principles.
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Clinicor is not a party to any collective bargaining agreement and
believes that its relations with its employees are generally
satisfactory. Since December 31, 1994, no significant labor dispute
with any employees of Clinicor or union organizing effort has existed
or, to the knowledge of Clinicor, is imminent or threatened.
(II) Clinicor is not in violation of its charter or bylaws or
in default in the performance of, and no event has occurred that, with
notice or lapse of time or both, would constitute a default in the
performance of, any note, bond, indenture, mortgage, deed of trust,
lease, franchise, permit, authorization, license, contract, instrument
or other agreement or commitment, order, judgment or decree to which
Clinicor is a party or by which Clinicor or any of the assets or
properties thereof is bound or encumbered.
(G) CERTAIN FEES. Neither Clinicor nor any of its directors,
------------
officers, employees, agents or representatives, on behalf of Clinicor or
its board of directors, or any committee thereof, has employed any
financial advisor, actuary, broker or finder or incurred any liability for
any financial advisory, actuarial, brokerage or finders' fees or
commissions in connection with the transactions contemplated hereby.
(H) LITIGATION. There are no claims, actions, suits, investigations
----------
or proceedings pending or, to the knowledge of Clinicor, threatened against
or affecting Clinicor or any of its assets or properties, at law or in
equity, before or by any Federal, state, municipal or other governmental
agency or authority, foreign or domestic, or before any arbitration board
or panel, wherever located.
(I) EMPLOYEE BENEFIT PLANS. There are no "employee pension benefit
----------------------
plans", as defined in Section 3(2) of ERISA, maintained by Clinicor for the
benefit of its employees.
(J) TAXES.
-----
(I) All Tax Returns of or relating to any Taxes heretofore
required to be filed by Clinicor have been duly filed on a timely
basis. To the best knowledge of all Clinicor Parties, all such Tax
Returns were complete and accurate in all material respects. To the
best knowledge of all Clinicor Parties, Clinicor has paid or made
adequate provision for the payment of all Taxes.
(II) As of the date of this Agreement there are no audits or
administrative proceedings, court proceedings or claims pending
against Clinicor with respect to any Taxes, no assessment, deficiency
or adjustment has been asserted or, to the knowledge of Clinicor,
proposed with respect to any Tax Return of or with respect to Clinicor
and there are no liens for Taxes upon the assets or properties of
Clinicor, except liens for Taxes not yet delinquent.
-14-
(III) There are not in force any waivers or agreements
arrangements or understandings by or with respect to Clinicor of or
for an extension of time for the assessment or payment of any Taxes.
Clinicor has not received a written ruling of a taxing authority
relating to Taxes or entered into a written and legally binding
agreement with a taxing authority relating to Taxes that would have a
continuing material adverse effect after the Closing Date. Clinicor is
not required to include in income any adjustment pursuant to Section
481(a) of the Code by reason of a voluntary change in accounting
method initiated by Clinicor and, to the best knowledge of Clinicor,
the IRS has not proposed any such adjustment or change in accounting
method.
(IV) Clinicor has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, creditor, independent contractor or other third party.
(K) PATENTS AND OTHER INTANGIBLE RIGHTS. To the best knowledge of
-----------------------------------
all Clinicor Parties, Clinicor has good title (without any unlawful
misappropriation) to all patents, copyrights, tradenames and service marks
covering Clinicor's existing technology and proprietary property rights,
including but not limited to, any invention, trade secrets, or intellectual
property rights (collectively the "Trade Secret Property Rights"), or
adequate licenses and rights to use the Trade Secret Property Rights of
others on terms deemed favorable by Clinicor, which are necessary for the
conduct of the business of Clinicor as now conducted or proposed to be
conducted. To the best of Clinicor's knowledge after due inquiry and
investigation, the business of Clinicor does not infringe upon or conflict
with the Trade Secret Property Rights of others in a manner which would
materially or adversely affect the business of Clinicor as now conducted or
proposed to be conducted. None of the Trade Secret Property Rights is
subject to any mortgage, pledge, lien, charge, security interest or
encumbrance or a lease or license (except for leases or licenses to or from
Clinicor), or any claim or litigation proceedings alleging a violation of
the rights of any third party. Clinicor has not granted exclusive rights to
manufacture, assemble, sell or use any Trade Secret Property Rights and is
not otherwise bound by any agreement which affects Clinicor's exclusive
right to manufacture, sell or assemble its products or Trade Secret
Property Rights. To the best knowledge of Clinicor after reasonable
investigation and inquiry, no shareholder or employee of Clinicor is under
any restriction, whether contractual, or by virtue of previous employment
or otherwise, that would prevent him from performing his duties for
Clinicor or prevent Clinicor from using the Trade Secret Property Rights.
All patents, trademarks, copyright registrations and applications therefor
of Clinicor are set forth in Schedule II. No employee or consultant of
Clinicor is in violation of any term of any proprietary information or
confidentiality agreement with Clinicor.
(L) BUSINESS PLAN. Clinicor's business plan previously delivered to
-------------
Pegasus (the "Business Plan") was prepared in good faith by Clinicor
and does not, to the best of Clinicor's knowledge, contain any untrue
statement of a material fact, except that with respect to projections
contained in the Business
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Plan, the projections are not deemed by Clinicor to be a valid or reliable
indicators of Clinicor's future financial performance, and the Pegasus
Parties should not and may not rely on such projections.
(M) BOOKS AND RECORDS. The financial records and books of account of
-----------------
Clinicor are complete and correct, and have been maintained in accordance
with good business practices and are fairly reflected in the Financial
Statements. Copies of the minute books of Clinicor as delivered to counsel
to Pegasus contain all minutes and other records of the board of directors
(including committees of the board) and shareholders of Clinicor, are
accurate records of all meetings and corporate action of the shareholders,
the board of directors and all directors' committees of Clinicor since its
formation, and correctly reflect all issuances of stock of any kind by
Clinicor. The stock records of Clinicor accurately reflect all transfers of
record ownership of said stock from the date of organization of Clinicor
until the date hereof.
(N) DISCLOSURE. Neither this Agreement, nor any of the schedules,
----------
attachments, exhibits, written statements, documents, certificates or
other materials prepared or supplied by Clinicor with respect to the
transactions contemplated hereby contain any untrue statements of a
material fact or omit a material fact necessary to make the statements
contained herein or therein not misleading. The Clinicor Parties, jointly
and severally, represent and warrant to their knowledge that there is no
fact which Clinicor has not disclosed to the Pegasus Parties, in writing,
which involves a claim or loss in excess of $5,000, individually, or in the
aggregate, or which could reasonably be anticipated to have a material
adverse effect upon the existing or expected financial condition, operating
results, assets, customer relations, employee relations or business
prospects of Clinicor.
(O) DISSENTING SHAREHOLDER RIGHTS. No holders of outstanding shares
-----------------------------
of Clinicor Common Stock shall be, or have the right to become, entitled
to dissenting shareholder/appraisal rights pursuant to Texas Law arising
out of or in connection with this Merger.
III. COVENANTS OF CLINICOR
3.1 CONDUCT OF BUSINESS BY CLINICOR PENDING THE MERGER. Clinicor
--------------------------------------------------
covenants and agrees with Pegasus that, with respect to Clinicor prior to the
Effective Time, unless Pegasus shall otherwise agree in writing or as is
otherwise expressly contemplated by this Agreement or set forth in Schedule III:
(A) The business of Clinicor will be conducted only in, and Clinicor
will not take any material action except in, the ordinary course of
business and consistent with prior practices.
(B) Clinicor will not directly or indirectly do any of the following:
(i) issue, sell, pledge, dispose of or encumber (A) any shares of capital
stock of Clinicor, (B) any investment assets of Clinicor other than in the
ordinary course of business consistent with prior practices or in
transactions not in excess of
-16-
$25,000 in the aggregate, or (C) any other assets or properties of Clinicor
other than in the ordinary course of business and consistent with prior
practices or in transactions not in excess of $25,000 in the aggregate;
(ii) amend or propose to amend its charter or Bylaws; (iii) split, combine
or reclassify any outstanding capital stock, or declare, set aside or pay
any dividend or distribution payable in cash, stock, property or otherwise
with respect to its capital stock whether now or hereafter outstanding;
(iv) redeem, purchase or acquire or offer to acquire any of its capital
stock; or (v) agree or commit to do any of the foregoing.
(C) Clinicor will not directly or indirectly do any of the following:
(i) grant, issue, sell, pledge or dispose of any options, warrants or
rights of any kind to acquire any shares of any class of capital stock of
Clinicor or any securities that are convertible or exchangeable therefor;
(ii) acquire (whether by merger, consolidation, acquisition of stock or
assets or otherwise) any corporation, partnership or other business
organization or division thereof; (iii) incur any indebtedness for borrowed
money or issue any debt securities; (iv) cancel any material debts or
obligations owing to it; (v) liquidate or merge into or consolidate with
any other corporation; or (vi) agree or commit to do any of the foregoing.
(D) Clinicor will not enter into, amend in any material respect,
terminate or waive any material right under any contract or agreement
referred to in Clause (i) or (iii) of Section 2.2(e) or that would have
been disclosed pursuant to such clause if such contract or agreement had
been in effect as of the date hereof.
(E) Clinicor will not enter into or amend any employment, consulting,
separation or termination agreement, arrangement or understanding nor take
any action with respect to the grant of any separation or termination pay
or with respect to any increase of benefits payable under its separation or
termination pay policies or agreements or arrangements in effect as of the
date hereof; provided however, that this Section 3.1(e) shall not prohibit
entering into employment agreements, arrangements or understandings to the
extent permitted by Section 3.1(f) or payments by Clinicor in excess of
those provided for under existing separation or termination pay policies if
made in settlement of employment termination claims arising in the ordinary
course and the amount of such payments is consistent with prior practices.
(F) Clinicor will not (i) hire any new executive employee, (ii) hire
any new management employee with annual compensation greater than $60,000,
(iii) except for replacement in the ordinary course of business consistent
with prior practices, hire any other new employee, (iv) except in the
ordinary course of business consistent with prior practices, increase the
compensation of any employee, or (v) adopt or amend (except to comply with
applicable law) any bonus, profit sharing, compensation, stock option,
pension, retirement, separation, deferred compensation or other employee
benefit plan, agreement, trust fund or arrangement for the benefit or
welfare of, any employee or former employee.
-17-
(G) Clinicor will not make any capital expenditure or commitment for
which it is not contractually bound at the date hereof except (i) necessary
replacements in the ordinary course of business consistent with past
practices, and (ii) other capital expenditures and commitments not to
exceed $25,000 in the aggregate. All capital expenditures and commitments
in excess of $25,000 for which Clinicor is contractually bound at the date
hereof are disclosed in Schedule III.
(H) Subject to the provisions hereof, Clinicor will use all
reasonable efforts (i) to preserve intact the business organization of
Clinicor, to maintain in effect any licenses, franchises, authorizations or
similar rights material to the business of Clinicor, to keep available the
services of its current officers and key employees and to preserve the
goodwill of those having relationships with Clinicor, and (ii) to cooperate
with Pegasus in jointly communicating with Clinicor's employees and
independent contractors, regarding the Merger and continuing operations
after consummation of the Merger.
3.2 NO SOLICITATION OF ACQUISITION TRANSACTIONS. Clinicor will not
-------------------------------------------
directly or indirectly, through any director, officer, employee, agent,
representative or otherwise, solicit, initiate or intentionally encourage
submission of any inquiries, proposals or offers from any person or entity
(other than Pegasus) relating to any merger, consolidation, share exchange,
purchase or other acquisition of all or (other than in the ordinary course of
business) any substantial portion of the assets of or any substantial equity
interest in Clinicor or any business combination with Clinicor (collectively, an
"Acquisition Transaction"), or participate in any discussions or negotiations
regarding, or furnish to any other person any information with respect to
Clinicor or afford access to the properties, books or records of Clinicor for
the purposes of, or cooperate with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other person or entity to seek or effect
an Acquisition Transaction; provided however, that (a) Clinicor may furnish or
cause to be furnished any information with respect to Clinicor and its business,
properties or assets, or afford access to the properties, books or records of
Clinicor to a third party, (b) Clinicor may cooperate with, assist or engage in
discussions or negotiations with a third party with respect to an Acquisition
Transaction but in each case referred to in Clauses (a) and (b) of this Section
3.2, only to the extent that the Clinicor Board shall determine (after
consultation with outside counsel knowledgeable in corporate fiduciary matters)
that such action is necessary in order for the Clinicor Board to act in
accordance with its fiduciary obligations under applicable law. Clinicor will
promptly notify Pegasus if any such inquiry, proposal or offer, or any contact
with any person or entity with respect thereto, is made, describing to Pegasus
the substance thereof.
IV. COVENANTS OF PEGASUS
4.1 CONDUCT OF BUSINESS BY PEGASUS PENDING THE MERGER. Pegasus covenants
-------------------------------------------------
and agrees with Clinicor that, with respect to Pegasus prior to the Effective
Time, unless Clinicor shall otherwise agree in writing or as is otherwise
expressly contemplated by this Agreement or as set forth in Schedule IV:
-18-
(A) The businesses of Pegasus will be conducted only in, and Pegasus
will not take any material action except in, the ordinary course of
business and consistent with prior practices.
(B) Pegasus will not directly or indirectly do any of the following:
(i) issue, sell, pledge, dispose of or encumber (A) any shares of capital
stock of Pegasus, (B) any investment assets of Pegasus; (ii) amend or
propose to amend its Articles of Incorporation or Bylaws; (iii) split,
combine or reclassify any outstanding capital stock, or declare, set aside
or pay any dividend or distribution payable in cash, stock, property or
otherwise with respect to its capital stock whether now or hereafter
outstanding; (iv) redeem, purchase or acquire or offer to acquire any of
their capital stock; or (v) agree or commit to do any of the foregoing.
(C) Except as contemplated herein, Pegasus will not directly or
indirectly do any of the following: (i) grant, issue, sell, pledge or
dispose of any options, warrants or rights of any kind to acquire shares of
capital stock of Pegasus or any securities that are convertible or
exchangeable therefor; (ii) acquire (whether by way of merger,
consolidation, acquisition of stock or assets or otherwise) any
corporation, partnership or other business organization or division
thereof; (iii) incur any indebtedness for borrowed money or issue any debt
securities; (iv) cancel any material debts or obligations owing to it,
except in connection with the settlement of policy claims; (v) liquidate or
merge into or consolidate with any other corporation; or (vi) agree or
commit to do any of the foregoing.
(D) Subject to the provisions hereof, Pegasus will use all reasonable
efforts (i) to preserve intact the business organization of Pegasus to
maintain in effect any licenses, franchises, authorizations or similar
rights material to the businesses of Pegasus and to preserve the goodwill
of those having relationships with Pegasus and (ii) to cooperate with
Clinicor in jointly communicating with Clinicor's employees and independent
contractors, regarding the Merger and continuing operations after
consummation of the Merger.
4.2 RESERVATION OF PEGASUS CAPITAL STOCK. Prior to the Effective Time,
------------------------------------
Pegasus shall reserve for issuance, out of its authorized but unissued capital
stock, such number of shares of Pegasus Common Stock as may be issuable upon
consummation of the Merger.
4.3 CONTINUING DIRECTORS. At the Effective Time, Pegasus will take such
--------------------
action as may be necessary to appoint or elect Xxxxxx Xxxx, Xxxxxx Xxxxxx and
Xxxxxx X'Xxxxxxx to the Pegasus Board.
-19-
V. MUTUAL COVENANTS
5.1 EXPENSES. Except as otherwise set forth on Schedule V, all cost and
--------
expenses incurred in connection with this Agreement and the transactions
contemplated hereby will be paid by the party incurring such costs and expenses.
5.2 ADDITIONAL AGREEMENTS. In accordance with the terms and subject to
---------------------
the conditions hereof, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable to fulfill the conditions and
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement.
5.3 NOTIFICATION OF CERTAIN MATTERS. Clinicor will give prompt notice to
-------------------------------
Pegasus, and Pegasus will give prompt notice to Clinicor, of (a) the occurrence,
or failure to occur, of any event which occurrence or failure would be likely to
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time, and (b) any material failure of Clinicor or Pegasus, or any
director, officer, employee, agent or representative thereof, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder.
5.4 AGREEMENT TO DEFEND. In the event any claim, action, suit,
-------------------
investigation or other proceeding by any governmental body or other person or
other legal or administrative proceeding is commenced that questions the
validity or legality of the transactions contemplated hereby or seeks damages in
connection therewith, whether before or after the Effective Time, the parties
hereto agree to cooperate and use all reasonable efforts to defend against and
respond thereto.
5.5 CONTINUED DISCLOSURE OBLIGATIONS. After the Effective Time, the
--------------------------------
Surviving Corporation shall be obligated to continue to provide and make
publicly available the information identified in Rule 15(c)(2)(11) to meet the
conditions imposed by Rule 144(c)(2) and Standard and Poor's and/or Xxxxx'x
listing requirements for a period of at least three years after the Merger so as
to permit the Surviving Corporation's eligible unrestricted stock to be traded
over-the-counter on the NASD electronic bulletin board in accordance with SEC
rules and regulations.
5.6 AUTHORIZED DIRECTORS. After the Effective Time, the authorized number
--------------------
of Board members of the Surviving Corporation shall be three (3) with Xxxxxx
Xxxx, Xxxxxx Xxxxxx and Xxxxxx X'Xxxxxxx named as the three Directors, each to
hold office for a two year term commencing on the Effective Date. The number of
authorized directors shall not be increased or decreased without a consent of
all of the directors. Each of Xxxxxx and X'Xxxxxxx shall use their best efforts
to insure compliance of this covenant by them and the Surviving Corporation.
5.6 AUTHORIZED OFFICERS. Effective as of the Effective Time, the officers
-------------------
of Pegasus shall have resigned and the officers of Clinicor in office
immediately prior to the Effective Time shall become the officers of the
Surviving Corporation.
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VI. CONDITIONS
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
------------------------------------------------------------
respective obligations of each party hereto to effect the Merger and to
consummate the other transactions contemplated hereby will be subject to the
fulfillment at or prior to the Closing of the following conditions:
(A) The Merger and this Agreement shall have been approved and
adopted by the unanimous vote of the shareholders of Pegasus and the
shareholders of Clinicor.
(B) No order shall have been entered and remain in effect in any
action or proceeding before any Federal or state court or governmental
agency or other Federal or state regulatory or administrative agency or
commission that would prevent or make illegal the consummation of the
Merger.
(C) There shall have been obtained permits, consents and approvals of
securities or "blue sky" commissions or agencies of any jurisdiction and of
other governmental bodies or agencies that may reasonably be deemed
necessary so that the consummation of the Merger and the other transactions
contemplated hereby will be in compliance with applicable laws, and they
shall not contain (i) any condition that, in the judgment of Pegasus
reasonably exercised, would reasonably be expected to result in a material
adverse change in the financial condition, results of operations or
businesses of either Pegasus, or Clinicor or (ii) any condition that, in
the judgment of Clinicor reasonably exercised, would reasonably be expected
to result in a material adverse change in the financial condition, results
of operations or businesses of Pegasus.
(D) Prior to the Effective Time, Xxxx, Xxxxxxxxx and Irawan Onggara
shall have purchased in the aggregate 750,000 shares of Common Stock of
Pegasus, at a purchase price of $1.00 per share in cash pursuant to Stock
Purchase Agreements substantially in the form attached hereto as Exhibit
6.2(d).
(E) The Surviving Corporation and Xxxxx Xxxx shall have entered into
an Investment Banking Rights Agreement in substantially the form attached
hereto as Exhibit 6.2(e).
(F) At the Effective Time, the Surviving Corporation shall have
entered into a three year option agreement under the Pegasus Option Plan
with each of Xxxxx Xxxxx and Xxxxxx Xxxx and shall have issued (i) options
to Xxxxx Xxxxx to purchase up to 25,000 shares of Common Stock of the
Surviving Corporation at an exercise price of $0.10 per share, and (ii)
options to Xxxxxx Xxxx to purchase up to 25,000 shares of Common Stock of
the Surviving Corporation at an exercise price of $0.10 per share.
-21-
(G) At the Effective Time, the Surviving Corporation shall have
issued to each of Xxxxxx and X'Xxxxxxx 150,000 incentive stock options
under the Pegasus Option Plan with an exercise price of $1.25 per share and
a five (5) year term, subject to the following vesting conditions:
(i) The first 100,000 stock options will vest 50,000 each to
Messrs. Xxxxxx and X'Xxxxxxx no earlier than one (1) year after the Closing
if for the 1995 fiscal year the Surviving Corporation achieves sales of
$5.0 million or $750,000 in pre-tax earnings;
(ii) The next 50,000 options to each of Messrs. Xxxxxx and
X'Xxxxxxx will vest no earlier than January 1, 1998 if prior thereto for
any rolling 12 month period the Surviving Corporation achieves $12 million
in sales or $2 million in pre-tax earnings; and
(iii) The final set of 50,000 options to each of Messrs. Xxxxxx
and X'Xxxxxxx will vest no earlier than January 1, 1999 if prior thereto
for any rolling 12 month period the Surviving Corporation achieves $18
million in sales or $3 million in pre-tax earnings.
Each of the above options may be exercisable by delivery of a three-year
promissory note from Xxxxxx and X'Xxxxxxx (as applicable) payable to the
Surviving Corporation, with interest only payable annually at the rate
required by the Internal Revenue Code to avoid the imputation of interest.
(H) At the Effective Time, the Surviving Corporation shall have also
entered into five year option agreements under the Pegasus Option Plan with
certain existing shareholders of Clinicor for options to purchase an
aggregate of 29,679 shares of Common Stock with an exercise price of $1.25.
Such options shall vest in increments of 16,959, 8,481 and 4,239 shares
upon the occurrence of each of the milestones/conditions set forth in
Section (g) immediately above.
(I) The Surviving Corporation and certain shareholders of Pegasus
shall have entered into a Preemptive Rights Agreement in substantially the
form attached hereto as Exhibit 6.1(i).
(J) The Surviving Corporation and each of Xxxxxx Xxxxxx and Xxxxxx
X'Xxxxxxx shall have entered into a Non-Compete Agreement in substantially
the form attached hereto as Exhibit 6.1(j).
(K) X'Xxxxxxx and Xxxxxx shall have entered into a Proprietary
Information and Inventions Agreement with the Surviving Corporation in
substantially the form attached hereto as Exhibit 6.1(k).
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF PEGASUS. The obligations of
-----------------------------------------------
Pegasus to effect the Merger and to consummate the other transactions
contemplated hereby are, at the option of Pegasus, also subject to the
fulfillment at or prior to the Closing of the following conditions:
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(A) The representations and warranties of Clinicor contained in
Section 2.2 shall be accurate in all material respects as of the date of
this Agreement, and there shall be no inaccuracy in any such
representations and warranties as of the Closing Date except to the extent
that any such inaccuracy individually or in the aggregate does not
constitute a material adverse change in the financial condition, results of
operations or businesses of Clinicor; all of the terms, covenants and
conditions of this Agreement to be complied with and performed by Clinicor
at or before the Closing shall have been duly complied with and performed
in all material respects; and a certificate to the foregoing effect dated
as of the Closing Date and signed by the Chief Executive Officer or Chief
Financial Officer of Clinicor shall have been delivered to Pegasus.
(B) Since the date of this Agreement, no material adverse change in
the financial condition, results of operations or businesses of Clinicor
shall have occurred and a certificate to such effect dated as of the
Closing Date and signed by the Chief Executive Officer or Chief Financial
Officer of Clinicor shall have been delivered to Pegasus.
(C) Holders of shares of Clinicor Common Stock shall not have
dissenters' rights with respect to the Merger or the other transactions
contemplated hereby, as provided in Section 5.11 of the Texas Law.
(D) Pegasus shall have received a written opinion of counsel to
Clinicor, dated as of the Closing Date, substantially to the effect set
forth in Exhibit 6.2(d) hereto.
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF CLINICOR. The obligations of
------------------------------------------------
Clinicor to effect the Merger and consummate the other transactions contemplated
hereby are, at the option of Clinicor, also subject to the fulfillment at or
prior to the Closing of the following conditions:
(A) The representations and warranties of Pegasus contained in
Section 2.1 shall be accurate in all material respects as of the date of
this Agreement, and there shall be no inaccuracy in any such
representations and warranties as of the Closing Date except to the extent
that any such inaccuracy individually or in the aggregate does not
constitute a material adverse change in the financial condition, results of
operations or businesses of Pegasus; all of the terms, covenants and
conditions of this Agreement to be complied with and performed by Pegasus
at or before the Closing shall have been duly complied with and performed
in all material respects; and a certificate to the foregoing effect dated
as of the Closing Date and signed by the Chief Executive Officer or Chief
Financial Officer of Pegasus shall have been delivered to Clinicor.
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(B) Since the date of this Agreement, no material adverse change in
the financial condition, results of operations or businesses of Pegasus
shall have occurred, and a certificate to such effect dated as of the
Closing Date and signed by the Chief Executive Officer or Chief Financial
Officer of Pegasus shall have been delivered to Clinicor.
(C) Pegasus shall have taken such action as may be necessary to
appoint or elect to the Pegasus Board the Xxxxxx Xxxx, Xxxxxx Xxxxxx and
Xxxxxx X'Xxxxxxx as contemplated by Section 4.10.
(D) Clinicor shall have received a written opinion of counsel to
Pegasus, dated as of the Closing Date, substantially to the effect set
forth in Exhibit 6.3(d) hereto.
VII. MISCELLANEOUS
7.1 WAIVER AND AMENDMENT. Any provision of this Agreement may be waived
--------------------
at any time by the party that is, or whose shareholders or shareholders are,
entitled to the benefits thereof. This Agreement may not be amended or
supplemented at any time, except by an instrument in writing signed on behalf of
each party hereto; provided however, that after this Agreement has been approved
and adopted by the shareholders of Pegasus and the shareholders of Clinicor this
Agreement may be amended only as may be permitted by applicable provisions of
the Nevada Law and the Texas Law.
7.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
------------------------------------------
warranties in this Agreement shall survive the consummation of the Merger.
7.3 PUBLIC STATEMENTS. Pegasus and Clinicor agree to consult with each
-----------------
other prior to issuing any press release or otherwise making any public
statement or disclosure with respect to the transactions contemplated hereby,
and neither will issue any such press release or make any such public statement
or disclosure prior to such consultation, except as may be required by law or
applicable stock exchange policy.
7.4 KNOWLEDGE. All references in this Agreement to knowledge of a
---------
corporation shall be deemed to mean knowledge of any one or more of its
executive officers.
7.5 ASSIGNMENT. This Agreement will not be assignable by the parties
----------
hereto.
7.6 NOTICES. All notices, requests, claims, demands and other
-------
communications hereunder will be in writing and will be given (and will be
deemed to have been duly received if so given) by delivery by cable, telegram,
telex, telecopy or by registered or certified mail, postage prepaid, return
receipt requested, to the respective parties as follows:
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if to Pegasus:
PEGASUS TAX AND FINANCIAL
PLANNING SERVICES, INC.
00000 Xxxxx Xxxxx Xxxxx
Xxxxxxx, XX
Telephone Number:
Telecopy Number: (000) 000-0000
with copy to:
Xxxxxx X. Xxxxxx, Esq.
Pezzola & Xxxxxx
0000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Telephone Number: 510/000-0000
Telecopy Number: 510/834-7440
and if to Clinicor:
Clinicor Corporation
000 Xxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Telephone Number: 512/000-0000
Telecopy Number: 512/327-8226
with copy to:
Xxxxx Xxxxxxxxxx, Esq.
Graves, Dougherty, Xxxxxx & Xxxxx
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Telephone Number: 512/000-0000
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.
7.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE SUBSTANTIVE LAW OF THE STATE OF TEXAS WITHOUT GIVING EFFECT
TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF, EXCEPT TO THE EXTENT THE INTERNAL
CORPORATE AFFAIRS OF PEGASUS OR THE SURVIVING CORPORATION ARE GOVERNED BY THE
LAWS OF THE STATE OF NEVADA.
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7.8 SEVERABILITY. If any term, provision, covenant, agreement or
------------
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants, agreements and restrictions of this Agreement will continue in full
force and effect and will in no way be affected, impaired or invalidated.
7.9 COUNTERPARTS. This Agreement may be executed in counterparts, each of
------------
which will be an original, but all of which together will constitute one and the
same agreement.
7.10 HEADINGS. The section headings herein are for convenience only and
--------
will not affect the construction hereof.
7.11 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
----------------
between the parties hereto and supersedes all other prior agreements and
understandings, both oral and written, between the parties relating to the
subject matter hereof and thereof.
IN WITNESS WHEREOF, Pegasus has caused this Agreement to be signed by its
Chairman or its President or a Vice President and attested by its Secretary or
an Assistant Secretary, and Clinicor has caused this Agreement to be signed by
its Chairman or its President or a Vice President and attested by its Secretary
or an Assistant Secretary, all as of the date first above written.
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7.8 SEVERABILITY. If any term, provision, covenant, agreement or
------------
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants, agreements and restrictions of this Agreement will continue in full
force and effect and will in no way be affected, impaired or invalidated.
7.9 COUNTERPARTS. This Agreement may be executed in counterparts, each of
------------
which will be an original, but all of which together will constitute one and the
same agreement.
7.10 HEADINGS. The section headings herein are for convenience only and
--------
will not affect the construction hereof.
7.11 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
----------------
between the parties hereto and supersedes all other prior agreements and
understandings, both oral and written, between the parties relating to the
subject matter hereof and thereof.
IN WITNESS WHEREOF, Pegasus has caused this Agreement to be signed by its
Chairman or its President or a Vice President and attested by its Secretary or
an Assistant Secretary, and Clinicor has caused this Agreement to be signed by
its Chairman or its President or a Vice President and attested by its Secretary
or an Assistant Secretary, all as of the date first above written.
PEGASUS TAX AND FINANCIAL CLINICOR, INC.
SERVICES, INC. A TEXAS CORORATION
A NEVADA CORPORATION
by /s/ Xxxxxx X. Xxxx by /s/ Xxxxxx X. X'Xxxxxxx
------------------------ ----------------------------
(Signature) (Signature)
XXXXXX X. XXXX, PRESIDENT XXXXXX X. X'XXXXXXX, PRESIDENT
-------------------------- ------------------------------
(Print Name & Title) (Print Name & Title)
/s/ Xxxxxxxx Xxxx /s/ Xxxxxx X. X'Xxxxxxx
-------------------------- ------------------------------
XXXXXXXX XXXX XXXXXX X. X'XXXXXXX
1918.B Xxxxx Hill Drive
-------------------------- ------------------------------
Xxxxxx XX 00000
-------------------------- ------------------------------
(Address) (Address)
/s/ Xxxxxxx Xxxxxxxxx /s/ Xxxxxx X. Xxxxxx
-------------------------- ------------------------------
XXXXXXX XXXXXXXXX XXXXXX X. XXXXXX
9454 Wilshire Blvd., 6th Floor 3709 Xxxxxxx
-------------------------- ------------------------------
Xxxxxxx Xxxxx, XX 00000 Xxxxxx, Xx 00000
-------------------------- ------------------------------
(Address) (Address)
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Exhibits and Schedules Omitted
