AGREEMENT AND PLAN OF MERGER
AMONG
MEDICAL DYNAMICS, INC. (A COLORADO CORPORATION)
CADI ACQUISITION CORP. (A CALIFORNIA CORPORATION)
AND
COMPUTER AGE DENTIST, INC. (A CALIFORNIA CORPORATION)
AS OF OCTOBER 1, 1997
This Agreement and Plan of Merger (the "Agreement") is made as of the 1st
day of October, 1997, among Medical Dynamics, Inc., a Colorado corporation
("MEDY"); CADI Acquisition Corp., a California corporation (the "Merger
Subsidiary"), which is wholly owned by MEDY; and Computer Age Dentist, Inc., a
California corporation ("CADI").
RECITALS
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WHEREAS, the respective Boards of Directors of MEDY, the Merger Subsidiary
and CADI each have determined that it is in the best interests of their
respective stockholders for MEDY to acquire CADI through the merger of the
Merger Subsidiary with and into CADI upon the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and certain other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto covenant and
agree as follows:
ARTICLE 1.
The Merger
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1.1 Merger and the Merger Consideration. In accordance with the provisions
of the California Corporations Code (the "CCC") at the Effective Date (as
hereinafter defined), the Merger Subsidiary shall be merged (the "Merger") into
CADI, as soon as practicable following the satisfaction or waiver, if
permissible, of the conditions set forth in Articles 6 and 7. The consideration
to be paid to the shareholders of CADI as a result of the Merger (the "Merger
Consideration") consists of:
1,295,520 shares of MEDY Common Stock (which shares will be restricted as
that term is defined in Rule 144 under the Securities Act of 1933 (the
"1933 Act");
$254,697 in cash; and
Two promissory notes, each in the amount of $150,000 in the form of
Schedule 1.1 hereto.
Following the Merger, CADI shall continue as the surviving corporation (the
"Surviving Corporation") and shall continue to be governed by the laws of the
State of California.
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1.2 Continuing of Corporate Existence. Except as may otherwise be set forth
herein, the corporate existence and identity of CADI, with all its purposes,
powers, franchises, privileges, rights and immunities, shall continue unaffected
and unimpaired by the Merger, and the corporate existence and identity of the
Merger Subsidiary, with all its purposes, powers, franchises, privileges, rights
and immunities, at the Effective Date shall be merged with and into that of
CADI, and the Surviving Corporation shall be vested fully therewith and the
separate corporate existence and identity of Merger Subsidiary shall thereafter
cease except to the extent continued by statute.
1.3 Effective Date. The Merger shall become effective upon the filing of
the Articles of Merger with the Secretary of State of California pursuant to the
provisions of the CCC. The date and time when the Merger shall become effective
is hereinafter referred to as the "Effective Date".
1.4 Corporate Government of the Surviving Corporation.
(a) The Articles of Incorporation of CADI, as in effect on the
Effective Date, shall continue in full force and effect and shall be the
Articles of Incorporation of the Surviving Corporation.
(b) The Bylaws of CADI, as in effect as of the Effective Date, shall
continue in full force and effect and shall be the Bylaws of the Surviving
Corporation.
(c) The members of the Board of Directors of the Surviving Corporation
shall be the persons holding such office in the Merger Subsidiary as of the
Effective Date. Immediately following the Effective Date, the Board of Directors
of the Surviving Corporation shall be reconstituted to consist of Xxxxxx
Xxxxxxxx, Xxxx Uk Xxx, and Xxx Xxxxxxx.
(d) The officers of the Surviving Corporation shall be the persons
holding such offices in CADI as of the Effective Date.
1.5 Rights and Liabilities of the Surviving Corporation. The Surviving
Corporation shall have the following rights and obligations:
(a) The Surviving Corporation shall have all the rights, privileges,
immunities and powers and shall be subject to all the duties and liabilities of
a corporation organized under the laws of the State of California.
(b) The title to all real estate and other property owned by each of
CADI and the Merger Subsidiary shall be, at the Effective Date, transferred to
and vested in the Surviving Corporation without reversion or impairment; and
such transfer to and vesting in the Surviving Corporation shall be deemed to
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to occur by operation of law, and no consent or approval of any other person
shall be required in connection with any such transfer or vesting unless such
consent or approval is specifically required in the event of merger by law or by
express provision in any contract, agreement, decree, order, or other instrument
to which CADI or the Merger Subsidiary is a party or by which it is bound.
(c) At the Effective Date, the Surviving Corporation shall thenceforth
have all liabilities of CADI and the Merger Subsidiary, and any proceeding
pending against CADI or the Merger Subsidiary may be continued as if the Merger
did not occur or the Surviving Corporation may be substituted in the proceeding
for the Merger Subsidiary.
1.6 Closing. Completion of the transactions contemplated by this Agreement
(the "Closing") shall take place at the executive offices of MEDY in Denver,
Colorado, commencing at 10:00 a.m., local time, as soon as practicable after the
last to be fulfilled or waived of the conditions set forth in Articles 6 and 7
or at such other place, time and date as shall be fixed by mutual agreement
between MEDY and CADI. The day on which the Closing shall occur is referred to
herein as the "Closing Date." Each party will cause to be prepared, executed and
delivered the Articles of Merger to be filed with the Secretary of State of
California and all other appropriate and customary documents as any party or its
counsel may reasonably request for the purpose of completing the transactions
contemplated by this Agreement. All actions taken at the Closing shall be deemed
to have been taken simultaneously at the time the last of any such actions is
taken or completed.
1.7 Tax Consequences. It is intended that the Merger shall constitute a
reorganization within the meaning of Section 368(a)(2)(E) of the Internal
Revenue Code of 1986, as amended (the "Code"), and that this Agreement shall
constitute a "plan of reorganization" for the purposes of Section 368 of the
Code.
ARTICLE 2
Conversion of Shares; Treatment of Options
------------------------------------------
2.1 Conversion of Shares; Payment of the Merger Consideration. At the
Effective Date, by virtue of the Merger and without any action on the part of
the holder thereof:
(a) Each share of common stock of CADI ("CADI Common Stock"), which
shall be outstanding immediately prior to the Effective Date (the "Converted
Shares") shall at the Effective Date, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and represent the
right to receive:
43.184 shares of Common Stock of MEDY (the "MEDY Common Stock"); and
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A proportionate amount of the Merger Consideration represented by the cash
and note payable.
(b) Each share of Common Stock of the Merger Subsidiary which shall be
outstanding immediately prior to the Effective Date shall at the Effective Date,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted into one share of newly issued CADI Common Stock.
(c) No CADI shareholders will dissent from the transaction.
2.2 Fractional Shares. No scrip or fractional shares of MEDY Common Stock
shall be issued in the Merger. All fractional shares of MEDY Common Stock to
which a holder of CADI Common Stock immediately prior to the Effective Date
would otherwise be entitled at the Effective Date shall be aggregated. If a
fractional share results from such aggregation, the fraction will be rounded to
one and such stockholder shall be entitled to receive an additional share of
MEDY Common Stock.
2.3 Stock Options and Warrants. There are no options, warrants or
convertible securities outstanding entitling the holder thereof to purchase CADI
Common Stock.
2.4 Adjustment. If, between the date of this Agreement and the Closing Date
or the Effective Date, as the case may be, the outstanding shares of CADI Common
Stock or MEDY Common Stock shall have been changed into a different number of
shares or a different class by reason of any classification, recapitalization,
split-up, combination, exchange of shares, or readjustment or a stock dividend
thereon shall be declared with a record date within such period, then the Merger
Consideration shall be adjusted to accurately reflect such change.
ARTICLE 3
Representations and Warranties of CADI
--------------------------------------
CADI represents and warrants to MEDY and the Merger Subsidiary that the
statements contained in Article 3 are true and correct in all material respects
and will be true and correct as of the Closing Date and the Effective Date,
except as set forth in the schedules attached hereto. As used in this Article 3
and elsewhere in this Agreement, the phrases "to CADI's knowledge" or "to CADI's
actual knowledge" shall mean to the actual knowledge of Xxx Xxxxxxxx and Xxxx Uk
Xxx, executive officers of CADI.
3.1 Organization and Good Standing of CADI. CADI is a corporation duly
organized, validly existing and in good standing under the laws of California.
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3.2 No Subsidiaries or Investments. CADI owns no equity or debt interest in
any subsidiary corporation, limited liability company, partnership, or other
business entity except as described in Schedule 3.2 of the CADI financial
statements.
3.3 Foreign Qualification. CADI is duly qualified or licensed to do
business and is in good standing as a foreign corporation in every jurisdiction
where the failure so to qualify would have a material adverse effect (a "CADI
Material Adverse Effect") on (a) the business, operations, assets or financial
condition of CADI taken as a whole or (b) the validity or enforceability of, or
the ability of CADI to perform its obligations under, this Agreement. CADI
affirmatively represents that it is qualified to do business in no state but
California.
3.4 Company Power and Authority. CADI has the corporate power and authority
to own, lease and operate its properties and assets and to carry on its business
as currently being conducted. CADI has the corporate power and authority to
execute and deliver this Agreement and, subject to the approval of this
Agreement and the Merger by its stockholders, to perform its obligations under
this Agreement and to complete the Merger. The execution, delivery and
performance by CADI of this Agreement has been duly authorized by all necessary
corporate action.
3.5 Binding Effect. This Agreement has been duly executed and delivered by
CADI and is the legal, valid and binding obligation of CADI enforceable in
accordance with its terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights;
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability; and
(c) rights to indemnification may be limited by considerations of
public policy.
3.6 Absence of Restrictions and Conflicts. The execution, delivery and
performance of this Agreement and the completion of the Merger and the
fulfillment of and compliance with the terms and conditions of this Agreement do
not and will not, with the passing of time or the giving of notice or both,
violate or conflict with, constitute a breach of or default under, result in the
loss of any material benefit under, or permit the acceleration of any obligation
under, (i) any term or provision of the articles of Incorporation or bylaws of
CADI, (ii) any "Material Contract" (as defined in Section 3.13), (iii) any
judgment, decree or order of any court or governmental authority or agency to
which CADI is a party or by which CADI or any of its properties is bound, or
(iv) any statute, law, regulation or rule applicable to CADI other than such
violations, conflicts, breaches or defaults which would not have a CADI Material
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Adverse Effect. Except for the filing of the Articles of Merger with the
Secretary of State of California, the Securities Act of 1933 (the "Securities
Act"), Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
applicable state securities laws, no consent, approval, order or authorization
of, or registration, declaration or filing with, any governmental agency or
public or regulatory unit, agency, body or authority with respect to CADI is
required in connection with the execution, delivery or performance of this
Agreement by CADI or the completion of the transactions contemplated hereby.
3.7 Capitalization of CADI.
(a) The authorized capital stock of CADI consists of 100,000 shares of
common stock. As of the date hereof, there were 30,000 shares of CADI Common
Stock issued and outstanding and no shares of CADI Common Stock reserved for
issuance upon the exercise of any Options.
(b) All of the issued and outstanding shares of CADI Common Stock have
been duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights.
(c) There are no voting trusts, stockholder agreements or other voting
arrangements by the stockholders of CADI except that certain shareholders'
agreement which will be cancelled on or prior to the Effective Date.
(d) There is no outstanding subscription, contract, convertible or
exchangeable security, option, warrant, call or other right obligating CADI to
issue, sell, exchange, or otherwise dispose of, or to purchase, redeem or
otherwise acquire, shares of, or securities convertible into or exchangeable
for, capital stock of CADI.
3.8 CADI Information. CADI has made or will make available to MEDY and the
Merger Subsidiary all information that CADI has available (including all tax
returns, financial statements given to any other person, contracts, payroll
schedules, financial books and records, and all other information regarding
CADI, its business, its customers, its management, and its financial condition
which MEDY may have requested (all such information being referred to herein as
the "CADI Information"). As of their respective dates, the CADI Information did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
3.9 Financial Statements and Records of CADI. CADI has made available to
MEDY and the Merger Subsidiary true, correct and complete copies of the
following financial statements (the "CADI Financial Statements"):
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Audited Financial Statements as of September 30, 1996 and the year then
ended; and
Unaudited Financial Statements as of June 30, 1997 and the nine months then
ended.
The CADI Financial Statements have been prepared from, and are in
accordance with, the books and records of CADI and its subsidiaries and present
fairly, in all material respects, the consolidated financial position of CADI as
of the dates thereof and the results of operations and cash flows thereof for
the periods then ended, in each case in conformity with generally accepted
accounting principles, consistently applied, except as noted therein. Adequate
reserves are set forth on the CADI Financial Statements and the amount of such
reserves are reasonable. Since September 30, 1996, there has been no change in
accounting principles applicable to, or methods of accounting utilized by, CADI
except as noted in the CADI Financial Statements. The books and records of CADI
have been and are being maintained in accordance with good business practice,
reflect only valid transactions, are complete and correct in all material
respects and present fairly in all material respects the basis for the financial
position and results of operations of CADI as set forth on the CADI Financial
Statements.
3.10 Absence of Certain Changes. Since September 30, 1996, CADI has not,
except as otherwise set forth in the CADI Information or the CADI Financial
Statements:
(a) suffered any adverse change in the business, operations, assets,
or financial condition, except for such changes that would not result in a CADI
Material Adverse Effect;
(b) suffered any material damage or destruction to or loss of the
assets of CADI, whether or not covered by insurance, which property or assets
are material to the operations or business of CADI;
(c) settled, forgiven, compromised, canceled, released, waived or
permitted to lapse any material rights or claims other than in the ordinary
course of business;
(d) entered into or terminated any material agreement, commitment or
transaction, or agreed or made any changes in material leases or agreements,
other than renewals or extensions thereof and leases, agreements, transactions
and commitments entered into or terminated in the ordinary course of business;
(e) written up, written down or written off the book value of any
material amount of assets other than in the ordinary course of business;
(f) declared, paid or set aside for payment any dividend or
distribution with respect to CADI's capital stock;
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(g) redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of CADI's capital stock or
securities or any rights to acquire such capital stock or securities, or agreed
to changes in the terms and conditions of any such rights outstanding as of the
date of this Agreement except for the transaction between CADI, the CADI
shareholders, and Xxxxx XxXxxx, Xx.;
(h) increased the compensation of or paid any bonuses to any employees
or contributed to any employee benefit plan, other than in accordance with
established policies, practices or requirements and as provided in Section 5.1
hereof;
(i) entered into any employment, consulting or compensation agreement
with any person or group;
(j) entered into any collective bargaining agreement with any person
or group;
(k) entered into, adopted or amended any employee benefit plan; or
(l) entered into any agreement to do any of the foregoing.
3.11 No Material Undisclosed Liabilities. There are no material liabilities
or obligations of CADI of any nature, whether absolute, accrued, contingent, or
otherwise, other than:
(a) the liabilities and obligations that are reflected, accrued or
reserved against on the CADI Financial Statements, or referred to in the
footnotes to the CADI Financial Statements or incurred in the ordinary course of
business and consistent with past practices since September 30, 1996; or
(b) liabilities and obligations which in the aggregate would not
result in a CADI Material Adverse Effect.
3.12 Tax Returns; Taxes. CADI has duly filed all U.S. federal and material
state, county, local and foreign tax returns and reports required to be filed by
it, including those with respect to income, payroll, property, withholding,
social security, unemployment, franchise, excise and sales taxes and all such
returns and reports are correct in all material respects; has either paid in
full all taxes that have become due as reflected on any return or report and any
interest and penalties with respect thereto or has fully accrued on its books or
have established adequate reserves for all taxes payable but not yet due; and
has made cash deposits with appropriate governmental authorities representing
estimated payments of taxes, including income taxes and employee withholding tax
obligations. No extension or waiver of any statute of limitations or time within
which to file any return has been granted to or requested by CADI with respect
to any tax. No unsatisfied deficiency, delinquency or default for any tax,
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assessment or governmental charge has been claimed, proposed or assessed against
CADI, nor has CADI received notice of any such deficiency, delinquency or
default. CADI has no material tax liabilities other than those reflected on the
CADI Financial Statements and those arising in the ordinary course of business
since the date thereof. CADI will make available to MEDY true, complete and
correct copies of CADI's consolidated U.S. federal tax returns for the last
three years and make available such other tax returns requested by MEDY. There
is no dispute or claim concerning any tax liability of CADI or any of its
subsidiaries either: (a) raised by any taxing authority in writing; (b) as to
which CADI has received notice concerning a potential audit of any return filed
by CADI; and (c) there is no outstanding audit or pending audit of any tax
return filed by CADI.
3.13 Material Contracts. CADI has furnished or made available to MEDY
accurate and complete copies of the Material Contracts (as defined herein)
applicable to CADI. Except as set forth on Schedule 3.13, there is not under any
of the Material Contracts any existing breach, default or event of default by
CADI nor event that with notice or lapse of time or both would constitute a
breach, default or event of default by CADI other than breaches, defaults or
events of default which would not have a CADI Material Adverse Effect nor does
CADI know of, and CADI has not received notice of, or made a claim with respect
to, any breach or default by any other party thereto which would, severally or
in the aggregate, have a CADI Material Adverse Effect. As used herein, the term
"Material Contracts" shall mean all contracts and agreements providing for
expenditures or commitments by CADI in excess of $10,000 over not more than a 12
month period.
3.14 Litigation and Government Claims. Except as disclosed in the CADI
Information, there is no pending suit, claim, action or litigation, or
administrative, arbitration or other proceeding or governmental investigation or
inquiry against CADI to which its businesses or assets are subject which would,
severally or in the aggregate, reasonably be expected to result in a CADI
Material Adverse Effect. To the knowledge of CADI, and except as disclosed in
the CADI Information, there are no such proceedings threatened or contemplated
which would, severally or in the aggregate, have a CADI Material Adverse Effect.
CADI is not subject to any judgment, decree, injunction, rule or order of any
court, or, to the knowledge of CADI, any governmental restriction applicable to
CADI which is reasonably likely (i) to have a CADI Material Adverse Effect or
(ii) to cause a material limitation on MEDY's ability to operate the business of
CADI (as it is currently operated) after the Closing.
3.15 Compliance With Laws. CADI has all material authorizations, approvals,
licenses and orders to carry on its business as it is now being conducted, to
own or hold under lease the properties and assets it owns or holds under lease
and to perform all of its obligations under the agreements to which its is a
party, except for instances which would not have a CADI Material Adverse Effect.
CADI has been and is, to the knowledge of CADI, in compliance with all
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applicable laws (including those referenced in the CADI Information),
regulations and administrative orders of any country, state or municipality or
of any subdivision of any thereof to which its business and its employment of
labor or its use or occupancy of properties or any part hereof are subject, the
violation of which would have a CADI Material Adverse Effect.
3.16 Employee Benefit Plans. Each employee benefit plan, as such term is
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), of CADI (collectively the "Employee Plans") complies in
all material respects with all applicable requirements of ERISA and the Internal
Revenue Code of 1986, as amended (the "Code"), and other applicable laws. None
of the Employee Plans is an employee pension benefit plan or a multiemployer
plan, as such terms are defined in ERISA. Neither CADI nor any of its directors,
officers, employees or agents has, with respect to any Employee Plan, engaged in
any "prohibited transaction," as such term is defined in the Code or ERISA, nor
has any Employee Plan engaged in such prohibited transaction which could result
in any taxes or penalties or other prohibited transactions, which in the
aggregate could have a CADI Material Adverse Effect. All Employee Plans are
described in Schedule 3.17.
3.17 Employment Agreements; Labor Relations.
(a) Schedule 3.17 sets forth a complete and accurate list of all
material employee benefit or compensation plans, agreements and arrangements to
which CADI is a party, including without limitation (i) all severance,
employment, consulting or similar contracts, (ii) all material agreements and
contracts with "change of control" provisions or similar provisions and (iii)
all indemnification agreements or arrangements with directors or officers.
(b) CADI is in compliance in all material respects with all laws
(including Federal and state laws) respecting employment and employment
practices, terms and conditions of employment, wages and hours, and is not
engaged in any unfair labor or unlawful employment practice. To CADI's
knowledge, there is no unlawful employment practice discrimination charge
pending before the EEOC or EEOC recognized state "referral agency." Except as
would not have a CADI Material Adverse Effect, there is no unfair labor practice
charge or complaint against CADI pending before the National Labor Review Board.
There is no labor strike, dispute, slowdown or stoppage actually pending or, to
the knowledge of CADI, threatened against or involving or affecting CADI and no
National Labor Review Board representation question exists respecting their
respective employees. Except as would not have a CADI Material Adverse Effect,
no grievances or arbitration proceeding is pending and no written claim therefor
exists. There is no collective bargaining agreement that is binding on CADI.
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3.18 Intellectual Property. CADI owns or has valid, binding and enforceable
rights to use all material patents, trademarks, trade names, service marks,
service names, copyrights, applications therefor and licenses or other rights in
respect thereof ("Intellectual Property") used or held for use in connection
with the business of CADI, without any known conflict with the rights of others,
except for such conflicts as do not have a CADI Material Adverse Effect. CADI
has not received any notice from any other person pertaining to or challenging
the right of CADI to use any Intellectual Property or any trade secrets,
proprietary information, inventions, know-how, processes and procedures owned or
used or licensed to CADI, except with respect to rights the loss of which,
individually or in the aggregate, would not have a CADI Material Adverse Effect.
3.19 Title to Properties and Related Matters.
(a) CADI has good and marketable title to or valid leasehold interests
in their respective properties (the "Real Estate") reflected on the CADI
Financial Statements or acquired after the date thereof (other than personal
properties sold or otherwise disposed of in the ordinary course of business),
and all of such properties and all assets purchased by CADI since the date of
the most recent CADI Financial Statements are free and clear of any lien, claim
or encumbrance, except as reflected in the CADI Financial Statements or notes
thereto and except for:
(i) liens for taxes, assessments or other governmental charges not
yet due and payable or the validity of which are being contested in good faith
by appropriate proceedings;
(ii) statutory liens incurred in the ordinary course of business
that are not yet due and payable or the validity of which are being contested in
good faith by appropriate proceedings;
(iii) landlord liens contained in leases entered in the ordinary
course of business; and
(iv) other liens, claims or encumbrances that, in the aggregate, do
not materially subtract from the value of, or materially interfere with, the
present use of, the Real Estate.
Except for those assets acquired since the date of the most recent CADI
Financial Statements, all properties and assets material to the present
operations of CADI are owned or leased by CADI and are reflected on the CADI
Financial Statements and notes thereto in the manner and to the extent required
by generally accepted accounting principles.
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(b)(i) Applicable zoning ordinances permit the operation of CADI's
business at the Real Estate; (ii) CADI has all easements and rights, including
easements for all utilities, services, roadways and other means of ingress and
egress, necessary to operate CADI's business at the Real Estate; and (iii)
neither the whole nor any portion of the Real Estate has been condemned,
requisitioned or otherwise taken by any public authority, and no notice of any
such condemnation, requisition or taking has been received; except in each case
where the failure of such provisions to be true and correct would not have a
CADI Material Adverse Effect. No such condemnation, requisition or taking is
threatened or contemplated to CADI's knowledge, and there are no pending public
improvements which may result in special assessments against or which may
otherwise materially and adversely affect the Real Estate. To the knowledge of
CADI, the Real Estate has not been used for deposit or disposal of hazardous
wastes or substances in violation of any past or current law in any material
respect and there is no material liability under past or current law with
respect to any hazardous wastes or substances which have been deposited or
disposed of on or in the Real Estate.
(c) CADI has received no notice of, and has no actual knowledge of,
any material violation of any zoning, building, health, fire, water use or
similar statute, ordinance, law, regulation or code in connection with the Real
Estate.
(d) To CADI's knowledge, no hazardous or toxic material (as
hereinafter defined) exists in any structure located on, or exists on or under
the surface of, the Real Estate which is, in any case, in material violation of
applicable environmental law. For purposes of this Agreement, "hazardous or
toxic material" shall mean waste, substance, materials, smoke, gas or
particulate matter designated as hazardous, toxic or dangerous under any
applicable environmental law. For purposes of this Agreement, "environmental
law" shall include the Comprehensive Environmental Response Compensation and
Liability Act, the Clean Air Act, the Clean Water Act and any other applicable
federal, state or local environmental, health or safety law, rule or regulation
relating to or imposing liability or standards concerning or in connection with
hazardous, toxic or dangerous waste, substance, materials, smoke, gas or
particulate matter.
3.20 Tax Representations.
(a) The fair market value of the MEDY Common Stock and other
consideration received by each CADI shareholder will be approximately equal to
the fair market value of the CADI Common Stock surrendered in the Merger.
(b) There is no plan or intention by any of the shareholders of CADI
to sell, exchange, or otherwise dispose of a number of shares of MEDY Common
Stock received in the transaction that would reduce the CADI shareholders'
ownership of MEDY Common Stock to a number of shares having a value, as of the
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date of the transaction, of less than 50% of the value of all of the formerly
outstanding stock of CADI as of the same date.
(c) Following the transaction, CADI will hold at least 90% of the fair
market value of its net assets and at least 70% of the fair market value of its
gross assets and at least 90% of the fair market value of Merger Subsidiary's
net assets and at least 70% of the fair market value of Merger Subsidiary's
gross assets held immediately prior to the transaction.
(d) CADI has no plan or intention to issue additional shares of its
stock that would result in MEDY losing control of CADI within the meaning of
ss.368(c) of the Code.
(e) Following the transaction, CADI will continue its historic
business or use a significant portion of its historic business assets in a
business.
(f) MEDY, Merger Subsidiary, CADI, and the shareholders of CADI will
pay their respective expenses, if any, incurred in connection with the
transaction.
(g) There is no intercorporate indebtedness existing between MEDY and
CADI or between Merger Subsidiary and CADI that was issued, acquired, or will be
settled at a discount.
(h) In the transaction, shares of CADI Common Stock representing
control of CADI, as defined in ss.368(c) of the Code, will be exchanged solely
for voting stock of MEDY and the other consideration described herein.
(i) At the time of the transaction, CADI will not have outstanding any
warrants, options, convertible securities, or any other type of right pursuant
to which any person could acquire stock in CADI that, if exercised or converted,
would affect MEDY's acquisition or retention of control of CADI, as defined in
ss.368(c) of the Code.
(j) Neither MEDY nor Merger Subsidiary is an investment company as
defined in ss.368(a)(2)(f)(iii) and (iv) of the Code
(k) On the date of the transaction, the fair market value of the
assets of CADI will exceed the sum of its liabilities, plus the amount of
liabilities, if any, to which the assets are subject.
(l) CADI is not under the jurisdiction of a court in a title 11 or
similar case within the meaning of ss.368(a)(3)(A) of the Code.
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3.21 No Brokers and Finders. None of CADI or, to CADI's knowledge, any of
its officers, directors and employees has employed any broker, finder or
investment bank or incurred any liability for any investment banking fees,
financial advisory fees, brokerage fees or finders' fees in connection with the
transactions contemplated hereby. CADI is not aware of any claim for payment of
any finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the completion of
the transactions contemplated hereby.
ARTICLE 4
Representations and Warranties of MEDY
and the Merger Subsidiary
-------------------------
MEDY and the Merger Subsidiary represent and warrant to CADI that the
statements contained in Article 4 are true and correct in all material respects
and will be true and correct as of the Closing Date and the Effective Date,
except as set forth in the schedules attached hereto. As used in this Article 4
and elsewhere in this Agreement, the phrase "to MEDY's or the Merger
Subsidiary's knowledge" or "to MEDY's or the Merger Subsidiary's actual
knowledge" shall mean to the actual knowledge of Van X. Xxxxxxx.
4.1 Organization and Good Standing. Each of MEDY and the Merger Subsidiary
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization. All shares of capital stock
or other equity interests of each of the Merger Subsidiary are owned by MEDY,
free and clear of all material liens, encumbrances, equities or claims.
4.2 Foreign Qualification. MEDY and the Merger Subsidiary are duly
qualified or licensed to do business and are in good standing as a foreign
corporation in every jurisdiction where the failure so to qualify would have a
material adverse effect (a "MEDY Material Adverse Effect") on (a) the business,
operations, assets or financial condition of MEDY and the Merger Subsidiary
taken as a whole or (b) the validity or enforceability of, or the ability of
MEDY to perform its obligations under, this Agreement.
4.3 Corporate Power and Authority. MEDY and the Merger Subsidiary have the
corporate power and authority and all material licenses and permits to own,
lease and operate their respective properties and assets and to carry on their
respective businesses as currently being conducted. Each of MEDY and the Merger
Subsidiary has the corporate power and authority to execute and deliver this
Agreement and to perform its obligations under this Agreement and to complete
the Merger. The execution, delivery and performance by MEDY and the Merger
Subsidiary of this Agreement has been duly authorized by all necessary corporate
action.
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4.4 Binding Effect. This Agreement has been duly executed and delivered by
MEDY and the Merger Subsidiary and is the legal, valid and binding obligations
of MEDY and the Merger Subsidiary, enforceable in accordance with its terms
except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights;
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability; and
(c) rights to indemnification may be limited by considerations of
public policy.
4.5 Absence of Restrictions and Conflicts. The execution, delivery and
performance of this Agreement and the completion of the Merger and the
fulfillment of and compliance with the terms and conditions of this Agreement do
not and will not, with the passing of time or the giving of notice or both,
violate or conflict with, constitute a breach of or default under, result in the
loss of any material benefit under, or permit the acceleration of any obligation
under, (i) any term or provision of the Articles of Incorporation or Bylaws of
MEDY or the Merger Subsidiary, (ii) any "MEDY Material Contract" (as defined in
Section 4.12), (iii) any judgment, decree or order of any court or governmental
authority or agency to which MEDY or the Merger Subsidiary is a party or by
which MEDY or the Merger Subsidiary or any of their respective properties is
bound, or (iv) any statute, law, regulation or rule applicable to MEDY or the
Merger Subsidiary other than such violations, conflicts, breaches or defaults as
would not have a MEDY Material Adverse Effect. Except for the filing of the
Articles of Merger with the Secretary of State of California, compliance with
the applicable requirements of the Securities Act, the Exchange Act and
applicable state securities laws, no consent, approval, order or authorization
of, or registration, declaration or filing with, any governmental agency or
public or regulatory unit, agency, body or authority with respect to MEDY or the
Merger Subsidiary is required in connection with the execution, delivery or
performance of this Agreement by MEDY or the completion of the transactions
contemplated hereby.
4.6 Capitalization of MEDY.
(a) The authorized capital stock of MEDY consists of 15,000,000 shares
of MEDY Common Stock, and 5,000,000 shares of preferred stock. As of the date
hereof, there are (i) approximately 7,643,233 shares of MEDY Common Stock
outstanding, and no shares of preferred stock outstanding; and (ii) at June 30,
1997, 1,420,537 shares were reserved for issuance upon the exercise of
outstanding options under MEDY's Stock Option Plans (the "MEDY Options" and
"MEDY Option Plans," respectively). All of the issued and outstanding shares of
MEDY Common Stock have been duly authorized and validly issued and are fully
paid and nonassessable.
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(b) All of the issued and outstanding shares of MEDY Common Stock have
been duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights.
(c) The shares of MEDY Common Stock to be issued in the Merger will be
duly authorized and validly issued and will be fully paid, nonassessable shares
of MEDY Common Stock free of preemptive rights.
(d) To MEDY's knowledge, there are no voting trusts, stockholder
agreements or other voting arrangements by the stockholders of MEDY.
(e) Except as set forth in subsection (a) above, there is no
outstanding subscription, contract, convertible or exchangeable security,
option, warrant, call or other right obligating MEDY or its subsidiaries to
issue, sell, exchange, or otherwise dispose of, or to purchase, redeem or
otherwise acquire, shares of, or securities convertible into or exchangeable
for, capital stock of MEDY.
4.7 MEDY SEC Reports. MEDY has made available to CADI (i) MEDY's Annual
Reports on Form 10-KSB for the year ended September 30, 1996, including all
exhibits filed thereto and items incorporated therein by reference, (ii) MEDY's
Quarterly Reports on Form 10-QSB for the quarters ended December 31, 1996 and
March 31 and June 30, 1997, including all exhibits thereto and items
incorporated therein by reference, (iii) and all other reports or registration
statements (as amended or supplemented prior to the date hereof), filed by MEDY
with the SEC since October 1, 1996, including all exhibits thereto and items
incorporated therein by reference (items (i) through (iv) being referred to as
the "MEDY SEC Reports"). As of their respective dates, MEDY SEC Reports did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Since
October 1, 1994, MEDY has filed all material forms (and necessary amendments),
reports and documents with the SEC required to be filed by it pursuant to the
federal securities laws and the SEC rules and regulations thereunder, each of
which complied as to form, at the time such form, report or document was filed,
in all material respects with the applicable requirements of the Securities Act
and the Exchange Act and the applicable rules and regulations thereunder.
4.8 Financial Statements and Records of MEDY. MEDY has made available to
CADI true, correct and complete copies of the following financial statements
(the "MEDY Financial Statements"):
(a) the consolidated balance sheets of MEDY and its consolidated
subsidiaries as of September 30, 1996, and the consolidated statements of
income, stockholders' equity and cash flows for the fiscal years then ended,
including the notes thereto, in each case examined by and accompanied by the
report of MEDY's independent certified public accountants as of the date of such
financial statements; and
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(b) the unaudited balance sheet of MEDY as of June 30, 1997 (the "MEDY
Balance Sheet"), with any notes thereto, and the related unaudited statement of
income for the fiscal quarter then ended (collectively, the "MEDY Quarterly
Statements").
The MEDY Financial Statements present fairly, in all material respects, the
financial position of MEDY as of the dates thereof and the results of operations
and changes in financial position thereof for the periods then ended, in each
case in conformity with generally accepted accounting principles, consistently
applied, except as noted therein. Since September 30, 1996, there has been no
change in accounting principles applicable to, or methods of accounting utilized
by, MEDY, except as noted in the MEDY Financial Statements. The books and
records of MEDY have been and are being maintained in accordance with good
business practice, reflect only valid transactions, are complete and correct in
all material respects, and present fairly in all material respects the basis for
the financial position and results of operations of MEDY set forth in the MEDY
Financial Statements.
4.9 Absence of Certain Changes. Since the date of the MEDY Balance Sheet,
MEDY has not, except as otherwise set forth in the MEDY SEC Reports or on
Schedule 4.9:
(a) suffered any adverse change in the business, operations, assets,
or financial condition except for such changes that would not have a MEDY
Material Adverse Effect;
(b) suffered any material damage or destruction to or loss of the
assets of MEDY or the Merger Subsidiary, whether or not covered by insurance,
which property or assets are material to the operations or business of MEDY and
its subsidiaries taken as a whole;
(c) settled, forgiven, compromised, canceled, released, waived or
permitted to lapse any material rights or claims other than in the ordinary
course of business;
(d) entered into or terminated any material agreement, commitment or
transaction, or agreed or made any changes in material leases or agreements,
other than renewals or extensions thereof and leases, agreements, transactions
and commitments entered into or terminated in the ordinary course of business;
(e) written up, written down or written off the book value of any
material amount of assets other than in the ordinary course of business;
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(f) declared, paid or set aside for payment any dividend or
distribution with respect to MEDY's capital stock;
(g) redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of MEDY's capital stock or
securities (other than shares issued upon exercise of the MEDY Options) or any
rights to acquire such capital stock or securities, or agreed to changes in the
terms and conditions of any such rights outstanding as of the date of this
Agreement provided, however, nothing herein is intended or shall prevent MEDY
from issuing MEDY Options to its employees or in lieu of royalty payments or
license fees substantially in accordance with MEDY's past practices or which are
currently under contract;
(h) increased the compensation of or paid any bonuses to any employees
or contributed to any employee benefit plan, other than in accordance with
established policies, practices or requirements and as provided in Section 5.2
hereof;
(i) entered into any employment, consulting or compensation agreement
with any person or group, except for agreements which would not have a MEDY
Material Adverse Effect;
(j) entered into any collective bargaining agreement with any person
or group;
(k) entered into, adopted or amended any employee benefit plan; or
(l) entered into any agreement to do any of the foregoing.
4.10 No Material Undisclosed Liabilities. There are no material liabilities
or obligations of MEDY and its consolidated subsidiaries of any nature, whether
absolute, accrued, contingent, or otherwise, other than:
(a) liabilities and obligations that are reflected, accrued or
reserved against on the MEDY Balance Sheet or referred to in the footnotes to
the MEDY Balance Sheet, or incurred in the ordinary course of business and
consistent with past practices since the date of the MEDY Balance Sheet; or
(b) liabilities and obligations which in the aggregate would not
result in a MEDY Material Effect.
4.11 Tax Returns; Taxes. Each of MEDY and the Merger Subsidiary have duly
filed all U.S. federal and material state, county, local and foreign tax returns
and reports required to be filed by it, including those with respect to income,
payroll, property, withholding, social security, unemployment, franchise, excise
and sales taxes and all such returns and reports are correct in all material
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respects; have either paid in full all taxes that have become due as reflected
on any return or report and any interest and penalties with respect thereto or
have fully accrued on its books or have established adequate reserves for all
taxes payable but not yet due; and have made cash deposits with appropriate
governmental authorities representing estimated payments of taxes, including
income taxes and employee withholding tax obligations. No extension or waiver of
any statute of limitations or time within which to file any return has been
granted to or requested by MEDY or the Merger Subsidiary with respect to any
tax. No unsatisfied deficiency, delinquency or default for any tax, assessment
or governmental charge has been claimed, proposed or assessed against MEDY or
the Merger Subsidiary, nor has MEDY or the Merger Subsidiary received notice of
any such deficiency, delinquency or default. MEDY and the Merger Subsidiary have
no material tax liabilities other than those reflected on the MEDY Balance Sheet
and those arising in the ordinary course of business since the date thereof.
MEDY will make available to CADI true, complete and correct copies of MEDY's
consolidated U.S. federal tax returns for the last five years and make available
such other tax returns requested by CADI. There is no dispute or claim
concerning any material tax liability of MEDY or any of its subsidiaries either:
(a) raised by any taxing authority in writing; (b) as to which MEDY or any of
its subsidiaries has received notice concerning a potential audit of any return
filed by MEDY; and (c) there is no outstanding audit or pending audit of any tax
return filed by MEDY.
4.12 Material Contracts. MEDY has furnished or made available to CADI
accurate and complete copies of the MEDY Material Contracts (as defined herein)
applicable to MEDY or the Merger Subsidiary. There is not under any of the MEDY
Material Contracts any existing breach, default or event of default by MEDY or
the Merger Subsidiary nor event that with notice or lapse of time or both would
constitute a breach, default or event of default by MEDY or the Merger
Subsidiary other than breaches, defaults or events of default which would not
have a MEDY Material Adverse Effect nor does MEDY know of, and MEDY has not
received notice of, or made a claim with respect to, any breach or default by
any other party thereto which would, severally or in the aggregate, have a MEDY
Material Adverse Effect. As used herein, the term "MEDY Material Contracts"
shall mean all contracts and agreements filed, or required to be filed, as
exhibits to MEDY's Annual Report on Form 10-KSB for the year ended September 30,
1996 and any contracts and agreements entered into since September 30, 1996
which would be required to be filed or incorporated by reference therein as an
exhibit to MEDY's Annual Report on Form 10-KSB for the year ending September 30,
1997, and all contracts entered into in the ordinary course of business
providing for financial obligations of MEDY of more than $10,000 over a 12 month
period (excluding purchase orders entered into in the ordinary course of
business).
4.13 Litigation and Government Claims. Except as disclosed in the MEDY SEC
Reports, there is no pending suit, claim, action or litigation, or
administrative, arbitration or other proceeding or governmental investigation or
inquiry against MEDY or the Merger Subsidiary to which their businesses or
assets are subject which would, severally or in the aggregate, reasonably be
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expected to result in a MEDY Material Adverse Effect. To the knowledge of MEDY,
there are no such proceedings threatened or contemplated which would, severally
or in the aggregate, have a MEDY Material Adverse Effect. Neither MEDY nor the
Merger Subsidiary is subject to any judgment, decree, injunction, rule or order
of any court, or, to the knowledge of MEDY, any governmental restriction
applicable to MEDY or the Merger Subsidiary which is reasonably likely to have a
MEDY Material Adverse Effect.
4.14 Compliance with Laws. MEDY and the Merger Subsidiary each have all
material authorizations, approvals, licenses and orders to carry on their
respective businesses as they are now being conducted, to own or hold under
lease the properties or assets they own or hold under lease and to perform all
of their obligations under the agreements to which they are a party, except for
instances which would not have a MEDY Material Adverse Effect. MEDY and the
Merger Subsidiary have been and are, to the knowledge of MEDY, in compliance
with all applicable laws (including those referenced in the MEDY SEC Reports),
regulations and administrative orders of any country, state or municipality or
any subdivision of any thereof to which their respective businesses and their
employment of labor or their use or occupancy of properties or any part hereof
are subject, the violation of which would have a MEDY Material Adverse Effect.
4.15 MEDY Employee Benefit Plans. Each employee benefit plan, as such term
is defined in Section 3(3) of ERISA, of MEDY and the Merger Subsidiary
(collectively the "MEDY Employee Plans") complies in all material respects with
all applicable requirements of ERISA, the Code and other applicable laws. None
of the MEDY Employee Plans is an employee pension benefit plan or a
multiemployer plan, as such terms are defined in ERISA. Neither MEDY nor the
Merger Subsidiary nor any of their respective directors, officers, employees or
agents has, with respect to any MEDY Employee Plan, engaged in any "prohibited
transaction," as such term is defined in the Code or ERISA, nor has any MEDY
Employee Plan engaged in such prohibited transaction which could result in any
taxes or penalties or other prohibited transactions, which in the aggregate
could have a MEDY Material Adverse Effect.
4.16 Employment Agreements; Labor Relations. Each of MEDY and the Merger
Subsidiary is in compliance in all material respects with all laws (including
Federal and state laws) respecting employment and employment practices, terms
and conditions of employment, wages and hours, and is not engaged in any unfair
labor or unlawful employment practice. There is no unlawful employment practice
discrimination charge pending before the EEOC or EEOC recognized state "referral
agency." Except as would not have a MEDY Material Adverse Effect, there is no
unfair labor practice charge or complaint against MEDY or the Merger Subsidiary
pending before the National Labor Review Board. There is no labor strike,
dispute, slowdown or stoppage actually pending or, to the knowledge of MEDY,
threatened against or involving or affecting MEDY or the Merger Subsidiary and
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no National Labor Review Board representation question exists respecting their
respective employees. Except as would not have a MEDY Material Adverse Effect,
no grievances or arbitration proceeding is pending and no written claim therefor
exists. There is no collective bargaining agreement that is binding on MEDY or
the Merger Subsidiary.
4.17 Intellectual Property. MEDY and the Merger Subsidiary own or have
valid, binding and enforceable rights to use all material patents, trademarks,
trade names, service marks, service names, copyrights, applications therefor and
licenses or other rights in respect thereof ("MEDY Intellectual Property") used
or held for use in connection with the business of MEDY or the Merger
Subsidiary, without any known conflict with the rights of others, except for
such conflicts as do not have a MEDY Material Adverse Effect. Neither MEDY nor
the Merger Subsidiary has received any notice from any other person pertaining
to or challenging the right of MEDY or the Merger Subsidiary to use any MEDY
Intellectual Property or any trade secrets, proprietary information, inventions,
know-how, processes and procedures owned or used or licensed to MEDY or the
Merger Subsidiary, except with respect to rights the loss of which, individually
or in the aggregate, would not have a MEDY Material Adverse Effect.
4.18 Nasdaq Fees. MEDY has paid all fees due and owing to Nasdaq with
respect to MEDY Common Stock on the SmallCap Market, and MEDY will pay all such
fees arising out of the issuance of any shares of MEDY common stock in
connection with transactions contemplated hereby.
4.19 Tax Representations.
(a) Following the transaction, CADI will hold at least 90% of the fair
market value of its net assets and at least 70% of the fair market value of its
gross assets and at least 90% of the fair market value of Merger Subsidiary's
net assets and at least 70% of the fair market value of Merger Subsidiary's
gross assets held immediately prior to the transaction.
(b) Prior to the transaction, MEDY will be in control of Merger
Subsidiary within the meaning of ss.368(c) of the Code.
(c) MEDY has no plan or intention to reacquire any of its stock issued
in the transaction.
(d) MEDY has no plan or intention to liquidate CADI; to merge CADI
with or into another corporation; to sell or otherwise dispose of the stock of
CADI except for transfers of stock to corporations controlled by MEDY; or to
cause CADI to sell or otherwise dispose of any of its assets or of any of the
assets acquired from Merger Subsidiary, except for dispositions made in the
ordinary course of business or transfers of assets to a corporation controlled
by CADI.
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(e) Merger Subsidiary will have no liabilities assumed by CADI, and
will not transfer to CADI any assets subject to liabilities, in the transaction.
(f) Following the transaction, CADI will continue its historic
business or use a significant portion of its historic business assets in a
business.
(g) MEDY, Merger Subsidiary, CADI, and the shareholders of CADI will
pay their respective expenses, if any, incurred in connection with the
transaction.
(h) There is no intercorporate indebtedness existing between MEDY and
CADI or between Merger Subsidiary and CADI that was issued, acquired, or will be
settled at a discount.
(i) In the transaction, shares of CADI Common Stock representing
control of CADI, as defined in ss.368(c) of the Code, will be exchanged solely
for voting stock of MEDY except as otherwise described herein.
(j) MEDY does not own, nor has it owned during the past five years,
any shares of the stock of CADI.
(k) Neither MEDY nor Merger Subsidiary is an investment company as
defined in ss.368(a)(2)(f)(iii) and (iv) of the Code.
4.20 Title to Properties and Related Matters.
(a) MEDY has good and marketable title to or valid leasehold interests
in their respective properties (the "Real Estate") reflected on the MEDY
Financial Statements or acquired after the date thereof (other than personal
properties sold or otherwise disposed of in the ordinary course of business),
and all of such properties and all assets purchased by MEDY since the date of
the most recent MEDY Financial Statements are free and clear of any lien, claim
or encumbrance, except as reflected in the MEDY Financial Statements or notes
thereto and except for:
(i) liens for taxes, assessments or other governmental charges not
yet due and payable or the validity of which are being contested in good faith
by appropriate proceedings;
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(ii) statutory liens incurred in the ordinary course of business
that are not yet due and payable or the validity of which are being contested in
good faith by appropriate proceedings;
(iii) landlord liens contained in leases entered in the ordinary
course of business; and
(iv) other liens, claims or encumbrances that, in the aggregate, do
not materially subtract from the value of, or materially interfere with, the
present use of, the Real Estate.
Except for those assets acquired since the date of the MEDY Balance Sheet, all
properties and assets material to the present operations of MEDY are owned or
leased by MEDY and are reflected on the MEDY Financial Statements and notes
thereto in the manner and to the extent required by generally accepted
accounting principles.
(b) (i) Applicable zoning ordinances permit the operation of MEDY's
business at the Real Estate; (ii) MEDY has all easements and rights, including
easements for all utilities, services, roadways and other means of ingress and
egress, necessary to operate MEDY's business at the Real Estate; (iii) the Real
Estate is not located within a flood plain or lakeshore erosion hazard area; and
(iv) neither the whole nor any portion of the Real Estate has been condemned,
requisitioned or otherwise taken by any public authority, and no notice of any
such condemnation, requisition or taking has been received; except in each case
where the failure of such provisions to be true and correct would not have a
MEDY Material Adverse Effect. No such condemnation, requisition or taking is
threatened or contemplated to MEDY's knowledge, and there are no pending public
improvements which may result in special assessments against or which may
otherwise materially and adversely affect the Real Estate. To the knowledge of
MEDY, the Real Estate has not been used for deposit or disposal of hazardous
wastes or substances in violation of any past or current law in any material
respect and there is no material liability under past or current law with
respect to any hazardous wastes or substances which have been deposited or
disposed of on or in the Real Estate.
(c) MEDY has received no notice of, and has no actual knowledge of,
any material violation of any zoning, building, health, fire, water use or
similar statute, ordinance, law, regulation or code in connection with the Real
Estate.
(d) To MEDY's knowledge, no hazardous or toxic material (as
hereinafter defined) exists in any structure located on, or exists on or under
the surface of, the Real Estate which is, in any case, in material violation of
applicable environmental law. For purposes of this Agreement, "hazardous or
toxic material" shall mean waste, substance, materials, smoke, gas or
particulate matter designated as hazardous, toxic or dangerous under any
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applicable environmental law. For purposes of this Agreement, "environmental
law" shall include the Comprehensive Environmental Response Compensation and
Liability Act, the Clean Air Act, the Clean Water Act and any other applicable
federal, state or local environmental, health or safety law, rule or regulation
relating to or imposing liability or standards concerning or in connection with
hazardous, toxic or dangerous waste, substance, materials, smoke, gas or
particulate matter.
4.21 No Brokers and Finders. None of MEDY or, to MEDY's knowledge, any of
its officers, directors and employees has employed any broker, finder or
investment bank or incurred any liability for any investment banking fees,
financial advisory fees, brokerage fees or finders' fees in connection with the
transactions contemplated hereby. MEDY is not aware of any claim for payment of
any finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the completion of
the transactions contemplated hereby.
ARTICLE 5
Certain Covenants and Agreements
--------------------------------
5.1 Conduct of Business by CADI. From the date hereof to the Effective
Date, CADI will, except as required in connection with the Merger and the other
transactions contemplated by this Agreement and except as otherwise disclosed on
the schedules hereto or consented to in writing by MEDY:
(a) carry on its business in the ordinary and regular course in
substantially the same manner as heretofore conducted and not engage in any new
line of business or enter into any material agreement, transaction or activity
or make any material commitment except those in the ordinary and regular course
of business and not otherwise prohibited under this Section 5.1;
(b) neither change nor amend its Articles of Incorporation or Bylaws;
(c) not issue or sell shares of capital stock of CADI or issue, sell
or grant options, warrants or rights to purchase or subscribe to, or enter into
any arrangement or contract with respect to the issuance or sale of any of the
capital stock of CADI or rights or obligations convertible into or exchangeable
for any shares of the capital stock of CADI or make any changes (by split-up,
combination, reorganization or otherwise) in the capital structure of CADI;
(d) not declare, pay or set aside for payment any dividend or other
distribution in respect of the capital stock or other equity securities of CADI
and not redeem, purchase or otherwise acquire any shares of the capital stock or
other securities of CADI or rights or obligations convertible into or
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exchangeable for any shares of the capital stock or other securities of CADI or
obligations convertible into such, or any options, warrants or other rights to
purchase or subscribe to any of the foregoing;
(e) not acquire or enter into any agreement to acquire, by merger,
consolidation or purchase of stock or assets, any business or entity;
(f) use its reasonable efforts to preserve intact the corporate
existence, goodwill and business organization of CADI, to keep the officers and
employees of CADI available to CADI and to preserve the relationships of CADI
with suppliers, customers and others having business relations with any of them,
except for such instances which would not have a CADI Material Adverse Effect;
(g) [intentionally omitted.];
(h) Not (i) enter into, modify or extend in any manner the terms of
any employment, severance or similar agreements with officers and directors,
(ii) grant any increase in the compensation of officers or directors, whether
now or hereafter payable or (iii) grant any increase in the compensation of any
other employees except for compensation increases in the ordinary course of
business and consistent with past practice (it being understood by the parties
hereto that for the purposes of (ii) and (iii) above increases in compensation
shall include any increase pursuant to any option, bonus, stock purchase,
pension, profit-sharing, deferred compensation, retirement or other plan,
arrangement, contract or commitment);
(i) [intentionally omitted];
(j) except in instances which would not have a CADI Material Adverse
Effect, perform all of its obligations under all Material Contracts (except
those being contested in good faith) and not enter into, assume or amend any
contract or commitment that would be a Material Contract other than contracts to
provide services entered into in the ordinary course of business; and
(k) except in instances which would not have a CADI Material Adverse
Effect, prepare and file all federal, state, local and foreign returns for taxes
and other tax reports, filings and amendments thereto required to be filed by
it, and allow MEDY, at its request, to review all such returns, reports, filings
and amendments at CADI's offices prior to the filing thereof, which review shall
not interfere with the timely filing of such returns.
In connection with the continued operation of the business of CADI between
the date of this Agreement and the Effective Date, CADI shall confer in good
faith and on a regular and frequent basis with one or more representatives of
MEDY designated in writing to report operational matters of materiality and the
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general status of ongoing operations. In addition, during regular business
hours, CADI will allow MEDY employees and agents to be present at CADI's
business locations to observe the business and operations of CADI. CADI
acknowledges that MEDY does not and will not waive any rights it may have under
this Agreement as a result of such consultations nor shall MEDY be responsible
for any decisions made by CADI's officers and directors with respect to matters
which are the subject of such consultation.
5.2 Conduct of Business by MEDY. From the date hereof to the Effective
Date, MEDY will, and will cause the Merger Subsidiary and each of the Merger
Subsidiary to, except as required in connection with the Merger and the other
transactions contemplated by this Agreement and except as otherwise disclosed in
the schedules hereto or consented to in writing by CADI:
(a) Carry on its businesses in the ordinary and regular course in
substantially the same manner as heretofore conducted and not engage in any new
line of business or enter into any agreement, transaction or activity or make
any commitment except in the ordinary and regular course of business and not
otherwise prohibited under this Section 5.2;
(b) Neither change nor amend its Articles of Incorporation or Bylaws;
(c) Not make any changes (by split-up, combination, reorganization or
otherwise) in the capital structure of MEDY, Merger Subsidiary or the Merger
Subsidiary;
(d) Not declare, pay or set aside for payment any dividend or other
distribution in respect of the capital stock or other equity securities of MEDY
and not redeem, purchase or otherwise acquire any shares of the capital stock or
other securities of MEDY or the Merger Subsidiary, or rights or obligations
convertible into or exchangeable for any shares of the capital stock or other
securities of MEDY, Merger Subsidiary or the Merger Subsidiary or obligations
convertible into such, or any options, warrants or other rights to purchase or
subscribe to any of the foregoing;
(e) Not acquire or enter into any agreement to acquire, by merger,
consolidation or purchase of stock or assets, any business or entity which would
have a MEDY Material Adverse Effect; and
(f) Use its reasonable efforts to preserve intact the corporate
existence, goodwill and business organization of MEDY and the Merger Subsidiary,
to keep the officers and employees of MEDY and the Merger Subsidiary available
to MEDY and to preserve the relationships of MEDY and the Merger Subsidiary with
suppliers, customers and others having business relations with any of them,
except for such instances which would not have a MEDY Material Adverse Effect;
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5.3 Notice of any Material Change. Each of CADI and MEDY shall, promptly
after the first notice or occurrence thereof but not later than the Closing
Date, advise the other in writing of any event or the existence of any state of
facts that (i) would make any of its representations and warranties in this
Agreement untrue in any material respect, or (ii) would otherwise constitute
either a CADI Material Adverse Effect or a MEDY Material Adverse Effect.
5.4 Inspection and Access to Information.
(a) Between the date of this Agreement and the Effective Date, CADI
will provide to the Merger Subsidiary and MEDY and their accountants, counsel
and other authorized representatives reasonable access, during normal business
hours to its premises, properties, contracts, commitments, books, records and
other information (including tax returns filed and those in preparation) and
will cause its officers to furnish to MEDY and the Merger Subsidiary and their
authorized representatives such financial, technical and operating data and
other information pertaining to its business, as the Merger Subsidiary and MEDY
shall from time to time reasonably request.
(b) Between the date of this Agreement and the Effective Date, MEDY
will, and will cause the Merger Subsidiary to, provide to CADI, the CADI
Shareholders, and their respective accountants, counsel and other authorized
representatives reasonable access, during normal business hours to its premises,
properties, contracts, commitments, books, records and other information
(including tax returns filed and those in preparation) and will cause its
officers to furnish to CADI and the CADI Shareholders and their authorized
representatives such financial, technical and operating data and other
information pertaining to its business, as CADI or any CADI Shareholder may from
time to time reasonably request.
(c) Each of the parties hereto and their respective representatives
shall maintain the confidentiality of all information (other than information
which is generally available to the public) concerning the other parties hereto
acquired pursuant to the transactions contemplated hereby in the event that the
Merger is not completed. Each of the parties hereto and their representatives
shall not use such information so obtained. All files, records, documents,
information, data and similar items relating to the confidential information of
CADI, whether prepared by MEDY or otherwise coming into MEDY's possession, shall
remain the exclusive property of CADI and shall be promptly delivered to CADI,
together with all copies thereof, upon termination of this Agreement. All files,
records, documents, information, data and similar items relating to the
confidential information of MEDY, whether prepared by CADI or otherwise coming
into CADI's possession, shall remain the exclusive property of MEDY and shall be
promptly delivered to MEDY, together with all copies thereof, upon termination
of this Agreement.
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5.5 MEDY Exchange Act Reports. CADI acknowledges that MEDY will be required
to reports its acquisition of CADI promptly following the Effective Date. CADI
agrees to provide as promptly as practicable to MEDY such information concerning
its business and financial statements and affairs as, in the reasonable judgment
of MEDY, may be required or appropriate for inclusion in the required report, or
in any amendments or supplements thereto, and to cause its counsel and auditors
to cooperate with MEDY's counsel and auditors in the preparation of such report.
5.6 Nasdaq Notification. MEDY will file a notification with the Nasdaq
SmallCap Market for the issuance of the shares of MEDY Common Stock to be issued
in the Merger.
5.7 Reasonable Efforts; Further Assurances; Cooperation. Subject to the
other provisions of this Agreement, the parties hereby shall each use their
reasonable efforts to perform their obligations herein and to take, or cause to
be taken or do, or cause to be done, all things reasonably necessary, proper or
advisable under applicable law to obtain all regulatory approvals and satisfy
all conditions to the obligations of the parties under this Agreement and to
cause the Merger and the other transactions contemplated herein to be carried
out promptly in accordance with the terms hereof. The parties agree to use their
reasonable best efforts to complete the transactions contemplated hereby by the
date specified in Section 9.1(b) hereof. The parties shall cooperate fully with
each other and their respective officers, directors, employees, agents, counsel,
accountants and other designees in connection with any steps required to be
taken as a part of their respective obligations under this Agreement, including
without limitation:
(a) In the event any claim, action, suit, investigation or other
proceeding by any governmental body or other person is commenced which questions
the validity or legality of the Merger or any of the other transactions
contemplated hereby or seeks damages in connection therewith, the parties agree
to cooperate and use all reasonable efforts to defend against such claim,
action, suit, investigation or other proceeding and, if an injunction or other
order is issued in any such action, suit or other proceeding, to use all
reasonable efforts to have such injunction or other order lifted, and to
cooperate reasonably regarding any other impediment to the completion of the
transactions contemplated by this Agreement.
(b) Each party shall give prompt written notice to the other of (i)
the occurrence, or failure to occur, of any event which occurrence or failure
would be likely to cause any representation or warranty of CADI or MEDY, as the
case may be, contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the Effective Date or that
will or may result in the failure to satisfy the conditions specified in Article
6 or 7 and (ii) any failure of CADI or MEDY, as the case may be, to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder.
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5.8 Public Announcements. The timing and content of all announcements
regarding any aspect of this Agreement or the Merger to the financial community,
government agencies, employees or the general public shall be mutually agreed
upon in advance (unless MEDY or CADI is advised by counsel that any such
announcement or other disclosure not mutually agreed upon in advance is required
to be made by law or applicable SmallCap Market rule and then only after making
a reasonable attempt to comply with the provisions of this Section).
5.9 No Solicitations. From the date hereof until the Effective Date or
until this Agreement is terminated or abandoned as provided in this Agreement,
CADI shall not directly or indirectly (i) solicit or initiate discussion with or
(ii) enter into negotiations or agreements with, or furnish any information to,
any corporation, partnership, person or other entity or group (other than MEDY,
an affiliate of MEDY or their authorized representatives pursuant to this
Agreement) concerning any proposal for a merger, sale of substantial assets,
sale of shares of stock or securities or other takeover or business combination
transaction (the "Acquisition Proposal") involving CADI, and CADI will instruct
its officers, directors, advisors and its financial and legal representatives
and consultants not to take any action contrary to the foregoing provisions of
this sentence; provided, however, that CADI, its officers, directors, advisors
and its financial and legal representatives and consultants will not be
prohibited from taking any action described in (ii) above to the extent such
action is taken by, or upon the authority of, the Board of Directors of CADI in
the exercise of good faith judgment as to its fiduciary duties to the
shareholders of CADI, which judgment is based upon the advice of independent,
outside legal counsel that a failure of the Board of Directors of CADI to take
such action would be likely to constitute a breach of its fiduciary duties to
such shareholders. CADI will notify MEDY promptly if CADI becomes aware that any
inquiries or proposals are received by, any information is requested from or any
negotiations or discussions are sought to be initiated with, CADI with respect
to an Acquisition Proposal, and CADI shall promptly deliver to MEDY any written
inquiries or proposals received by CADI relating to an Acquisition Proposal.
5.10 MEDY Board of Directors. MEDY's Board of Directors shall following the
Effective Date take all action necessary to cause the Board of Directors of MEDY
to be increased by one director and shall take all such action necessary to
cause Xxxxxx Xxxxxxxx and Xxxx Uk Xxx to be elected as a director of MEDY for a
term expiring at the first annual meeting of stockholders of MEDY following the
Effective Date.
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ARTICLE 6
Conditions Precedent to Obligations of CADI
-------------------------------------------
Except as may be waived by CADI, the obligations of CADI to complete the
transactions contemplated by this Agreement shall be subject to the satisfaction
on or before the Closing Date of each of the following conditions:
6.1 Compliance. MEDY shall have, or shall have caused to be, satisfied or
complied with and performed in all material respects all terms, covenants and
conditions of this Agreement to be complied with or performed by MEDY on or
before the Closing Date.
6.2 Representations and Warranties. All of the representations and
warranties made by MEDY in this Agreement shall be true and correct in all
material respects at and as of the Closing Date with the same force and effect
as if such representations and warranties had been made at and as of the Closing
Date, except for changes permitted or contemplated by this Agreement.
6.3 Material Adverse Changes. Subsequent to June 30, 1997, there shall have
occurred no MEDY Material Adverse Effect other than any such change that affects
both MEDY and CADI in a substantially similar manner.
6.4 Certificates. CADI shall have received a certificate or certificates,
executed on behalf of MEDY by an executive officer of MEDY, to the effect that
the conditions contained in Sections 6.1, 6.2 and 6.3 hereof have been
satisfied.
6.5 Stockholder Approval. This Agreement shall have been approved and
adopted by the affirmative vote of the holders of a majority of all of the
outstanding shares of CADI Common Stock.
6.6 Consents; Litigation. Other than the filing of Articles of Merger as
described in Article 1, all authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations or terminations of waiting periods
imposed by any governmental entity, and all required third-party consents, the
failure to obtain which would have a MEDY Material Adverse Effect, shall have
been obtained. In addition, no preliminary or permanent injunction or other
order shall have been issued by any court or by any governmental or regulatory
agency, body or authority which prohibits the completion of the Merger and the
transactions contemplated by this Agreement and which is in effect at the
Effective Date.
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6.7 Employment and Non-Competition Agreements. The Employment Agreements,
in the forms of Schedules 6.7a and 6.7b hereto, between CADI and each of Xxx
Xxxxxxxx and Xxxx Uk Xxx shall be executed and delivered by the parties thereto.
6.8 Stock Option Agreements. In connection with the Employment Agreements
described in Section 6.7 hereof, MEDY shall issue to each of Messrs. Richmond
and Xxx options to purchase 600,000 shares of MEDY Common Stock, such options to
be represented by Agreements in the form of Schedule 6.8.
6.9 Employee Stock Options. Prior to the Effective Date, MEDY shall have
approved an employee stock option plan for employees of CADI in the form of
Schedule 6.9.
6.10 Registration Rights Agreement. The Registration Rights Agreement, in
the form of Schedule 6.10 hereto, by and among Xxx Xxxxxxxx, Xxxx Uk Xxx, and
XXXX, will be in full force and effect as of the Closing Date.
6.11 Legal Opinion. CADI shall have received a legal opinion from counsel
to MEDY in the form of Schedule 6.11 hereto.
ARTICLE 7
Conditions Precedent to Obligations of MEDY
and the Merger Subsidiary
-------------------------
Except as may be waived by MEDY and the Merger Subsidiary, the obligations
of MEDY and the Merger Subsidiary to complete the transactions contemplated by
this Agreement shall be subject to the satisfaction, on or before the Closing
Date, of each of the following conditions:
7.1 Compliance. CADI shall have, or shall have caused to be, satisfied or
complied with and performed in all material respects all terms, covenants, and
conditions of this Agreement to be complied with or performed by it on or before
the Closing Date.
7.2 Representations and Warranties. All of the representations and
warranties made by CADI in this Agreement shall be true and correct in all
material respects at and as of the Closing Date with the same force and effect
as if such representations and warranties had been made at and as of the Closing
Date.
7.3 Material Adverse Changes. Since June 30, 1997, except as set forth in
this Agreement or on the schedules hereto, there shall have occurred no CADI
Material Adverse Effect other than any such change that affects both MEDY and
CADI in a substantially similar manner.
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7.4 Certificates. MEDY shall have received a certificate or certificates,
executed on behalf of CADI by an executive officer of CADI, to the effect that
the conditions in Sections 7.1, 7.2 and 7.3 hereof have been satisfied.
7.5 Consents; Litigation. Other than the filing of the Articles of Merger
as described in Article 1, all authorizations, consents, orders or approvals of,
or declarations or filings with, or expirations or terminations of waiting
periods imposed by, any governmental entity, and all required third-party
consents, the failure to obtain which would have a CADI Material Adverse Effect
or a MEDY Material Effect, shall have been obtained. In addition, no preliminary
or permanent injunction or other order shall have been issued by any court or by
any governmental or regulatory agency, body or authority which prohibits the
completion of the Merger and the transactions contemplated by this Agreement and
which is in effect at the Effective Date.
7.6 Release by Xxxxx XxXxxx, Xx. Effective the Effective Date and receipt
by Xx. XxXxxx of the requisite consideration, Xxxxx XxXxxx, Xx., formerly a
shareholder of CADI, will execute a mutual general release satisfactory to MEDY
for the benefit of CADI, its officers, directors, employees, shareholders,
agents, and parents in substantially the form of Schedule 7.6 hereto. In
connection with obtaining the release from Xx. XxXxxx, and provided Xx. XxXxxx
enters into an the investment letter in the form of Schedule 7.9 here and an
exemption exists for the transaction (which must be established to the
reasonable satisfaction of MEDY), MEDY will pay Xx. XxXxxx:
(a) 304,480 shares of MEDY Common Stock;
(b) $45,303 in cash; and
(c) An unsecured promissory note for $100,000 in the form of Schedule
1.1.
7.7 Employment and Non-Competition Agreements. The Employment and
Non-Competition Agreements, in the form of Schedules 6.7a and 6.7b hereto,
between CADI and each of Xxx Xxxxxxxx and Xxxx Uk Xxx shall be executed and
delivered by the parties thereto.
7.8 Legal Opinion. MEDY shall have received a legal opinion from counsel to
CADI in the form of Schedule 7.8 hereto.
7.9 Investment Representations. Each of the CADI Shareholders and each
person entitled to receive MEDY Common Stock or a Promissory Note from MEDY as a
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part of the Merger Consideration shall have conducted such investigation into
MEDY as such person may have desired and shall, on or before the Effective Date,
execute and deliver to MEDY an Investment Letter in the form of Schedule 7.9
hereto.
ARTICLE 8
8.1 Indemnification. In the event of any threatened or actual claim,
action, suit, proceeding or investigation (including any claims regarding
securities law matters), whether civil, criminal or administrative, including,
without limitation, any such claim, action, suit, proceeding or investigation in
which any of the present or former officers or directors (the "Managers") of
CADI is, or is threatened to be, made a party by reason of the fact that he or
she is or was a stockholder, director, officer, employee or agent of CADI, or is
or was serving at the request of CADI as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
whether before or after the Effective Date,
CADI shall indemnify and hold harmless, and from and after the Effective
Date each of the Surviving Corporation and
MEDY shall indemnify and hold harmless, as and to the full extent permitted
by applicable law (including by advancing expenses promptly as statements
therefor are received),
each such Manager against any losses, claims, damages, liabilities, costs,
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement in connection with any such claim, action, suit, proceeding or
investigation, and in the event of any such claim, action, suit proceeding or
investigation (whether arising before or after the Effective Date),
(i) if CADI (prior to the Effective Date) or MEDY or the Surviving
Corporation (after the Effective Date) have not promptly assumed the defense of
such matter, the Managers may retain counsel satisfactory to them, and CADI, or
the Surviving Corporation and MEDY after the Effective Date, shall pay all fees
and expenses of such counsel for the Managers promptly, as statements therefor
are received, and
(ii) CADI, or the Surviving Corporation and MEDY after the
Effective Date, will use their respective best efforts to assist in the vigorous
defense of any such matter; provided that neither CADI nor the Surviving
Corporation or MEDY shall be liable for any settlement effected without its
prior written consent (which consent shall not be unreasonably withheld);
and provided further that the Surviving Corporation and MEDY shall have no
obligation under the foregoing provisions of this Section 8.1 to any Manager if
(x) the indemnification
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of such Manager in the manner contemplated hereby is prohibited by applicable
law, and (y) CADI has breached a representation or warranty hereunder with
respect to the same matters for which indemnification is being sought by such
Manager and such Manager fails to prove that such Manager had no actual
knowledge of such breach at the Effective Date.
(b) Reimbursement. Upon the determination that the Surviving
Corporation or MEDY is not liable for any such indemnification claims, the
Manager will reimburse MEDY and the Surviving Corporation for any fees, expenses
and costs incurred by MEDY or the Surviving Corporation in connection with the
defense of such claims.
(c) Notification. Any Manager wishing to claim indemnification under
this Section 8.1, upon learning of any such claim, action, suit, proceeding or
investigation, shall notify CADI and, after the Effective Date, the Surviving
Corporation and MEDY, thereof (provided that the failure to give such notice
shall not affect any obligations hereunder, except to the extent that the
indemnifying party is actually and materially prejudiced thereby). MEDY and CADI
agree that all rights to indemnification existing in favor of the Managers as
provided in CADI's Articles of Incorporation or Bylaws as in effect as of the
date hereof, and in any agreement between CADI and any Manager with respect to
matters occurring prior to the Effective Date, shall survive the Merger. MEDY
further covenants not to amend or repeal any provisions of the Articles of
Incorporation or Bylaws of CADI in any manner which would adversely affect the
indemnification or exculpatory provisions contained therein.
(d) Inurement. The provisions of this Section 8.1 are intended to be
for the benefit of, and shall be enforceable by, each indemnified party and his
or her heirs and representatives.
ARTICLE 9
Miscellaneous
-------------
9.1 Termination. In addition to the provisions regarding termination set
forth elsewhere herein, this Agreement and the transactions contemplated hereby
may be terminated at any time on or before the Closing Date:
(a) by mutual consent of CADI and MEDY;
(b) by either MEDY or CADI if the transactions contemplated by this
Agreement have not been completed by October 25, 1997, unless such failure of
completion is due to the failure of the terminating party to perform or observe
the covenants, agreements, and conditions hereof to be performed or observed by
it at or before the Closing Date;
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(c) by either CADI or MEDY if the transactions contemplated hereby
violate any nonappealable final order, decree, or judgment of any court or
governmental body or agency having competent jurisdiction; or
(d) by MEDY if the CADI Board of Directors withdraws or materially
modifies or changes its recommendation to the stockholders of CADI to approve
this Agreement and the Merger if there exists at such time an Acquisition
Proposal.
9.2 Expenses.
(a) Except as provided in (b) below, if the transactions contemplated
by this Agreement are not completed, each party hereto shall pay its own
expenses incurred in connection with this Agreement and the transactions
contemplated hereby.
(b) If, (i) this Agreement is terminated by MEDY pursuant to Section
9.1(d) hereof on or before the date set forth in Section 9.1(b) and while this
Agreement remains in effect, CADI enters into a definitive agreement with
respect to an Acquisition Proposal with any corporation, partnership, person or
other entity or group (other than MEDY or any affiliate of MEDY), and such
transaction (including any revised transaction based upon the Acquisition
Proposal) is thereafter completed (whether before or after such date) then CADI
shall pay to MEDY a fee equal to the sum of the documented fees, costs and
expenses, including legal and accounting fees incurred by MEDY in connection
with the transactions contemplated by this Agreement, which such amounts shall
be payable in same day funds to an account specified by MEDY.
9.3 Entire Agreement. This Agreement and the schedules hereto contain the
complete agreement among the parties with respect to the transactions
contemplated hereby and supersede all prior agreements and understandings among
the parties with respect to such transactions. Section and other headings are
for reference purposes only and shall not affect the interpretation or
construction of this Agreement. The parties hereto have not made any
representation or warranty except as expressly set forth in this Agreement or in
any certificate or schedule delivered pursuant hereto. The obligations of any
party under any agreement executed pursuant to this Agreement shall not be
affected by this section.
9.4 Survival of Representations and Warranties. The representations and
warranties of each party contained herein or in any schedule, certificate,
document or instrument delivered pursuant to this Agreement shall survive the
Closing for three years following the Effective Date.
9.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute only one original.
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9.6 Notices. All notices, demands, requests, or other communications that
may be or are required to be given, served, or sent by any party to any other
party pursuant to this Agreement shall be in writing and shall be sent by
facsimile transmission, next-day courier or mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, or transmitted by
hand delivery, addressed as follows:
(i) If to CADI:
Computer Age Dentist, Inc.
0000 Xxxxx Xxxx Xxxx., Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Attention: Xxx Xxxxxxxx, CEO
Tel: 000-000-0000
Fax: 000-000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx & Xxxxxxx
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Tel: 000-000-0000
Fax: 000-000-0000
(ii) If to MEDY or Merger Subsidiary:
Medical Dynamics, Inc.
00 Xxxxxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Van X. Xxxxxxx, President
Tel: 000-000-0000
Fax: 000-000-0000
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with a copy (which shall not constitute notice) to:
Friedlob Xxxxxxxxx Xxxxxx Xxxxxxx & Xxxxxxxxxxx, LLC
0000 Xxxxxxx Xxxxx
Xxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Xx., Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
Each party may designate by notice in writing a new address to which any
notice, demand, request, or communication may thereafter be so given, served, or
sent. Each notice, demand, request, or communication that is mailed, delivered,
or transmitted in the manner described above shall be deemed sufficiently given,
served, sent, and received for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery receipt or the affidavit of
messenger being deemed conclusive evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
9.7 Successors; Assignments. This Agreement and the rights, interests, and
obligations hereunder shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned, by operation of law or otherwise, by any of the parties hereto without
the prior written consent of the other.
9.8 Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Colorado (except the choice of law
rules thereof).
9.9 Waiver and Other Action. This Agreement may be amended, modified, or
supplemented only by a written instrument executed by the parties against which
enforcement of the amendment, modification or supplement is sought.
9.10 Severability. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable, such provision shall be fully severable, and
this Agreement shall be construed and enforced as if such illegal, invalid, or
unenforceable provision were never a part hereof; the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance; and in lieu of
such illegal, invalid, or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid, and enforceable.
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9.11 No Third Party Beneficiaries. Article 8 is intended for the benefit of
each "Manager" (as defined in Article 8) and may be enforced by such persons,
their heirs and representatives. Other than as expressly set forth in this
Section 9.11, nothing expressed or implied in this Agreement is intended, or
shall be construed, to confer upon or give any person, firm or corporation other
than the parties hereto and their stockholders, any rights, remedies,
obligations or liabilities under or by reason of this Agreement or result in
such person, firm or corporation being deemed a third party beneficiary of this
Agreement, even if such person is specifically named herein.
9.12 Mutual Contribution. The parties to this Agreement and their counsel
have mutually contributed to its drafting. Consequently, no provision of this
Agreement shall be construed against any party on the ground that such party
drafted the provision or caused it to be drafted or the provision contains a
covenant of such party.
9.13 Arbitration. Any controversy or dispute among the parties arising in
connection with this Agreement shall be submitted to a panel of three
arbitrators and finally settled by arbitration in accordance with the commercial
arbitration rules of the American Arbitration Association. Each of the disputing
parties shall appoint one arbitrator, and these two arbitrators shall
independently select a third arbitrator. Arbitration shall take place in Denver,
Colorado. The prevailing party in such arbitration shall be entitled to the
award of all costs and attorneys' fees in connection with such action. Any award
for monetary damages resulting from nonpayment of sums due hereunder shall bear
interest from the date on which such sums were originally due and payable.
Judgment upon the award rendered may be entered in any court having jurisdiction
or application may be made to such court for judicial acceptance of the award
and an order of enforcement, as the case may be.
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9.14 Schedules. The following Schedules constitute a part of, and
incorporated into, this Agreement.
Schedule Description
-------- -----------
1.1 Promissory Note
3.2 CADI Subsidiaries and Investments
3.13 Material Contracts
3.17 Employment Agreements and Plans
4.9 Changes
6.7a Employment Agreement - Richmond
6.7b Employment Agreement - Xxx
6.8 Form of Stock Option Agreement
6.9 Employee Stock Option Plan
6.10 Registration Rights Agreement
6.11 Opinion of Counsel to MEDY
7.6 Release of Xxxxx XxXxxx, Xx.
7.8 Opinion of Counsel to CADI
7.9 Investment Letter
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MEDICAL DYNAMICS, INC.
By:
---------------------------------------------------
Van X. Xxxxxxx, President
CADI ACQUISITION CORP.
By:
---------------------------------------------------
Van X. Xxxxxxx, President
COMPUTER AGE DENTIST, INC.
By:
---------------------------------------------------
Xxxxxx X. Xxxxxxxx, Chief Executive Officer
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