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DRAFT: MAY 2, 1999
CONFIDENTIAL
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AGREEMENT AND PLAN OF MERGER
Between
MINIMALLY INVASIVE SURGERY CORPORATION
And
MIS ACQUISITION COMPANY I, INC.
And
VALLEY PAIN CENTERS, INC.
2
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of the _____ day of May,
1999, is by and between Minimally Invasive Surgery Corporation, a Delaware
Corporation ("MIS"), MIS Acquisition Company I, Inc., a Florida corporation
("ACQUISITION COMPANY") and Valley Pain Centers, Inc., a Florida corporation
("VPC")
In consideration of the mutual covenants and agreements contained in
this Agreement, and intending to be legally bound hereby, MIS and VPC hereby
agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement:
"ACQUISITION COMPANY" shall mean MIS Acquisition Company I, Inc., a
Florida corporation and which is a wholly-owned subsidiary of MIS.
"ACQUISITION COMPANY BOARD APPROVAL" shall mean that the Board of
Directors of Acquisition Company, at a meeting duly called and held, has (i)
determined that the Merger is advisable and in the best interest of Acquisition
Company and its stockholders and approved it, (ii) duly approved, authorized and
ratified the execution and delivery of this Agreement and the consummation of
the Transactions, and (iii) recommended the approval of this Agreement, the
Merger, the Articles and each of the Closing Documents to which it is or will be
a party by the holders of Acquisition Company Capital Stock (and any other class
of stock of MIS entitled to vote on the Merger) and directed that this
Agreement, the Merger, the Articles of Merger and each of the Closing Documents
to which it is or will be a party be submitted for consideration by the holders
of Acquisition Company Capital Stock, at a meeting to be held for that purpose.
"ACQUISITION COMPANY CAPITAL STOCK" shall mean all the issued and
outstanding Acquisition Company Common Stock which is owned by MIS.
"ACQUISITION PROPOSAL" shall have the meaning ascribed to it in Section
7.2 hereof.
"ADDITIONAL MERGER CONSIDERATION" shall have the meaning ascribed to it
in Section 3.5 hereof.
"ADVERSE CONSEQUENCES" shall have the meaning ascribed to it in Section
5.13 hereof.
"AFFILIATE" shall have the meaning ascribed to it in Section 7.6
hereof.
"AFFILIATED GROUP" shall have the meaning ascribed to it in Section
5.13 hereof.
"AGREEMENT" means this Agreement and Plan of Merger, and all Schedules
and Exhibits hereto.
"ASSETS" means all of the assets of MIS and its Subsidiaries, or VPC,
as the case may be, of every kind and nature. Any representations and warranties
made by a party hereto with respect
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to the Assets shall pertain only to those Assets which are owned, leased or
otherwise controlled by such party.
"AUDITED FINANCIAL STATEMENT" shall have the meaning ascribed to it in
Section 6.8(a) hereof.
"AUTOMATIC TERMINATION DATE" shall have the meaning ascribed to it in
Section 10.1(e) hereof.
"BOARD APPROVAL" shall mean MIS Board Approval, Acquisition Company
Board Approval or VPC Board Approval, as applicable.
"BUSINESS DAY" shall mean any weekday, excluding any legal holiday
observed pursuant to the United States federal law or the laws of the State of
Florida.
"CERTIFICATE(S)" shall have the meaning ascribed to it in section 3.4
hereof.
"CLOSING" and "CLOSING DATE" shall have the meanings ascribed to such
terms in Section 3.6 hereof.
"CLOSING DOCUMENTS" means this Agreement and all other documents to be
executed and delivered either simultaneously herewith or at Closing in
connection with the Transactions.
"CODE" means the Internal Revenue Code of 1986, as amended.
"DEBENTURES" shall have the meaning ascribed to it in Section 3.1(j)
hereof.
"DELAWARE ACT" shall mean the Delaware General Corporation Law.
"DOL" shall mean the United States Department of Labor.
"EFFECTIVE TIME" shall have the meaning ascribed to it in Section 2.2
hereof.
"EMPLOYMENT AGREEMENTS" shall have the meaning ascribed to it in
Section 4.1 hereof.
"ENVIRONMENTAL LAWS" shall have the meaning ascribed to it in Section
5.6(b) hereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"EXCHANGE ACT" shall mean the Securities and Exchange Act of 1934, as
amended, and all regulations promulgated pursuant thereto.
"EXCHANGE AGENT" shall have the meaning set forth in Section 3.4(b)
hereof.
"EXCHANGE RATIO" shall have the meaning ascribed to it in Section
3.1(a) hereof.
"FINANCIAL STATEMENTS" shall have the meaning ascribed to it in Section
5.8(a) and 6.8(a) hereof.
"FLORIDA ACT" shall mean the Florida Business Corporation Act.
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"FORMULA PERIODS" shall have the meaning ascribed to it in Section
3.1(g) hereof.
"FORMULA PROFITS" shall have the meaning ascribed to it in Section
3.1(f) hereof.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"GOVERNMENTAL AUTHORITY" shall include any and all governmental or
quasi-governmental bodies, agencies, bureaus, departments, boards, commissions,
instrumentalities or other entities having or asserting jurisdiction over VPC,
MIS, or any Subsidiary of either, as applicable.
"HAZARDOUS SUBSTANCE" shall have the meaning ascribed to it in Section
5.6(b) hereof.
"INITIAL PAYMENT" shall have the meaning ascribed to it in Section
3.1(a) hereof.
"INSTALLMENT PAYMENTS" shall have the meaning ascribed to it in Section
3.1(c) hereof.
"INTERIM FINANCIALS" shall have the meaning ascribed to it in Section
6.8(a) hereof.
"IRS" shall mean the Internal Revenue Service.
"LIABILITY" shall have the meaning ascribed to it in Section 5.13
hereof.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon, or in,
or circumstances likely to result in, a material adverse change in (i) the
business, assets, liabilities, prospects, operations, results of operations,
properties (including intangible properties), regulatory status or condition
(financial or otherwise) of MIS or VPC, as the case may be, or any of such
party's respective Subsidiaries taken as a whole, (ii) the legality, validity,
binding effect or enforceability of this Agreement, or (iii) the ability of MIS
or VPC, as the case may be, or any of such party's respective Subsidiaries to
perform their obligations under this Agreement.
"MERGER" shall mean the Merger of VPC into Acquisition Company upon the
terms and subject to the conditions set forth in this Agreement.
"MERGER SHARES" shall have the meaning ascribed to it in Section 3.1(b)
hereof.
"MIS" shall mean Minimally Invasive Surgery Corporation, a Delaware
corporation.
"MIS BOARD APPROVAL" shall mean that the Board of Directors of MIS, at
a meeting duly called and held, has (i) determined that the Merger is advisable
and in the best interest of MIS and its stockholders and approved it, (ii) duly
approved, authorized and ratified the execution and delivery of this Agreement
and the consummation of the Transactions, and (iii) adopted a resolution to
elect not to be subject, to the extent permitted by applicable law, to any state
takeover law that may purport to be applicable to this Agreement, the Merger,
and other Transactions.
"MIS BREACH SETTLEMENT" shall have the meaning ascribed to it in
Section 7.6(b) hereof.
"MIS CAPITAL STOCK" shall mean, collectively, the MIS Common Stock and
the MIS Preferred Stock, if any.
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"MIS COMMON STOCK" shall mean the common stock, $______ par value, of
MIS.
"MIS EMPLOYEES" shall have the meaning ascribed to it in Section
5.19(a) hereof.
"MIS EMPLOYEE BENEFIT PLAN" shall have the meaning ascribed to it in
Section 5.19(a) hereof.
"MIS EQUITY INTERESTS" shall mean all capital stock of MIS and
securities convertible into capital stock of MIS.
"MIS ERISA AFFILIATE" shall have the meaning ascribed to it in Section
5.19(a) hereof.
"MIS FINAL REVISED SCHEDULES" shall have the meaning ascribed to it in
Section 8.9 hereof.
"MIS GROUP" shall have the meaning ascribed to it in Section 5.13(b)
hereof.
"MIS INTELLECTUAL PROPERTY" shall have the meaning ascribed to it in
Section 5.10 hereof.
"MIS RECEIVABLES" shall have the meaning ascribed to it in Section 5.22
hereof.
"MIS SHAREHOLDER APPROVAL" means with respect to MIS the requisite
approval by the holders of MIS Capital Stock of this Agreement and the Merger.
"MONTHLY FINANCIALS" shall have the meaning ascribed to it in Section
4.9 hereof.
"MOST RECENT FISCAL QUARTER END" shall have the meaning ascribed to it
in Section 5.8 hereof.
"NONDISCLOSURES/NONCOMPETE AGREEMENTS" shall have the meaning ascribed
to it in Section 4.1 hereof.
"OPTION/WARRANT SHARES" shall have the meaning ascribed to it in the
Employment Agreements set forth in EXHIBIT 4.1 hereof.
"OUT-OF-POCKET COSTS" shall mean, with respect to MIS or VPC, as the
case may be, all fees, expenses, and other costs which are directly related to
the Transactions which such party has incurred through the date of termination
of this Agreement.
"PERMITTED EQUITY FINANCING" shall have the meaning ascribed to it in
Section 3.1(c) hereof.
"PERSON" means an individual, corporation, limited liability company,
limited liability partnership, limited partnership, trust, joint venture,
association or unincorporated organization or a Governmental Authority.
"PUBLIC REPORTS" shall have the meaning set forth in Section 5.6(c)
hereof.
"SEC" shall mean the U.S. Securities and Exchange Commission.
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"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and
all regulations promulgated thereunder.
"SECURITIES FILINGS" shall mean the most recent Form 10-KSB filed by
MIS with the SEC, as well as any and all filing made by MIS thereafter pursuant
to the Exchange Act.
"SECURITY INTEREST" shall have the meaning ascribed to it in Section
5.13 hereof.
"SETTLEMENT CUT-OFF" shall have the meaning ascribed to it in Section
7.6 hereof.
"SPECIAL MEETING" shall have the meaning ascribed to it in Section 7.1
hereof.
"SUBSIDIARY" shall mean one of the business entitles identified as such
on SCHEDULE 5.1 hereto, as to MIS.
"SURVIVING CORPORATION" shall have the meaning ascribed to it in
Section 2.1 hereof.
"TAX" shall have the meaning ascribed to it in Section 5.13 hereof.
"TAX RETURN" shall have the meaning ascribed to it in Section 5.13
hereof.
"TRANSACTIONS" means the transactions contemplated by this Agreement,
including but not limited to the Merger.
"VPC" shall mean Valley Pain Centers, Inc., a Florida corporation.
"VPC BOARD APPROVAL" shall mean that the Board of Directors of VPC, at
a meeting duly called and held, has in the exercise of its sole discretion (i)
determined that the Merger is advisable and in the best interest of VPC and its
stockholders and approved it, (ii) duly approved, authorized and ratified the
execution and delivery of this Agreement and the consummation of the
Transactions, (iii) recommended the approval of this Agreement, the Merger, the
Certificate of Merger and each of the Closing Documents to which it is or will
be a party, by the holders of VPC Capital Stock (and any other class of stock of
VPC entitled to vote on the Merger) and directed that this Agreement, the Merger
and each of the Closing Documents to which it is or will be a party, be
submitted for consideration by the holders of VPC Capital Stock at a meeting to
be held for that purpose, and (iv) adopted a resolution to elect not to be
subject, to the extent permitted by applicable law, to any state takeover law
that may purport to be applicable to this Agreement, the Merger, and the other
Transactions.
"VPC BREACH SETTLEMENT" shall have the meaning ascribed to it in
Section 7.6(a) hereof.
"VPC CAPITAL STOCK" shall mean all VPC capital stock.
"VPC CLASS A COMMON STOCK" shall mean the Class A voting common stock,
$.001 par value, of VPC.
"VPC CLASS B COMMON STOCK" shall mean the Class B nonvoting common
stock, $.001 par value, of VPC.
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"VPC COMMON STOCK" shall mean the Class A voting common stock, $.001
par value, and the Class B nonvoting common stock, $.001 par value, of VPC.
"VPC CLASS A COMMON STOCKHOLDERS" shall mean the holders of the VPC
Class A Common Stock.
"VPC CLASS A COMMON STOCKHOLDERS" shall mean the holders of the VPC
Class A Common Stock.
"VPC EMPLOYEES" shall have the meaning ascribed to it in Section
6.19(a) hereof.
"VPC EMPLOYEE BENEFIT PLAN" shall have the meaning ascribed to it in
Section 6.19(a) hereof.
"VPC EQUITY INTERESTS" shall mean all capital stock of VPC and
securities convertible into capital stock of VPC.
"VPC ERISA AFFILIATE" shall have the meaning ascribed to it in Section
6.19(a) hereof.
"VPC FINAL REVISED SCHEDULES" shall have the meaning ascribed to it in
Section 9.9 hereof.
"VPC GROUP" shall have the meaning ascribed to it in Section 6.13(a)
hereof.
"VPC INTELLECTUAL PROPERTY" shall have the meaning ascribed to it in
Section 6.10 hereof.
"VPC STOCKHOLDERS" shall mean the VPC Class A Common Stockholders and
the VPC Class B Common Stockholders.
"VPC RECEIVABLES" shall have the meaning ascribed to it in Section 6.24
hereof.
"VPC STOCK OPTION PLANS" shall have the meaning ascribed to it in
Section 3.3 hereof.
"VPC STOCKHOLDER APPROVAL" means with respect to VPC, the requisite
approval by the holders of VPC Capital Stock of this Agreement and the Merger.
ARTICLE 2
THE MERGER
2.1 THE MERGER. At the Effective Time and subject to and upon the terms
and conditions of this Agreement, the Delaware Act and the Florida Act, VPC
shall be merged with and into Acquisition Company, the separate existence of VPC
shall cease and Acquisition Company, which shall change its name to Valley Pain
Centers, Inc., shall continue as the surviving corporation. Acquisition Company
after the Merger shall be governed by the Florida Act and is hereinafter
sometimes referred to as the "Surviving Corporation". The Surviving Corporation
shall remain a wholly-owned subsidiary of MIS.
2.2 EFFECTIVE TIME. As promptly as practicable after the satisfaction
or waiver of the conditions set forth in Articles 8 and 9, the parties hereto
shall cause the Merger to be
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consummated by filing Articles of Merger with the Secretary of State of Florida
in such form as required by, in executed in accordance with, the relevant
provisions of the Florida Act, copies of which are attached hereto as EXHIBIT
2.2 (the filing being the "Effective Time"). At the Effective Time, MIS will
irrevocably instruct its stock transfer agent to issue and deliver in the manner
provided in Articles 2 and 3 hereof the certificates evidencing the Merger
Shares to be issued in the Merger.
2.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the Florida Act.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all property, rights, privileges, powers and franchises of
Acquisition Company and VPC shall vest in the Surviving Corporation, and all
debts, liabilities and duties of Acquisition Company and VPC shall become the
debts, liabilities and duties of the Surviving Corporation.
2.4 SUBSEQUENT ACTIONS. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to (i) vest, perfect or conform of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or Assets of VPC or Acquisition Company acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or (ii) otherwise carry out this Agreement, then the officers and
directors of the Surviving Corporation shall be authorized to (x) execute and
deliver, in the name and on behalf of either VPC or Acquisition Company all such
deeds, bills of sale, assignments, assurances and (y) to take and do, in the
name of and on behalf of each such other corporation or otherwise, all such
actions and things as may be necessary or desirable, to vest, perfect or confirm
any and all right, title and interest in, to and under such rights, properties
or assets in the Surviving Corporation or otherwise carry out this Agreement.
2.5 ARTICLES OF INCORPORATION; BY-LAWS; DIRECTORS AND OFFICERS.
(a) At the Effective Time and as part of the Merger, the
Articles of Incorporation of the Surviving Corporation shall be in the form
attached hereto as EXHIBIT 2.5(a), until thereafter amended as provided by law,
its by-laws and such Articles of Incorporation.
(b) At the Effective Time and as part of the Merger, the
By-Laws of the Surviving Corporation shall be in the form attached hereto as
EXHIBIT 2.5(b), until thereafter amended as provided by law, the Articles of
Incorporation and such By-Laws.
(c) After the Effective Time, the Board of Directors of the
Surviving Corporation will consist of Xxxxx X. Xxxxx, M.D., Xxxxxx X. Xxxxxx,
Xx., and Xxxx Xxxxxxxxx.
(d) After the Effective Time, the Board of Directors of MIS
will consist of Xxxx Xxxx, M.D., Xxxx Xxxxxxxxx, an appointee of Xx. Xxxx and
Xx. Xxxxxxxxx, Xxxxx X. Xxxxx, M.D., Xxxxxx X. Xxxxxx, Xx., an appointee of Xx.
Xxxxx and Xx. Xxxxxx and an appointee mutually agreed to by Messrs. Chiu,
Palazzolo, Xxxxx and Xxxxxx.
2.6 BOARD AND STOCKHOLDER APPROVAL. This Agreement is subject to, and
it is a condition to the consummation of the Merger, that MIS Board Approval,
MIS Stockholder Approval, Acquisition Company Board Approval, VPC Board Approval
and VPC Stockholder Approval be obtained.
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2.7 TAX CONSEQUENCES. It is intended that this Transaction shall
constitute a reorganization within the meaning of Section 368 of the Code, and
that this Agreement shall constitute a "plan of reorganization" for purposes of
Section 368 of the Code.
ARTICLE 3
MERGER CONSIDERATION
In exchange for merging VPC into Acquisition Company and canceling and
extinguishing the VPC Capital Stock in accordance with this Merger Agreement,
the VPC Stockholders, as designated and in the amounts set forth in SCHEDULE 3,
shall receive the following Merger Consideration:
3.1 MERGER CONSIDERATION. MIS agrees, subject to the provisions of this
Merger Agreement, to pay to the VPC Stockholders an amount up to, but not
exceeding, Eight Million Two Hundred Fifty Thousand Dollars ($8,250,000.00) as
set forth below (hereinafter the "PURCHASE PRICE"). The Purchase Price has been
initially calculated and the Installment Payments (as defined below) are
conditioned upon MIS recognizing the Formula Profits (as defined below).
(a) INITIAL PAYMENT. MIS will pay, at Closing, the VPC Class A Common
Stockholders the sum of Four Million Five Hundred Thousand Dollars
($4,500,000.00) (the "INITIAL PAYMENT"). The Initial Payment shall be made in
non-registered MIS Common Stock (the "INITIAL MIS SHARES"). For purposes of
determining the number of Initial MIS Shares the VPC Class A Common Stockholders
will receive with respect to the Initial Payment, the following calculation
shall be made: the amount of the Initial Payment shall be divided by $3.00 with
the resulting quotient equaling the number of MIOA Shares that shall be
delivered to the VPC Class A Common Stockholders as set forth in SCHEDULE 3 in
respect of such payment (i.e., 1,500,000) (which shall not be subject to any
adjustments for subdivisions or other recapitalizations of MIS that would
otherwise have the effect of reducing the number of issued and outstanding
shares of MIS that occur prior to Closing).
Notwithstanding, in the event the MIS Common Stock or
its successor's common stock does not have a Fair Market Value of at least $3.00
per share (which shall for these purposes be increased by the ratio of any MIS
Common Stock combinations or decreased by the ratio of any MIS Common Stock
subdivisions that occur subsequent to Closing) during the period beginning on
the first anniversary date of the Closing and ending on the second anniversary
date of the Closing Date (the "TRADING PERIOD"), the VPC Class A Common
Stockholders will receive additional shares of MIS Common Stock equal to the
difference between $3.00 and the Fair Market Value per share for the Trading
Period. The Fair Market Value per share for these purposes shall equal the
average of the close prices of the MIS Common Stock as reported on NASDAQ or
other national exchange for each trading day during the Trading Period.
To illustrate, the VPC Class A Common Stockholders
will receive 1,500,000 Initial MIS Shares in respect of the Initial Payment
(i.e., $4,500,000.00/$3.00) and if the per share Fair Market Value of the MIS
Common Stock (as calculated above) for the Trading Period is less than $3.00
then, in such event, divide $4,500,000.00 by the Fair Market Value per share of
the MIS Common Stock for the Trading Period; then subtract 1,500,000 from the
resulting quotient to determine the additional number of MIS Common Shares the
VPC Class A Common Stockholders will receive. For example, if the per share Fair
Market Value is $2.50,
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then the VPC Class A Common Stockholders will receive 300,000 more MIS Common
Shares ($4,500,000.00/$2.50 = 1,800,000; 1,800,000 - 1,500,000 = 300,000).
(b) EXCHANGE OF SHARES. The manner and basis of exchanging shares of
VPC Capital Stock and MIS Capital Stock into stock of the Surviving Corporation
shall be as follows:
(i) Except as provided in Section 3.2, each share of VPC
Capital Stock which shall be outstanding immediately prior to the Effective Time
shall at the Effective Time, by virtue of the Merger, and without any action on
the part of the holder hereof, be exchanged into only the right to receive the
number of shares of MIS Common Stock as provided herein and the Convertible
Debentures (defined below) (the "EXCHANGE Ratio"). The common shares to be
issued by MIS with respect to the VPC Capital Stock are collectively hereinafter
referred to as "Merger Shares". The Exchange Ratio shall be subject to equitable
adjustment in the event of any stock split, stock dividend or other
recapitalization of MIS after the date hereof but prior to Closing, except for
capital stock combinations or other recapitalizations that have the effect of
reducing the number of Merger Shares the VPC Class A Common Stockholders would
otherwise receive pursuant to this transaction. After the Effective Time, no VPC
Capital Stock shall be recognized or deemed to be issued outstanding, and the
holders thereof shall not have any rights other than as set forth in Article 3.
(ii) Each share of VPC Capital Stock, if any, held in the
treasury of VPC shall automatically be cancelled, shall not be converted into
the right to receive Merger Shares, and shall be extinguished without exchange
thereof and no payment will be made with respect thereto.
(iii) Each share of Acquisition Company Capital Stock which
shall be outstanding immediately prior to the Effective Time shall at the
Effective Time, by virtue of the Merger, and without any action on the part of
the holder hereof, remain outstanding.
(iv) Except as otherwise specifically set forth herein, each
share of MIS Capital Stock which shall be outstanding immediately prior to the
Effective Time shall at the Effective Time remain outstanding. In no event shall
the MIS Capital Stock issued and outstanding on a fully diluted basis exceed on
a fully diluted basis 9,500,000 shares at the Closing or at the closing of the
Permitted Equity Financing described in subsection (v) immediately below.
(v) The parties acknowledge that the other party may, prior to
the Closing and with respect to MIS within 60 days subsequent to the Closing and
with the consent of the other party hereto, issue additional shares of its
capital stock (and/or securities convertible into shares of its capital stock)
in connection with (i) those offerings specifically identified on EXHIBIT 3.1(v)
so long as the conditions with respect to each such offering contained in such
Exhibit are satisfied, including but not limited to the condition that any such
offering is closed no later than: (1) in the case of VPC, the Closing Date; or
(2) in the case of MIS, the date which is 60 days subsequent to the Closing
Date, or (ii) any offering of such issuer's securities issued as consideration
for the Merger of assets or equity interests of another entity if the securities
issued in such offering have an aggregate fair market value of less than
$3,800,000 (each, a "Permitted Equity Financing"), provided, that in either
case, such offering must be made in compliance with all applicable securities
laws and structured so that is will not be integrated with the offering of
Merger Shares and/or Option Shares as contemplated herein, and in the case of
MIS with respect to its offering described in EXHIBIT 3.1(v) shall the MIS
Capital Stock issued and outstanding on a fully diluted basis exceed 9,500,000
shares at the closing of such Permitted Equity Financing. In
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the event that either MIS or VPC desires to issue additional shares of its
capital stock (and/or securities convertible into shares of its capital stock)
in an offering that does not constitute a Permitted Equity Financing, then MIS
and VPC shall attempt in good faith to agree upon the terms and conditions of
the proposed offering and how the resulting percentage ownership of MIS will be
allocated on a fully diluted basis (using the treasury stock method) among the
holders of VPC Equity Interest or the holders of MIS Equity Interest, as the
case may be, issued in connection with such offering.
(vi) MIS shall be required to effect a registration in
accordance with the Registration Rights Agreement attached hereto as EXHIBIT
3.1(vi) on Form S-1 (or other applicable form) to register the Merger Shares,
the common shares underlying the Debentures and the common shares underlying the
Option/Warrant shares to be issued to the VPC Stockholders in connection with
the Merger. MIS shall pay the fees and expenses incurred by it that are
associated with the Registration Statement and the registration of the Merger
Shares, the shares underlying the Debentures and the common shares underlying
the Option/Warrant Shares.
(c) INSTALLMENT PAYMENTS. On the Effective Time, the VPC Class B Common
Stockholders shall have the right to earn the remaining portion of the Purchase
Price (i.e., $3,750,000.00) (hereinafter the "INSTALLMENT PAYMENTS") during the
Formula Periods in accordance with the following formula:
(i) FORMULA PERIOD 1. In respect of Formula Period 1 as
defined below: (x) If Formula Profits of MIS equal One Million Five Hundred
Dollars ($1,500,000.00) (hereinafter the "FORMULA PERIOD 1 EARNINGS TARGET"),
MIS shall pay the VPC Class B Common Stockholders an amount equal to One Million
Two Hundred Fifty Thousand Dollars ($1,250,000.00) (hereinafter the "FORMULA
PERIOD 1 INSTALLMENT PAYMENT"); (y) If Formula Profits exceed the Formula Period
1 Earnings Target, MIS shall pay the VPC Class B Common Stockholders the Formula
Period 1 Installment Payment plus One Dollar ($1.00) for each dollar ($1.00) of
Formula Profits in excess of the Formula Period 1 Earnings Target; or, (z) If
Formula Profits are less than the Formula Period 1 Earnings Target, MIS shall
pay the VPC Class B Common Stockholders an amount equal to: the actual Formula
Profits of MIS divided by the Formula Period 1 Earnings Target; with the
resulting quotient (i.e., percentage) multiplied by the Formula Period 1
Installment Payment.
(ii) FORMULA PERIOD 2. In respect of Formula Period 2 as
defined below: (x) If Formula Profits of MIS equal One Million Eight Hundred
Thousand Dollars ($1,800,000.00) (hereinafter the "FORMULA PERIOD 2 EARNINGS
TARGET"), MIS shall pay the VPC Class B Common Stockholders an amount equal to
One Million Two Hundred Fifty Thousand Dollars ($1,250,000.00)(hereinafter the
"FORMULA PERIOD 2 INSTALLMENT PAYMENT"); (y) If Formula Profits exceed the
Formula Period 2 Earnings Target, MIS shall pay the VPC Class B Common
Stockholders the Formula Period 2 Installment Payment plus One Dollar ($1.00)
for each dollar ($1.00) of Formula Profits in excess of the Formula Period 2
Earnings Target; or, (z) If Formula Profits are less than the Formula Period 2
Earnings Target, MIS shall pay the VPC Class B Common Stockholders an amount
equal to: the actual Formula Profits of MIS divided by the Formula Period 2
Earnings Target; with the resulting quotient (i.e., percentage) multiplied by
the Formula Period 2 Installment Payment.
(iii) FORMULA PERIOD 3. In respect of Formula Period 3 as
defined below: (x) If Formula Profits of MIS equal Two Million One Hundred Sixty
Thousand Dollars ($2,160,000.00) (hereinafter the "FORMULA PERIOD 3 EARNINGS
Target"), MIS shall pay the VPC Class B Common Stockholders an amount equal to
One Million Two Hundred Fifty Thousand
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Dollars ($1,250,000.00)(hereinafter the "FORMULA PERIOD 3 INSTALLMENT PAYMENT");
(y) If Formula Profits exceed the Formula Period 3 Earnings Target, MIS shall
cause pay the VPC Class B Common Stockholders the Formula Period 3 Installment
Payment plus One Dollar ($1.00) for each dollar ($1.00) of Formula Profits in
excess of the Formula Period 3 Earnings Target; or, (z) If Formula Profits are
less than the Formula Period 3 Earnings Target, MIS shall pay the VPC Class B
Common Stockholders an amount equal to: the actual Formula Profits of MIS
divided by the Formula Period 3 Earnings Target; with the resulting quotient
(i.e., percentage) multiplied by the Formula Period 3 Installment Payment.
(d). MAXIMUM PAYMENTS. The foregoing notwithstanding, the
maximum amount of Installment Payments the VPC Class B Common Stockholders may
receive pursuant to these provisions shall not exceed Three Million Seven
Hundred Fifty Thousand Dollars ($3,750,000.00).
(e). ACCELERATION OF INSTALLMENT PAYMENTS. In the event MIS or
any successor company undertakes a public offering, merger, recapitalization,
consolidation or otherwise (hereinafter a "Dilutive Transaction") whereby more
than 50 percent of its issued and outstanding Capital Stock is issued to third
parties prior to the expiration of the Formula Periods, the VPC Class B Common
Stockholders shall, at their election, be paid the portion of the unpaid
Installment Payments immediately prior to the effectiveness of such Dilutive
Transaction by applying the above formula to the proforma Formula Profits for
the remainder of the Formula Period(s) calculated based on the immediately
preceding twelve (12) month period or such shorter period if less than 12
months.
(f). FORMULA PROFITS. For the purposes of this Agreement, the
term "FORMULA PROFITS" shall mean the pre-tax consolidated net profits of MIS,
as calculated utilizing generally accepted accounting principles by MIS's
independent certified public accountants for annual Formula Periods, where
possible, and as calculated by MIS otherwise. Notwithstanding the foregoing, for
purposes of determining Formula Profits: (i) there shall not be included any
non-recurring charges, losses, profits, gains, or non-cash adjustments not
related to the ongoing operations of the business, including, but not limited to
discount operations, extraordinary items, acquisition costs, goodwill charges,
or unusual or infrequent items as they are defined under generally accepted
accounting principles, and (ii) there shall not be included any charge related
to grants or exercises of the Options/Warrant Shares pursuant to the employment
agreements or other agreements with the individuals listed in EXHIBIT 4.1.
(g) FORMULA PERIODS. The period commencing on the Effective
Time and ending on the last day of the 12th month following the Effective Date
shall be deemed to be "FORMULA PERIOD 1". The period commencing on the first day
following FORMULA PERIOD 1 and ending on the last day of the 12th month
following FORMULA PERIOD 1 shall be deemed to be "FORMULA PERIOD 2". The period
commencing on the first day following FORMULA PERIOD 2 and ending on the last
day of the 12th month following FORMULA PERIOD 2 shall be deemed to be "FORMULA
PERIOD 3".
(h) CALCULATION TIMING. MIS shall cause the aforementioned
calculations to be made as soon as reasonably possible and the Installment
Payments paid to the VPC Class B Common Stockholders within fifteen (15) days of
such calculation but in no event later than the 90th day following each Formula
Period.
(i) EXAMPLE. Attached hereto as EXHIBIT 3.1(i) and
incorporated herein by this reference is an example of how the aforementioned
Formula is to be applied.
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(j) PAYMENT OF INSTALLMENT PAYMENTS. The Installment Payments
shall be made within fifteen (15) days of calculating the Installment Payment
for each Formula Period but in no event later than the 90th day following the
end of each Formula Period by delivering to the VPC Class B Common Stockholders,
in accordance with their percentage of ownership interest as described in
SCHEDULE 3.1, a series of convertible collaterialized promissory notes (the
"DEBENTURES"), one to each VPC Merger Shareholder for each Installment Payment,
in the form annexed hereto as EXHIBIT 3.1(j)(1). The Debentures will bear
interest at an annual rate of 9.0% and the payment of such Debentures will be
secured by the issued and outstanding capital stock of the Surviving
Corporation. To that end, MIS will enter into with the VPC Class B Common
Stockholders a pledge agreement in the form attached hereto as EXHIBIT 3.1(j)(2)
(hereinafter the "PLEDGE AGREEMENT"). Interest will be paid on the Formula
Earnings as calculated herein on a quarterly basis, in arrears, commencing at
the end of the first calendar quarter following the Effective Time and will be
subject to adjustment at the end of each Formula Period based upon the principal
face value of the applicable Debenture earned during such Formula Period. If
excess interest is paid pursuant to this Section in any Formula Period as the
result of the foregoing, such excess interest will be offset first against any
future interest to be paid pursuant to this Section and then, if necessary,
against the principal face value of the Debentures. The principal face value, if
any, of each Debenture together with all accrued but unpaid interest on said
Debenture shall be due and payable on the first anniversary date of its
issuance. The Debentures may be prepaid by MIS at any time without penalty or
additional interest. The VPC Class B Common Stockholders may convert the
principal face value of the Debentures at any time prior to redemption into MIS
Common Stock at the rate of $3.00 per share. Cash will be paid in lieu of any
fractional shares.
(k) CAPITAL ADJUSTMENTS. In case of any consolidation or
merger of MIS with or into another corporation or the conveyance of all or
substantially all of the assets of MIS to another corporation or a share
exchange transaction, the Debentures shall thereafter be convertible into the
number of shares of stock, options or other securities or property to which a
holder of the number of shares of common stock deliverable upon entitlement to
the MIS Common Stock would have been entitled upon such consolidation, merger,
conveyance, conversion or exchange; and, in any such case, appropriate
adjustment shall be made in the application of the provisions herein set forth
with respect to the rights and interest thereafter of the VPC Class B Common
Stockholders' rights to receive Debentures to the end that the provisions set
forth herein shall thereafter be applicable, as nearly as reasonably possible,
in relation to any shares of stock, options or other property thereafter
deliverable upon entitlement to the Debentures.
3.2 FRACTIONAL SHARES. No scrip or fractional shares of the capital
stock of MIS shall be issued in the Merger, nor will any outstanding fractional
share interest entitle the owner thereof to vote, to receive dividends or to
exercise any other right as a stockholder of MIS. All fractional shares of the
common stock to which a holder of multiple certificates of VPC Class A Common
Stock immediately prior to the Effective Time would otherwise be entitled at the
Effective Time shall be aggregated. If a fractional share results from such
aggregation, the number of shares of the Merger Shares to which such stockholder
shall be entitled, after the Effective Time shall be rounded to the nearest
whole number of Merger Shares.
3.3 STOCK OPTIONS AND WARRANTS. Except as described in SCHEDULE 3.3,VPC
does not presently have nor will it have at the time of Closing any options or
warrants issued or outstanding nor has it committed to issue any options and/or
warrants.
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3.4 DELIVERY OF MERGER SHARES.
(a) Except as set forth in this Agreement, from and after the
Effective Time, each holder of a certificate or certificates that immediately
prior to the Effective Time represented outstanding shares of VPC Capital Stock
("Certificate(s)") shall be entitled to receive in exchange therefor, upon
surrender thereof to the Exchange Agent, the appropriate number and type of
Merger Shares for each share of VPC Class A Common Stock so represented by the
Certificates(s) surrendered by such holder and the right to earn the appropriate
amount of the Debentures for each share of VPC Class B Common Stock so
represented by the Certificates(s) surrendered by such holder.
(b) At or simultaneous with the Closing, (1) MIS will furnish
to MIS's transfer agent (the "Exchange Agent") irrevocable instructions to issue
certificates to holders of VPC Class A Common Stock which represent that number
and type of Merger Shares to which each such holder of VPC Class A Common Stock
is entitled hereunder, and (2) MIS will cause the Exchange Agent to mail a
letter of transmittal (with instructions for its use) to each record holder of
outstanding VPC Class A Common Stock for the holder to use in surrendering the
Certificate(s) that represented such holder's VPC Class A Common Stock in
exchange for a stock certificate representing the number of type of Merger
Shares to which the holder is entitled. Such letter of transmittal shall specify
that delivery shall be effected, and risk of loss and title to the
Certificate(s) shall pass, only upon proper delivery of the Certificate(s) for
exchange therefor. Upon surrender to the Exchange Agent of Certificate(s),
together with such letter of transmittal duly executed and completed in
accordance with the instructions thereon, and such other documents as may be
reasonably requested by the Exchange Agent, the Exchange Agent shall, pursuant
to this Agreement, promptly deliver the appropriate number and type of Merger
Shares to the person entitled to such Merger Shares for each share of VPC Class
A Common Stock so represented by the Certificate(s) surrendered by such holder
thereof, and such Certificate(s) shall forthwith be cancelled.
(c) If delivery of all or part of the Merger Shares is to be
made to a person other than the person in whose name a surrendered Certificate
is registered, it shall be a condition of such delivery or exchange that the
Certificate so surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the person requesting such delivery or
exchange shall have paid any transfer and other taxes required by reason of such
delivery or exchange in a name other than that of the registered holder of the
Certificate surrendered or shall have established to the reasonable satisfaction
of VPC that such tax either has been paid or is not payable.
(d) Until surrendered and exchanged in accordance with this
Section 3.4 each such Certificate shall, after the Effective Time, represent
solely the right to receive the Merger Shares, in an amount and of the type
determined in accordance with Section 3.1 hereof, and shall have no ownership or
other rights. No interest shall accrue or be payable on any Merger Shares.
Neither MIS or VPC shall be liable to any holder of VPC Capital Stock for any
Merger Shares (or dividends or distributions with respect thereto) delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
(e) From and after the Effective Time, no holder of
Certificate(s) shall be entitled to receive any dividend or other distribution
from MIS until proper surrender by such holder of such Certificate(s) for stock
certificate(s) representing Merger Shares. Upon such surrender, the holder shall
be paid the amount of any dividends or other distributions (without interest)
that theretofore became payable by MIS after the Effective Time but prior to
such
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surrender, but were not paid by reason of the foregoing with respect to the
number and type of Merger Shares represented by the certificate(s) issued upon
such surrender. From and after the Effective Time, MIS shall, however, be
entitled to treat such Certificate(s) that have not yet been surrendered or
exchanged as evidencing the ownership of the type and aggregate number of Merger
Shares into which the shares of VPC Capital Stock represented by such
Certificate(s) would have been exchanged, notwithstanding any failure to
surrender such Certificate(s).
(f) MIS shall be responsible for the payment of all changes
and expenses of the Exchange Agent.
(g) If any Certificate shall have been lost, stolen or
destroyed, upon the receipt by MIS of an indemnity agreement and the making of
an affidavit by the person claiming such Certificate to be lost, stolen or
destroyed and, if required by MIS, the posting by such person of a bond in such
reasonable amount as MIS may direct as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the number and type
of Merger Shares and any cash in lieu of fractional shares, and unpaid dividends
and distributions on the number and type of Merger Shares deliverable in respect
thereof pursuant to this Agreement.
3.5 CLOSING. The closing of the Transactions (the "CLOSING") shall take
place on or before May ____, 1999, at the offices of VPC in Orlando, Florida, or
another mutually agreed upon location on the Business Day following compliance
or waiver of the terms, conditions and contingencies contained in this Agreement
or such other date as is mutually agreed upon by the parties hereto (such date
to be herein referred to as the "CLOSING DATE"). All computations, adjustments,
and transfers for the purposes hereof shall be effective as of the close of
business on the Closing Date. Each of the parties will take all such reasonable
and lawful action as may be necessary or appropriate in order to effectuate the
Merger as promptly as possible subject to the satisfaction of the closing
conditions set forth in Articles 8 and 9.
ARTICLE 4
ADDITIONAL COVENANTS
4.1 SUPPLEMENTAL AGREEMENTS. Concurrently with the Closing, each of the
individuals listed in EXHIBIT 4.1 shall enter into employment agreements with
MIS in the form of COMPOSITE EXHIBIT 4.1(a) hereof (the "EMPLOYMENT
AGREEMENTS"), which shall replace such individual's existing employment
agreement with MIS or VPC, as applicable. Each of such individuals shall also
enter into Nondisclosure/Noncompete Agreements in the form of COMPOSITE EXHIBIT
4.1(b) hereof ((the "Nondisclosure/Noncompete Agreements), which shall replace
each such individual's existing nondisclosure and Noncompete agreements with MIS
or VPC, as applicable, and a Stockholders' Agreement in the form of EXHIBIT 4.1
(c)(i). On or before the Closing Date, each of such individuals will have
entered into Standstill/Voting Agreements in the form of COMPOSITE EXHIBIT
4.1(c)(ii) hereof pursuant to which such individuals have agreed to (among other
things) vote their respective shares of capital stock in each of MIS and VPC, as
applicable, in favor of the Merger, and after the Closing, to vote their
respective shares of capital stock of MIS in favor of the election of the
individuals listed in EXHIBIT 4.1(d) to the Board of Directors of MIS so long as
such nominees remain employed by MIS.
4.2 CONDUCT OF BUSINESS BY MIS AND VPC PENDING MERGER. MIS and VPC
Covenant and agree that, unless the other party shall otherwise consent in
writing or except as otherwise set forth in this Agreement, between the date of
such party's Board Approval and the
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Closing, the business of MIS and VPC, respectively, and the Subsidiaries of MIS
shall be conducted only in, and none of said parties shall take any action
except in, the ordinary course of business and in a manner consistent with past
practice; and all of said parties will use their best efforts to preserve intact
their business organization, to keep available the services of their present
officers, employees and consultants and to preserve their present relationships
with customers, suppliers and other persons with which they have significant
business relations. Except as set forth on EXHIBIT 4.2, but without otherwise
limiting the foregoing, each of VPC and MIS covenants that neither of them or
the Subsidiaries of MIS shall, between the date of such party's Board Approval
and the Closing, directly or indirectly, do any of the following with the prior
written consent of the other;
(a) (i) issue, sell (other than upon exercise of outstanding
options or warrants, whose terms shall not be changed), pledge, dispose of,
encumber, authorize, or propose the issuance, sale, pledge, disposition,
encumbrance or authorization of any shares of capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind to acquire
any shares of capital stock of, or any other ownership interest in, VPC, MIS or
any Subsidiary; PROVIDED, HOWEVER, that VPC and MIS shall have the right to
carry out any Permitted Equity Financing or other offering of its securities
that such parties have agreed to pursuant to Section 3.1(b) hereof; (ii) amend
or propose to amend the Articles of Incorporation as applicable, or By-Laws of
VPC or MIS, except as contemplated by this Agreement; (iii) split, combine or
reclassify any outstanding shares of VPC Capital Stock or MIS Capital Stock or
any Subsidiary's capital stock, or declare, set aside or pay any dividend or
distribution payable in cash, stock, property or otherwise with respect to such
capital stock; (iv) redeem, purchase or otherwise acquire or offer to redeem,
purchase or otherwise acquire any shares of capital stock or that of any
Subsidiary; or (v) authorize or propose or enter into any contract, agreement,
commitment or arrangement with respect to any of the matters set forth in this
Section 4.2(a):
(b) (i) acquire (by merger, consolidation, or Merger of stock
or assets) directly or indirectly, any Person or any business owned by such
Person; (ii) except in the ordinary course of business and in a manner
consistent with past practices, sell, pledge, dispose of, or encumber or
authorize or propose the sale, pledge, disposition or encumbrance of any assets
of VPC, MIS or any Subsidiary; (iii) enter into any material contract or
agreement, except in the ordinary course of business; (iv) authorize any single
capital expenditure or commitment in excess of $500,000, except as otherwise set
forth in EXHIBIT 4.2(b)(iv); (v) authorize any capital expenditure or commitment
outside the ordinary course of business, except as otherwise set forth in
EXHIBIT 4.2(b)(iv); or (vi) enter into or amend any contract, agreement,
commitment or arrangement with respect to any of the matters prohibited by
Section 4.2(b);
(c) take any action other than in the ordinary course of
business and in a manner consistent with the past practices (none of which
actions shall be unreasonable or unusual) with respect to increasing
compensation of any officer, director, stockholder or employee or with respect
to the grant of any severance or termination pay (otherwise than pursuant to
policies in effect on the date hereof and fully disclosed to the other party
prior to the date hereof) or with respect to any increase of benefits payable
under its severance or termination pay policies in effect on the date hereof;
(d) make any payments except in the ordinary course of
business and in amounts and in a manner consistent with past practice (none of
which payments shall be unreasonable or unusual), under any employee benefit
plan or otherwise to any employee, independent contractor or consultant, enter
into any employee benefit plan, any employment or consulting agreement,
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grant or establish any new awards under any such existing employee benefit plan
or agreement, or adopt or otherwise amend any of the foregoing;
(e) take any action in the ordinary course of business and in
a manner consistent with past practice or make any change in existing methods of
management, distribution, marketing, accounting or operating (or practices
relating to payment of trade accounts or to other payments);
(f) except in the order course of business or as set forth on
EXHIBIT 4.2(f), incur or increase prior to Closing any indebtedness for borrowed
money from banks, financial institutions or other Persons or cancel, without
payment in full, any notes, loans or receivables;
(g) directly or indirectly loan or advance monies to any
Person (other than any of its own Subsidiaries) under any circumstances
whatsoever except for credit transactions with customers on terms consistent
with past practices; or
(h) do any act or omit to do any act which might reasonably be
expected to cause a breach of any material contract, commitment or obligation.
4.3 EXPENSES. All of the expenses incurred by VPC in
connection with authorization, preparation, execution and performance of this
Agreement and other agreements referred to in this Agreement, including, without
limitation, all fees and expenses of agents, representatives, brokers, counsel
and accountants for VPC, shall be paid by VPC if the Transaction is not
consummated, and all of the expenses incurred by MIS in connection with the
authorization, preparation, execution and performance of this Agreement and
other agreements referred to in this Agreement, including without limitation,
all reasonable fees and expenses of advisors, agents, representatives, brokers,
counsel and accountants, shall be paid by MIS if the Transaction is not
consummated. After the Closing, such expenses of VPC and MIS will be paid by
MIS.
4.4 NOTIFICATION OF CERTAIN MATTERS.
(a) MIS shall give prompt written notice to VPC of the
following:
(i) the occurrence or nonoccurrence of any event
whose occurrence or nonoccurrence would be likely to cause either (A) any
representation or warranty of MIS contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the Execution of this
Agreement to the Closing (assuming that each representation and warranty was
re-affirmed as of each day between the Execution of this Agreement and the
Closing Date, inclusive), including but not limited those resulting from the
consummation of any Permitted Equity Financings, or (B) directly or indirectly,
any Material Adverse Effect; or
(ii) any material failure of MIS, any officer,
director, employee or agent thereof, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder.
(b) VPC shall give prompt written notice to MIS of the
following:
(i) the occurrence or nonoccurrence of any event
whose occurrence or nonoccurrence would be likely to cause either (A) any
representation or warranty of VPC contained in this Agreement to be untrue or
inaccurate in any material respect at any time from
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the execution of this Agreement to the Closing (assuming that each
representation and warranty was re-affirmed as of each day between the execution
of this Agreement and the Closing Date, inclusive), including but not limited
those resulting from the consummation of any Permitted Equity Financings; or (B)
directly or indirectly, any Material Adverse Effect;
(ii) any material failure of VPC, any officer,
director, employee or agent thereof, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder.
(c) In the event that either MIS or VPC is required to deliver
a written notice pursuant to subsection (a) or (b) above, respectively, such
party shall, within three (3) days after delivery of such notice, delivery to
the other party a revised schedule updating such representation or warranty. The
receiving party shall review the schedule and within five (5) days after its
receipt, elect to either (i) approve the schedule for attachment to this
Agreement and treat such schedule, as if it had been delivered and attached to
this Agreement as of the Closing Date, or (ii) treat such schedule and the
events giving rise to such Schedule as a breach of such related representation
or warranty in accordance with the terms of this Agreement, including but not
limited Section 7.6, 8.1 and 9.1, as applicable; PROVIDED, however, that any
events which are permitted to occur between the date hereof and the Closing
pursuant to the terms of this Agreement (such as a Permitted Equity Financing)
shall in no event be treated as a breach of a representation or warranty
hereunder.
(d) Notwithstanding the foregoing, the delivery of any notice
pursuant to this Section shall not waive or release MIS or VPC, as the case may
be, from its representations, warranties, covenants or agreements under this
Agreement, except as they may be modified and approved in accordance with
subsection (c)(i) above.
4.5 PUBLIC ANNOUNCEMENTS.
(a) Except for and to the extent of any public announcement or
disclosures relating to the Transactions previously made by MIS or VPC, as may
be required by law or as provided in this Section 4.5, MIS and VPC agree that
until the consummation of the Transactions or the termination of this Agreement,
as the case may be, each party will not, and will direct its directors,
officers, employees, representatives and agents who have knowledge of the
Transaction not to, disclose to any Person who is not a participant in
discussions concerning the Transactions (other than Persons whose consent is
required to be obtained hereunder), any of the terms, conditions or other facts
with respect to the Transactions.
(b) MIS shall obtain the prior written consent of VPC and VPC
shall obtain the prior written consent of MIS, before issuing any press release
or otherwise making any public statement prior to receiving such consent, except
in the case where such disclosure is required by law and the party whose consent
is required has unreasonably refused to give such consent or is unable to
consent prior to such disclosure because of exigent circumstances. The
disclosing party shall be responsible for the accuracy and completeness of any
such disclosure. Subject to the foregoing, the parties acknowledge and agree
that MIS and VPC expect to issue a press releases with respect to the
Transactions immediately after the execution of this Agreement, as well as after
the Closing.
(c) This Section 4.5 shall not restrict either MIS or VPC in
any actions by such parties which are necessary or appropriate to enforce their
respective rights under this Agreement.
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4.6 CONFIDENTIALITY. Until the Closing, VPC and MIS shall, and shall
cause their respective employees, agents, counsel, accountants, consultants and
other representatives to hold in strict confidence any and all information
obtained from the other party and to not disclose any such information (unless
such information is or becomes ascertainable from public sources or public
disclosure of such information which in the good faith judgment of MIS or VPC is
required by law; provided, however, that nothing contained in this Agreement
shall limit the right of any such persons to disclose any such information to
VPC or MIS or their respective employees, agents, representatives, counsel,
accountants, financial advisors and/or underwriters for the purpose of
facilitating the consummating of the Transactions. This obligation is in
furtherance, and not in limitation, of any other confidentiality agreements
between the parties.
4.7 ACCESS AND INSPECTION. On reasonable notice, each of MIS and VPC
and the Subsidiaries of MIS shall provide the other full access during normal
business hours from and after the date hereof until the Closing to all of their
respective offices, properties, books and records as they relate to the business
of each and the Assets, and shall furnish such information concerning the
business and affairs of each as may be requested, in each case for information
concerning the business and affairs of each as may be requested, in each case
for the purpose of making such continuing investigation of MIS and Subsidiaries
or VPC , as the case may be, and their respective predecessors and the Assets.
Each of VPC and MIS and the Subsidiaries of MIS shall cause appropriate
personnel to assist in such continuing investigation and shall cause personnel,
counsel, accountants and other non employee representatives to be reasonably
available in connection with such continuing investigation.
4. 8 CERTAIN FILINGS, CONSENTS AND ARRANGEMENTS. Subject to compliance
with applicable law, VPC and MIS will (a) cooperate with one another (i) in
promptly determining whether any filings are required to be made or consents,
approvals, permits or authorizations are required to be obtained under any
federal, state or foreign law or regulation and (ii) in promptly making any such
filings, furnishing information required in connection therewith and seeking
timely to obtain any such consents, approvals, permits or authorization and (b)
provide one another with copies of all filings made by such party with any
governmental authority in connection with this Agreement.
4.9 MONTHLY FINANCIAL STATEMENTS. From and after the date hereof until
the Closing, each of VPC and MIS shall provide to the other party its monthly
internal unaudited financial statements (the "Monthly Financials") as soon as
reasonably practicable after their preparation, but in no event later than the
20th day of each month for the immediately preceding month.
4.10 EFFORTS TO CLOSE TRANSACTIONS. After the date hereof but prior to
the Closing, MIS hereby agrees that it shall use its reasonable efforts to close
that certain Permitted Equity Financing in the amount of $750,000.00 as
disclosed in Section 3.1(b) on terms and conditions mutually agreeable to the
parties hereto.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF MIS
In order to induce VPC to enter into this Agreement and consummate the
Transactions, MIS hereby represents and warrants the following to VPC as of the
Execution of this Agreement (and not the date hereof), each of which
representations and warranties shall be material to and relied upon by VPC and
shall be deemed remade on and as of the date of the Closing:
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5.1. ORGANIZATION AND AUTHORITY. MIS is a corporation duly organized
and validly existing under the laws of the State of Delaware and each of its
Subsidiaries is incorporated in the states identified on SCHEDULE 5.1. The
states in which MIS and each Subsidiary are qualified to do business are set
forth on SCHEDULE 5.1. Neither MIS nor any of its Subsidiaries is required to be
qualified as a foreign corporation in any other jurisdiction where its failure
to qualify would have a Material Adverse Effect. MIS and its Subsidiaries have
all necessary corporate power and authority to own, lease and operate their
properties and conduct their business as it is currently being conducted. Except
for MIS's ownership of its Subsidiaries, which is fully described on SCHEDULE
5.1, and as otherwise set forth on SCHEDULE 5.1, neither MIS nor any of its
Subsidiaries owns, directly or indirectly, any equity interest in any
corporation, partnership, joint venture, or other entity. The list of MIS's
Subsidiaries contained in SCHEDULE 5.1 is a true, correct and complete list of
all entities in which MIS has a direct or indirect equity interest. SCHEDULE 5.1
identifies each owner of an equity interest, or right to acquire any such
interest, in each Subsidiary of MIS.
5.2. CORPORATE POWER AND AUTHORITY; DUE AUTHORIZATION. Subject to MIS
Board Approval and MIS Stockholder Approval, MIS has full corporate power and
authority to execute and deliver this Agreement and each of the Closing
Documents to which MIS is or will be a party, to amend its Articles of
Incorporation in the manner set forth in this Agreement, and to consummate the
Transactions. No corporate proceeding is necessary to approve the Transactions
other than MIS Board Approval and MIS Stockholder Approval. Assuming MIS Board
Approval, MIS Stockholder Approval and that this Agreement and each of the
Closing Documents to which VPC is a party constitutes a valid and binding
agreement of VPC, this Agreement and each of the Closing Documents to which MIS
is a party constitutes, or will constitute when executed and delivered, a valid
and binding agreement of MIS in each case enforceable in accordance with its
terms, except as the enforceability thereof may be limited by applicable
bankruptcy, insolvency or other similar laws relating to the enforcement of
creditors' rights generally and by the applicable of general principles of
equity. The duly elected officers and directors of MIS and its Subsidiaries are
set forth on SCHEDULE 5.2. Copies of the Articles of Incorporation, the Bylaws
and all minutes of MIS and its Subsidiaries are contained in the minute books of
MIS, or such Subsidiaries, respectively. True, correct and complete copies of
the minute books of MIS and its Subsidiaries have been made available to VPC.
5.3. SUFFICIENCY OF ASSETS. All material assets and rights relating to
MIS's business and that of its Subsidiaries are held solely by, and all
agreements, obligations, expenses and transactions relating to the business of
MIS and its Subsidiaries have been entered into, incurred and conducted solely
by, MIS and its Subsidiaries. Except as described in SCHEDULE 5.3, the Assets
are all of the items necessary to provide all services required in connection
with the business of MIS and its Subsidiaries, assuming competent personnel,
general office facilities, and adequate facilities are available.
5.4. NO CONFLICT; REQUIRED CONSENTS. Exclusive of MIS Board Approval
and MIS Stockholder Approval, SCHEDULE 5.4 lists all material third-party
consents or approvals required with respect to MIS and its Subsidiaries for
consummation of the Transactions, which consents MIS agrees to use its best
reasonable efforts to obtain. Assuming all such consents and approvals have been
obtained and assuming the appropriate filings and mailings are made by VPC and
MIS to effectuate the Merger under the Florida Act, and under the Securities Act
and the Exchange Act, the execution and delivery by MIS of this Agreement and
the Closing Documents and the consummation by MIS of the Transactions do not and
will not, except as set forth on SCHEDULE 5.4, (a) require the consent, approval
or action of, or any filing or notice to, any corporation, firm,
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Person or other entity or any public, governmental or judicial authority (except
for such consents, approvals, actions, filing or notices the failure of which to
make or obtain will not in the aggregate have a Material Adverse Effect); (b)
violate in any material respect the terms of any material instrument, document
or agreement to which MIS or any of its Subsidiaries is a party, or by which MIS
or any of its Subsidiaries or the property of MIS or any of its Subsidiaries is
bound, or be in conflict in any material respect with, result in a material
breach of or constitute (upon the giving of notice or lapse of time or both) a
material default under any such instrument, document or agreement, or result in
the creation of any lien upon any of the property or assets of MIS or any of its
Subsidiaries; (c) violate in any respect the terms of any instrument, document
or agreement to which MIS or any of its Subsidiaries is a party, or by which MIS
or any of its Subsidiaries or the property of MIS or any of it Subsidiaries is
bound, or be in conflict in any respect with, result in a breach of or
constitute (upon the giving of notice or lapse of time or both) a default under
any such instrument, document or agreement, or result in the creation of any
lien upon any of the property or assets of MIS or any of its Subsidiaries if the
aggregate effect of all such violations listed in this subsection (d) results in
a Material Adverse Effect on MIS and its Subsidiaries taken as a whole; (e)
violate MIS's Certificate of Incorporation or Bylaws; or (f) violate any order,
write, injunction, decree, judgment, ruling, law, rule or regulation of any
federal, state, county, municipal, or foreign court of governmental authority
applicable to MIS or any of its Subsidiaries, or the business or assets of MIS
or any of its Subsidiaries. Neither MIS nor any of its Subsidiaries is subject
to, or a party to, any mortgage, lien, lease, agreement, contract, instrument,
order, judgment or decree or any other material restriction of any kind or
character which would prevent or hinder the continued operation of the business
of MIS and its Subsidiaries after the closing on substantially the same basis as
theretofore operated.
5.5. CAPITALIZATION. All of the authorized and outstanding MIS capital
stock is set forth on SCHEDULE 5.5, and no shares of MIS capital stock are held
in the treasury of MIS. No shares or any class of capital stock or other equity
interests of MIS, other than (i) MIS Common Stock, (ii) options or warrants for
MIS Common Stock, or (iii) those shares of MIS Capital Stock identified in
SCHEDULE 5.5, shall be issued and outstanding at the Closing. All outstanding
MIS capital stock has been duly authorized, and is validly issued, fully paid
and nonassessable. No preemptive (whether statutory or contractual) rights have
been violated. Current MIS stock option plans, all previous forms of those
plans, and amendments, and all outstanding options and warrants, are identified
on SCHEDULE 5.5. Except as set forth on SCHEDULE 5.5, all options were granted
in accordance with the provisions of MIS stock option plans. SCHEDULE 5.5 also
sets forth information as to options (if any) and warrants (if any) previously
granted which have terminated, expired or been exercised. Except for the
outstanding options, warrants and other commitments set forth in SCHEDULE 5.5,
MIS has no convertible securities, options, warrants, or other contracts,
commitments, agreements, understandings, arrangements or restrictions by which
it is bound to issue any additional shares of MIS Capital Stock or other
securities. Except as set forth on SCHEDULE 5.2, MIS owns, directly or
indirectly, all of the equity in its Subsidiaries and no third party has a right
to acquire any such interest. All securities of MIS and its Subsidiaries were
offered and sold in compliance with applicable federal and state securities
laws. SCHEDULE 5.5 identifies each stock option plan and outstanding option,
warrant, or other right, if any, to acquire the capital stock of any of its
Subsidiaries, full and complete copies of which have been provided to VPC. Each
and every dividend of MIS and each Subsidiary, if any, whether paid in cash or
other property, has been declared and paid in compliance with applicable law,
and neither MIS nor any of its Subsidiaries has any further obligation with
respect to such payment. SCHEDULE 5.5 also summarizes in detail all currently
effective registration rights which have been granted by MIS to any other person
or entity and all currently effective shareholder agreements between any
shareholders of MIS.
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5.6. COMPLIANCE WITH LAWS; FILINGS WITH THE SEC. Except as set forth in
SCHEDULE 5.6, (a) to the best of MIS's knowledge, MIS and its Subsidiaries are
in compliance with, and MIS and its Subsidiaries have operated any Persons or
businesses previously owned or operated by them in compliance with, all
applicable laws, orders, rules and regulations of all governmental bodies and
agencies, including applicable environmental laws and regulations, but excluding
applicable laws and regulations related to Medicare, Medicaid and other
federally funded programs, except where such noncompliance has and will have, in
the aggregate, no Material Adverse Effect. Neither MIS, nor any of its
Subsidiaries, has received notice of any noncompliance with the foregoing.
(b) Without limiting the foregoing, MIS and each of its
Subsidiaries and any other person or entity for whose conduct MIS is legally
held responsible are in material compliance with all applicable federal, state,
regional, local or provincial laws, statutes, ordinances, judgments, rulings and
regulations relating to any matters of pollution, protection of the environment,
health or safety, or environmental regulation or control (collectively,
"Environmental Laws"). Neither MIS nor any of its Subsidiaries, nor any other
person or entity for whose conduct MIS is legally responsible, has (i) received
any notice, demand, request for information, or administrative inquiry relating
to any violation of an Environmental Law or the institution of any suit, action,
claim or proceeding alleging such violation or investigation by any Governmental
Authority or any third party of any such violation, (ii) manufactured,
generated, treated, stored, handled, processed, released, transported or
disposed of any Hazardous Substance on, under, from or at any of MIS's or any of
its Subsidiaries' properties or any other properties, (iii) become aware or
received notice of the release or disposal of any Hazardous Substances in
violation of any applicable Environmental Law, on, under or at any of MIS's, or
any of its Subsidiaries' properties or any other properties, (iv) become aware
or received notice of any actual or potential material liability on the part of
MIS for the response to or remediation of any Hazardous Substance at or arising
from any of MIS's or any of its Subsidiaries' properties or any other properties
owned or operated by MIS, any of its Subsidiaries or any other Person for whose
conduct MIS is legally responsible, or (v) become aware of or received notice of
any actual or potential liability on the part of MIS for the costs of response
to or remediation of Hazardous Substances at or arising from any of MIS's or any
of its Subsidiaries' properties or any other properties owned or operated by
MIS, any of its Subsidiaries or any other Person for whose conduct MIS is or may
be held responsible. For purposes of this Agreement, the term "Hazardous
Substance" shall mean any toxic or hazardous materials or substances, including
asbestos, buried contaminants, chemicals, flammable explosives, radioactive
materials or petroleum and petroleum products and any substances defined as, or
included in the definition of, "hazardous substances," "hazardous wastes,"
"hazardous materials" or "toxic substances" under any Environmental Law. No
Environmental Law imposes any obligation upon MIS or its Subsidiaries arising
out of or as a condition to any transaction contemplated hereby, including,
without limitation, any requirement to modify or to transfer any permit or
license, any requirement to file any notice or other submission with any
Governmental Authority, the placement of any notice, acknowledgment, or covenant
in any land records, or the modification of or provision of notice under any
agreement, consent order, or consent decree. No lien has been placed upon any of
MIS's properties or its Subsidiaries' properties under any Environmental Law.
(c) MIS is not a Reporting Company as defined under the
Securities and Exchange Act of 1934. The parties recognize that MIS may not have
made all filings with the SEC that it is required to make under the Securities
Act and the Exchange Act (collectively, the "Public Reports") or that such
filings, if any, may not have been correct in all material respects.
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(d) MIS currently satisfies all applicable Nasdaq rules in
order to be traded on the bulletin board.
5.7. LICENSES AND PERMITS. Except as set forth in SCHEDULE 5.7, neither
MIS nor any of its Subsidiaries has received notice of any violations in respect
of any licenses, permits, concessions, grants, franchises, approvals or
authorizations necessary or required for the use or ownership of their assets
and the operation of their business. No proceeding is pending or, to the
knowledge of MIS, threatened, which seeks revocation or limitation of any such
licenses, permits, concessions, grants, franchises, approvals or authorizations.
5.8. FINANCIAL INFORMATION.
(a) MIS has provided to VPC its interim financial statements
for the period through March 31, 1999 ("Interim Financials") and an unaudited
financial statement for the most recent fiscal year-end December 31, 1998
("Unaudited Financial Statement"); together with Interim Financials are herewith
called (the "Financial Statements"), copies of which are attached hereto as
EXHIBIT 5.8. Except as disclosed in SCHEDULE 5.8 attached hereto, the Financial
Statements have been and MIS's Monthly Financials will be, prepared in
accordance with GAAP (except as to notes necessary for the Interim Financials
and MIS's Monthly Financials) applied on a consistent basis throughout the
periods covered thereby, present fairly the financial condition of MIS and its
Subsidiaries as of the indicated dates and the results of operations of MIS and
its Subsidiaries for the indicated periods, are consistent with the books and
records of MIS and its Subsidiaries and, except as discussed on SCHEDULE 5.8 do
not contain any material item of special or nonrecurring income not earned in
the ordinary course of business; provided, however, that the Interim Financials
and such Monthly Financials are subject to normal year-end adjustments that are
not expected to be material in amount.
(b) Except as and to the extent specifically disclosed in this
Agreement, there are no liabilities or obligations of MIS or any of its
Subsidiaries of any nature, whether liquidated, accrued, absolute, contingent or
otherwise except for those (i) that are specifically reflected or reserved
against as to amount in the latest balance sheet contained in the Financials,
(ii) that arose thereafter in the ordinary course of business, or (iii) that are
specifically set forth on SCHEDULE 5.8; and at all times after the execution of
this Agreement until the Closing, there will be no liabilities or obligations of
MIS or any of its Subsidiaries of any nature, whether liquidated, unliquidated,
accrued, absolute, contingent or otherwise, which are material, individually or
in the aggregate, except for those (A) that are specifically reflected or
reserved against as to amount in the latest balance sheet contained in the
Financials, or (B) that arose after the date of such balance sheet in the
ordinary course of business (and are, individually and in the aggregate,
immaterial), (C) that are specifically set forth on SCHEDULE 5.8, or (D) that
are permitted as set forth on EXHIBITS 4.2, 4.2(b)(iv), or 4.2(f).
(c) MIS and its Subsidiaries are not, nor have any of them
been during the twelve (12) months immediately preceding the execution of this
Agreement, insolvent within the meaning of 11 U.S.C. ss. 101(31). MIS and its
Subsidiaries have paid and are paying their debts as they become due.
5.9. NO UNDISCLOSED LIABILITIES. Except as and to the extent
specifically disclosed in this Agreement and those that are specifically
reflected or reserved against as to amount in the latest balance sheet contained
in the Financial Statements, neither MIS nor any of its Subsidiaries knows of
any reasonable basis for the assertion against MIS or any of its Subsidiaries of
any material liabilities or obligations of any nature, whether absolute,
accrued, contingent or
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otherwise and whether due or to become due, including, without limitation, any
liability for taxes and interest, penalties and other charges payable with
respect thereto. Except as set forth in this Agreement, neither the execution
and delivery of this Agreement nor the consummation of the Merger will (a)
result in any payment (whether severance pay, unemployment compensation or
otherwise) becoming due from MIS to any employee, director or officer or former
employee, director or officer of MIS, (b) increase any benefits otherwise
payable to any employee, director or officer or former employee, director or
officer of MIS, or (c) result in the acceleration of the time of payment or
vesting of any such benefits.
5.10. INTELLECTUAL PROPERTY. Except as described in SCHEDULE 5.10, to
the knowledge of MIS and its Subsidiaries, no patent, formula, process, trade
secret, trademark, trade name, assumed name or copyright relating to MIS's
business and that of its Subsidiaries, including all intellectual property used
in the operation of the business of MIS and its Subsidiaries (collectively, the
"MIS Intellectual Property"), infringes on any patent, copyright, trademark or
other intellectual property right of any Person, or violates the terms of any
agreements related thereto, nor to MIS's knowledge have there been any claims of
infringement. Except as set forth in SCHEDULE 5.10, there are no pending or, to
MIS's and its Subsidiaries' knowledge, threatened claims against MIS or any of
its Subsidiaries contesting the validity of, or their right to use any of, the
MIS Intellectual Property.
5.11. CONTRACTS AND COMMITMENTS. Except as disclosed on SCHEDULE 5.8:
(a) To MIS's and its Subsidiaries knowledge, no aspect of
MIS's and its Subsidiaries' business or operations or the Assets is of such
character as would restrict the Surviving Corporation from carrying on the
business of MIS and its Subsidiaries anywhere in the world.
(b) MIS and its Subsidiaries have no consultants or
independent contractors who are officers or directors of MIS or any of its
Subsidiaries, or who are affiliates of such officers or directors, to whom they
are paying compensation for services.
(c) Neither MIS nor any of its Subsidiaries has material
contracts, commitments, arrangements, or understandings relating to their
business, operations, financial condition, or prospects. For purposes of this
Section 5.11(c), "material" means payment or performance of a contract,
commitment, arrangement or understanding entered into in the ordinary course of
business which is expected to (i) involve payments in excess of $100,000 per
year, or (ii) have a duration exceeding five (5) years with expected payments
over its duration exceeding $100,000 (in each case other than leases not
required to be disclosed pursuant to Section 5.17), or any contract, commitment,
arrangement or understanding entered into not in the ordinary course of
business.
(d) To MIS's and its Subsidiaries' knowledge, there are no
outstanding contracts, commitments or bids, or services, development or sales
proposals, that will result in any substantial loss to MIS or any of its
Subsidiaries (and/or the Surviving Corporation) upon completion or performance
thereof, after allowance for normal direct employee expenses, licensing,
development, distribution expenses and other costs.
(e) There are no outstanding material lease or purchase
commitments of MIS or any of its Subsidiaries which are not consistent with
MIS's and its Subsidiaries' past lease and purchase commitment practices.
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5.12. ABSENCE OF CERTAIN CHANGES. Except as reflected on SCHEDULE 5.12,
or elsewhere in this Agreement or specifically identified on any Schedules
hereto, since December 31, 1998, MIS and its Subsidiaries have not, and at the
Closing Date will not, have:
(a) Suffered a Material Adverse Effect, or become aware of any
circumstances which might reasonably be expected to result in such a Material
Adverse Effect; or suffered any material casualty loss to the Assets (whether or
not insured);
(b) Incurred any obligations specifically related to the
Assets, except in the ordinary course of business, consistent with past
practices;
(c) Permitted or allowed any of the Assets to be mortgaged,
pledged, or subjected to any lien or encumbrance, except liens or encumbrances
specifically excepted by the provisions of Section 5.14;
(d) Written down the value of any inventory, contract or other
intangible asset, or written off as uncollectible any notes or accounts
receivable or any portion thereof, except for write-downs and write-offs in the
ordinary course of business, consistent with past practice and at a rate no
greater than during the latest complete fiscal year; cancelled any other debts
or claims, or waived any rights of substantial value, or sold or transferred any
of its material properties or assets, real, personal, or mixed, tangible or
intangible, except in the ordinary course of business and consistent with past
practice;
(e) Sold, licensed or transferred or agreed to sell, license
or transfer, any of the Assets, except in the ordinary course of business and
consistent with past practice;
(f) To MIS's and its Subsidiaries' knowledge, received notice
of any pending or threatened adverse claim or an alleged infringement of
proprietary material, whether such claim or infringement is based on trademark,
copyright, patent, license, trade secret, contract or other restrictions on the
use or disclosure of proprietary materials;
(g) Incurred obligations to refund money to customers, except
in the ordinary course of business, all of which will have no Material Adverse
Effect;
(h) Become aware of any event, condition or other circumstance
relating solely to the Assets (as opposed to any such event, condition, etc.,
which is, for example, national or industry-wide in nature) which might
reasonably be expected to have a Material Adverse Effect on the Assets;
(i) Made any capital expenditures or commitments, any one of
which is more than $500,000, for additions to property, plant, or equipment,
unless approved in writing by VPC or deemed approved by VPC pursuant to EXHIBIT
4.2(b)(iv) hereof;
(j) Made any material change in any method of accounting or
accounting practice;
(k) Paid, loaned, guaranteed, or advanced any material amount
to, or sold, transferred, or leased any material properties or assets (real,
personal, or mixed, tangible or intangible) to, or entered into any agreement,
arrangement, or transaction with any of MIS's or any Subsidiaries' officers or
directors, or any business or Person in which any officer or director
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of MIS or any of its Subsidiaries, or any affiliate or associate of any of such
Persons has any direct or indirect interest; or
(l) Agreed to take any action described in this Section 5.12.
5.13. TAXES.
(a) As used in this Agreement:
(i) "Adverse Consequences" means all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues, penalties,
fines, costs, amounts paid in settlement, liabilities, obligations, taxes,
liens, losses, expenses, and fees, including court costs and attorneys' fees and
expenses;
(ii) "Affiliated Group" means any affiliated group
within the meaning of Code ss. 1504(a) (or any similar group defined under a
similar provision of state, local or foreign law);
(iii) "Liability" means any liability (whether known
or unknown, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and whether
due or to become due), including, without limitation, any liability for Taxes;
(iv) "Security Interest" means any mortgage, lien,
encumbrance or other security including any "tax lien" (other than for current
taxes not yet due);
(v) "Tax" means any federal, state, local, or foreign
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
ss. 59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property personal
property, sales, use, transfer, registration, value added, alternative, or
added-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not;
(vi) "Tax Return" means any return, declaration,
report, claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
(b) MIS and its Subsidiaries have not been a member of an
Affiliated Group filing a consolidated federal income Tax Return other than a
group the common parent of which is MIS. The Affiliated Group of which MIS is
the common parent (the "MIS Group") has filed all income Tax Returns that it was
required to file for each taxable period during which MIS and its Subsidiaries
were a member of the MIS Group. All such Tax Returns are correct and complete in
all material respects. All income Taxes owed by the MIS Group (whether or not
shown on any Tax Return) have been paid for each taxable period during which MIS
and its Subsidiaries filed a consolidated federal income Tax Return.
(c) The amounts booked as provisions for Taxes in the
Financial Statements are sufficient for payment of all unpaid Taxes of MIS, its
Subsidiaries, and the MIS Group through
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December 31, 1998. Copies of the MIS Group's federal and state income Tax
Returns for calendar years 1995, 1996, and 1997 have been provided to VPC.
(d) No claim has ever been made by a Governmental Authority in
a jurisdiction where MIS or a Subsidiary does not file Tax Returns that it is or
it may be subject to taxation by that jurisdiction. There are no Security
Interests on any of the assets of MIS or any of its Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any Tax when due.
(e) MIS, each MIS Subsidiary, and the MIS Group have withheld
and paid over to the proper governmental authorities all Taxes required to have
been withheld and paid over, and complied with all information reporting and
back-up withholding requirements, including maintenance of required records with
respect thereto, in connection with amounts paid to any employee, independent
contractor, creditor, or other third party.
(f) There is no dispute or claim concerning any Tax Liability
of MIS, a Subsidiary or the MIS Group either (i) claimed or raised by any
Governmental Authority in writing, or (ii) as to which any of MIS or any of its
Subsidiaries (and employees responsible for Tax matters) has knowledge.
(g) MIS, its Subsidiaries, and the MIS Group have not waived
any statute of limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency.
(h) MIS and its Subsidiaries do not have any liability for the
Taxes of any Person other than MIS or its Subsidiaries (i) as a transferee or
successor, (ii) by contract, or (iii) otherwise.
(i) MIS and each Subsidiary currently utilize the accrual
method of accounting for income Tax purposes. MIS has utilized the accrual
method of accounting for income Tax purposes since the date of its
incorporation. Each Subsidiary of MIS has utilized the accrual method of
accounting for income Tax purposes since the date of its incorporation or Merger
by MIS, as the case may be. MIS, its Subsidiaries, and the MIS Group have not
agreed to, and are not and will not be required to, make any adjustments under
Code Section 481(a) as a result of a change in accounting methods.
(j) There are no contracts, agreements, plans or arrangements,
including but not limited to the provisions of this Agreement, covering any
employee or former employee of MIS or its Subsidiaries that, individually or
collectively, could give rise to the payment of any amount (or portion thereof)
that would not be deductible pursuant to Sections 280G, 404 or 162 of the Code.
5.14. TITLE TO PROPERTIES; ENCUMBRANCES. Except as specifically
identified in the Schedules hereto and except for items leased or licensed by
MIS or any of its Subsidiaries, or on SCHEDULE 5.14, MIS or such Subsidiaries
have good, valid, and marketable title to all of the Assets. All of the Assets
are in the possession or under the control of MIS or a Subsidiary, and none of
the Assets are subject to any mortgage, pledge, lien, security interest,
conditional sale agreement, encumbrance, or charge of any kind except as set
forth on SCHEDULE 5.14 or as specifically disclosed on the other Schedules
hereto and, except minor imperfections or title and encumbrances, if any, that
are not substantial in amount, do not materially detract from the value
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or functional utility of the property subject thereto, and do not in any way
materially impair the value of the Assets.
5.15. EQUIPMENT. All of the equipment owned or leased by MIS and its
Subsidiaries which has (or had at the date of its Merger or execution of the
related lease by MIS or its Subsidiary) a fair market value of $400,000 or
greater is listed on SCHEDULE 5.15 attached hereto. All of the equipment owned
or leased by MIS and its Subsidiaries is in adequate operating condition and
repair subject to normal wear and tear, except as set forth on SCHEDULE 5.15.
5.16. REAL PROPERTY. SCHEDULE 5.16 contains a list of all real property
owned by MIS and its Subsidiaries, including, without limitation, the
improvements and structures located thereon. To MIS's and its Subsidiaries'
knowledge, such improvements and structures are structurally sound with no known
defects and in good operating condition and repair subject to normal wear and
tear, and neither MIS nor any of its Subsidiaries has received any written
notification that there is any violation of any building, zoning, or other law,
ordinance, or regulation in respect of such property, improvements, or
structures, and to the best of MIS's and its Subsidiaries' knowledge, no such
violation exists.
5.17. LEASES. SCHEDULE 5.17 contains a list of all leases (including
both operating and capital leases) pursuant to which MIS or any of its
Subsidiaries leases real or personal property and (i) which involve lease
payments in excess of $30,000 per year, (ii) which are between MIS or any of its
Subsidiaries, on the one hand, and any of their Affiliates, on the other hand,
or (iii) which were not entered into in the ordinary course of business. Copies
of all such leases have been delivered to VPC. All such leases are valid,
binding, and enforceable in accordance with their terms (except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency or
other similar laws relating to the enforcement of creditors' rights generally
and by the application of general principles of equity), are in full force and
effect and except as set forth on SCHEDULE 5.17, no event has occurred which is
a default or which with the passage of time will constitute a default by MIS or
any of its Subsidiaries thereunder, nor has any such event occurred to the
knowledge of MIS and its Subsidiaries which is a default, or with the passage of
time will constitute a default, by any other party to such lease. All property
leased by MIS or any of its Subsidiaries as lessee is in the possession of MIS
and its Subsidiaries. Except as indicated in SCHEDULE 5.17, no consent of any
lessor is required in connection with the Transactions.
5.18. LITIGATION. Except as set forth in SCHEDULE 5.18, (i) there are
no pending (served) actions, proceedings or regulatory agency investigations
against MIS or its Subsidiaries or, to MIS or such Subsidiaries' knowledge,
threatened against MIS or any of its Subsidiaries involving the Assets, and (ii)
no such action, proceeding, or regulatory agency investigation has been pending
(served) during the three-year period preceding the date of this Agreement. No
assertion has ever been made to MIS or any of its Subsidiaries to the effect
that MIS or any of its Subsidiaries has any liability as a successor to a third
party's business or product line, and neither MIS nor any of its Subsidiaries
has knowledge of any basis for such an assertion.
5.19. EMPLOYEE BENEFIT PLANS; EMPLOYEES. (a) SCHEDULE 5.19 sets forth a
list of each material "employee benefit plan" (as defined by Section 3(e) of
ERISA) and any other material compensation, deferred compensation, fringe
benefit, severance, disability, sick leave, vacation, or other agreement,
policy, or arrangement (each such plan, agreement, policy, or arrangement is
referred to herein as a "MIS Employee Benefit Plan," and, collectively, the "MIS
Employee Benefit Plans") for the benefit of employees (and their beneficiaries)
of MIS or any of its Subsidiaries (collectively, "MIS Employees") or with
respect to which MIS or any "MIS ERISA Affiliate" (hereby defined to include any
trade or business, whether or not incorporated,
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other than MIS, which has employees who are treated pursuant to Section
4001(a)(14) of ERISA and/or Section 414 of the Code as employees of a single
employer which includes MIS).
(b) MIS has, or will have prior to the Closing Date,
delivered to VPC, with respect to each MIS Employee Benefit Plan, copies of the
documents embodying the Plan, if any, and employee handbooks governing the
employment of MIS Employees.
(c) Neither MIS nor any Subsidiary has any obligation
to contribute to or provide benefits pursuant to, and has no other liability of
any kind with respect to, (i) a "multiple employer welfare arrangement" (within
the meaning of Section 3(40) of ERISA), (ii) a "plan maintained by more than one
employer" (within the meaning of Section 413(c) of the Code), (iii) a
"multi-employer plan" within the meaning of Section 3(37) of ERISA), or (iv) an
"employee pension benefit plan" (within the meaning of Section 3(2) of ERISA)
which is subject to Title IV of ERISA.
(d) To the knowledge of MIS, neither MIS nor any
Subsidiary is subject to any liens, or excise or other taxes under ERISA, the
Code or other applicable law relating to any MIS Employee Benefit Plan.
(e) The consummation of the Transactions will not
give rise to any liability for any employee benefits to any MIS Employee,
including, without limitation, liability for severance pay, unemployment
compensation, termination pay or withdrawal liability.
(f) No MIS Employee Benefit Plan in any way provides
for any benefits of any kind whatsoever (other than under Section 4980B of the
Code and Part 6 of Subtitle B of Title I of ERISA, the Federal Social Security
Act or any MIS Employee Benefit Plan qualified under Section 401(a) of the Code)
to any MIS Employee who, at the time the benefit is to be provided, is a former
director or employee of, other provider of services to MIS or an MIS ERISA
Affiliate (or a beneficiary of any such person).
(g) Any contribution, insurance premium, excise tax,
interest charge or other liability or charge imposed or required with respect to
any MIS Employee Benefit Plan which is attributable to any period or any portion
of any period prior to the Closing will be paid by MIS or a Subsidiary or xxxx
be reflected on the Financial Statements.
(h) Except as disclosed on SCHEDULE 5.19(h), to the
knowledge of MIS, no claim, lawsuit, arbitration or other action has been
asserted or instituted or threatened in writing against any MIS Employee Benefit
Plan, any trustee or fiduciaries thereof, MIS, any of its Subsidiaries or any
MIS ERISA Affiliate, any director, officer or employee thereof, or any of the
assets of an MIS Employee Benefit Plan or any related trust.
(i) Except as disclosed on SCHEDULE 5.19(i), to the
knowledge of MIS, no MIS Employee Benefit Plan is under audit or investigation
by the IRS or the DOL or any other governmental authority and no such completed
audit, if any, has resulted in the imposition of any tax, interest or penalty.
(j) Since December 31, 1998 and through the date
hereof, and except as set forth on SCHEDULE 5.19(j), neither MIS, any of its
Subsidiaries nor any MIS ERISA Affiliate has, nor will it, (i) institute or
agree to institute any new MIS Employee Benefit Plan or practice, (ii) make or
agree to make any change in any MIS Employee Benefit Plan, (iii) make or agree
to make any increase in the compensation payable or to become payable by MIS,
any of its
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Subsidiaries or any MIS ERISA Affiliate to any MIS Employee, except for normal
periodic salary increases consistent with past practices, or (iv) except
pursuant to this Agreement and except for contributions required to provide
benefits pursuant to the provisions of the MIS Employee Benefit Plans, pay or
accrue or agree to pay or accrue any bonus, percentage of compensation, or other
like benefit to, or for the credit of, any MIS Employee.
(k) There are no collective bargaining or other labor
union agreements to which MIS or any of its Subsidiaries is a party or by which
any of them is bound.
5.20. ADVISORS FEES. Other than as set forth on SCHEDULE 5.20, neither
MIS nor any of its Subsidiaries or any Affiliate thereof has retained or
utilized the services of any advisor, broker, finder or intermediary, or paid or
agreed to pay any fee or commission to any other Person or entity for or on
account of the Transactions, or had any communications with any Person or entity
which would obligate VPC to pay any such fees or commission.
5.21. NO EXISTING DISCUSSION FOR ACQUISITION PROPOSAL. Except as set
forth on SCHEDULE 5.21, as of the date hereof, MIS is not engaged in any
negotiations with any other party with respect to an Acquisition Proposal.
5.22. ACCOUNTS RECEIVABLE. Except as set forth on SCHEDULE 5.22 and as
otherwise may be specifically identified on the Financial Statements, all
accounts receivable (the "MIS Receivables") of MIS which are reflected n the
Financial Statements, and all MIS Receivables acquired or generated since the
date of the Financial Statements, are in all material respects valid and BONA
FIDE MIS Receivables arising from the furnishing of goods or services to
customers in the ordinary course of business.
5.23. INVENTORIES. Any and all inventories of MIS which are reflected
on the Financial Statements, plus any replacements for such items acquired on or
before the Closing, and minus any such items sold by MIS in the ordinary course
of business on or before the Closing, are properly valued at the lower of cost
(first-in, first-out) or market in accordance with generally accepted accounting
principles consistently applied and, except for obsolete and slow moving items
which have been fully written off or reserved for and except for items sold in
the ordinary course of business, consist of items of a quality and quantity
currently useable and saleable in the ordinary course of business without
markdown or discount.
5.24. SOFTWARE. Except as set forth on SCHEDULE 5.24, MIS presently has
the right to use all computer software owned by it, and to the knowledge of MIS,
the right to use all other computer software which is leased or licensed to, or
otherwise used by MIS. To the knowledge of MIS, neither MIS nor any Subsidiary
is in violation of any license or other agreement related to its software.
5.25. Y2K COMPLIANCE. MIS's equipment, computers, software, hardware,
business and processes in which date sensitive software is utilized are year
2000 compliant such that such equipment, computers, software, hardware, business
and processes will not experience failures, interruptions or malfunctions in a
manner that will have a material adverse effect on such equipment, computers,
software, hardware, business and processes, MIS and/or it Assets.
5.26. SHARES TO BE DELIVERED. The Merger Shares and the shares of MIS
common stock underlying the Debentures and Option/Warrants to be issued with
respect to previously outstanding VPC Capital Stock and the Employment
Agreements set forth in Exhibit 4.1 when issued and delivered to such VPC
stockholders pursuant to this Agreement will be duly
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authorized, validly issued, fully paid and nonassessable shares of voting common
stock of MIS. Upon delivery of the Merger Shares after the Closing and assuming
that the former stockholders of VPC are receiving the Merger Shares in good
faith without notice of any adverse claims, such stockholders will receive good
and unencumbered title to the Merger Shares, free and clear of all liens,
restrictions, charges, encumbrances, and other security interests of any kind or
nature whatsoever, except for claims arising out of acts of or claims against
such stockholders, restrictions existing under applicable securities laws, and
the restrictions imposed hereby (as to Affiliates).
5.27. DISCLOSURE AND ALL DOCUMENTATION. No representation or warranty
by MIS contained in this Agreement and no statement contained in any certificate
or schedule furnished to VPC pursuant to the provisions hereof contains or shall
contain any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements therein not misleading. To the
knowledge of MIS and its Subsidiaries, there is no current event or condition of
any kind or character pertaining to MIS or its Subsidiaries that may reasonably
be expected to have a Material Adverse Effect, except as disclosed in this
Agreement and except for those events and conditions which are national or
industry-wide in nature. Except as specifically indicated elsewhere in this
Agreement, all documents delivered by MIS or its Subsidiaries to VPC in
connection herewith have been and will be complete originals, or exact copies
thereof.
5.28. TAX-FREE REORGANIZATION. To the knowledge of MIS, there is no
fact pertaining to it, any stockholder of MIS or any of its Subsidiaries that
would prevent the Merger from qualifying as a tax-free reorganization under the
Code.
5.29. SURVIVAL. The representations and warranties contained in this
Article 5 shall survive the Closing for one (1) year, but the running of such
period shall xxxxx upon delivery of a notice of a breach until such time as the
alleged breach is resolved.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF VPC
In order to induce MIS to enter into this Agreement and consummate the
Transactions, VPC hereby represents and warrants the following to MIS as of the
Execution of this Agreement (and not the date hereof), each of which
representations and warranties shall be material to and relied upon by MIS and
shall be deemed remade on and as of the date of the Closing:
6.1. ORGANIZATION AND AUTHORITY. VPC is a corporation duly organized
and validly existing under the laws of the State of Florida and it has no
Subsidiaries. The states in which VPC is qualified to do business are set forth
on SCHEDULE 6.1. VPC is not required to be qualified as a foreign corporation in
any other jurisdiction where its failure to qualify would have a Material
Adverse Effect. VPC has all necessary corporate power and authority to own,
lease and operate its properties and conduct its business as it is currently
being conducted. VPC does not own, directly or indirectly, any equity interest
in any corporation, partnership, joint venture, or other entity.
6.2. CORPORATE POWER AND AUTHORITY; DUE AUTHORIZATION. Subject to VPC
Board Approval and VPC Stockholder approval, VPC has full corporate power and
authority to execute and deliver this Agreement and each of the Closing
Documents to which VPC is or will be a party, and to consummate the
Transactions. No corporate proceeding is necessary to approve the Transactions
other than VPC Board Approval and VPC Stockholder Approval. Assuming VPC
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Board Approval, VPC Stockholder Approval and that this Agreement and each of the
Closing Documents to which MIS is a party constitutes a valid and binding
agreement of MIS this Agreement and each of the Closing Documents to which VPC
is a party constitutes, or will constitute when executed and delivered, a valid
and binding agreement of VPC in each case enforceable in accordance with its
terms, except as the enforceability thereof may be limited by applicable
bankruptcy, insolvency or other similar laws relating to the enforcement of
creditors' rights generally and by the applicable of general principles of
equity. The duly elected officers and directors of VPC is set forth on SCHEDULE
6.2. Copies of the Articles of Incorporation, the Bylaws and all minutes of VPC
are contained in the minute book of VPC. True, correct and complete copies of
the minute book of VPC have been made available to MIS.
6.3. SUFFICIENCY OF ASSETS. All material assets and rights relating to
VPC's business are held solely by, and all agreements, obligations, expenses and
transactions relating to the business of VPC have been entered into, incurred
and conducted solely by, VPC. Except as described in SCHEDULE 6.3, the Assets
are all of the items necessary to provide all services required in connection
with the business of VPC, assuming competent personnel, general office
facilities, and adequate facilities are available.
6.4. NO CONFLICT; REQUIRED CONSENTS. Exclusive of VPC Board Approval
and VPC Stockholder Approval, SCHEDULE 6.4 lists all material third-party
consents or approvals required with respect to VPC for consummation of the
Transactions, which consents VPC agrees to use its best reasonable efforts to
obtain. Assuming all such consents and approvals have been obtained and assuming
the appropriate filings and mailings are made by VPC and VPC to effectuate the
Merger under the Florida Act, and under the Securities Act and the Exchange Act,
the execution and delivery by VPC of this Agreement and the Closing Documents
and the consummation by VPC of the Transactions do not and will not, except as
set forth on SCHEDULE 6.4, (a) require the consent, approval or action of, or
any filing or notice to, any corporation, firm, Person or other entity or any
public, governmental or judicial authority (except for such consents, approvals,
actions, filing or notices the failure of which to make or obtain will not in
the aggregate have a Material Adverse Effect); (b) violate in any material
respect the terms of any material instrument, document or agreement to which VPC
is a party, or by which VPC or the property of VPC is bound, or be in conflict
in any material respect with, result in a material breach of or constitute (upon
the giving of notice or lapse of time or both) a material default under any such
instrument, document or agreement, or result in the creation of any lien upon
any of the property or assets of VPC; (c) violate in any respect the terms of
any instrument, document or agreement to which VPC is a party, or by which VPC
or the property of VPC is bound, or be in conflict in any respect with, result
in a breach of or constitute (upon the giving of notice or lapse of time or
both) a default under any such instrument, document or agreement, or result in
the creation of any lien upon any of the property or assets of VPC if the
aggregate effect of all such violations listed in this subsection (c) results in
a Material Adverse Effect on VPC taken as a whole; (d) violate VPC's Articles of
Incorporation or Bylaws; or (e) violate any order, write, injunction, decree,
judgment, ruling, law, rule or regulation of any federal, state, county,
municipal, or foreign court of governmental authority applicable to VPC, or the
business or assets of VPC. VPC is not subject to, or a party to, any mortgage,
lien, lease, agreement, contract, instrument, order, judgment or decree or any
other material restriction of any kind or character which would prevent or
hinder the continued operation of the business of VPC after the closing on
substantially the same basis as theretofore operated.
6.5. CAPITALIZATION. All of the authorized and outstanding VPC capital
stock is set forth on SCHEDULE 6.5, and no shares of VPC capital stock are held
in the treasury of VPC. No shares or any class of capital stock or other equity
interests of VPC, other than (i) VPC Common
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Stock, (ii) options or warrants for VPC Common Stock, or (iii) those shares of
VPC Capital Stock identified in SCHEDULE 6.5, shall be issued and outstanding at
the Closing. All outstanding VPC capital stock has been duly authorized, and is
validly issued, fully paid and nonassessable. No preemptive (whether statutory
or contractual) rights have been violated. Current VPC stock option plans, all
previous forms of those plans, and amendments, and all outstanding options and
warrants, are identified on SCHEDULE 6.5. Except as set forth on SCHEDULE 6.5,
all options were granted in accordance with the provisions of VPC stock option
plans. SCHEDULE 6.5 also sets forth information as to options (if any) and
warrants (if any) previously granted which have terminated, expired or been
exercised. Except for the outstanding options, warrants and other commitments
set forth in SCHEDULE 6.5, VPC has no convertible securities, options, warrants,
or other contracts, commitments, agreements, understandings, arrangements or
restrictions by which it is bound to issue any additional shares of VPC Capital
Stock or other securities. All securities of VPC were offered and sold in
compliance with applicable federal and state securities laws. Each and every
dividend of VPC, if any, whether paid in cash or other property, has been
declared and paid in compliance with applicable law, and VPC has no further
obligation with respect to such payment. SCHEDULE 6.5 also summarizes in detail
all currently effective registration rights which have been granted by VPC to
any other person or entity and all currently effective shareholder agreements
between any shareholders of VPC.
6.6. COMPLIANCE WITH LAWS. Except as set forth in SCHEDULE 6.6, (a) to
the best of VPC's knowledge, VPC is in compliance with, and VPC has operated and
any Persons or businesses previously owned or operated by them in compliance
with, all applicable laws, orders, rules and regulations of all governmental
bodies and agencies, including applicable environmental laws and regulations,
but excluding applicable laws and regulations related to Medicare, Medicaid and
other federally funded programs, except where such noncompliance has and will
have, in the aggregate, no Material Adverse Effect. VPC has not received notice
of any noncompliance with the foregoing.
(b) Without limiting the foregoing, VPC and any other person
or entity for whose conduct VPC is legally held responsible are in material
compliance with all applicable federal, state, regional, local or provincial
laws, statutes, ordinances, judgments, rulings and regulations relating to any
matters of pollution, protection of the environment, health or safety, or
environmental regulation or control (collectively, "Environmental Laws").
Neither VPC nor any other person or entity for whose conduct VPC is legally
responsible, has (i) received any notice, demand, request for information, or
administrative inquiry relating to any violation of an Environmental Law or the
institution of any suit, action, claim or proceeding alleging such violation or
investigation by any Governmental Authority or any third party of any such
violation, (ii) manufactured, generated, treated, stored, handled, processed,
released, transported or disposed of any Hazardous Substance on, under, from or
at any of VPC's properties or any other properties, (iii) become aware or
received notice of the release or disposal of any Hazardous Substances in
violation of any applicable Environmental Law, on, under or at any of VPC's,
properties or any other properties, (iv) become aware or received notice of any
actual or potential material liability on the part of VPC for the response to or
remediation of any Hazardous Substance at or arising from any of VPC's
properties or any other properties owned or operated by VPC or any other Person
for whose conduct VPC is legally responsible, or (v) become aware of or received
notice of any actual or potential liability on the part of VPC for the costs of
response to or remediation of Hazardous Substances at or arising from any of
VPC's properties or any other properties owned or operated by VPC or any other
Person for whose conduct VPC is or may be held responsible. For purposes of this
Agreement, the term "Hazardous Substance" shall mean any toxic or hazardous
materials or substances, including asbestos, buried contaminants, chemicals,
flammable explosives, radioactive materials or petroleum and petroleum products
and
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any substances defined as, or included in the definition of, "hazardous
substances," "hazardous wastes," "hazardous materials" or "toxic substances"
under any Environmental Law. No Environmental Law imposes any obligation upon
VPC or its Subsidiaries arising out of or as a condition to any transaction
contemplated hereby, including, without limitation, any requirement to modify or
to transfer any permit or license, any requirement to file any notice or other
submission with any Governmental Authority, the placement of any notice,
acknowledgment, or covenant in any land records, or the modification of or
provision of notice under any agreement, consent order, or consent decree. No
lien has been placed upon any of VPC's properties or its Subsidiaries'
properties under any Environmental Law.
6.7. LICENSES AND PERMITS. Except as set forth in SCHEDULE 6.7, VPC has
not received notice of any violations in respect of any licenses, permits,
concessions, grants, franchises, approvals or authorizations necessary or
required for the use or ownership of their assets and the operation of their
business. No proceeding is pending or, to the knowledge of VPC, threatened,
which seeks revocation or limitation of any such licenses, permits, concessions,
grants, franchises, approvals or authorizations.
6.8. FINANCIAL INFORMATION.
(a) VPC has provided to MIS its interim financial statements
for the period through March 31, 1999 ("Interim Financials") and an audited
financial statement for the most recent fiscal year-end December 31, 1998
("Audited Financial Statement"); together with Interim Financials are herewith
called (the "Financial Statements"), copies of which are attached hereto as
EXHIBIT 6.8. Except as disclosed in SCHEDULE 6.8 attached hereto, the Financial
Statements have been and VPC's Monthly Financials will be, prepared in
accordance with GAAP (except as to notes necessary for the Interim Financials
and VPC's Monthly Financials) applied on a consistent basis throughout the
periods covered thereby, present fairly the financial condition of VPC as of the
indicated dates and the results of operations of VPC for the indicated periods,
are consistent with the books and records of VPC and, except as discussed on
SCHEDULE 6.8 do not contain any material item of special or nonrecurring income
not earned in the ordinary course of business; provided, however, that the
Interim Financials and such Monthly Financials are subject to normal year-end
adjustments that are not expected to be material in amount.
(b) Except as and to the extent specifically disclosed in this
Agreement, there are no liabilities or obligations of VPC of any nature, whether
liquidated, accrued, absolute, contingent or otherwise except for those (i) that
are specifically reflected or reserved against as to amount in the latest
balance sheet contained in the Financial Statements, (ii) that arose thereafter
in the ordinary course of business, or (iii) that are specifically set forth on
SCHEDULE 6.8; and at all times after the execution of this Agreement until the
Closing, there will be no liabilities or obligations of VPC of any nature,
whether liquidated, unliquidated, accrued, absolute, contingent or otherwise,
which are material, individually or in the aggregate, except for those (A) that
are specifically reflected or reserved against as to amount in the latest
balance sheet contained in the Financial Statements, or (B) that arose after the
date of such balance sheet in the ordinary course of business (and are,
individually and in the aggregate, immaterial), (C) that are specifically set
forth on SCHEDULE 6.8, or (D) that are permitted as set forth on EXHIBITS 4.2,
4.2(b)(iv), or 4.2(f).
(c) VPC is not, nor has it been during the twelve (12) months
immediately preceding the execution of this Agreement, insolvent within the
meaning of 11 U.S.C. ss. 101(31). VPC has paid and is paying its debts as they
become due.
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6.9. NO UNDISCLOSED LIABILITIES. Except as and to the extent
specifically disclosed in this Agreement and those that are specifically
reflected or reserved against as to amount in the latest balance sheet contained
in the Financial Statements, VPC knows of any reasonable basis for the assertion
against VPC of any material liabilities or obligations of any nature, whether
absolute, accrued, contingent or otherwise and whether due or to become due,
including, without limitation, any liability for taxes and interest, penalties
and other charges payable with respect thereto. Except as set forth in this
Agreement, neither the execution and delivery of this Agreement nor the
consummation of the Merger will (a) result in any payment (whether severance
pay, unemployment compensation or otherwise) becoming due from VPC to any
employee, director or officer or former employee, director or officer of VPC,
(b) increase any benefits otherwise payable to any employee, director or officer
or former employee, director or officer of VPC, or (c) result in the
acceleration of the time of payment or vesting of any such benefits.
6.10. INTELLECTUAL PROPERTY. Except as described in SCHEDULE 6.10, to
the knowledge of VPC, no patent, formula, process, trade secret, trademark,
trade name, assumed name or copyright relating to VPC's business, including all
intellectual property used in the operation of the business of VPC
(collectively, the "VPC Intellectual Property"), infringes on any patent,
copyright, trademark or other intellectual property right of any Person, or
violates the terms of any agreements related thereto, nor to VPC's knowledge
have there been any claims of infringement. Except as set forth in SCHEDULE
6.10, there are no pending or, to VPC's knowledge, threatened claims against VPC
contesting the validity of, or their right to use any of, the VPC Intellectual
Property.
6.11. CONTRACTS AND COMMITMENTS. Except as disclosed on SCHEDULE 6.8:
(a) To VPC's knowledge, no aspect of VPC's business or
operations or the Assets is of such character as would restrict the MIS from
carrying on the business of VPC.
(b) VPC has no consultants or independent contractors who are
officers or directors of VPC, or who are affiliates of such officers or
directors, to whom they are paying compensation for services.
(c) VPC has no material contracts, commitments, arrangements,
or understandings relating to their business, operations, financial condition,
or prospects. For purposes of this Section 5.11(c), "material" means payment or
performance of a contract, commitment, arrangement or understanding entered into
in the ordinary course of business which is expected to (i) involve payments in
excess of $100,000 per year, or (ii) have a duration exceeding five (5) years
with expected payments over its duration exceeding $100,000 (in each case other
than leases not required to be disclosed pursuant to Section 5.17), or any
contract, commitment, arrangement or understanding entered into not in the
ordinary course of business.
(d) To VPC's knowledge, there are no outstanding contracts,
commitments or bids, or services, development or sales proposals, that will
result in any substantial loss to VPC (and/or the MIS) upon completion or
performance thereof, after allowance for normal direct employee expenses,
licensing, development, distribution expenses and other costs.
(e) There are no outstanding material lease or purchase
commitments of VPC which are not consistent with VPC's past lease and purchase
commitment practices.
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6.12. ABSENCE OF CERTAIN CHANGES. Except as reflected on SCHEDULE 6.12,
or elsewhere in this Agreement or specifically identified on any Schedules
hereto, since December 31, 1998, VPC has not, and at the Closing Date will not,
have:
(a) Suffered a material Adverse Effect, or become aware of any
circumstances which might reasonably be expected to result in such a Material
Adverse Effect; or suffered any material casualty loss to the Assets (whether or
not insured);
(b) Incurred any obligations specifically related to the
Assets, except in the ordinary course of business, consistent with past
practices;
(c) Permitted or allowed any of the Assets to be mortgaged,
pledged, or subjected to any lien or encumbrance, except liens or encumbrances
specifically excepted by the provisions of Section 6.14;
(d) Written down the value of any inventory, contract or other
intangible asset, or written off as uncollectible any notes or accounts
receivable or any portion thereof, except for write-downs and write-offs in the
ordinary course of business, consistent with past practice and at a rate no
greater than during the latest complete fiscal year; cancelled any other debts
or claims, or waived any rights of substantial value, or sold or transferred any
of its material properties or assets, real, personal, or mixed, tangible or
intangible, except in the ordinary course of business and consistent with past
practice;
(e) Sold, licensed or transferred or agreed to sell, license
or transfer, any of the Assets, except in the ordinary course of business and
consistent with past practice;
(f) To VPC's knowledge, received notice of any pending or
threatened adverse claim or an alleged infringement of proprietary material,
whether such claim or infringement is based on trademark, copyright, patent,
license, trade secret, contract or other restrictions on the use or disclosure
of proprietary materials;
(g) Incurred obligations to refund money to customers, except
in the ordinary course of business, all of which will have no Material Adverse
Effect;
(h) Become aware of any event, condition or other circumstance
relating solely to the Assets (as opposed to any such event, condition, etc.,
which is, for example, national or industry-wide in nature) which might
reasonably be expected to have a Material Adverse Effect on the Assets;
(i) Made any capital expenditures or commitments, any one of
which is more than $500,000, for additions to property, plant, or equipment,
unless approved in writing by MIS or deemed approved by MIS pursuant to EXHIBIT
4.2(b)(iv) hereof;
(j) Made any material change in any method of accounting or
accounting practice;
(k) Paid, loaned, guaranteed, or advanced any material amount
to, or sold, transferred, or leased any material properties or assets (real,
personal, or mixed, tangible or intangible) to, or entered into any agreement,
arrangement, or transaction with any of VPC's officers or directors, or any
business or Person in which any officer or director of VPC or any affiliate or
associate of any of such Persons has any direct or indirect interest; or
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(l) Agreed to take any action described in this Section 6.12.
6.13. TAXES.
(a) Except a set forth on SCHEDULE 6.13(a), VPC have not been
a member of an Affiliated Group filing a consolidated federal income Tax Return
other than a group the common parent of which is Medical Industries of America,
Inc. The Affiliated Group of which VPC is a member (the "VPC Group") has to the
best of its knowledge filed all income Tax Returns that it was required to file
for each taxable period during which VPC was a member of the VPC Group. All such
Tax Returns are correct and complete in all material respects. To VPC's
knowledge, all income Taxes owned by the VPC Group (whether or not shown on any
Tax Return) have been paid for each taxable period during which VPC filed a
consolidated federal income Tax Return.
(b) The amounts booked as provisions for Taxes on the
Financial Statements are sufficient for payment of all unpaid Taxes of VPC, and
the VPC Group through December 31, 1998. Copies of the VPC Group's federal and
state income Tax Returns for calendar years 1995, 1996 and 1997 have been
provided to MIS.
(c) No claim has ever been made by a Governmental Authority in
a jurisdiction where VPC does not file Tax Returns that it is or it may be
subject to taxation by that jurisdiction. There are no Security Interests on any
of the assets of VPC that arose in connection with any failure (or alleged
failure) to pay any Tax when due.
(d) VPC has withheld and paid over to the proper governmental
authorities all Taxes required to have been withheld and paid over, and complied
with all information reporting and back-up withholding requirements, including
maintenance of required records with respect thereto, in connection with amounts
paid to any employee, independent contractor, creditor, or other third party.
(e) There is no dispute or claim concerning any Tax Liability
of VPC either (i) claimed or raised by any Governmental Authority in writing, or
(ii) as to which any of VPC (and employees responsible for Tax matters) has
knowledge.
(f) VPC has not waived any statute of limitations in respect
of Taxes or agreed to any extension or time with respect to a Tax assessment or
deficiency.
(g) VPC does not have any liability of the Taxes of any Person
other than VPC (i) as a transferee or successor, (ii) by contract, or (iii)
otherwise.
(h) VPC currently utilize the accrual method of accounting for
income Tax purposes. VPC has not agreed to, and are not and will not be required
to, make any adjustments under Code Section 481(a) as a result of a change in
accounting methods.
(i) There are no contracts, agreements, plans or arrangements,
including but not limited to the provisions of this Agreement, covering any
employee or former employee of VPC that, individually or collectively, could
give rise to the payment of any amount (or portion thereof) that would not be
deductible purchase to Sections 280G, 404 or 162 of the Code.
6.14. TITLE TO PROPERTIES; ENCUMBRANCES. Except as specifically
identified in the Schedules hereto and except for items leased or licensed by
VPC, or on SCHEDULE 6.14, VPC has
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good, valid, and marketable title to all of the Assets. All of the Assets are in
the possession or under the control of VPC, and none of the Assets are subject
to any mortgage, pledge, lien, security interest, conditional sale agreement,
encumbrance, or charge of any kind except as set forth on SCHEDULE 6.14 or as
specifically disclosed on the other Schedules hereto and, except minor
imperfections or title and encumbrances, if any, that are not substantial in
amount, do not materially detract from the value or functional utility of the
property subject thereto, and do not in any way materially impair the value of
the Assets.
6.15. EQUIPMENT. All of the equipment owned or leased by VPC which has
(or had at the date of its Merger or execution of the related lease by VPC) a
fair market value of $400,000 or greater is listed on SCHEDULE 6.15 attached
hereto. All of the equipment owned or leased by VPC is in adequate operating
condition and repair subject to normal wear and tear, except as set forth on
SCHEDULE 6.15.
6.16. REAL PROPERTY. SCHEDULE 6.16 contains a list of all real property
owned by VPC, including, without limitation, the improvements and structures
located thereon. To VPC's knowledge, such improvements and structures are
structurally sound with no known defects and in good operating condition and
repair subject to normal wear and tear, and VPC has not received any written
notification that there is any violation of any building, zoning, or other law,
ordinance, or regulation in respect of such property, improvements, or
structures, and to the best of VPC's knowledge, no such violation exists.
6.17. LEASES. SCHEDULE 6.17 contains a list of all leases (including
both operating and capital leases) pursuant to which VPC leases real or personal
property and (i) which involve lease payments in excess of $30,000 per year,
(ii) which are between VPC, on the one hand, and any of its Affiliates, on the
other hand, or (iii) which were not entered into in the ordinary course of
business. Copies of all such leases have been delivered to VPC. All such leases
are valid, binding, and enforceable in accordance with their terms (except as
the enforceability thereof may be limited by applicable bankruptcy, insolvency
or other similar laws relating to the enforcement of creditors' rights generally
and by the application of general principles of equity), are in full force and
effect and except as set forth on SCHEDULE 6.17, no event has occurred which is
a default or which with the passage of time will constitute a default by VPC
thereunder, nor has any such event occurred to the knowledge of VPC which is a
default, or with the passage of time will constitute a default, by any other
party to such lease. All property leased by VPC as lessee is in the possession
of VPC. Except as indicated in SCHEDULE 6.17, no consent of any lessor is
required in connection with the Transactions.
6.18. LITIGATION. Except as set forth in SCHEDULE 6.18, (i) there are
no pending (served) actions, proceedings or regulatory agency investigations
against VPC or, to VPC's knowledge, threatened against VPC involving the Assets,
and (ii) no such action, proceeding, or regulatory agency investigation has been
pending (served) during the three-year period preceding the date of this
Agreement. No assertion has ever been made to VPC to the effect that VPC has any
liability as a successor to a third party's business or product line, and VPC
has no knowledge of any basis for such an assertion.
6.19. EMPLOYEE BENEFIT PLANS; EMPLOYEES.
(a) SCHEDULE 6.19 sets forth a list of each material "employee
benefit plan" (as defined by Section 3(e) of ERISA) and any other material
compensation, deferred compensation, fringe benefit, severance, disability, sick
leave, vacation, or other agreement, policy, or arrangement (each such plan,
agreement, policy, or arrangement is referred to herein as a "VPC
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Employee Benefit Plan," and, collectively, the "VPC Employee Benefit Plans") for
the benefit of employees (and their beneficiaries) of VPC (collectively, "VPC
Employees") or with respect to which VPC or any "VPC ERISA Affiliate" (hereby
defined to include any trade or business, whether or not incorporated, other
than VPC, which has employees who are treated pursuant to Section 4001(a)(14) of
ERISA and/or Section 414 of the Code as employees of a single employer which
includes VPC).
(b) VPC has, or will have prior to the Closing Date, delivered
to VPC, with respect to each VPC Employee Benefit Plan, copies of the documents
embodying the Plan, if any, and employee handbooks governing the employment of
VPC Employees.
(c) VPC has no obligation to contribute to or provide benefits
pursuant to, and has no other liability of any kind with respect to, (i) a
"multiple employer welfare arrangement" (within the meaning of Section 3(40) of
ERISA), (ii) a "plan maintained by more than one employer" (within the meaning
of Section 413(c) of the Code), (iii) a "multi-employer plan" within the meaning
of Section 3(37) of ERISA), or (iv) an "employee pension benefit plan" (within
the meaning of Section 3(2) of ERISA) which is subject to Title IV of ERISA.
(d) To the knowledge of VPC, VPC is not subject to any liens,
or excise or other taxes under ERISA, the Code or other applicable law relating
to any VPC Employee Benefit Plan.
(e) The consummation of the Transactions will not give rise to
any liability for any employee benefits to any VPC Employee, including, without
limitation, liability for severance pay, unemployment compensation, termination
pay or withdrawal liability.
(f) No VPC Employee Benefit Plan in any way provides for any
benefits of any kind whatsoever (other than under Section 4980B of the Code and
Part 6 of Subtitle B of Title I of ERISA, the Federal Social Security Act or any
MIAO Employee Benefit Plan qualified under Section 401(a) of the Code) to any
VPC Employee who, at the time the benefit is to be provided, is a former
director or employee of, other provider of services to MIAO or an VPC ERISA
Affiliate (or a beneficiary of any such person).
(g) Any contribution, insurance premium, excise tax, interest
charge or other liability or charge imposed or required with respect to any VPC
Employee Benefit Plan which is attributable to any period or any portion of any
period prior to the Closing will be paid by VPC or xxxx be reflected on the
Financial Statements.
(h) Except as disclosed on SCHEDULE 6.19(h), to the knowledge
of VPC, no claim, lawsuit, arbitration or other action has been asserted or
instituted or threatened in writing against any VPC Employee Benefit Plan, any
trustee or fiduciaries thereof, VPC, or any VPC ERISA Affiliate, any director,
officer or employee thereof, or any of the assets of a VPC Employee Benefit Plan
or any related trust.
(i) Except as disclosed on SCHEDULE 6.19(i), to the knowledge
of VPC, no VPC Employee Benefit Plan is under audit or investigation by the IRS
or the DOL or any other governmental authority and no such completed audit, if
any, has resulted in the imposition of any tax, interest or penalty.
(j) Since December 31, 1998 and through the date hereof, and
except as set forth on SCHEDULE 6.19(j), neither VPC nor any VPC ERISA Affiliate
has, nor will it, (i) institute or agree to institute any new VPC Employee
Benefit Plan or practice, (ii) make or agree to make any
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change in any VPC Employee Benefit Plan, (iii) make or agree to make any
increase in the compensation payable or to become payable by VPC or any VPC
ERISA Affiliate to any VPC Employee, except for normal periodic salary increases
consistent with past practices, or (iv) except pursuant to this Agreement and
except for contributions required to provide benefits pursuant to the provisions
of the VPC Employee Benefit Plans, pay or accrue or agree to pay or accrue any
bonus, percentage of compensation, or other like benefit to, or for the credit
of, any VPC Employee.
(k) There are no collective bargaining or other labor union
agreements to which VPC or any of its Subsidiaries is a party or by which any of
them is bound.
6.20. ADVISORS FEES. Other than as set forth on SCHEDULE 6.20, neither
VPC or any Affiliate thereof has retained or utilized the services of any
advisor, broker, finder or intermediary, or paid or agreed to pay any fee or
commission to any other Person or entity for or on account of the Transactions,
or had any communications with any Person or entity which would obligate MIS to
pay any such fees or commission.
6.21. NO EXISTING DISCUSSION FOR ACQUISITION PROPOSAL. Except as set
forth on SCHEDULE 6.23, as of the date hereof, MIS is not engaged in any
negotiations with any other party with respect to an Acquisition Proposal.
6.22. ACCOUNTS RECEIVABLE. Except as set forth on SCHEDULE 6.22 and as
otherwise may be specifically identified on the Financial Statements, all
accounts receivable (the "VPC Receivables") of VPC which are reflected n the
Financial Statements, and all VPC Receivables acquired or generated since the
date of the Financial Statements, are in all material respects valid and BONA
FIDE VPC Receivables arising from the furnishing of goods or services to
customers in the ordinary course of business.
6.23. INVENTORIES. Any and all inventories of VPC which are reflected
on the Financial Statements, plus any replacements for such items acquired on or
before the Closing, and minus any such items sold by VPC in the ordinary course
of business on or before the Closing, are properly valued at the lower of cost
(first-in, first-out) or market in accordance with generally accepted accounting
principles consistently applied and, except for obsolete and slow moving items
which have been fully written off or reserved for and except for items sold in
the ordinary course of business, consist of items of a quality and quantity
currently useable and saleable in the ordinary course of business without
markdown or discount.
6.24. SOFTWARE. Except as set forth on SCHEDULE 6.24, VPC presently has
the right to use all computer software owned by it, and to the knowledge of VPC,
the right to use all other computer software which is leased or licensed to, or
otherwise used by VPC. To the knowledge of VPC, VPC is not in violation of any
license or other agreement related to its software.
6.25. Y2K COMPLIANCE. VPC's equipment, computers, software, hardware,
business and processes in which date sensitive software is utilized are year
2000 compliant such that such equipment, computers, software, hardware, business
and processes will not experience failures, interruptions or malfunctions in a
manner that will have a material adverse effect on such equipment, computers,
software, hardware, business and processes, VPC and/or it Assets
6.26. DISCLOSURE AND ALL DOCUMENTATION. No representation or warranty
by VPC contained in this Agreement and no statement contained in any certificate
or schedule furnished to MIS pursuant to the provisions hereof contains or shall
contain any untrue statement of a
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material fact or omits to state a material fact necessary in order to make the
statements therein not misleading. To the knowledge of VPC, there is no current
event or condition of any kind or character pertaining to VPC that may
reasonably be expected to have a Material Adverse Effect, except as disclosed in
this Agreement and except for those events and conditions which are national or
industry-wide in nature. Except as specifically indicated elsewhere in this
Agreement, all documents delivered by VPC to MIS in connection herewith have
been and will be complete originals, or exact copies thereof.
6.27. TAX-FREE REORGANIZATION. To the knowledge of VPC, there is no
fact pertaining to it, any stockholder of VPC that would prevent the Merger
from qualifying as a tax-free reorganization under the Code.
6.28. SURVIVAL. The representations and warranties contained in this
Article 6 shall survive the Closing for one (1) year, but the running of such
period shall xxxxx upon delivery of a notice of a breach until such time as the
alleged breach is resolved.
ARTICLE 7
CERTAIN ADDITIONAL COVENANTS
7.1. SPECIAL MEETING. Subject to VPC Board Approval and MIS Board
Approval, VPC and MIS shall each take all action necessary, in accordance with
applicable law and its Articles of Incorporation and Bylaws, to convene a
special meeting of its stockholders (each, a "Special Meeting") or obtain
through written consents, as applicable, as promptly as practicable after the
signing of this Agreement for the purpose of considering and taking action upon
this Agreement and the Transactions. Subject to Board Approval, the Board of
Directors of VPC and MIS will recommend, subject to Section 7.4 hereof, that the
VPC and MIS stockholders, respectively, vote in favor of and approve the Merger
and this Agreement at the Special Meeting or by written consent, as applicable.
7.2. NO SOLICITATION. Subject to the provisions of Section 7.4, in
consideration of the expenses to be incurred by VPC and MIS in negotiating this
Agreement and in conducting their due diligence investigation, neither VPC nor
MIS shall, directly or indirectly, through any officer, director, employee,
financial advisor, representative or agent of such party: (i) solicit, initiate,
or encourage any inquiries or proposals that constitute, or could reasonably be
expected to lead to, a proposal or offer for a merger, consolidation, business
combination, sale or transfer of substantial assets, sale of any shares of
capital stock (including without limitation by way of tender offer) or similar
transaction involving such party or any of its Subsidiaries, other than the
Transactions (any of the foregoing inquiries or proposals being referred to this
Agreement as an "Acquisition Proposal"), or (ii) engage in negotiations or
discussions concerning, or provide any non-public information to any Person
relating to, any Acquisition Proposal, or agree to or recommend any Acquisition
Proposal.
7.3. NOTIFICATION OF ACQUISITION PROPOSAL. MIS and VPC shall notify the
other within three (3) Business Days after receipt by such party (or its
advisors) of any Acquisition Proposal or any request for non-public information
in connection with an Acquisition Proposal or for access to its properties,
books or records by any person or entity that informs such party that it is
considering making, or has made, an Acquisition Proposal. Such notice shall be
made orally and in writing and shall indicate in reasonable detail the identity
of the offeror and the terms and conditions of such proposal, inquiry or
contact. Such party shall continue to keep the other party
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informed, on a prompt and current basis, of the status of any such discussions,
negotiations and the terms being discussed or negotiated.
7.4. FIDUCIARY OUT. (a) Notwithstanding the provisions of Section 7.2
above, nothing contained in this Agreement shall prevent MIS or its Board of
Directors, from (A) furnishing non-public information, or entering into
discussions or negotiations, with, any person or entity in connection with an
unsolicited bona fide written Acquisition Proposal by such person or entity or
recommending an unsolicited bona fide written Acquisition Proposal to its
stockholders, if and only to the extent that (1) the Board of Directors of MIS
believes in good faith (after consultation with its financial advisor) that such
Acquisition Proposal is reasonably capable of being completed on the terms
proposed and, after taking into account the strategic benefits anticipated to be
derived from the Merger and long-term prospects of MIS and VPC as a combined
company, such Acquisition Proposal would, if consummated, result in a
transaction significantly more favorable over the long term than the
Transactions, and MIS's Board of Directors determines in good faith after
receipt of an opinion from outside legal counsel to the effect that such action
is likely necessary for the Board of Directors to comply with its fiduciary
duties to stockholders under applicable law and (2) prior to furnishing such
non-public information to, or entering into discussions or negotiations with,
such person or entity, the MIS Board of Directors receives from such Person an
executed confidentiality agreement with terms no more favorable to such Person
than those contained in this Agreement; or (B) complying with 14e-2 promulgated
under the Exchange Act with regard to an Acquisition Proposal. Without limiting
Section 7.3 above, MIS shall give written notice to VPC as soon as possible of
any Acquisition Proposal that the MIS Board of Directors determines meets the
standards set forth in this Agreement and whether MIS will exercise its right to
use such Acquisition Proposal as a fiduciary out. Notice from MIS to VPC of its
election to use such Acquisition Proposal as a fiduciary out shall mean that
this Agreement is terminated and a termination fee is payable by MIS pursuant to
Section 7.5 hereof.
(b) Notwithstanding the provisions of Section 7.2 above,
nothing contained in this Agreement shall prevent VPC or its Board of Directors,
from (A) furnishing non-public information, or entering into discussions or
negotiations, with, any person or entity in connection with an unsolicited bona
fide written Acquisition Proposal by such person or entity in connection with an
unsolicited bona fide written Acquisition Proposal by such person or entity or
recommending an unsolicited bona fide written Acquisition Proposal to its
stockholders, if and only to the extent that (1) the Board of Directors of VPC
believes in good faith (after consultation with financial advisor) that such
Acquisition Proposal is reasonably capable of being completed on the terms
proposed and, after taking into account the strategic benefits anticipated to be
derived from the Merger and the long-term prospects of MIS and VPC as a combined
company, such Acquisition Proposal would, if consummated, result in a
transaction significantly more favorable over the long term that the
Transactions, and VPC's Board of Directors determines in good faith after
receipt of an opinion from outside legal counsel to the effect that such action
is likely necessary for the Board of Directors to comply with its fiduciary
duties to stockholders under applicable law and (2) prior to furnishing such
non-public information to, or entering into discussions or negotiations with,
such person or entity, the VPC Board of Directors receives from such Person an
executed confidentiality agreement with terms no more favorable to such party
than those contained in this Agreement. Without limiting Section 7.3 above, VPC
shall give written notice to MIS as soon as possible of any such Acquisition
Proposal that the VPC Board of Directors determines meets standards set forth in
this Agreement and whether VPC will exercise its right to use Acquisition
Proposal as a fiduciary out shall mean that this Agreement is terminated and a
termination fee is payable by VPC to MIS pursuant to Section 7.5 hereof.
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7.5. BREAK-UP FEE/UPON OCCURRENCE OF FIDUCIARY OUT. MIS or VPC, as the
case may be, shall pay to the other party a termination fee upon the termination
of this Agreement pursuant to Section 7.4. The termination fee shall be the sum
of (i) the other party's Out-Of-Pocket Costs, and (ii) $250,000.00, but shall
not in any event exceed $500,000.00. The payment of a termination fee pursuant
to this subsection, which is agreed to be a fair estimate of the expenses and
lost opportunity which would be suffered by the non-terminating party in such
event, shall be the sole and exclusive remedy of the non-terminating against the
terminating party and any of its Subsidiaries and their respective directors,
officers, employees, attorneys, agents, advisors or other representatives, with
respect to the occurrences giving rise to such payment; provided that this
limitation shall not be applicable to the terminating party in the event of a
willful breach of Sections 4.5 or 4.6 of this Agreement by the terminating party
or its representatives.
7.6. BREACH. (a) If MIS becomes aware of breach(es) by VPC of any of
its representations or warranties contained in this Agreement after the
execution of this Agreement but prior to the date the expiration of the warranty
survival period (the "Settlement Cut-Off Date") as a result of its due diligence
investigation of VPC or otherwise, it shall give written notice to VPC of the
nature and the amount of damages suffered as a result of such breach(es). If in
the exercise of its good faith business judgment MIS alleges that such damages
exceed $250,000 in the aggregate, MIS and VPC shall in good faith negotiate a
mutually acceptable dollar value settlement ( the "VPC Breach Settlement") of
the damages caused by such breach(es). If MIS and VPC agree on the VPC Breach
Settlement, they shall jointly instruct the Exchange Agent to decrease the
number of Merger Shares issuable to all holders of VPC Class A Common Stock
immediately prior to the Closing or if subsequent to Closing, the VPC Class A
Common Stockholders shall return to MIS the number of Merger Shares issued by an
amount equal to the VPC Breach Settlement divided by the Fair Market Value. Such
decrease in the number of Merger Shares to be issued to or returned by the VPC
Class A Common Stockholders shall be allocated among the VPC Class A Common
Stockholders pro rata based upon the ownership of the VPC Class A Common Stock
immediately prior to the Merger. In the event that MIS and VPC, in the exercise
of good faith efforts, cannot reach agreement on the VPC Breach Settlement by
the earlier of (i) the date that is thirty (30) days after the notice of breach
called for above in this subsection (a) or (ii) the Settlement Cutoff Date, MIS
shall have the right to rescind this Agreement, whereupon each of MIS and VPC
shall be responsible for their own Out-Of-Pocket Costs (except to the extent
that such Out-of-Pocket Costs or expenses incurred by either party are agreed to
be paid otherwise by the terms of this Agreement) and neither MIS nor VPC shall
have any further obligation to the other under the terms of this Agreement. If
such damages do not exceed $250,000 in the aggregate, or if VPC and MIS do not
agree on a VPC Breach Settlement and MIS does not exercise its right to rescind
this Agreement, no decease in the number of Mergers Shares issuable or issued to
the VPC Class A Common Stockholders shall be made.
(b) If VPC becomes aware of breach(es) by MIS of any of its
representations or warranties contained in this Agreement after the execution of
this agreement but prior to the Settlement Cut-Off Date as a result of its due
diligence investigation of MIS and its Subsidiaries or otherwise, its shall give
written notice to MIS of the nature and the amount of damages suffered as a
result of such breach(es). If in the exercise of its good faith business
judgment VPC alleges that such damages exceed $250,000 in the aggregate, MIS and
VPC shall in good faith negotiate a mutually acceptable dollar value settlement
(the "MIS Breach Settlement") of the damages caused by such breach(es). If MIS
and VPC agree on the MIS Breach Settlement, they shall jointly instruct the
Exchange Agent to increase the number of Merger Shares issuable to the VPC Class
A Common Stockholders by an amount equal to the MIS Breach Settlement divided
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by the Fair Market Value. Such increase in the number of Merger Shares to be
issued to the VPC Class A Common Stockholders shall be allocated among the VPC
Class A Common Stockholders pro rata based upon the ownership of the VPC Class A
Common Stock immediately prior to the Merger. In the event that MIS and VPC, in
the exercise of good faith efforts, cannot reach agreement on the MIS Breach
Settlement by the earlier of (i) the date that is thirty (30) days after the
notice of breach called for above in this subsection (b) or (ii) the Settlement
Cut Off Date, VPC shall have the right to rescind this Agreement, whereupon each
of MIS and VPC shall be responsible for their own Out-Of-Pocket Costs (except
to the extent that such Out-of-Pocket or expenses incurred by either party are
agreed to be paid otherwise by the terms of this Agreement) and neither MIS nor
VPC shall have any further obligation to the other under the terms of the this
Agreement. If such damages do not exceed $250,000 in the aggregate, or if VPC
and MIS do not agree on a MIS Breach Settlement and VPC does not exercise its
right to rescind under this Section, no increase in the number of Mergers Shares
issuable to the VPC Class A Common Stockholders shall be made.
(c) If an adjustment has been agreed to under both subsection
(a) and (b) above, the adjustments made pursuant thereto shall be netted against
each other in order to determine the net adjustment to the number of Merger
Shares.
(d) Notwithstanding anything to the contrary in this Section
7.6, (i) no adjustment shall be made to the number of Merger Shares if the
absolute difference between the aggregate amount of VPC Breach Settlement(s) and
the aggregate amount of MIS Breach Settlement(s) does not exceed $250,000 and
(ii) in no event shall the net aggregate adjustment to the number of Merger
Shares exceed an amount equal to $3,000,000 million divided by $3.00.
7.7 RETURN OF MIS COMMON STOCK. As a material inducement for VPC to
enter into this transaction for which VPC has relied, Dr. Xxxx Xxxx has agreed
to deliver to MIS, contemporaneous with the Closing, 1,350,000 shares of VPC
Common Stock owned by Xx. Xxxx either directly or beneficially. Such shares
shall be retired by MIS to its treasury.
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF VPC TO CLOSE
Each and every obligation of VPC under this Agreement to be performed on or
prior to the Closing shall be subject to the fulfillment, on or prior to the
Closing, of each of the following conditions, which conditions MIS agrees to use
its best efforts to satisfy:
8.1 REPRESENTATIONS AND WARRANTIES AT CLOSING. The representations and
warranties made by MIS in or pursuant to this Agreement or given on its behalf
hereunder shall be true and correct on and as of the Closing Date, in each case
with the same effect as though such representations and warranties had been made
or given on and as of the Closing Date except for such representation and
warranties which if not true and correct on and as of the Closing Date, do not
result in damages suffered by VPC in excess of $250,000 in the aggregate.
8.2 OBLIGATIONS PERFORMED. MIS shall have performed and complied with
all material agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing.
8.3 CONSENTS AND STOCKHOLDER APPROVAL.
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(a) MIS shall have obtained and delivered to VPC the written
consents or approvals specified, or to be specified, in SCHEDULE 5.4 (except for
such consents or approvals as to which, in the aggregate, the failure to obtain
them shall not have a Material Adverse Effect) and all of such consents shall
remain in full force and effect at and as of the Closing.
(b) This Agreement and the Merger shall have received the
requisite MIS Board Approval, MIS Stockholder Approval, Acquisition Company
Board Approval, VPC Board Approval and VPC Stockholder Approval, as applicable.
(c) VPC shall have received all consents to the consummation
of the Transaction that VPC deems necessary or appropriate from its lenders.
8.4. CLOSING DELIVERIES. MIS shall have delivered to VPC each of the
following, together with any additional items which VPC may reasonably request
to effect the Transaction:
(a) a certificate of the President of MIS certifying as to the
matters set forth in Sections 8.1, 8.2 and 8.3 (except for 8.3(c)) hereof and as
to the satisfaction of all other conditions set forth in this Article 8:
(b) Employment Agreements duly executed by the individuals
described in SCHEDULE 4.1.
(c) Nondisclosure/Noncompete Agreements duly executed by the
individuals described in Schedule 4.1 in the form of EXHIBIT 4.1(b);
(d) Standstill/Voting Agreements duly executed by the
individuals described in Schedule 4.1 in the form of EXHIBIT 4.1 (c)(i);
(e) Stockholder's Agreement duly executed by the individuals
described in Schedule 4.1 in the form of EXHIBIT 4.1 (c)(ii);
(f) the Registration Rights Agreement in the form attached
hereto as EXHIBIT 3.1(vi); and
(g) a confirmation letter from the Exchange Agent that the
number and types of Merger Shares are available for delivery at the Effective
Time;
(h) any other documents or agreements contemplated hereby
and/or necessary or appropriate to consummate the Transactions.
8.5. NO INVESTIGATIONS OF MIS AND ITS SUBSIDIARIES OR THEIR
BUSINESS. As of the Closing Date, there shall be no, and neither MIS nor any of
its Subsidiaries shall have any knowledge of any material pending or threatened
investigation by any municipal, state or federal government agency or regulatory
body with respect to MIS or its Subsidiaries, the Assets or the business of MIS
and its Subsidiaries, other than such as have been disclosed to VPC prior to the
date hereof.
8.6. NO MATERIAL ADVERSE EFFECT. Since March 31, 1999, there
shall have been no Material Adverse effect with respect to MIS.
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8.7. MINUTES. VPC shall have received at Closing copies of
minutes of the Board of Directors of MIS, certified by the corporate secretary
of MIS, approving and authorizing the Merger and the Transactions.
8.9. REVISED SCHEDULES. MIS and its Subsidiaries shall have
provided VPC with revised Schedules dated as of the Closing Date (the "MIS Final
Revised Schedules"), with all material changes through such date duly noted
thereon, including any modifications to MIS's representations and warranties
resulting from the Permitted Equity Financings, and the MIS Final Revised
Schedules will not contain any disclosures which (i) should have been but were
not disclosed on the Schedules in accordance with Section 4.4, or (ii) set forth
changes which, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect unless such disclosures are approved in writing
by VPC.
8.10. LEGALITY. No federal or state statute, rule, regulation,
executive order, decree or injunction shall have been enacted, entered,
promulgated or enforced by any court or governmental authority which is in
effect and has the effect of making the Merger illegal or otherwise prohibiting
the consummation of the Merger.
8.11. REGULATORY MATTERS. All filings shall have been made and
all approvals shall have been obtained as may be legally required pursuant to
federal and state laws prior to the consummation of the Transactions and all
actions by or in respect of, or filings with, any governmental body, agency or
official or any other Person required to permit the consummation of the Merger
so that VPC shall be able to continue to carry on the business of MIS
substantially in the manner now conducted by MIS shall have been taken or made.
8.12. AGREEMENT AS TO EXHIBITS AND SCHEDULES. The parties
hereto shall have mutually agreed in the exercise of their respective sole
discretion to the terms contained in each Schedule and Exhibit to this
Agreement.
8.13. ADDITIONAL CLOSING CONDITIONS. Each and every one of the
additional closing conditions, if any, required of MIS or its stockholders set
forth in SCHEDULE 8.13 attached hereto shall have completed or fulfilled, as the
case may be.
8.14. RETURN OF SHARES. Xx. Xxxx shall have delivered to MIS
for retirement in its treasury 1,350,000 shares of MIS Common Stock.
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF MIS TO CLOSE
Each and every obligation of MIS under this Agreement to be performed on or
prior to the Closing shall be subject to the fulfillment, on or prior to the
Closing, of each of the following conditions, which conditions VPC agrees to use
its best efforts to satisfy:
9.1 REPRESENTATIONS AND WARRANTIES AT CLOSING. The representations and
warranties made by VPC in or pursuant to this Agreement or given on its behalf
hereunder shall be true and correct on and as of the Closing Date, in each case
with the same effect as though such representations and warranties had been made
or given on and as of the Closing Date except for such representation and
warranties which if not true and correct on and as of the Closing Date, do not
result in damages suffered by MIS in excess of $250,000.00 in the aggregate.
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9.2. OBLIGATIONS PERFORMED. VPC shall have performed and complied with
all material agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing.
9.3. CONSENTS AND STOCKHOLDER APPROVAL.
(a) VPC shall have obtained and delivered to MIS the written
consents or approvals specified, or to be specified, in SCHEDULE 6.4 (except for
such consents or approvals as to which, in the aggregate, the failure to obtain
them shall not have a Material Adverse Effect) and all of such consents shall
remain in full force and effect at and as of the Closing.
(b) This Agreement and the Merger shall have received the
requisite VPC Board Approval, MIS Board Approval, Acquisition Company Board
Approval, MIS Stockholder Approval and VPC Stockholder Approval, as applicable.
(c) MIS shall have received all consents to the consummation
of the Transaction that MIS deems necessary or appropriate from its lenders, if
any.
9.4. CLOSING DELIVERIES. VPC shall have delivered to MIS each of the
following, together with any additional items which MIS may reasonably request
to effect the Transaction:
(a) a certificate of the President of VPC certifying as to the
matters set forth in Sections 9.1, 9.2 and 9.3 (except for 9.3(d)) hereof and as
to the satisfaction of all other conditions set forth in this Article 9:
(b) Employment Agreements duly executed by the individuals
described in SCHEDULE 4.1.
(c) Nondisclosure/Noncompete Agreements duly executed by the
individuals described in Schedule 4.1 in the form of EXHIBIT 4.1(b);
(d) Standstill/Voting Agreements duly executed by the
individuals described in Schedule 4.1 in the form of EXHIBIT 4.1 (c)(i);
(e) Stockholder's Agreement duly executed by the individuals
described in the form of EXHIBIT 4.1 (c)(ii);
(f) the Registration Rights Agreement in the form attached
hereto as EXHIBIT 3.1(vi); and
(g) any other documents or agreements contemplated hereby
and/or necessary or appropriate to consummate the Transactions.
9.5. NO INVESTIGATIONS OF VPC OR ITS BUSINESS. As of the Closing Date,
there shall be no, and neither VPC nor any of its Subsidiaries shall have any
knowledge of any material pending or threatened investigation by any municipal,
state or federal government agency or regulatory body with respect to VPC or its
Subsidiaries, the Assets or the business of VPC , other than such as have been
disclosed to MIS prior to the date hereof.
9.6. NO MATERIAL ADVERSE EFFECT. Since March 31, 1998, there shall have
been no Material Adverse effect with respect to VPC.
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9.7. SECURITIES LAWS. The parties shall have complied with all federal
and state securities laws applicable to the Transactions. All SEC and "Blue Sky"
permits or approvals required to carry out the Transactions shall have been
received.
9.8. MINUTES. MIS shall have received at Closing copies of minutes of
the stockholders and the Board of Directors of VPC, certified by the corporate
secretary of VPC, approving and authorizing the Merger and the Transactions.
9.9. REVISED SCHEDULES. VPC shall have provided MIS with revised
Schedules dated as of the Closing Date (the "VPC Final Revised Schedules"), with
all material changes through such date duly noted thereon, including any
modifications to VPC's representations and warranties resulting from the
Permitted Equity Financings, and the VPC Final Revised Schedules will not
contain any disclosures which (i) should have been but were not disclosed on the
Schedules in accordance with Section 4.4, or (ii) set forth changes which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect unless such disclosures are approved in writing by MIS.
9.10. LEGALITY. No federal or state statute, rule, regulation,
executive order, decree or injunction shall have been enacted, entered,
promulgated or enforced by any court or governmental authority which is in
effect and has the effect of making the Merger illegal or otherwise prohibiting
the consummation of the Merger.
9.11. REGULATORY MATTERS. All filings shall have been made and all
approvals shall have been obtained as may be legally required pursuant to
federal and state laws prior to the consummation of the Transactions and all
actions by or in respect of, or filings with, any governmental body, agency or
official or any other Person required to permit the consummation of the Merger
so that MIS shall be able to continue to carry on the business of VPC
substantially in the manner now conducted by VPC shall have been taken or made.
9.12. AGREEMENT AS TO EXHIBITS AND SCHEDULES. The parties hereto shall
have mutually agreed in the exercise of their respective sole discretion to the
terms contained in each Schedule and Exhibit to this Agreement.
9.13. ADDITIONAL CLOSING CONDITIONS. Each and every one of the
additional closing conditions, if any, required of VPC or its stockholders set
forth in SCHEDULE 9.13 attached hereto shall have completed or fulfilled, as the
case may be.
ARTICLE 10
TERMINATION
10.1. TERMINATION. This Agreement may be terminated:
(a) by mutual written consent of VPC and MIS at any time
before the Closing Date;
(b) by either VPC or MIS if there occurs prior to Closing a
substantial loss, damage or diminution of the other party's Assets or other
Material Adverse Effect on the business of the other party and MIS's
Subsidiaries (taken as a whole) arising from any cause, including but not
limited to theft, fire, flood or act of God;
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(c) by either VPC or MIS if VPC Board Approval or MIS Board
Approval has not been obtained on or before May 3, 1999.
(d) by either VPC or MIS if the Closing is not consummated on
or before April 30, 1999 (the "Automatic Termination Date"), unless the failure
to close by such date is attributable to actions or omissions of the party
seeking to terminate this Agreement under this subsection (d);
(e) by either MIS or VPC pursuant to Section 7.4 (Fiduciary
Out);
(f) in accordance with Section 7.6 (a) or (b), as applicable;
10.2. EFFECT OF TERMINATION. In the event this Agreement is terminated
pursuant to Sections 10.1(a), 10.1(b), 10.1(c), or 10.1(d) above, no party shall
have any obligations to the other hereunder except for those obligations set
forth in Section 4.3 (Expenses) and those with respect to confidentiality and
the return of confidential information set forth below. If this Agreement is
terminated pursuant to Section 10.1(e), the remedies set forth in Section 7.4
shall apply. If this Agreement is terminated pursuant to Section 10.1(f), the
remedies set forth in Section 7.6 shall apply. If this Agreement is terminated,
each party shall promptly return to the other party all copies of the due
diligence materials previously provided by such party to the other or their
representatives including, without limitation, each party's Intellectual
Property, and the obligations in respect of confidentiality set forth in this
Agreement.
10.3. RECISION POST CLOSING DATE. The parties recognize and agree that
MIS is (a) undergoing an audit by its independent certified accountants, and (b)
required as a material inducement to VPC to enter into this transaction to
obtained, either through a debt or equity offering, on terms agreeable to VPC a
minimum of $3,000,000.00 for the purpose of providing MIS with at least
$1,000,000.00 of working capital and at least $2,000,000 for acquisitions, joint
ventures and strategic alliances (hereinafter the "Capital Raise"). If, for
whatever reason, MIS is deemed to be unauditable by such accountants or if
during the course of the audit a matter is revealed or discovered which could,
in the good faith opinion of VPC, have a material adverse affect on MIS or VPC
or if MIS is unable to obtain then on terms agreeable to VPC the Capital Raise
within 60 days of the Closing Date then, in such event, VPC shall have the
right, in its sole and absolute discretion to rescind this transaction by
providing written notice to MIS at any time subsequent to six (6) months from
the Closing Date but no later than nine (9) months from the Closing Date. If
notice is provided, the Transactions will be rescinded, unless otherwise agreed,
within thirty (30) days of the receipt of such notice. If the transaction is
rescinded in accordance with this provision, VPC shall transfer all the stock of
the Surviving Corporation to VPC Merger Shareholders in exchange for any and all
consideration paid to the Shareholders in connection with this Agreement.
Thereafter, all rights, duties and obligations of the parties shall terminate
and this Agreement shall be null and void with no further force or effect except
that MIS shall be required to pay VPC a recission fee of $500,000 and shall
forgive any debt or other obligations VPC and/or any VPC Stockholder may have to
MIS.
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1 SEVERABILITY. If any provision of this Agreement is prohibited by
the laws of any jurisdiction as those laws apply to this Agreement, that
provision shall be ineffective to the extent
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of such prohibition and/or shall be modified to conform with such laws, without
invalidating the remaining provisions hereto.
11.2. MODIFICATION. This Agreement may not be changed or modified
except in writing specifically referring to this Agreement and signed by each of
the parties hereto.
11.3. ASSIGNMENT, SURVIVAL AND BINDING AGREEMENT. This Agreement and
the Closing Documents may not be assigned by VPC, without prior written consent
of MIS, and may not be assigned by MIS, without prior written consent of VPC.
The terms and conditions hereof shall survive the Closing as provided in this
Agreement and shall inure to the benefit of and be binding upon the parties
hereto and their respective heirs, personal representatives, successors and
assigns.
11.4. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.5. NOTICES. All notices, requests, demands, claims and other
communication hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly give if (and then two
Business Days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid and addressed to the intended recipient as set forth
below:
If to MIS Minimally Invasive Surgery Corporation
0000 Xxxx Xxxx, Xxxxx 000 X
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: ____________________
Telefax: _____________________
If to VPC Valley Pain Centers, Inc.
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Facsimile No: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
or at such other address as any party hereto notifies the other parties hereof
in writing.
11.6. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement,
together with the Exhibits and Schedules attached hereto, constitutes the entire
agreement and supersedes any and all other prior agreements and undertakings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof and, except as otherwise expressly provided in this
Agreement, is not intended to confer upon any Person other than VPC and MIS, any
rights or remedies hereunder. No provision of this Agreement shall be construed
against any party on the ground that such party drafted the provision or caused
it to be drafted or the provision contains a covenant of such party.
11.7. GOVERNING LAW; JURISDICTION AND VENUE. This Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Florida, excluding those relating to conflicts of laws. The parties
hereto expressly agree that the exclusive jurisdiction and venue for legal
proceedings under this Agreement shall be the state or applicable
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federal court having jurisdiction over the defendant's domicile (or in the case
of VPC and MIS, the location of its principal corporate office).
11.8. ATTORNEY'S FEES. In any action between the parties to enforce any
of the terms of this Agreement, the prevailing party shall be entitled to
recover reasonable expenses, including reasonable attorney's fees.
11.9. HEADINGS. The section headings contained in this Agreement and
the Schedules and Exhibits attached hereto are inserted for convenience only and
shall not affect in any way the meaning or interpretation of this Agreement.
11.10. INCORPORATION OF EXHIBIT AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated in this Agreement by
reference and made a part hereof.
11.11. CONSTRUCTION. Within this Agreement, the singular shall include
the plural and the plural shall include the singular and any gender shall
include all other genders, all as the meaning and context of this Agreement
shall require. The parties hereto have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties hereto an no presumption or burden of proof shall arise
favoring or disfavoring any party hereto by virtue of the authorship of any of
the provisions of this Agreement.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
MINIMALLY INVASIVE SURGERY CORPORATION
By:
-----------------------------------------
Its:
-----------------------------------------
VALLEY PAIN CENTER, INC.
By:
-----------------------------------------
Its:
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