EXHIBIT 6.14
PLAN AND AGREEMENT OF REORGANIZATION
This PLAN AND AGREEMENT OF REORGANIZATION (the "Agreement") is entered
into on this 30th day of June, 1997, by and between MEDICAL RESOURCES
MANAGEMENT, INC., a Nevada corporation ("MRM") and MED SURG SPECIALTIES,
INC., a California corporation ("MSS"), and those persons listed in EXHIBIT A
hereto, being all of the shareholders of MSS who own individually at least
five percent (5%) of the outstanding stock of MSS and together hold over 50%
of the outstanding stock of MSS as of the date this Agreement is executed.
PLAN OF REORGANIZATION
The transaction contemplated by this Agreement is intended to be a "tax
free" exchange as contemplated by the provisions of Sections 351 and
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended. MRM will
acquire up to 100% of MSS' issued and outstanding common stock (no par value
per share), and all warrants and options outstanding (the "MSS Stock" or the
"MSS Shares"), in exchange for approximately 235,000 shares of MRM's common
stock ($.001 par value per share) (the "Exchange Stock") (collectively, the
"Exchange Transaction"). The Exchange Transaction will result in MSS becoming
a wholly owned subsidiary of MRM.
AGREEMENT
SECTION 1
TRANSFER OF MSS SHARES
1.1 All shareholders of MSS (the "Shareholders" or the "MSS
Shareholders") as of the date of Closing, as such term is defined in Section
3 herein (the "Closing" or the "Closing Date"), shall transfer, assign,
convey and deliver to MRM at the Closing Date certificates representing 100%
of the MSS shares then issued and outstanding, or such lesser percentage as
shall be acceptable to MRM, but in no event less than 95% of the MSS Shares.
The transfer of the MSS Shares shall be made free and clear of all liens,
mortgages, pledges, encumbrances or charges, whether disclosed or
undisclosed, except as the MSS Shareholders and MRM shall have otherwise
agreed in writing.
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SECTION 2
ISSUANCE OF EXCHANGE STOCK AND ADDITIONAL
STOCK TO MSS SHAREHOLDERS
2.1 As consideration for the transfer, assignment, conveyance and
delivery of the MSS Stock hereunder, MRM shall, at the Closing, issue to the
MSS Shareholders, pro rata in accordance with each Shareholder's percentage
ownership of MSS immediately prior to the Closing, certificates for 214,667
shares of Exchange Stock. The parties intend that the Exchange Stock being
issued will be used to acquire all issued and outstanding MSS Shares. To the
extent that less than 100% of the MSS Stock is acquired, the number of shares
of Exchange Stock issuable to those MSS Shareholders who have elected to
participate in the exchange described in this Agreement (the "Exchange")
shall increase proportionately.
2.2 An additional 22,000 shares of MRM common stock ("Additional
Stock") shall be issued pro rata to the MSS Shareholders pro rata in
accordance with each Shareholder's percentage ownership of MSS prior to the
Closing, provided that such Additional Stock shall only be issued in
accordance with the following terms and conditions: such Additional Stock
shall be held pending the completion of a sales tax audit of MSS currently
being conducted by California taxing authorities. Upon the completion and
final determination as a result of such audit, the liability of MSS
(including sales tax, penalties and interest) for such audit shall be
subtracted from the value of the Additional Stock, which is stipulated by the
parties hereto to be $33,000 for purposes of this paragraph, with each such
share valued at a price of $1.50 per share. If the value of the Additional
Stock exceeds the audit liability of MSS, then the difference shall be
distributed as Additional Stock to the MSS Shareholders at the rate of one
share of common stock for each $1.50 of such difference. If, however, the
audit liability exceeds $33,000 then no Additional Stock will be issued and
the MSS Shareholders agree to reimburse MSS for any such excess liability
within ten (10) days of notice from MSS.
2.3 The issuance of the Exchange Stock and Additional Stock shall be
made free and clear of all liens, mortgages, pledges, encumbrances or
charges, whether disclosed or undisclosed, except as the MSS Shareholders and
MRM shall have otherwise agree in writing. As provided herein, and
immediately prior to the Closing, MRM shall have issued and outstanding: (i)
not more than 7,200,000 shares of common stock; (ii) not more than 1,300,000
options outstanding; (iii) not more than 515,540 Class A warrants issued in
conjunction with a recent Private Offering; (iv) not more than 515,540 Class
B warrants issued in conjunction with a recent Private Offering; (v) 140,000
warrants held by an investment relations firm; (vi) 100,000 warrants held by
a lender; and (vii) shall not have any shares of preferred stock issued and
outstanding. All options and warrants provide for the purchase of one share
of common stock for each option or warrant.
2.4 None of the Exchange Stock or Additional Stock issued to the MSS
Shareholders, nor any of the MSS Stock transferred to MRM hereunder shall, at
the time
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of Closing, be registered under federal securities laws but, rather, shall be
issued pursuant to an exemption therefrom and be considered "restricted
stock" within the meaning of Rule 144 promulgated under the Securities Act of
1933, as amended (the "Act"). All of such shares shall bear a legend worded
substantially as follows:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 (the "Act") and are 'restricted
securities' as that term is defined in Rule 144 under the Act. The
shares may not be offered for sale, sold or otherwise transferred
except pursuant to an exemption from registration under the Act, the
availability of which is to be established to the satisfaction of the
Company."
The respective transfer agents of MRM and MSS shall annotate their records to
reflect the restrictions on transfer embodied in the legend set forth above.
There shall be no requirement that MRM register the Exchange Stock under the
Act, nor shall MSS or the Shareholders be required to register any MSS Shares
under the Act.
SECTION 3
CLOSING
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3.1 CLOSING OF TRANSACTION. Subject to the fulfillment or waiver of
the conditions precedent set forth in Section 11 hereof, the Closing shall
take place on the Closing Date at the offices of Medical Resources
Management, Inc., 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx at 10:00
a.m., local time, or at such other time on the Closing Date as MSS and MRM
shall mutually agree in writing.
3.2 CLOSING DATE. The Closing Date of the Exchange shall take place on
a date chosen by mutual agreement of MSS and MRM within sixty (60) days from
the date of this Agreement, or such later date upon which MSS and MRM may
mutually agree in writing, or as extended pursuant to subsection 12.1(b)
herein.
3.3 DELIVERIES BY MSS AT CLOSING. MSS shall deliver or cause to be
delivered to MRM at the Closing:
(a) certificates representing all shares, or an amount of shares
acceptable to MRM, of the MSS Stock as described in Section 1,
each endorsed in blank by the registered owner;
(b) an agreement from each Shareholder surrendering his or her
shares agreeing to a restriction on the transfer of the Exchange
Stock as described in Section 2 hereof;
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(c) a copy of a consent by MSS' Board of Directors authorizing MSS
to take the necessary steps toward closing the transaction
described by this Agreement in the form set forth in EXHIBIT B;
(d) a copy of a Certificate of Good Standing for MSS issued not more
than thirty (30) days prior to the Closing Date by the
California Secretary of State;
(e) an opinion of Xxxxx & Xxxxx, counsel to MSS, dated the Closing
Date, in a form deemed acceptable by MRM and its counsel;
(f) Articles of Incorporation and Bylaws of MSS certified as of the
Closing Date by the President and Secretary of MSS;
(g) all of MSS' corporate records;
(h) executed bank forms for MSS bank accounts reflecting a change in
management and signatories to said bank accounts;
(i) such other documents, instruments or certificates as shall be
reasonably requested by MRM or its counsel.
3.4 DELIVERIES BY MRM AT CLOSING. MRM shall deliver or cause to be
delivered to MSS at the Closing:
(a) a copy of a consent of MRM's Board of Directors authorizing MRM
to take the necessary steps toward closing the transaction
described by this Agreement in the form set forth in EXHIBIT C;
(b) a copy of a Certificate of Good Standing for MRM issued not more
than thirty (30) days prior to the Closing by the Secretary of
State of Nevada;
(c) stock certificate(s) or a computer listing from MRM's transfer
agent representing the Exchange Stock to be newly issued by MRM
under this Agreement, which certificates shall be in the names
of the appropriate MSS Shareholders, each in the appropriate
denomination as described in Section 2;
(d) an opinion of Xxxxxxx X. Xxxxxxx, Esq., special counsel to MRM,
dated the Closing Date, in a form deemed acceptable to MSS and
its counsel;
(e) Articles of Incorporation and Bylaws of MRM certified as of the
Closing Date by the President and Secretary of MRM;
(f) such other documents, instruments or certificates as shall be
reasonably requested by MSS or its counsel.
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3.5 FILINGS, COOPERATION.
(a) Prior to the Closing, the parties shall proceed with due
diligence and in good faith to make such filings and take such
other actions as may be necessary to satisfy the conditions
precedent set forth in Section 11 below.
(b) On and after the Closing Date, MRM, MSS and the Shareholders set
forth in EXHIBIT A shall, on request and without further
consideration, cooperate with one another by furnishing or using
their best efforts to cause others to furnish any additional
information and/or executing and delivering or using their best
efforts to cause others to execute and deliver any additional
documents and/or instruments, and doing or using their best
efforts to cause others to do any and all such other things as
may be reasonably required by the parties or their counsel to
consummate or otherwise implement the transactions contemplated
by this Agreement.
SECTION 4
REPRESENTATIONS AND WARRANTIES BY
MSS AND CERTAIN SHAREHOLDERS
4.1 SUBJECT TO THE SCHEDULES OF EXCEPTIONS ATTACHED HERETO AND
INCORPORATED HEREIN BY THIS REFERENCE (WHICH SCHEDULES SHALL BE ACCEPTABLE TO
MRM), MSS AND THOSE SHAREHOLDERS LISTED ON EXHIBIT A REPRESENT AND WARRANT TO
MRM AS FOLLOWS:
(a) ORGANIZATION AND GOOD STANDING OF MSS. MSS is a corporation duly
organized, validly existing and in good standing under the laws
of the State of California, and has full corporate power and
authority to own or lease its properties and to carry on its
business as now being conducted and as proposed to be conducted.
The Articles of Incorporation of MSS and all Amendments thereto
as presently in effect, certified by the Secretary of State of
California, and the Bylaws of MSS as presently in effect,
certified by the President and Secretary of MSS, have been
delivered to MRM and are complete and correct, and since the
date of such delivery, there has been no amendment, modification
or other change thereto.
(b) CAPITALIZATION. MSS' authorized capital stock is 1,000,000
shares of no par value common stock (defined herein as "MSS
Common Stock"), of which 50,000 shares are issued and outstanding
prior to the Closing Date, and held of record by one (1) person,
who are currently residents of one of the following
jurisdictions: California. All of such outstanding shares are
validly issued, fully paid and non-assessable. All securities
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issued by MSS as of the date of this Agreement have been issued
in compliance with all applicable state and federal laws. Except
as set forth in SCHEDULE 4.1(b), no other equity securities or
debt obligations of MSS are authorized, issued or outstanding.
(c) SUBSIDIARIES. MSS has no subsidiaries and no other investments,
directly or indirectly, or other financial interest in any other
corporation or business organization, joint venture or
partnership of any kind whatsoever.
(d) FINANCIAL STATEMENTS. MSS will deliver to MRM, prior to the
Closing, a copy of MSS' unaudited financial statements through
December 31, 1996 and April 30, 1997 (the "MSS Financial
Statements"), which will be true and complete. The MSS Financial
Statements will be signed by the President and Secretary of MSS
certifying that, to the best of their knowledge, such financial
statements are true and complete. Other than changes in the
usual and ordinary conduct of the business, since April 30, 1997
there have been, and at the Closing Date there will be, no
material adverse changes in such financial statements.
(e) ABSENCE OF UNDISCLOSED LIABILITIES. MSS has no liabilities
which are not adequately reflected or reserved against in the
MSS Financial Statements or otherwise reflected in this
Agreement, and MSS shall not have as of the Closing Date any
liabilities (secured or unsecured and whether accrued, absolute,
direct, indirect or otherwise) which were incurred after April
30, 1997, and would be, individually or in the aggregate,
materially adverse to the results of operations or financial
condition of MSS as of the Closing Date.
(f) LITIGATION. Except as disclosed in SCHEDULE 4.1(f), there are
no outstanding orders, judgments, injunctions, awards or decrees
of any court, governmental or regulatory body, or arbitration
tribunal against MSS or its properties. Except as disclosed in
SCHEDULE 4.1(f), there are no actions, suits or proceedings
pending, or, to the knowledge of MSS, threatened against or
affecting MSS, any of its officers or directors relating to their
positions as such, or any of its properties, at law or in equity,
or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, foreign or domestic, in connection with the
business, operations or affairs of MSS, which might result in
any material adverse change in the operations or financial
condition of MSS, or which might prevent or materially impede the
consummation of the transactions under this Agreement.
(g) COMPLIANCE WITH LAWS. To the best of its knowledge, the
operations and affairs of MSS do not violate any law, ordinance,
rule or regulation
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currently in effect, or any order, writ, injunction or decree of
any court or governmental agency, the violation of which would
substantially and adversely affect the business, financial
condition or operations of MSS.
(h) ABSENCE OF CERTAIN CHANGES. Except as set forth in SCHEDULE
4.1(h), or otherwise disclosed in writing to MRM, since April 30,
1997: (i) MSS has not entered into any material transaction; (ii)
there has been no change in the condition (financial or
otherwise), business, property, prospects, assets or liabilities
of MSS as shown in the MSS Financial Statements, other than
changes that both individually and in the aggregate do not have
a consequence that is materially adverse to such condition,
business, property, prospects, assets or liabilities; (iii) there
has been no damage to, destruction of or loss of any of the
properties or assets of MSS (whether or not covered by insurance)
materially and adversely affecting the condition (financial or
otherwise), business, property, prospects, assets or liabilities
of MSS; (iv) MSS has not declared or paid any dividend, made
any distribution on its capital stock, redeemed, purchased or
otherwise acquired any of its capital stock, granted any options
to purchase shares of its stock, or issued any shares of its
capital stock; (v) there has been no material adverse change,
except in the ordinary course of business, in the contingent
obligations of MSS by way of guaranty, endorsement, indemnity,
warranty or otherwise; (vi) there have been no loans made by
MSS to its employees, officers or directors; (vii) there has
been no waiver or compromise by MSS of a valuable right or of a
material debt owed to it; (viii) there has been no
extraordinary increase in the compensation of any of MSS'
employees; (ix) there has been no agreement of commitment by
MSS to do or perform any of the acts described in this Section
4.1(h); and (x) there has been no other event or conditions of
any character which might reasonably be expected either to
result in a material and adverse change in the condition
(financial or otherwise), business, property, prospects, assets
or liabilities of MSS, or to materially impair the ability of
MSS to conduct the business now being conducted.
(i) EMPLOYEES. Except as disclosed in SCHEDULE 4.1(i), there are no
collective bargaining, bonus, profit sharing, compensation or
other plans, agreements or arrangements between MSS and any of
its employees, officers or directors, and there are no
employment, consulting, severance or indemnification
arrangements, agreements or understandings between MSS (on the
one hand), and any current or former employees, officers or
directors (on the other hand). MSS agrees to terminate in
writing all of its employees prior to the Closing and to pay
prior to the Closing all wages, commissions, vacation pay and
any other monies owed to each employee. MSS also agrees to
terminate all insurance and benefit packages that have been
made available to each
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employee prior to the Closing. The MSS Shareholders assume all
responsibility for any claims by or damages to any current or
former MSS employees and their families. The MSS Shareholders
will indemnify and hold blameless MRM from any and all such
claims and damages that may result from litigation or otherwise
from any current or former MSS employees or their families.
(j) ASSETS. All of the assets reflected on the MSS Financial
Statements as of April 30, 1997 or acquired and held as of the
Closing Date will be owned by MSS on the Closing Date. Except
as set forth in SCHEDULE 4.1(j), MSS owns outright and has good
and marketable title, or holds valid and enforceable leases, to
all of such assets. None of MSS' equipment used by MSS in
connection with its business has any material defects, and all
such equipment is, in all material respects, in good operating
condition and repair, and is adequate for the uses to which it
is being put. None of MSS' equipment is in need of maintenance
or repairs, except for ordinary, routine maintenance and repair.
(k) TAX MATTERS. MSS represents that, except as set forth in
SCHEDULE 4.1(k), all federal, foreign, state and local tax
returns, reports and information statements required to be filed
by or with respect to the activities of MSS have been timely
filed. Since April 30, 1997, MSS has not incurred any liability
with respect to any federal, foreign, state or local taxes
except in the ordinary and regular course of business. Such
returns, reports and information statements are true and correct
in all material respects insofar as they relate to the activities
of MSS. On the date of this Agreement, MSS is not delinquent in
the payment of any such tax or assessment, and no deficiencies
for any amount of such tax have been proposed or assessed. Any
tax sharing agreement among or between MSS and any affiliate
thereof shall be terminated as of the Closing Date.
(l) CONTRACTS. Set forth on SCHEDULE 4.1(l) hereto is a true and
complete list of all material contracts, agreements or
commitments to which MSS is a party or is bound. All such
material contracts, agreements and commitments are valid and
biding on MSS in accordance with their terms.
(m) INSURANCE. Set forth on SCHEDULE 4.1(m) hereto is a list of
insurance policies currently maintained by MSS in full force and
effect which provide for coverages which are usual and customary
in its business as to amount and scope, and are adequate to
protect MSS against any reasonably foreseeable risk of loss.
(n) OPERATING AUTHORITIES. To the best of its knowledge, MSS has all
material operating authorities, governmental certificates, and
licenses,
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permits, authorizations and approvals (the "Permits" or,
individually, "Permit") required to conduct its business as
presently conducted. Such Permits are set forth on SCHEDULE
4.1(n) Since MSS' inception (i) there has not been any notice or
adverse development regarding such Permits; (ii) such Permits
are in full force and effect; (iii) no material violations
are or have been recorded in respect of any Permit; and (iv)
no proceeding is pending or threatened to revoke or limit any
Permit.
(o) BOOKS AND RECORDS. The books and records of MSS are complete
and correct, are maintained in accordance with good business
practice, and accurately reflect, in all material respects,
all of the transactions described therein, and there have been
no material transactions involving MSS which properly should
have been set forth therein and which have not been accurately
so set forth.
(p) AUTHORITY TO EXECUTE AGREEMENT. The Board of Directors of
MSS, pursuant to the power and authority legally vested in it,
has duly authorized the execution and delivery by MSS of this
Agreement, and has duly authorized each of the transactions
hereby contemplated. MSS has the power and authority to
execute and deliver this Agreement, to consummate the
transactions hereby contemplated, and to take all other
actions required to be taken by it pursuant to the provisions
hereof. MSS has taken all actions required by law, its
Articles of Incorporation, as amended, its Bylaws, as amended,
or otherwise, to authorize the execution and delivery of this
Agreement. This Agreement is valid and binding upon MSS and
those MSS Shareholders listed in EXHIBIT A hereto in
accordance with its terms. Neither the execution and delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby, will constitute a violation or breach of
the Articles of Incorporation, as amended, or the Bylaws, as
amended, of MSS, or of any agreement, stipulation, order,
writ, injunction, decree, law, rule or regulation applicable
to MSS.
(p) FINDER'S FEES. MSS is not, and on the Closing Date will not
be, liable or obligated to pay any finder's, agent's or
broker's fee arising out of or in connection with this
Agreement or the transactions contemplated by this Agreement.
4.2 DISCLOSURE. At the date of this Agreement, MSS and those MSS
Shareholders listed in EXHIBIT A have, and at the Closing Date they will
have, disclosed all events, conditions and facts materially affecting the
business and prospects of MSS. MSS and such Shareholders have not now, and
will not have at the Closing Date, withheld knowledge of any such events,
conditions or facts which they know, or have reasonable grounds to know, may
materially affect MSS' business or prospects. Neither this Agreement, nor
any certificate, exhibit, schedule or other written document or statement,
furnished to MRM by MSS and/or by such Shareholders in connection with
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the transactions contemplated by this Agreement, contains or will contain any
untrue statement of a material fact, or omits or will omit to state a
material fact necessary to be stated in order to make the statements
contained herein or therein not misleading.
SECTION 5
REPRESENTATIONS AND WARRANTIES BY MRM
5.1 Subject to the schedules of exceptions, attached hereto and
incorporated herein by this reference (which schedules shall be acceptable to
MSS), MRM represents and warrants to MSS and those Shareholders listed in
EXHIBIT A as follows:
(a) ORGANIZATION AND GOOD STANDING OF MRM. MRM is a corporation
duly organized, validly existing and in good standing under
the laws of the State of Nevada, and has full corporate power
and authority to own or lease its properties and to carry on
its business as now being conducted and as proposed to be
conducted. MRM is qualified to conduct business as a foreign
corporation in no other jurisdiction, and the failure to so
qualify in any other jurisdiction does not materially
adversely affect the ability of MRM to carry on its business
as most recently conducted. The Articles of Incorporation of
MRM, and all amendments thereto, as presently in effect,
certified by the Secretary of State of Nevada, and the Bylaws
of MRM as presently in effect, certified by the President and
Secretary of MRM, have been delivered to MSS and are complete
and correct, and since the date of such delivery, there has
been no amendment, modification or other change thereto.
(b) CAPITALIZATION. MRM's authorized capital stock consists of
100,000,000 shares of $.001 par value common stock (defined
herein as "MRM Common Stock"), approximately 7,200,000 shares
of which will be issued and outstanding prior to the Closing
Date. All authorized and/or outstanding options and warrants
are set forth on SCHEDULE 5.1(b). Except as set forth on
SCHEDULE 5.1(b), no other equity securities or debt
obligations of MRM are authorized, issued or outstanding, and
as of the Closing Date, there will be no other outstanding
options, warrants, agreements, contracts, calls, commitments
or demands of any character, preemptive or otherwise, other
than this Agreement, relating to any of the MRM Common Stock,
and there will be no outstanding security of any kind
convertible into MRM Common Stock. The shares of MRM Common
Stock are free and clear of all liens, charges, claims,
pledges, restrictions and encumbrances whatsoever of any kind
or nature that would inhibit, prevent or otherwise interfere
with the transactions contemplated hereby. All of the
outstanding shares of MRM Common Stock are validly issued,
fully paid and non-assessable, and there are no
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voting trust agreements or other contracts, agreements, or
arrangements restricting or affecting voting or dividend rights
or transferability with respect to the outstanding shares of MRM
Common Stock.
(c) ISSUANCE OF EXCHANGE STOCK. All of the MRM Common Stock to be
issued to or transferred to MSS Shareholders pursuant to this
Agreement, when issued, transferred and delivered as provided
herein, will be duly authorized, validly issued, fully paid
and non-assessable, and will be free and clear of all liens,
charges, claims, pledges, restrictions and encumbrances
whatsoever of any kind or nature, except those restrictions
imposed by state or federal corporate and securities
regulations.
(d) APPROVAL OF THE TRANSACTION. MRM will use its best efforts to
forthwith obtain any approval of the transactions set forth in
this Agreement relating to its outstanding shares if required
by the General Corporation Law of California.
(e) VIOLATIONS, CONFLICTS. Neither the execution and delivery of
this Agreement nor the consummation of the transactions
contemplated hereby, nor compliance by MRM with any of the
provisions hereof will: (i) violate or conflict with, or
result in a breach of any provisions of, or constitute a
default (or an event which, with notice or lapse of time or
both, would constitute a default) under, any of the terms,
conditions or provisions of the Articles of Incorporation or
Bylaws of MRM, or any note, bond, mortgage, indenture, deed of
trust, license, agreement or other instrument to which MRM is
a party, or by which it or its properties or assets may be
bound or affected; or (ii) violate any order, writ,
injunction, decree, statute, rule, permit or regulations
applicable to MRM or to any of its properties or assets.
(f) FINANCIAL STATEMENTS. MRM will deliver to MSS, prior to the
Closing, a copy of MRM's audited financial statements through
October 31, 1996 (the "MRM Financial Statements"), which will
be true and complete, and which have been prepared in
accordance with generally accepted accounting principles.
Other than changes in the usual and ordinary conduct of the
business, since October 31, 1996 there have been, and at the
Closing Date there will be, no material adverse changes in
such financial statements.
(g) ABSENCE OF UNDISCLOSED LIABILITIES. MRM has no liabilities
which are not adequately reflected or reserved against in the
MRM Financial Statements or otherwise reflected in this
Agreement, and MRM shall not have as of the Closing Date any
liabilities (secured or unsecured and whether accrued,
absolute, direct, indirect or otherwise) which were incurred
after October 31, 1996, and would be, individually or in the
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aggregate, materially adverse to the results of operations or
financial condition of MRM as of the Closing Date.
(h) LITIGATION. There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, governmental or
regulatory body, or arbitration tribunal against MRM or its
properties. There are no actions, suits or proceedings
pending, or, to the knowledge of MSS, threatened against or
affecting MRM, any of its officers or directors relating to
their positions as such, or any of its properties, at law or
in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau,
agency or instrumentality, foreign or domestic, in connection
with the business, operations or affairs of MRM which might
result in any material adverse change in the operations or
financial condition of MRM, or which might prevent or
materially impede the consummation of the transactions under
this Agreement.
(i) COMPLIANCE WITH LAWS. To the best of its knowledge, the
operations and affairs of MRM do not violate any law,
ordinance, rule or regulation currently in effect, or any
order, writ, injunction or decree of any court or governmental
agency, the violation of which would substantially and
adversely affect the business, financial condition or
operations of MRM.
(j) TAX MATTERS. MRM represents that, except as set forth in
SCHEDULE 5.1(j), all federal, foreign, state and local tax
returns, reports and information statements required to be
filed by or with respect to the activities of MRM have been
timely filed. Since October 31, 1996, MRM has not incurred
any liability with respect to any federal, foreign, state or
local taxes except in the ordinary and regular course of
business. Such returns, reports and information statements
are true and correct in all material respects insofar as they
relate to the activities of MRM. On the date of this
Agreement, MRM is not delinquent in the payment of any such
tax or assessment, and no deficiencies for any amount of such
tax have been proposed or assessed. Any tax sharing agreement
among or between MRM and any affiliate thereof shall be
terminated as of the Closing Date.
(k) BOOKS AND RECORDS. The books and records of MRM are complete
and correct, are maintained in accordance with good business
practice, and accurately reflect, in all material respects,
all of the transactions described therein, and there have been
no material transactions involving MRM which properly should
have been set forth therein and which have not been accurately
so set forth.
(l) AUTHORITY TO EXECUTE AGREEMENT. The Board of Directors of
MRM, pursuant to the power and authority legally vested in it,
has duly authorized the execution and delivery by MRM of this
Agreement and
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the Exchange Stock, and has duly authorized each of the
transactions hereby contemplated. MRM has the power and
authority to execute and deliver this Agreement, to consummate
the transactions hereby contemplated, and to take all other
actions required to be taken by it pursuant to the provisions
hereof. MRM has taken all actions required by law, its
Articles of Incorporation, as amended, it Bylaws, as amended,
or otherwise, to authorize the execution and delivery of this
Agreement and the Exchange Stock, pursuant to the provisions
hereof. This Agreement is valid and binding upon MSS in
accordance with its terms. Neither the execution and delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby, will constitute a violation or breach of
the Articles of Incorporation, as amended, or the Bylaws, as
amended, of MRM, or of any agreement, stipulation, order,
writ, injunction, decree, law, rule or regulation applicable
to MRM.
(m) FINDER'S FEES. MRM is not, and on the Closing Date will not
be, liable or obligated to pay any finder's, agent's or
broker's fee arising out of or in connection with this
Agreement or the transactions contemplated by this Agreement.
5.2 DISCLOSURE. At the date of this Agreement, MRM has, and at the
Closing Date it will have, disclosed all events, conditions and facts
materially affecting the business and prospects of MRM. MRM has not now, and
will not have at the Closing Date, withheld knowledge of any such events,
conditions or facts which it knows, or has reasonable grounds to know, may
materially affect MRM's business or prospects. Neither this Agreement, nor
any certificate, exhibit, schedule or other written document or statement,
furnished to MSS or the MSS Shareholders by MRM in connection with the
transactions contemplated by this Agreement, contains or will contain any
untrue statement of a material fact, or omits or will omit to state a
material fact necessary to be stated in order to make the statements
contained herein or therein not misleading.
SECTION 6
ACCESS AND INFORMATION
6.1 AS TO MSS. Subject to the protections provided by subsection 9.4
herein, MSS shall give to MRM and to MRM's counsel, accountants and other
representatives full access during normal business hours throughout the
period prior to the Closing to all of MSS' properties, books, contracts,
commitments and records, including information concerning products and
customer base, and patents held by, or assigned to, MSS, and shall furnish to
MRM during such period all such information concerning MSS' affairs as MRM
may reasonably request.
6.2 AS TO MRM. Subject to the protections provided by subsection 9.4
herein, MRM shall give to MSS, the MSS Shareholders and to MSS' counsel,
accountants and other representatives full access during normal business
hours throughout the period prior
13
to the Closing to all of MRM's properties, books, contracts, commitments and
records, and shall furnish to MSS and the MSS Shareholders during such period
all such information concerning MRM's affairs as MSS and the MSS Shareholders
may reasonably request.
SECTION 7
COVENANTS OF MSS AND MSS SHAREHOLDERS
7.1 NO SOLICITATION. MSS and the MSS Shareholders listed on EXHIBIT A,
to the extent within each Shareholder's control, will use their best efforts
to cause MSS' offic ers, employees, agents and representatives not, directly
or indirectly , to solicit, encourage, or initiate any discussions with, or
negotiate or otherwise deal with, or provide any information to, any person
or entity other than MRM and its officers, employees and agents, concerning
any merger, sale of substantial assets, or similar transaction involving MSS,
or any sale of an y of its capital stock or of the capital stock held by
such Shareholders in excess of 10% of such Shareholder's current stock
holdings, except as otherwise disclosed in this Agreement. MSS will notify
MRM immediately upon receipt of an inquiry, offer, or proposal relating to
any of the foregoing. None of the foregoing shall prohibit providing
information to others in a manner in keeping with the ordinary conduct of
MSS' business, or providing information to government authorities.
7.2 CONDUCT OF BUSINESS PENDING THE TRANSACTION. MSS and the MSS
Shareholders listed on EXHIBIT A, to the extent within each Shareholder's
control, covenant and agree with MRM that, prior to the consummation of the
transaction called for by this Ag reement, and the Closing, or the
termination of this Agreement pursuant to its terms, unless MRM shall
otherwise consent in writing, and except as otherwise contemplated by this
Agreement, they will each comply with all of the following:
(a) MSS' business shall be conducted only in the ordinary and
usual course. MSS shall use reasonable efforts to keep intact
its business organization and good will, keep available the
services of its respective officers and employees, and
maintain good relations with suppliers, creditors, employees,
customers and others having business or financial
relationships with MSS, and MSS shall immediately notify MRM
of any event or occurrence which is material to, and not in
the ordinary and usual course of, the business of MSS.
(b) MSS shall not (i) amend its Articles of Incorporation or
Bylaws, or (ii) split, combine, or reclassify any of its
outstanding securities, or (iii) declare, set aside, or pay
any dividend or other distribution on, or make or agree or
commit to make any exchange for or redemption of any such
securities payable in cash, stock or property.
14
(c) MSS shall not (i) issue or agree to issue any additional
shares of, or rights of any kind to acquire any shares of, its
capital stock of any class, or (ii) enter into any contract,
agreement, commitment, or arrangement with respect to any of
the foregoing, except as set forth in this Agreement.
(d) MSS shall not create, incur, or assume any long-term or
short-term indebtedness for money borrowed, or make any
capital expenditures or commitment for capital expenditures,
except in the ordinary course of business and consistent with
past practice.
(e) MSS shall not (i) adopt, enter into, or amend any bonus,
profit sharing, compensation, stock option, warrant, pension,
retirement, deferred compensation, employment, severance,
termination or other employee benefit plan, agreement, trust
fund, or arrangement for the benefit or welfare of any
officer, director or employee, or (ii) agree to any material
(in relation to historical compensation) increase in the
compensation payable or to become payable to, or any increase
in the contractual term of employment of, any officer,
director or employee, except, with respect to employees who
are not officers or directors, in the ordinary course of
business in accordance with past practices, or with the
written approval of MRM.
(f) MSS shall not sell, lease, mortgage, encumber or otherwise
dispose of, or grant an interest in, any of its assets or
properties, except for: (i) sales, encumbrances and other
dispositions or grants in the ordinary course of business and
consistent with past practice; (ii) liens for taxes not yet
due; (iii) liens or encumbrances that are not material in
amount or effect and that do not impair the use of the
property; or (iv) as specifically provided for or permitted in
this Agreement.
(g) Neither MSS nor any of its subsidiaries shall enter into any
agreement, commitment, or understanding, whether in writing or
otherwise, with respect to any of the matters referred to in
subparagraphs (a) through (f) above.
(h) MSS will continue to properly and promptly file when due all
federal, state, local, foreign and other tax returns, reports
and declarations required to be filed by it, and will pay, or
make full and adequate provision for the payment of, all taxes
and governmental charges due from or payable by MSS.
(i) MSS will comply with all laws and regulations applicable to it
and to its operations.
15
(j) MSS will maintain in full force and effect insurance coverage
of a type and in such amounts as are customary in its
business, but not less than that set forth in SCHEDULE 4.1(m).
SECTION 8
COVENANTS OF MRM
8.1 No Solicitation. MRM will not discuss or negotiate with any other
corporation, firm or other person or entertain or consider any inquiries or
proposals relating to the possible disposition of its shares of capital
stock, or its assets, and will conduct business only in the ordinary course.
Notwithstanding the foregoing, MRM shall be free to engage in activities
mentioned in the preceding sentence which are designed to further the mutual
interests of the parties to this Agreement.
8.2 Conduct of MRM Pending Closing. MRM covenants and agrees with MSS
that, prior to the consummation of the transactions called for by this
Agreement, and the Closing, or the termination of this Agreement pursuant to
its terms, unless MSS shall otherwise consent in writing, and except as
otherwise contemplated by this Agreement, MRM will comply with all of the
following:
(a) No change will be made in MRM's Articles of Incorporation or
Bylaws, or in MRM's authorized or issued shares of capital
stock, except as may be first approved in writing by MSS.
(b) No dividends shall be declared, no stock options granted and
no employment agreements shall be entered into with officers
or directors of MRM, except as may be first approved in
writing by MSS.
SECTION 9
ADDITIONAL COVENANTS OF THE PARTIES
9.1 COOPERATION. Both MSS and MRM will cooperate with each other and
with their respective counsel, accountants and agents in carrying out the
transaction contemplated by this Agreement, and in delivering all documents
and instruments deemed reasonably necessary or useful by the other party.
9.2 EXPENSES. Each of the parties hereto shall pay all of its
respective costs and expenses (including attorneys' and accountants' fees,
costs and expenses) incurred in connection with this Agreement and the
consummation of the transactions contemplated herein.
9.3 PUBLICITY. Prior to the Closing, any written news releases or
public disclosure by either party pertaining to this Agreement shall be
submitted to the other
16
party for its review and approval prior to such release or disclosure,
provided, however, that (a) such approval shall not be unreasonably withheld,
and (b) such review and approval shall not be required of disclosures
required to comply, in the judgment of counsel, with federal or state
securities or corporate laws or policies.
9.4 CONFIDENTIALITY. While each party is obligated to provide access
to and furnish information in accordance with Sections 4 and 5 herein, it is
understood and agreed that such disclosure and information subsequently
obtained as a result of such disclosures are proprietary and confidential in
nature. Each party agrees to hold such information in confidence and not to
reveal any such information to any person who is not a party to this
Agreement, or an officer, director or key employee of MRM or MSS, and not to
use the information obtained for any purpose other than assisting in its due
diligence inquiry precedent to the Closing. Upon request of any party
hereto, a confidentiality agreement, acceptable to the disclosing party, will
be executed by any person selected to receive such proprietary information,
prior to receipt of such information.
SECTION 10
SURVIVAL OF REPRESENTATIONS,
WARRANTIES AND COVENANTS
10.1 The representations, warranties and covenants of MSS, and of those
Shareholders listed on EXHIBIT A contained herein, shall survive the
execution and delivery of this Agreement, the Closing and the consummation of
the transactions called for by this Agreement. The representations,
warranties and covenants of MRM contained herein shall survive the execution
and delivery of this Agreement, the Closing and the consummation of the
transactions called for by this Agreement.
SECTION 11
CONDITIONS PRECENDENT TO OBLIGATIONS OF THE PARTIES
11.1 The obligations of MRM, MSS and the MSS Shareholders listed on
EXHIBIT A under this Agreement shall be subject to the fulfillment, on or
prior to the Closing, of all conditions elsewhere herein set forth,
including, but not limited to, receipt by the appropriate party of all
deliveries required by Sections 4 and 5 herein, and the fulfillment, prior to
Closing, of each of the following conditions:
(a) All representations and warranties made in this Agreement by
MRM, MSS and the MSS Shareholders listed on EXHIBIT A shall be
true and correct in all material respects on and as of the
Closing Date with the same effect as if such representations
and warranties had been made on and as of the Closing Date.
17
(b) MRM, MSS and the MSS Shareholders listed on EXHIBIT A shall
have performed or complied with all covenants, agreements and
conditions contained in this Agreement on their part required
to be performed or complied with at or prior to the Closing.
(c) All material authorizations, consents or approvals of any and
all governmental regulatory authorities necessary in
connection with the consummation of the transactions
contemplated by this Agreement shall have been obtained and be
in full force and effect.
(d) The Closing shall not violate any permit or order, decree or
judgment of any court or governmental body having competent
jurisdiction, and there shall not have been instituted any
legal or administrative action or proceeding to enjoin the
transaction contemplated hereby or seeking damages from any
party with respect thereto.
(e) Each MSS Shareholder acquiring Exchange Stock will be
required, at the Closing, to submit an agreement confirming
that all of the Exchange Stock received will be acquired for
investment and not with a view to, or for sale in connection
with, any distribution thereof, and agreeing not to transfer
any of the Exchange Stock for a period of one year from the
date of the Closing, except to those persons approved by legal
counsel to MRM as falling within the exemption from
registration under the Securities Act of 1933 and any
applicable state securities laws, which transfers do not
constitute a public distribution of securities, and in which
the transferees execute an investment letter in forma and
substance satisfactory to counsel for MRM. Each MSS
Shareholder acquiring Exchange Stock will be required to
transfer to MRM at the Closing his or her respective MSS
Shares, free and clear of all liens, mortgages, pledges,
encumbrances or charges, whether disclosed or undisclosed.
(f) All schedules prepared by MSS shall be current or updated as
necessary as of the Closing Date.
(g) Each party shall have received favorable opinions from the
other party's counsel on such matters in connection with the
transactions contemplated by this Agreement as are reasonable.
(h) Each party shall have satisfied itself that since the date of
this Agreement the business of the other party has been
conducted in the ordinary course. In addition, each party
shall have satisfied itself that no withdrawals of cash or
other assets have been made and no indebtedness has been
incurred since the date of this Agreement, except in the
ordinary course of business or with respect to services
rendered or expenses incurred in connection with the Closing
of this Agreement,
18
unless said withdrawals or indebtedness were either authorized
by the terms of this Agreement or subsequently consented to in
writing by the parties hereto.
(i) Each party covenants that, to the best of its knowledge, it
has complied in all material respects with all applicable
laws, orders and regulations of federal, state, municipal
and/or other governments and/or any instrumentality thereof,
foreign or domestic, applicable to their assets, to the
business conducted by them and to the transactions
contemplated by this Agreement.
(j) MRM shall have provided to MSS audited financial statements of
MRM as of October 31, 1996 and for the year then ended,
prepared in accordance with generally accepted accounting
principles.
(k) MSS shall have provided to MRM unaudited financial statements
of MSS as of December 31, 1996 and for the year then ended and
as of April 30, 1997 and for the four months then ended,
prepared in accordance with generally accepted accounting
principles.
(l) Each party hereto shall have granted to the other party
(acting through its management personnel, counsel, accountants
or other representatives designated by it) full opportunity to
examine its books and records, properties, plant and
equipment, proprietary rights and other instruments, rights
and papers of all kinds in accordance with Sections 4 and 5
hereof, and each party shall be satisfied to proceed with the
transactions contemplated by this Agreement upon completion of
such examination and investigation.
(m) If MSS Shareholders who in the aggregate own more than five
percent (5%) of the MSS Shares dissent from the proposed
Exchange Transaction, or are unable or for any reason refuse
to transfer any of all of their MSS Shares to MRM in
accordance with Section 1 of this Agreement, then MRM, at its
sole option, may terminate this Agreement.
(n) Each party shall have satisfied itself that all transactions
contemplated by this Agreement, including those contemplated
by the exhibits and schedules attached hereto, shall be legal
and binding under applicable statutory and case law of the
State of California, including, but not limited to, California
securities laws and all other applicable state securities laws.
(o) MRM and MSS shall agree to indemnify each other against any
liability to any broker or finder to which that party may
become obligated.
19
(p) The Exchange Transaction shall be approved by the Boards of
Directors of both MSS and MRM. Furthermore, the Exchange
Transaction shall be approved by the shareholders of MSS and
MRM, if deemed necessary of appropriate by counsel for the
same, within forty-five (45) days following execution of this
Agreement. If such a shareholder meeting is deemed necessary,
the management of MSS and MRM agree to recommend approval of
the Exchange Transaction to their respective shareholders and
to solicit proxies in support of the same.
(q) MRM and MSS and their respective legal counsel shall have
received copies of all certificates, opinions and other
documents and instruments as each party or its legal counsel
may reasonably request pursuant to this Agreement or otherwise
in connection with the consummation of the transactions
contemplated hereby, and all such certificates, opinions and
other documents and instruments received by each party shall
be reasonably satisfactory, in form and substance, to each
party and to its legal counsel.
(r) Both MSS and MRM shall have the right to waive any or all of
the conditions precedent to its obligations hereunder not
otherwise legally required; provided, however, that no waiver
by a party of any conditions precedent to its obligations
hereunder shall constitute a waiver by such party of any other
condition.
SECTION 12
TERMINATION, AMENDMENT, WAIVER
12.1 This Agreement may be terminated at any time prior to the Closing,
and the contemplated transactions abandoned, without liability to either
party hereto, except with respect to the obligations of MRM, MSS and the MSS
Shareholders under Section 9.4 hereof:
(a) By mutual agreement of MRM and MSS.
(b) If the Closing (as defined in Section 3) shall not have taken
place on or prior to August 30, 1997, this Agreement can be
terminated upon written notice given by MRM or MSS, provided
that such party giving notice is not in material default.
(c) By MRM, if in its reasonable belief there has been a material
misrepresentation or breach of warranty on the part of any
Shareholder in the representations and warranties set forth in
the Agreement.
(d) By MSS or by a majority (as measured by their equity interest)
of those MSS Shareholders listed on EXHIBIT A if, in the
reasonable belief of
20
MSS or of any such Shareholders, there has been a material
misrepresentation or breach or warranty on the part of MRM in
the representations and warranties set forth in this Agreement.
(e) By MRM if, in its opinion or that of its counsel, the Exchange
does not qualify for exemption from registration under
applicable federal or state securities laws, or qualification,
if obtainable, cannot be accomplished (in MRM's opinion or
that of its counsel) without unreasonable expense or effort.
(f) By MRM if, in its opinion or that of its counsel, the Exchange
cannot be consummated under California or other relevant state
corporate law or, if consummation is possible, that it cannot
be accomplished (in MRM's opinion or that of its counsel)
without unreasonable expense or effort.
(g) By MRM or by a majority (as measured by their equity interest)
of the MSS Shareholders listed on EXHIBIT A if either party shall
determine in its sole discretion that the Exchange has become
inadvisable or impracticable by reason of the institution or
threat by state, local or federal governmental authorities, or by
any other person, of material litigation or proceedings against
any party [it being understood and agreed that a written request
by a governmental authority for information with respect to the
Exchange Transaction, which information could be used in
connection with such litigation or proceedings, may be deemed to
be a threat of material litigation or proceedings regardless of
whether such request is received before or after the signing of
this Agreement].
(h) By MRM if the business or assets or financial condition of
MSS, taken as a whole, have been materially and adversely
affected, whether by the institution of litigation or be
reason of changes or developments, or in operations in the
ordinary course of business, or otherwise; or, by a majority
(as measured by their equity interest) of those MSS
Shareholders listed on EXHIBIT A if the business or assets or
financial condition of MRM, taken as a whole, have been
materially and adversely affected, whether by the institution
of litigation or by reason of changes or developments, or in
operations in the ordinary course of business, or otherwise.
(i) By MRM if holders of more than five percent (5%) of the MSS
Shares fail to tender their Shares at the Closing of the
Exchange Transaction.
(j) By MRM if, in its sole discretion, it appears that the
combined entity will not be auditable.
21
(k) By MSS if MRM fails to perform material conditions as set
forth in Section 11 herein.
(l) By MSS if examination of MRM's books and records pursuant to
Section 5 herein uncovers a material deficiency.
(m) By MRM if MSS fails to perform material conditions as set
forth in Section 11 herein.
(n) By MRM if examination of MSS' books and records pursuant to
Section 4 herein uncovers a material deficiency.
SECTION 13
MISCELLANEOUS
13.1 ENTIRE AGREEMENT. This Agreement (including the exhibits and
schedules attached hereto) contains the entire agreement between the parties
hereto with respect to the transactions contemplated hereby, and supersedes
all negotiations, representations, warranties, commitments, offers,
contracts, and writings prior to the date hereof. No waiver and no
modification or amendment of any provision of this Agreement shall be
effective unless specifically made in writing and duly signed by the parties
to be bound thereby.
13.2 BINDING AGREEMENT.
(a) This Agreement shall become binding upon the parties hereto
when, but only when, it shall have been signed on behalf of
all parties hereto.
(b) Subject to the condition stated in subsection (a) of this
Section 13.2, this Agreement shall be binding upon, and inure
to the benefit of, the respective parties hereto and their
legal representatives, successors and assigns. This
Agreement, in all of its particulars, shall be enforceable by
the means set forth in subsection 13.9 for the recovery of
damages or by way of specific performance, and the terms and
conditions of this Agreement shall remain in full force and
effect subsequent to the Closing and shall not be deemed to be
merged into any documents conveyed and delivered at the time
of Closing.
(c) In the event that subsection 13.9 hereof is found to be
unenforceable as to any party for any reason, or is not
invoked by any party, and any person is required to initiate
any action at law or in equity for the enforcement of this
Agreement, the prevailing party in such litigation shall be
entitled to recover from the party determined to be in default
all of its reasonable costs incurred in said litigation,
including attorneys' fees.
22
13.3 SHAREHOLDERS OWNING AT LEAST 5% OF MSS STOCK. The MSS Shareholders
owning at least five percent (5%) of the issued and outstanding common stock
of MSS (see EXHIBIT A hereto) are executing this Agreement only with respect
to sections 3.4, 4, 7, 9.4, 10, 11, 12.1 (d and g), 13.2, 13.3, 13.4, 13.8
and 13.9.
13.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which may be deemed an original, but all of which
together shall constitute one and the same instrument.
13.5 SEVERABILITY. If any provision(s) hereof shall be held invalid or
unenforceable by any court of competent jurisdiction or as a result of future
legislative action, such holding or action shall be strictly construed and
shall not affect the validity or effect of any other provision hereof.
13.6 ASSIGNABILITY. This Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the parties hereto; provided,
however, that neither this Agreement nor any right hereunder shall be
assignable by MSS or MRM without prior written consent of the other party
hereto.
13.7 CAPTIONS. The captions of the various sections of this Agreement
have been inserted only for convenience of reference, and shall not be deemed
to modify, explain, enlarge or restrict any of the provisions of this
Agreement.
13.8 GOVERNING LAW. The validity, interpretation and effect of this
Agreement shall be governed exclusively by the laws of the State of
California.
13.9 DISPUTE RESOLUTION. In the event of a dispute between the parties
hereto involving a claim of breach of representation or warranty hereunder,
or to enforce a covenant herein (either or both of which are referred to
hereafter as a "Claim"), if it is the desire of any party for quick
resolution, the rights and obligations of the parties hereto arising under
the terms of this Agreement with respect to such Claims and/or resolutions of
such disputes will be by the means of the judgment of an independent third
party ("Rent-a-Judge") who has been selected and hired through the mutual
agreement of the parties hereto. The utilization of this subsection 13.9, if
invoked by any party hereto, shall be the exclusive remedy for resolving a
Claim regardless of whether legal action has or has not been otherwise
instituted. If legal action has been instituted by any party, and this
subsection 13.9 is invoked in a timely manner, any such legal action shall be
void ab initio and immediately withdrawn.
(a) In the event of a Claim by any party, any party may make a
written request upon the other parties for a Rent-a-Judge. A
request by any party for the employment of a Rent-a-Judge to
resolve the Claim shall be binding on all other parties to
this Agreement in accordance with the terms hereof.
23
(b) The parties may agree upon one Rent-a-Judge, but in the event
that they cannot so agree, there shall be three Rent-a-Judges
selected, one named in writing by each of the parties hereto
(MRM and MSS) within twenty (20) days after the initial demand
for employment of a Rent-a-Judge, and a third chosen by the
two so appointed. Should either party refuse or neglect to
join in the appointment of the Rent-a-Judge, or to furnish the
Rent-a-Judge(s) with any papers or information demanded, the
Rent-a-Judge(s) are empowered by all parties to this Agreement
to proceed ex parte.
(c) Claim resolution proceedings shall take place in the City or
County of Los Angeles, State of California, and the hearing
before the Rent-a-Judge(s) of the matter to be arbitrated
shall be at the time and place within said city or county as
is selected by the Rent-a-Judge(s). The Rent-a-Judge(s) shall
select such time and place promptly after appointment and
shall give written notice thereof to each party at least
thirty (30) days prior to the date so fixed. At the hearing,
any relevant evidence may be presented by either party, and
the formal rules of evidence applicable to judicial
proceedings shall not govern. Evidence may be admitted or
excluded in the sole discretion of the Rent-a-Judge(s). Said
Rent-a-Judge(s) shall hear and determine the matter and shall
execute and acknowledge their award in writing, and cause a
copy thereof to be delivered to each of the parties.
(d) If there is only one Rent-a-Judge, his or her decision shall
be binding and conclusive on the parties. If there are three
(3) Rent-a-Judges, the decision of any two (2) shall be
binding and conclusive on the parties.
(e) If three Rent-a-Judges are selected under the foregoing
procedure, but two (2) of the three (3) fail to reach an
agreement in the determination of the matter in question, the
matter shall be decided by three (3) new Rent-a-Judges who
shall be appointed and shall proceed in the same manner as set
forth in this section, and the process shall be repeated until
a decision is finally reached by two (2) of the three (3)
Rent-a-Judges selected.
(f) The costs of such Claim resolution shall be borne by the
parties equally and each party shall pay its own attorneys'
fees, provided, however, that in the event either party
challenges or in any way seeks to have the decision or award
of the Rent-a-Judge(s) vacated, corrected or modified, if the
challenge is denied or the original decision or award is
affirmed, the challenging party shall pay the costs and fees,
including reasonable attorneys' fees, of the non-challenging
party, both for the challenge and for the original Claim
resolution process.
24
13.10 NOTICES. All notices, requests, demands and other communications
under this Agreement shall be in writing and delivered in person or sent by
certified mail, postage prepaid and properly addressed as follows:
TO MSS:
Xxxxx X. XxXxxxxxx, President
Med Surg Specialties, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx X
Xxxx, Xxxxxxxxxx 00000
WITH A COPY TO:
Xxxxx & Xxxxx
Xxxxxx X. Xxxxx
00000 Xxxxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxx, XX 00000-0000
TO MRM:
Xxxxx X. Xxxxxxxxxx, President
Medical Resources Management, Inc.
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
WITH A COPY TO:
Xxxxxxx X. Xxxxxxx, Esq.
Transworld Bank Plaza
00000 Xxxxxxx Xxxx., Xxxxx 0000
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Any party may from time to time change its address for the purpose of
notices to that party by a similar notice specifying a new address, but no such
change shall be deemed to have been given until it is actually received by the
other party hereto.
All notices and other communications required or permitted under this
Agreement which are addressed as provided in this section 13.10, if delivered
personally, shall be effective upon delivery; and, if delivered by mail, shall
be effective three (3) days following deposit in the United States mail, postage
prepaid.
25
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
MEDICAL RESOURCES MANAGEMENT, INC.
a Nevada corporation
By: /s/ XXXXX X. XXXXXXXXXX
--------------------------------
Xxxxx X. Xxxxxxxxxx, President
MED SURG SPECIALTIES, INC.
a California corporation
By: /s/ XXXXX X. XXXXXXXXX
--------------------------------
Xxxxx X. XxXxxxxxx, President
FIVE PERCENT SHAREHOLDERS OF MED SURG SPECIALTIES, INC.
/S/ XXXXX X. XXXXXXXXX
--------------------------------
Xxxxx X. XxXxxxxxx
26
