AGREEMENT AND PLAN OF MERGER
AMONG
MEDICAL DYNAMICS, INC. (a Colorado corporation)
COMPUTER AGE DENTIST, INC. (a California corporation)
AND
D.O.M. CORPORATION., d/b/a COMMAND DENTAL SYSTEMS
(a Michigan corporation)
AS OF APRIL 1, 1998
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is made as of the 1st
day of April, 1998, among Medical Dynamics, Inc., a Colorado corporation
("MEDY"); Computer Age Dentist, Inc., a California corporation ("CADI"), which
is wholly owned by MEDY; and D.O.M. Corporation, a Michigan corporation ("CDS")
doing business as Command Dental Systems.
RECITALS
--------
WHEREAS, the respective Boards of Directors of MEDY, CADI and CDS each have
determined that it is in the best interests of their respective stockholders for
MEDY to acquire CDS through the merger of CDS with and into CADI upon the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and certain other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto covenant and
agree as follows:
ARTICLE 1.
The Merger
----------
1.1 Merger and the Merger Consideration. In accordance with the provisions
of the California Corporations Code (the "CCC") (with respect to CADI) and the
Michigan Business Corporation Act (the "MBCA") (with respect to CDS) at the
Effective Date (as hereinafter defined), CDS shall be merged (the "Merger") into
CADI, as soon as practicable following the satisfaction or waiver, if
permissible, of the conditions set forth in Articles 6 and 7. The consideration
to be paid to the shareholders of CDS as a result of the Merger (the "Merger
Consideration") consists of:
141,667 shares of MEDY Common Stock (which shares will be restricted as
that term is defined in Rule 144 under the Securities Act of 1933 (the
"1933 Act")); and
Promissory notes (the "Notes") issued by MEDY in the amount of $500,000, in
the form of Exhibit 1.1.
Following the Merger, CADI shall continue as the surviving corporation (the
"Surviving Corporation") and shall continue to be governed by the laws of the
State of California.
1.2 Continuing of Corporate Existence. Except as may otherwise be set forth
herein, the corporate existence and identity of CADI, with all its purposes,
powers, franchises, privileges, rights and immunities, shall continue unaffected
and unimpaired by the Merger, and the corporate existence and identity of CDS,
with all its purposes, powers, franchises, privileges, rights and immunities, at
the Effective Date shall be merged with and into that of CADI, and CADI, as the
Surviving Corporation, shall be vested fully therewith and the separate
corporate existence and identity of CDS shall thereafter cease except to the
extent continued by statute.
Agreement and Plan of Merger - CADI, CDS Page 1
April 17, 1998 (12:17PM)
1.3 Effective Date. The Merger shall become effective upon the filing of
the Agreement of Merger and Articles of Merger with the Secretary of State of
California and the Michigan Corporation, Securities and Land Development Bureau,
pursuant to the provisions of the CCC and the MBCA. The date and time when the
Merger shall become effective is hereinafter referred to as the "Effective
Date".
1.4 Corporate Government of the Surviving Corporation.
(a) The Articles of Incorporation of CADI as in effect on the
Effective Date shall continue in full force and effect and shall be the Articles
of Incorporation of the Surviving Corporation.
(b) The Bylaws of CADI as in effect as of the Effective Date shall
continue in full force and effect and shall be the Bylaws of the Surviving
Corporation.
(c) The members of the Board of Directors of the Surviving Corporation
shall be the persons holding such office in CADI as of the Effective Date.
(d) The officers of the Surviving Corporation shall be the persons
holding such offices in CADI as of the Effective Date. Immediately following the
Effective Date, the Board of Directors of CADI will appoint Xxxxx Xxxxxxxx as
District Manager of CADI.
1.5 Rights and Liabilities of the Surviving Corporation. The Surviving
Corporation shall have the following rights and obligations:
(a) The Surviving Corporation shall have all the rights, privileges,
immunities and powers and shall be subject to all the duties and liabilities of
a corporation organized under the laws of the State of California.
(b) The title to all real estate and other property owned by CDS shall
be, at the Effective Date, transferred to and vested in the Surviving
Corporation without reversion or impairment; and such transfer to and vesting in
the Surviving Corporation shall be deemed to occur by operation of law, and no
consent or approval of any other person shall be required in connection with any
such transfer or vesting unless such consent or approval is specifically
required in the event of merger by law or by express provision in any contract,
agreement, decree, order, or other instrument to which CDS or CADI is a party or
by which it is bound.
(c) At the Effective Date, the Surviving Corporation shall thenceforth
have all liabilities of CDS and shall continue to have all the liabilities of
CADI, and any proceeding pending against CDS or CADI may be continued as if the
Merger did not occur or CADI, as the Surviving Corporation, may be substituted
in the proceeding for CDS.
1.6 Closing. Completion of the transactions contemplated by this Agreement
(the "Closing") shall take place at the executive offices of MEDY in Denver,
Colorado or at such other place as the parties may mutually agreement,
commencing at 10:00 a.m., local time, as soon as practicable after the last to
be fulfilled or waived of the conditions set forth in Articles 6 and 7 or at
such other place, time and date as shall be fixed by mutual agreement between
MEDY and CDS. The day on which the Closing shall occur is referred to herein as
Agreement and Plan of Merger - CADI, CDS Page 2
April 17, 1998 (12:17PM)
the "Closing Date." Each party will cause to be prepared, executed and delivered
the Articles of Merger to be filed with the Secretary of State of California and
the Michigan Corporation, Securities and Land Development Bureau, and all other
appropriate and customary documents as any party or its counsel may reasonably
request for the purpose of completing the transactions contemplated by this
Agreement. All actions taken at the Closing shall be deemed to have been taken
simultaneously at the time the last of any such actions is taken or completed.
1.7 Tax Consequences. It is intended that the Merger shall constitute a
reorganization within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of
the Internal Revenue Code of 1986, as amended (the "Code"), and that this
Agreement shall constitute a "plan of reorganization" for the purposes of
Section 368 of the Code.
ARTICLE 2
Conversion of Shares; Treatment of Options
------------------------------------------
2.1 Conversion of Shares; Payment of the Merger Consideration. At the
Effective Date, by virtue of the Merger and without any action on the part of
the holder thereof:
(a) The shares of common stock of CDS ("CDS Common Stock"), which
shall be outstanding immediately prior to the Effective Date (the "Converted
Shares") (being shares held by the sole shareholders of CDS, ADG, Inc., and
Xxxxxx and Xxxxx Xxxxxxxx) shall at the Effective Date, by virtue of the Merger
and without any action on the part of the holder thereof, be converted into and
represent the right to receive:
In the case of ADG, Inc., 65,521 shares of Common Stock of MEDY (the "MEDY
Common Stock") and one of the two Notes in the principal amount of
$231,250; and
In the case of Xxxxxx and Xxxxx Xxxxxxxx, 76,146 shares of Common Stock of
MEDY (the "MEDY Common Stock") and the second of the two Notes in the
principal amount of $268,750.
(b) No CDS shareholders will dissent from the transaction.
2.2 Fractional Shares. No scrip or fractional shares of MEDY Common Stock
shall be issued in the Merger. All fractional shares of MEDY Common Stock to
which a holder of CDS Common Stock immediately prior to the Effective Date would
otherwise be entitled at the Effective Date shall be aggregated. If a fractional
share results from such aggregation, the fraction will be rounded to one and
such stockholder shall be entitled to receive an additional share of MEDY Common
Stock.
2.3 Stock Options and Warrants. There are no options, warrants or
convertible securities outstanding entitling the holder thereof to purchase CDS
Common Stock.
2.4 Adjustment. If, between the date of this Agreement and the Closing Date
or the Effective Date, as the case may be, the outstanding shares of CDS Common
Stock or MEDY Common Stock shall have been changed into a different number of
shares or a different class by reason of any classification, recapitalization,
split-up, combination, exchange of shares, or readjustment or a stock dividend
thereon shall be declared with a record date within such period, then the Merger
Consideration shall be adjusted to accurately reflect such change.
Agreement and Plan of Merger - CADI, CDS Page 3
April 17, 1998 (12:17PM)
ARTICLE 3
Representations and Warranties of CDS
-------------------------------------
CDS represents and warrants to MEDY and CADI that the statements contained
in Article 3 are true and correct in all material respects and will be true and
correct as of the Closing Date and the Effective Date, except as set forth in
the schedules attached hereto. As used in this Article 3 and elsewhere in this
Agreement, the phrases "to CDS's knowledge" or "to CDS's actual knowledge" shall
mean to the actual knowledge of Xxxxx Xxxxxxxx, executive officer of CDS.
3.1 Organization and Good Standing of CDS. CDS is a corporation duly
organized, validly existing and in good standing under the laws of Michigan.
3.2 No Subsidiaries or Investments. CDS owns no equity or debt interest in
any subsidiary corporation, limited liability company, partnership, or other
business entity except as described in Schedule 3.2 or the CDS financial
statements.
3.3 Foreign Qualification. CDS is duly qualified or licensed to do business
and is in good standing as a foreign corporation in every jurisdiction where the
failure so to qualify would have a material adverse effect (a "CDS Material
Adverse Effect") on (a) the business, operations, assets or financial condition
of CDS taken as a whole or (b) the validity or enforceability of, or the ability
of CDS to perform its obligations under, this Agreement. CDS affirmatively
represents that it is qualified to do business in no state but Michigan.
3.4 Company Power and Authority. CDS has the corporate power and authority
to own, lease and operate its properties and assets and to carry on its business
as currently being conducted. CDS has the corporate power and authority to
execute and deliver this Agreement and, subject to the approval of this
Agreement and the Merger by its stockholders, to perform its obligations under
this Agreement and to complete the Merger. The execution, delivery and
performance by CDS of this Agreement has been duly authorized by all necessary
corporate action.
3.5 Binding Effect. This Agreement has been duly executed and delivered by
CDS and is the legal, valid and binding obligation of CDS enforceable in
accordance with its terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights;
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability; and
(c) rights to indemnification may be limited by considerations of
public policy.
Agreement and Plan of Merger - CADI, CDS Page 4
April 17, 1998 (12:17PM)
3.6 Absence of Restrictions and Conflicts. The execution, delivery and
performance of this Agreement and the completion of the Merger and the
fulfillment of and compliance with the terms and conditions of this Agreement do
not and will not, with the passing of time or the giving of notice or both,
violate or conflict with, constitute a breach of or default under, result in the
loss of any material benefit under, or permit the acceleration of any obligation
under, (i) any term or provision of the articles of Incorporation or bylaws of
CDS, (ii) any "Material Contract" (as defined in Section 3.13), (iii) any
judgment, decree or order of any court or governmental authority or agency to
which CDS is a party or by which CDS or any of its properties is bound, or (iv)
any statute, law, regulation or rule applicable to CDS other than such
violations, conflicts, breaches or defaults which would not have a CDS Material
Adverse Effect. Except for the filing of the Articles of Merger with the
Secretary of State of California and the Michigan Corporate and Securities
Bureau, the Securities Act of 1933 (the "Securities Act"), Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and applicable state securities
laws, no consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental agency or public or regulatory
unit, agency, body or authority with respect to CDS is required in connection
with the execution, delivery or performance of this Agreement by CDS or the
completion of the transactions contemplated hereby. When used in this Agreement,
the term "Material" or "CDS Material Adverse Effect" means any event which, if
determined adversely to CDS, would result in a charge against or other reduction
of capital or earnings of CDS in an amount greater than $25,000 if a single
event or, if an accumulation of events, $40,000 over a twelve month period, or
any other event, either singly or in the aggregate, which would have a material
adverse effect on the ability of CDS to carry on its business.
3.7 Capitalization of CDS.
(a) The authorized capital stock of CDS consists of 1,000 shares of
common stock. As of the date hereof, there were 800 shares of CDS Common Stock
issued and outstanding and no shares of CDS Common Stock reserved for issuance
upon the exercise of any Options.
(b) All of the issued and outstanding shares of CDS Common Stock have
been duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights.
(c) There are no voting trusts, stockholder agreements or other voting
arrangements by the stockholders of CDS.
(d) There is no outstanding subscription, contract, convertible or
exchangeable security, option, warrant, call or other right obligating CDS to
issue, sell, exchange, or otherwise dispose of, or to purchase, redeem or
otherwise acquire, shares of, or securities convertible into or exchangeable
for, capital stock of CDS.
3.8 CDS Information. CDS has made or will make available to MEDY and CADI
all information that CDS has available (including all tax returns, financial
statements given to any other person, contracts, payroll schedules, financial
books and records, and all other information regarding CDS, its business, its
customers, its management, and its financial condition which MEDY may have
requested (all such information being referred to herein as the "CDS
Information"). As of their respective dates, the CDS Information did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Agreement and Plan of Merger - CADI, CDS Page 5
April 17, 1998 (12:17PM)
3.9 Financial Statements and Records of CDS. CDS has made available to MEDY
and CADI true, correct and complete copies of the following financial statements
(the "CDS Financial Statements"): The internal financial statements as of
February 28, 1998 and the period then ended. The CDS Financial Statements have
been prepared from, and are in accordance with, the books and records of CDS and
its subsidiaries and present fairly, in all material respects, the consolidated
financial position of CDS as of the dates thereof and the results of operations
and cash flows thereof for the periods then ended. Adequate reserves are set
forth on the CDS Financial Statements and the amount of such reserves are
reasonable. Since February 28, 1998, there has been no change in accounting
principles applicable to, or methods of accounting utilized by, CDS except as
noted in the CDS Financial Statements. The books and records of CDS have been
and are being maintained in accordance with good business practice, reflect only
valid transactions, are complete and correct in all material respects and
present fairly in all material respects the basis for the financial position and
results of operations of CDS as set forth on the CDS Financial Statements.
Schedule 3.9 sets forth all liabilities of CDS as of the Effective Date.
3.10 Absence of Certain Changes. Since February 28, 1998, CDS has not,
except as otherwise set forth in the CDS Information or the CDS Financial
Statements:
(a) suffered any adverse change in the business, operations, assets,
or financial condition, except for such changes that would not result in a CDS
Material Adverse Effect;
(b) suffered any material damage or destruction to or loss of the
assets of CDS, whether or not covered by insurance, which property or assets are
material to the operations or business of CDS;
(c) settled, forgiven, compromised, canceled, released, waived or
permitted to lapse any material rights or claims other than in the ordinary
course of business;
(d) entered into or terminated any material agreement, commitment or
transaction, or agreed or made any changes in material leases or agreements,
other than renewals or extensions thereof and leases, agreements, transactions
and commitments entered into or terminated in the ordinary course of business;
(e) written up, written down or written off the book value of any
material amount of assets other than in the ordinary course of business;
(f) declared, paid or set aside for payment any dividend or
distribution with respect to CDS's capital stock;
(g) redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of CDS's capital stock or
securities or any rights to acquire such capital stock or securities, or agreed
to changes in the terms and conditions of any such rights outstanding as of the
date of this Agreement;
Agreement and Plan of Merger - CADI, CDS Page 6
April 17, 1998 (12:17PM)
(h) increased the compensation of or paid any bonuses to any employees
or contributed to any employee benefit plan, other than in accordance with
established policies, practices or requirements;
(i) entered into any employment, consulting or compensation agreement
with any person or group;
(j) entered into any collective bargaining agreement with any person
or group;
(k) entered into, adopted or amended any employee benefit plan; or
(l) entered into any agreement to do any of the foregoing.
3.11 No Material Undisclosed Liabilities. There are no material liabilities
or obligations of CDS of any nature, whether absolute, accrued, contingent, or
otherwise, other than:
(a) the liabilities and obligations that are reflected, accrued or
reserved against on the CDS Financial Statements, or referred to in the
footnotes to the CDS Financial Statements or incurred in the ordinary course of
business and consistent with past practices since December 31, 1997; or
(b) liabilities and obligations which in the aggregate would not
result in a CDS Material Adverse Effect.
3.12 Tax Returns; Taxes. CDS has duly filed all U.S. federal and material
state, county, local and foreign tax returns and reports required to be filed by
it, including those with respect to income, payroll, property, withholding,
social security, unemployment, franchise, excise and sales taxes and all such
returns and reports are correct in all material respects; has either paid in
full all taxes that have become due as reflected on any return or report and any
interest and penalties with respect thereto or has fully accrued on its books or
have established adequate reserves for all taxes payable but not yet due; and
has made cash deposits with appropriate governmental authorities representing
estimated payments of taxes, including income taxes and employee withholding tax
obligations. No extension or waiver of any statute of limitations or time within
which to file any return has been granted to or requested by CDS with respect to
any tax. No unsatisfied deficiency, delinquency or default for any tax,
assessment or governmental charge has been claimed, proposed or assessed against
CDS, nor has CDS received notice of any such deficiency, delinquency or default.
CDS has no material tax liabilities other than those reflected on the CDS
Financial Statements and those arising in the ordinary course of business since
the date thereof. CDS will make available to MEDY true, complete and correct
copies of CDS's consolidated U.S. federal tax returns for the last three years
and make available such other tax returns requested by MEDY. There is no dispute
or claim concerning any tax liability of CDS or any of its subsidiaries either:
(a) raised by any taxing authority in writing; (b) as to which CDS has received
notice concerning a potential audit of any return filed by CDS; and (c) there is
no outstanding audit or pending audit of any tax return filed by CDS.
3.13 Material Contracts. CDS has furnished or made available to MEDY
accurate and complete copies of the Material Contracts (as defined herein)
applicable to CDS. Except as set forth on Schedule 3.13, there is not under any
of the Material Contracts any existing breach, default or event of default by
Agreement and Plan of Merger - CADI, CDS Page 7
April 17, 1998 (12:17PM)
CDS nor event that with notice or lapse of time or both would constitute a
breach, default or event of default by CDS other than breaches, defaults or
events of default which would not have a CDS Material Adverse Effect nor does
CDS know of, and CDS has not received notice of, or made a claim with respect
to, any breach or default by any other party thereto which would, severally or
in the aggregate, have a CDS Material Adverse Effect. As used herein, the term
"Material Contracts" shall mean all contracts and agreements providing for
expenditures or commitments by CDS in excess of $10,000 over not more than a 12
month period.
3.14 Litigation and Government Claims. Except as disclosed in the CDS
Information, there is no pending suit, claim, action or litigation, or
administrative, arbitration or other proceeding or governmental investigation or
inquiry against CDS to which its businesses or assets are subject which would,
severally or in the aggregate, reasonably be expected to result in a CDS
Material Adverse Effect. To the knowledge of CDS, and except as disclosed in the
CDS Information, there are no such proceedings threatened or contemplated which
would, severally or in the aggregate, have a CDS Material Adverse Effect. CDS is
not subject to any judgment, decree, injunction, rule or order of any court, or,
to the knowledge of CDS, any governmental restriction applicable to CDS which is
reasonably likely (i) to have a CDS Material Adverse Effect or (ii) to cause a
material limitation on MEDY's ability to operate the business of CDS (as it is
currently operated) after the Closing.
3.15 Compliance With Laws. CDS has all material authorizations, approvals,
licenses and orders to carry on its business as it is now being conducted, to
own or hold under lease the properties and assets it owns or holds under lease
and to perform all of its obligations under the agreements to which its is a
party, except for instances which would not have a CDS Material Adverse Effect.
CDS has been and is, to the knowledge of CDS, in compliance with all applicable
laws (including those referenced in the CDS Information), regulations and
administrative orders of any country, state or municipality or of any
subdivision of any thereof to which its business and its employment of labor or
its use or occupancy of properties or any part hereof are subject, the violation
of which would have a CDS Material Adverse Effect.
3.16 Employee Benefit Plans. Each employee benefit plan, as such term is
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), of CDS (collectively the "Employee Plans") complies in all
material respects with all applicable requirements of ERISA and the Internal
Revenue Code of 1986, as amended (the "Code"), and other applicable laws. None
of the Employee Plans is an employee pension benefit plan or a multiemployer
plan, as such terms are defined in ERISA. Neither CDS nor any of its directors,
officers, employees or agents has, with respect to any Employee Plan, engaged in
any "prohibited transaction," as such term is defined in the Code or ERISA, nor
has any Employee Plan engaged in such prohibited transaction which could result
in any taxes or penalties or other prohibited transactions, which in the
aggregate could have a CDS Material Adverse Effect. All Employee Plans are
described in Schedule 3.17.
3.17 Employment Agreements; Labor Relations.
(a) Schedule 3.17 sets forth a complete and accurate list of all
material employee benefit or compensation plans, agreements and arrangements to
which CDS is a party, including without limitation (i) all severance,
employment, consulting or similar contracts, (ii) all material agreements and
contracts with "change of control" provisions or similar provisions and (iii)
all indemnification agreements or arrangements with directors or officers.
Agreement and Plan of Merger - CADI, CDS Page 8
April 17, 1998 (12:17PM)
(b) CDS is in compliance in all material respects with all laws
(including Federal and state laws) respecting employment and employment
practices, terms and conditions of employment, wages and hours, and is not
engaged in any unfair labor or unlawful employment practice. To CDS's knowledge,
there is no unlawful employment practice discrimination charge pending before
the EEOC or EEOC recognized state "referral agency." Except as would not have a
CDS Material Adverse Effect, there is no unfair labor practice charge or
complaint against CDS pending before the National Labor Review Board. There is
no labor strike, dispute, slowdown or stoppage actually pending or, to the
knowledge of CDS, threatened against or involving or affecting CDS and no
National Labor Review Board representation question exists respecting their
respective employees. Except as would not have a CDS Material Adverse Effect, no
grievances or arbitration proceeding is pending and no written claim therefor
exists. There is no collective bargaining agreement that is binding on CDS.
3.18 Intellectual Property. To CDS's knowledge, CDS owns or has valid,
binding and enforceable rights to use all material patents, trademarks, trade
names, service marks, service names, copyrights, applications therefor and
licenses or other rights in respect thereof ("Intellectual Property") used or
held for use in connection with the business of CDS, without any known conflict
with the rights of others, except for such conflicts as do not have a CDS
Material Adverse Effect. CDS has not received any notice from any other person
pertaining to or challenging the right of CDS to use any Intellectual Property
or any trade secrets, proprietary information, inventions, know-how, processes
and procedures owned or used or licensed to CDS, except with respect to rights
the loss of which, individually or in the aggregate, would not have a CDS
Material Adverse Effect.
3.19 Title to Properties and Related Matters.
(a) CDS has good and marketable title to or valid leasehold interests
in their respective properties (the "Real Estate") reflected on the CDS
Financial Statements or acquired after the date thereof (other than personal
properties sold or otherwise disposed of in the ordinary course of business),
and all of such properties and all assets purchased by CDS since the date of the
most recent CDS Financial Statements are free and clear of any lien, claim or
encumbrance, except as reflected in the CDS Financial Statements or notes
thereto and except for:
(i) liens for taxes, assessments or other governmental charges not yet
due and payable or the validity of which are being contested in good faith
by appropriate proceedings;
(ii) statutory liens incurred in the ordinary course of business that
are not yet due and payable or the validity of which are being contested in
good faith by appropriate proceedings;
(iii) landlord liens contained in leases entered in the ordinary
course of business; and
(iv) other liens, claims or encumbrances that, in the aggregate, do
not materially subtract from the value of, or materially interfere with,
the present use of, the Real Estate.
Agreement and Plan of Merger - CADI, CDS Page 9
April 17, 1998 (12:17PM)
Except for those assets acquired since the date of the most recent CDS Financial
Statements, all properties and assets material to the present operations of CDS
are owned or leased by CDS and are reflected on the CDS Financial Statements and
notes thereto in the manner and to the extent required by generally accepted
accounting principles.
(b)(i) Applicable zoning ordinances permit the operation of CDS's
business at the Real Estate; (ii) CDS has all easements and rights, including
easements for all utilities, services, roadways and other means of ingress and
egress, necessary to operate CDS's business at the Real Estate; and (iii)
neither the whole nor any portion of the Real Estate has been condemned,
requisitioned or otherwise taken by any public authority, and no notice of any
such condemnation, requisition or taking has been received; except in each case
where the failure of such provisions to be true and correct would not have a CDS
Material Adverse Effect. No such condemnation, requisition or taking is
threatened or contemplated to CDS's knowledge, and there are no pending public
improvements which may result in special assessments against or which may
otherwise materially and adversely affect the Real Estate. To the knowledge of
CDS, the Real Estate has not been used for deposit or disposal of hazardous
wastes or substances in violation of any past or current law in any material
respect and there is no material liability under past or current law with
respect to any hazardous wastes or substances which have been deposited or
disposed of on or in the Real Estate.
(c) CDS has received no notice of, and has no actual knowledge of, any
material violation of any zoning, building, health, fire, water use or similar
statute, ordinance, law, regulation or code in connection with the Real Estate.
(d) To CDS's knowledge, no hazardous or toxic material (as hereinafter
defined) exists in any structure located on, or exists on or under the surface
of, the Real Estate which is, in any case, in material violation of applicable
environmental law. For purposes of this Agreement, "hazardous or toxic material"
shall mean waste, substance, materials, smoke, gas or particulate matter
designated as hazardous, toxic or dangerous under any applicable environmental
law. For purposes of this Agreement, "environmental law" shall include the
Comprehensive Environmental Response Compensation and Liability Act, the Clean
Air Act, the Clean Water Act and any other applicable federal, state or local
environmental, health or safety law, rule or regulation relating to or imposing
liability or standards concerning or in connection with hazardous, toxic or
dangerous waste, substance, materials, smoke, gas or particulate matter.
3.20 Tax Representations.
(a) To the knowledge of CDS, the fair market value of the MEDY Common
Stock and other consideration received by each CDS shareholder will be
approximately equal to the fair market value of the CDS Common Stock surrendered
in the Merger.
(b) To the knowledge of CDS, there is no plan or intention by any of
the shareholders of CDS to sell, exchange, or otherwise dispose of a number of
shares of MEDY Common Stock received in the transaction that would reduce the
CDS shareholders' ownership of MEDY Common Stock to a number of shares having a
value, as of the date of the transaction, of less than 50% of the value of all
of the formerly outstanding stock of CDS as of the same date.
Agreement and Plan of Merger - CADI, CDS Page 10
April 17, 1998 (12:17PM)
(c) As a result of the completion of the Merger, CADI will hold at
least 90% of the fair market value of the CDS net assets and at least 70% of the
fair market value of the gross CDS assets and at least 90% of the fair market
value of CADI's net assets and at least 70% of the fair market value of CADI's
gross assets held immediately prior to the transaction.
(d) CADI has no plan or intention to issue additional shares of its
stock that would result in MEDY losing control of CADI following the Effective
Date within the meaning of ss.368(c) of the Code.
(f) MEDY, CADI, CDS, and the shareholders of CDS have agreed to pay
their respective expenses, if any, incurred in connection with the transaction.
(g) There is no intercorporate indebtedness existing between MEDY and
CDS or between CADI and CDS that was issued, acquired, or will be settled at a
discount.
(h) In the transaction, shares of CDS Common Stock representing
control of CDS, as defined in ss.368(c) of the Code, will be exchanged solely
for voting stock of MEDY and the other consideration described herein.
(i) At the time of the transaction, CDS will not have outstanding any
warrants, Options, convertible securities, or any other type of right pursuant
to which any person could acquire stock in CDS.
(j) On the date of the transaction, the fair market value of the
assets of CDS will exceed the sum of its liabilities, plus the amount of
liabilities, if any, to which the assets are subject.
(k) CDS is not under the jurisdiction of a court in a title 11 or
similar case within the meaning of ss.368(a)(3)(A) of the Code.
3.21 No Brokers and Finders. None of CDS or, to CDS's knowledge, any of its
officers, directors and employees has employed any broker, finder or investment
bank or incurred any liability for any investment banking fees, financial
advisory fees, brokerage fees or finders' fees in connection with the
transactions contemplated hereby. CDS is not aware of any claim for payment of
any finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the completion of
the transactions contemplated hereby.
ARTICLE 4
Representations and Warranties of MEDY
--------------------------------------
and CADI
--------
MEDY and CADI represent and warrant to CDS that the statements contained in
Article 4 are true and correct in all material respects and will be true and
correct as of the Closing Date and the Effective Date, except as set forth in
the schedules attached hereto. As used in this Article 4 and elsewhere in this
Agreement, the phrase "to MEDY's or CADI's knowledge" or "to MEDY's or CADI's
actual knowledge" shall mean to the actual knowledge of Van X. Xxxxxxx and
Xxxxxx X. Xxxxxxxx.
Agreement and Plan of Merger - CADI, CDS Page 11
April 17, 1998 (12:17PM)
4.1 Organization and Good Standing. Each of MEDY and CADI is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization. All shares of capital stock
or other equity interests of each of CADI are owned by MEDY, free and clear of
all material liens, encumbrances, equities or claims.
4.2 Foreign Qualification. MEDY and CADI are duly qualified or licensed to
do business and are in good standing as a foreign corporation in every
jurisdiction where the failure so to qualify would have a material adverse
effect (a "MEDY Material Adverse Effect") on (a) the business, operations,
assets or financial condition of MEDY and CADI taken as a whole or (b) the
validity or enforceability of, or the ability of MEDY to perform its obligations
under, this Agreement.
4.3 Corporate Power and Authority. MEDY and CADI have the corporate power
and authority and all material licenses and permits to own, lease and operate
their respective properties and assets and to carry on their respective
businesses as currently being conducted. Each of MEDY and CADI has the corporate
power and authority to execute and deliver this Agreement and to perform its
obligations under this Agreement and to complete the Merger. The execution,
delivery and performance by MEDY and CADI of this Agreement has been duly
authorized by all necessary corporate action.
4.4 Binding Effect. This Agreement has been duly executed and delivered by
MEDY and CADI and is the legal, valid and binding obligations of MEDY and CADI,
enforceable in accordance with its terms except that:
(a) enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights;
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability; and
(c) rights to indemnification may be limited by considerations of
public policy.
4.5 Absence of Restrictions and Conflicts. The execution, delivery and
performance of this Agreement and the completion of the Merger and the
fulfillment of and compliance with the terms and conditions of this Agreement do
not and will not, with the passing of time or the giving of notice or both,
violate or conflict with, constitute a breach of or default under, result in the
loss of any material benefit under, or permit the acceleration of any obligation
under, (i) any term or provision of the Articles of Incorporation or Bylaws of
MEDY or CADI, (ii) any "MEDY Material Contract" (as defined in Section 4.12),
(iii) any judgment, decree or order of any court or governmental authority or
agency to which MEDY or CADI is a party or by which MEDY or CADI or any of their
respective properties is bound, or (iv) any statute, law, regulation or rule
applicable to MEDY or CADI other than such violations, conflicts, breaches or
defaults as would not have a MEDY Material Adverse Effect. Except for the filing
of the Articles of Merger with the Secretary of State of California and with the
Michigan Corporate and Securities Bureau, compliance with the applicable
requirements of the Securities Act, the Exchange Act and applicable state
securities laws, no consent, approval, order or authorization of, or
registration, declaration or filing with, any governmental agency or public or
regulatory unit, agency, body or authority with respect to MEDY or CADI is
required in connection with the execution, delivery or performance of this
Agreement by MEDY or the completion of the transactions contemplated hereby.
Agreement and Plan of Merger - CADI, CDS Page 12
April 17, 1998 (12:17PM)
4.6 Capitalization of MEDY.
(a) The authorized capital stock of MEDY consists of 15,000,000 shares
of MEDY Common Stock, and 5,000,000 shares of preferred stock. As of March 31,
1998, there were (i) approximately 9,628,669 shares of MEDY Common Stock
outstanding, and no shares of preferred stock outstanding; and (ii) at the date
hereof, 3,915,852 shares were reserved for issuance upon the exercise of
outstanding options and warrants and upon the exercise of a convertible
debenture, in some cases pursuant to MEDY's Stock Option Plans (the "MEDY
Options" and "MEDY Option Plans," respectively). All of the issued and
outstanding shares of MEDY Common Stock have been duly authorized and validly
issued and are fully paid and nonassessable. As an exception to the
foregoing,MEDY affirmatively states that it has filed a preliminary proxy
statement with the Securities and Exchange Commission for a shareholders'
meeting at which the shareholders will consider and vote upon a reverse stock
split, a forward stock split, and a recapitalization. As a further exception to
the foregoing, MEDY states that it will pay interest to The Tail Wind Fund,
Ltd., which payment will be made in shares of MEDY Common Stock valued in
accordance with the debenture, which payment will be effective April 1, 1998 and
which will increase the total number of shares of MEDY Common Stock outstanding.
(b) All of the issued and outstanding shares of MEDY Common Stock have
been duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights.
(c) The shares of MEDY Common Stock to be issued in the Merger will be
duly authorized and validly issued and will be fully paid, nonassessable shares
of MEDY Common Stock free of preemptive rights.
(d) To MEDY's knowledge, there are no voting trusts, stockholder
agreements or other voting arrangements by the stockholders of MEDY.
(e) Except as set forth in subsection (a) above, there is no
outstanding subscription, contract, convertible or exchangeable security,
option, warrant, call or other right obligating MEDY or its subsidiaries to
issue, sell, exchange, or otherwise dispose of, or to purchase, redeem or
otherwise acquire, shares of, or securities convertible into or exchangeable
for, capital stock of MEDY.
4.7 MEDY SEC Reports. MEDY has made available to CDS (i) MEDY's Annual
Reports on Form 10-KSB for the year ended September 30, 1997, including all
exhibits filed thereto and items incorporated therein by reference, (ii) MEDY's
Current reports reporting events of October 23, 1997 (as amended), December 31,
1997, January 5, 1998 and February 6, 1998; (iii) MEDY's registration statement
on Form S-3 and Prospectus dated January 27, 1998 included therein; (iv) it
preliminary proxy statement for its annual meeting of shareholders to be held on
June 11, 1998; and (v) all other reports or registration statements (as amended
or supplemented prior to the date hereof), filed by MEDY with the SEC since
October 1, 1997, including all exhibits thereto and items incorporated therein
Agreement and Plan of Merger - CADI, CDS Page 13
April 17, 1998 (12:17PM)
by reference (items (i) through (iv) being referred to as the "MEDY SEC
Reports"). As of their respective dates, MEDY SEC Reports did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Since October 1, 1996,
MEDY has filed all material forms (and necessary amendments), reports and
documents with the SEC required to be filed by it pursuant to the federal
securities laws and the SEC rules and regulations thereunder, each of which
complied as to form, at the time such form, report or document was filed, in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act and the applicable rules and regulations thereunder.
4.8 Financial Statements and Records of MEDY. MEDY has made available to
CDS true, correct and complete copies of the following financial statements (the
"MEDY Financial Statements"):
(a) the consolidated balance sheets of MEDY and its consolidated
subsidiaries as of September 30, 1997, and the consolidated statements of
income, stockholders' equity and cash flows for the fiscal years then ended,
including the notes thereto, in each case examined by and accompanied by the
report of MEDY's independent certified public accountants as of the date of such
financial statements; and
(b) the unaudited balance sheet of MEDY as of December 31, 1997 (the
"MEDY Balance Sheet"), with any notes thereto (the "MEDY Quarterly Statements").
The MEDY Financial Statements present fairly, in all material respects, the
financial position of MEDY as of the dates thereof and the results of operations
and changes in financial position thereof for the periods then ended, in each
case in conformity with generally accepted accounting principles, consistently
applied, except as noted therein. Since September 30, 1997, there has been no
change in accounting principles applicable to, or methods of accounting utilized
by, MEDY, except as noted in the MEDY Financial Statements. The books and
records of MEDY have been and are being maintained in accordance with good
business practice, reflect only valid transactions, are complete and correct in
all material respects, and present fairly in all material respects the basis for
the financial position and results of operations of MEDY set forth in the MEDY
Financial Statements.
4.9 Absence of Certain Changes. Since the date of the MEDY Balance Sheet,
MEDY has not, except as otherwise set forth in the MEDY SEC Reports or on
Schedule 4.9:
(a) suffered any adverse change in the business, operations, assets,
or financial condition except for such changes that would not have a MEDY
Material Adverse Effect;
(b) suffered any material damage or destruction to or loss of the
assets of MEDY or CADI, whether or not covered by insurance, which property or
assets are material to the operations or business of MEDY and its subsidiaries
taken as a whole;
(c) settled, forgiven, compromised, canceled, released, waived or
permitted to lapse any material rights or claims other than in the ordinary
course of business;
(d) entered into or terminated any material agreement, commitment or
transaction, or agreed or made any changes in material leases or agreements,
other than renewals or extensions thereof and leases, agreements, transactions
and commitments entered into or terminated in the ordinary course of business
except the transaction with Information Presentation Systems of Marietta,
Georgia, which transaction was described in a current report on Form 8-K dated
February 6, 1998;
Agreement and Plan of Merger - CADI, CDS Page 14
April 17, 1998 (12:17PM)
(e) written up, written down or written off the book value of any
material amount of assets other than in the ordinary course of business;
(f) declared, paid or set aside for payment any dividend or
distribution with respect to MEDY's capital stock;
(g) redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of MEDY's capital stock or
securities (other than shares issued upon exercise of the MEDY Options) or any
rights to acquire such capital stock or securities, or agreed to changes in the
terms and conditions of any such rights outstanding as of the date of this
Agreement provided, however, nothing herein is intended or shall prevent MEDY
from issuing MEDY Options to its employees or in lieu of royalty payments or
license fees substantially in accordance with MEDY's past practices or which are
currently under contract;
(h) increased the compensation of or paid any bonuses to any employees
or contributed to any employee benefit plan, other than in accordance with
established policies, practices or requirements and as provided in Section 5.2
hereof;
(i) entered into any employment, consulting or compensation agreement
with any person or group, except for agreements which would not have a MEDY
Material Adverse Effect;
(j) entered into any collective bargaining agreement with any person
or group;
(k) entered into, adopted or amended any employee benefit plan; or
(l) entered into any agreement to do any of the foregoing.
When used in this Agreement, the term "Material" or "MEDY Material Adverse
Effect" means any event which, if determined adversely to MEDY, would result in
a charge against or other reduction of capital or earnings of MEDY in an amount
greater than $50,000 if a single event or, if an accumulation of events, $75,000
over a twelve month period, or any other event, either singly or in the
aggregate, which would have a material adverse effect on the ability of MEDY to
carry on its business.
4.10 No Material Undisclosed Liabilities. There are no material liabilities
or obligations of MEDY and its consolidated subsidiaries of any nature, whether
absolute, accrued, contingent, or otherwise, other than:
(a) liabilities and obligations that are reflected, accrued or
reserved against on the MEDY Balance Sheet or referred to in the footnotes to
the MEDY Balance Sheet, or incurred in the ordinary course of business and
consistent with past practices since the date of the MEDY Balance Sheet; or
Agreement and Plan of Merger - CADI, CDS Page 15
April 17, 1998 (12:17PM)
(b) liabilities and obligations which in the aggregate would not
result in a MEDY Material Effect.
4.11 Tax Returns; Taxes. Each of MEDY and CADI have duly filed all U.S.
federal and material state, county, local and foreign tax returns and reports
required to be filed by it, including those with respect to income, payroll,
property, withholding, social security, unemployment, franchise, excise and
sales taxes and all such returns and reports are correct in all material
respects; have either paid in full all taxes that have become due as reflected
on any return or report and any interest and penalties with respect thereto or
have fully accrued on its books or have established adequate reserves for all
taxes payable but not yet due; and have made cash deposits with appropriate
governmental authorities representing estimated payments of taxes, including
income taxes and employee withholding tax obligations. No extension or waiver of
any statute of limitations or time within which to file any return has been
granted to or requested by MEDY or CADI with respect to any tax. No unsatisfied
deficiency, delinquency or default for any tax, assessment or governmental
charge has been claimed, proposed or assessed against MEDY or CADI, nor has MEDY
or CADI received notice of any such deficiency, delinquency or default. MEDY and
CADI have no material tax liabilities other than those reflected on the MEDY
Balance Sheet and those arising in the ordinary course of business since the
date thereof. MEDY will make available to CDS true, complete and correct copies
of MEDY's consolidated U.S. federal tax returns for the last five years and make
available such other tax returns requested by CDS. There is no dispute or claim
concerning any material tax liability of MEDY or any of its subsidiaries either:
(a) raised by any taxing authority in writing; (b) as to which MEDY or any of
its subsidiaries has received notice concerning a potential audit of any return
filed by MEDY; and (c) there is no outstanding audit or pending audit of any tax
return filed by MEDY.
4.12 Material Contracts. MEDY has furnished or made available to CDS
accurate and complete copies of the MEDY Material Contracts (as defined herein)
applicable to MEDY or CADI. There is not under any of the MEDY Material
Contracts any existing breach, default or event of default by MEDY or CADI nor
event that with notice or lapse of time or both would constitute a breach,
default or event of default by MEDY or CADI other than breaches, defaults or
events of default which would not have a MEDY Material Adverse Effect nor does
MEDY know of, and MEDY has not received notice of, or made a claim with respect
to, any breach or default by any other party thereto which would, severally or
in the aggregate, have a MEDY Material Adverse Effect. As used herein, the term
"MEDY Material Contracts" shall mean all contracts and agreements filed, or
required to be filed, as exhibits to MEDY's Annual Report on Form 10-KSB for the
year ended September 30, 1997 and any contracts and agreements entered into
since September 30, 1997 which would be required to be filed or incorporated by
reference therein as an exhibit to MEDY's Annual Report on Form 10-KSB for the
year ending September 30, 1998, and all contracts entered into in the ordinary
course of business providing for financial obligations of MEDY of more than
$10,000 over a 12 month period (excluding purchase orders entered into in the
ordinary course of business).
4.13 Litigation and Government Claims. Except as disclosed in the MEDY SEC
Reports, there is no pending suit, claim, action or litigation, or
administrative, arbitration or other proceeding or governmental investigation or
inquiry against MEDY or CADI to which their businesses or assets are subject
which would, severally or in the aggregate, reasonably be expected to result in
a MEDY Material Adverse Effect. To the knowledge of MEDY, there are no such
proceedings threatened or contemplated which would, severally or in the
aggregate, have a MEDY Material Adverse Effect. Neither MEDY nor CADI is subject
to any judgment, decree, injunction, rule or order of any court, or, to the
knowledge of MEDY, any governmental restriction applicable to MEDY or CADI which
is reasonably likely to have a MEDY Material Adverse Effect.
Agreement and Plan of Merger - CADI, CDS Page 16
April 17, 1998 (12:17PM)
4.14 Compliance with Laws. MEDY and CADI each have all material
authorizations, approvals, licenses and orders to carry on their respective
businesses as they are now being conducted, to own or hold under lease the
properties or assets they own or hold under lease and to perform all of their
obligations under the agreements to which they are a party, except for instances
which would not have a MEDY Material Adverse Effect. MEDY and CADI have been and
are, to the knowledge of MEDY, in compliance with all applicable laws (including
those referenced in the MEDY SEC Reports), regulations and administrative orders
of any country, state or municipality or any subdivision of any thereof to which
their respective businesses and their employment of labor or their use or
occupancy of properties or any part hereof are subject, the violation of which
would have a MEDY Material Adverse Effect.
4.15 MEDY Employee Benefit Plans. Each employee benefit plan, as such term
is defined in Section 3(3) of ERISA, of MEDY and CADI (collectively the "MEDY
Employee Plans") complies in all material respects with all applicable
requirements of ERISA, the Code and other applicable laws. None of the MEDY
Employee Plans is an employee pension benefit plan or a multiemployer plan, as
such terms are defined in ERISA. Neither MEDY nor CADI nor any of their
respective directors, officers, employees or agents has, with respect to any
MEDY Employee Plan, engaged in any "prohibited transaction," as such term is
defined in the Code or ERISA, nor has any MEDY Employee Plan engaged in such
prohibited transaction which could result in any taxes or penalties or other
prohibited transactions, which in the aggregate could have a MEDY Material
Adverse Effect.
4.16 Employment Agreements; Labor Relations. Each of MEDY and CADI is in
compliance in all material respects with all laws (including Federal and state
laws) respecting employment and employment practices, terms and conditions of
employment, wages and hours, and is not engaged in any unfair labor or unlawful
employment practice. There is no unlawful employment practice discrimination
charge pending before the EEOC or EEOC recognized state "referral agency."
Except as would not have a MEDY Material Adverse Effect, there is no unfair
labor practice charge or complaint against MEDY or CADI pending before the
National Labor Review Board. There is no labor strike, dispute, slowdown or
stoppage actually pending or, to the knowledge of MEDY, threatened against or
involving or affecting MEDY or CADI and no National Labor Review Board
representation question exists respecting their respective employees. Except as
would not have a MEDY Material Adverse Effect, no grievances or arbitration
proceeding is pending and no written claim therefor exists. There is no
collective bargaining agreement that is binding on MEDY or CADI.
4.17 Intellectual Property. MEDY and CADI own or have valid, binding and
enforceable rights to use all material patents, trademarks, trade names, service
marks, service names, copyrights, applications therefor and licenses or other
rights in respect thereof ("MEDY Intellectual Property") used or held for use in
connection with the business of MEDY or CADI, without any known conflict with
the rights of others, except for such conflicts as do not have a MEDY Material
Adverse Effect. Neither MEDY nor CADI has received any notice from any other
person pertaining to or challenging the right of MEDY or CADI to use any MEDY
Intellectual Property or any trade secrets, proprietary information, inventions,
know-how, processes and procedures owned or used or licensed to MEDY or CADI,
except with respect to rights the loss of which, individually or in the
aggregate, would not have a MEDY Material Adverse Effect.
Agreement and Plan of Merger - CADI, CDS Page 17
April 17, 1998 (12:17PM)
4.18 Nasdaq Fees. MEDY has paid all fees due and owing to Nasdaq with
respect to MEDY Common Stock on the SmallCap Market, and MEDY will pay all such
fees arising out of the issuance of any shares of MEDY common stock in
connection with transactions contemplated hereby.
4.19 Tax Representations.
(a) Following the transaction, CADI will hold at least 90% of the fair
market value of the CDS net assets and at least 70% of the fair market value of
the CDS gross assets and at least 90% of the fair market value of CADI's net
assets and at least 70% of the fair market value of CADI's gross assets held
immediately prior to the transaction.
(b) Prior to the transaction, MEDY will be in control of CADI within
the meaning of ss.368(c) of the Code.
(c) MEDY has no plan or intention to reacquire any of its stock issued
in the transaction.
(d) MEDY has no plan or intention to liquidate CADI; to merge CADI
with or into another corporation; to sell or otherwise dispose of the stock of
CADI except for transfers of stock to corporations controlled by MEDY; or to
cause CADI to sell or otherwise dispose of any of its assets or of any of the
assets acquired from CDS, except for dispositions made in the ordinary course of
business or transfers of assets to a corporation controlled by CADI.
(e) CDS will have no liabilities assumed by CADI, and will not
transfer to CADI any assets subject to liabilities, in the transaction.
(f) Following the transaction, CADI will continue the historic
business of CDS.
(g) MEDY, CADI, CDS, and the shareholders of CDS will pay their
respective expenses, if any, incurred in connection with the transaction.
(h) There is no intercorporate indebtedness existing between MEDY and
CDS or between CADI and CDS that was issued, acquired, or will be settled at a
discount.
(i) In the transaction, shares of CDS Common Stock representing
control of CDS, as defined in ss.368(c) of the Code, will be exchanged solely
for voting stock of MEDY.
(j) MEDY does not own, nor has it owned during the past five years,
any shares of the stock of CDS.
(k) Neither MEDY nor CADI is an investment company as defined in
ss.368(a)(2)(f)(iii) and (iv) of the Code.
Agreement and Plan of Merger - CADI, CDS Page 18
April 17, 1998 (12:17PM)
4.20 Title to Properties and Related Matters.
(a) MEDY has good and marketable title to or valid leasehold interests
in their respective properties (the "Real Estate") reflected on the MEDY
Financial Statements or acquired after the date thereof (other than personal
properties sold or otherwise disposed of in the ordinary course of business),
and all of such properties and all assets purchased by MEDY since the date of
the most recent MEDY Financial Statements are free and clear of any lien, claim
or encumbrance, except as reflected in the MEDY Financial Statements or notes
thereto and except for:
(i) liens for taxes, assessments or other governmental charges not yet
due and payable or the validity of which are being contested in good faith
by appropriate proceedings;
(ii) statutory liens incurred in the ordinary course of business that
are not yet due and payable or the validity of which are being contested in
good faith by appropriate proceedings;
(iii) landlord liens contained in leases entered in the ordinary
course of business; and
(iv) other liens, claims or encumbrances that, in the aggregate, do
not materially subtract from the value of, or materially interfere with,
the present use of, the Real Estate.
Except for those assets acquired since the date of the MEDY Balance Sheet, all
properties and assets material to the present operations of MEDY are owned or
leased by MEDY and are reflected on the MEDY Financial Statements and notes
thereto in the manner and to the extent required by generally accepted
accounting principles.
(b) (i) Applicable zoning ordinances permit the operation of MEDY's
business at the Real Estate; (ii) MEDY has all easements and rights, including
easements for all utilities, services, roadways and other means of ingress and
egress, necessary to operate MEDY's business at the Real Estate; (iii) the Real
Estate is not located within a flood plain or lakeshore erosion hazard area; and
(iv) neither the whole nor any portion of the Real Estate has been condemned,
requisitioned or otherwise taken by any public authority, and no notice of any
such condemnation, requisition or taking has been received; except in each case
where the failure of such provisions to be true and correct would not have a
MEDY Material Adverse Effect. No such condemnation, requisition or taking is
threatened or contemplated to MEDY's knowledge, and there are no pending public
improvements which may result in special assessments against or which may
otherwise materially and adversely affect the Real Estate. To the knowledge of
MEDY, the Real Estate has not been used for deposit or disposal of hazardous
wastes or substances in violation of any past or current law in any material
respect and there is no material liability under past or current law with
respect to any hazardous wastes or substances which have been deposited or
disposed of on or in the Real Estate.
(c) MEDY has received no notice of, and has no actual knowledge of,
any material violation of any zoning, building, health, fire, water use or
similar statute, ordinance, law, regulation or code in connection with the Real
Estate.
Agreement and Plan of Merger - CADI, CDS Page 19
April 17, 1998 (12:17PM)
(d) To MEDY's knowledge, no hazardous or toxic material (as
hereinafter defined) exists in any structure located on, or exists on or under
the surface of, the Real Estate which is, in any case, in material violation of
applicable environmental law. For purposes of this Agreement, "hazardous or
toxic material" shall mean waste, substance, materials, smoke, gas or
particulate matter designated as hazardous, toxic or dangerous under any
applicable environmental law. For purposes of this Agreement, "environmental
law" shall include the Comprehensive Environmental Response Compensation and
Liability Act, the Clean Air Act, the Clean Water Act and any other applicable
federal, state or local environmental, health or safety law, rule or regulation
relating to or imposing liability or standards concerning or in connection with
hazardous, toxic or dangerous waste, substance, materials, smoke, gas or
particulate matter.
4.21 No Brokers and Finders. None of MEDY or, to MEDY's knowledge, any of
its officers, directors and employees has employed any broker, finder or
investment bank or incurred any liability for any investment banking fees,
financial advisory fees, brokerage fees or finders' fees in connection with the
transactions contemplated hereby. MEDY is not aware of any claim for payment of
any finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the completion of
the transactions contemplated hereby.
ARTICLE 5
Certain Covenants and Agreements
--------------------------------
5.1 Conduct of Business by CDS. From the date hereof to the Effective Date,
CDS will, except as required in connection with the Merger and the other
transactions contemplated by this Agreement and except as otherwise disclosed on
the schedules hereto or consented to in writing by MEDY:
(a) carry on its business in the ordinary and regular course in
substantially the same manner as heretofore conducted and not engage in any new
line of business or enter into any material agreement, transaction or activity
or make any material commitment except those in the ordinary and regular course
of business and not otherwise prohibited under this Section 5.1;
(b) neither change nor amend its Articles of Incorporation or Bylaws;
(c) not issue or sell shares of capital stock of CDS or issue, sell or
grant options, warrants or rights to purchase or subscribe to, or enter into any
arrangement or contract with respect to the issuance or sale of any of the
capital stock of CDS or rights or obligations convertible into or exchangeable
for any shares of the capital stock of CDS or make any changes (by split-up,
combination, reorganization or otherwise) in the capital structure of CDS;
(d) not declare, pay or set aside for payment any dividend or other
distribution in respect of the capital stock or other equity securities of CDS
and not redeem, purchase or otherwise acquire any shares of the capital stock or
other securities of CDS or rights or obligations convertible into or
exchangeable for any shares of the capital stock or other securities of CDS or
obligations convertible into such, or any options, warrants or other rights to
purchase or subscribe to any of the foregoing;
(e) not acquire or enter into any agreement to acquire, by merger,
consolidation or purchase of stock or assets, any business or entity;
Agreement and Plan of Merger - CADI, CDS Page 20
April 17, 1998 (12:17PM)
(f) use its reasonable efforts to preserve intact the corporate
existence, goodwill and business organization of CDS, to keep the officers and
employees of CDS available to CDS and to preserve the relationshCDS of CDS with
suppliers, customers and others having business relations with any of them,
except for such instances which would not have a CDS Material Adverse Effect;
(g) Not (i) enter into, modify or extend in any manner the terms of
any employment, severance or similar agreements with officers and directors,
(ii) grant any increase in the compensation of officers or directors, whether
now or hereafter payable or (iii) grant any increase in the compensation of any
other employees except for compensation increases in the ordinary course of
business and consistent with past practice (it being understood by the parties
hereto that for the purposes of (ii) and (iii) above increases in compensation
shall include any increase pursuant to any option, bonus, stock purchase,
pension, profit-sharing, deferred compensation, retirement or other plan,
arrangement, contract or commitment);
(h) except in instances which would not have a CDS Material Adverse
Effect, perform all of its obligations under all Material Contracts (except
those being contested in good faith) and not enter into, assume or amend any
contract or commitment that would be a Material Contract other than contracts to
provide services entered into in the ordinary course of business; and
(i) except in instances which would not have a CDS Material Adverse
Effect, prepare and file all federal, state, local and foreign returns for taxes
and other tax reports, filings and amendments thereto required to be filed by
it, and allow MEDY, at its request, to review all such returns, reports, filings
and amendments at CDS's offices prior to the filing thereof, which review shall
not interfere with the timely filing of such returns.
In connection with the continued operation of the business of CDS between
the date of this Agreement and the Effective Date, CDS shall confer in good
faith and on a regular and frequent basis with one or more representatives of
MEDY designated in writing to report operational matters of materiality and the
general status of ongoing operations. In addition, during regular business
hours, CDS will allow MEDY employees and agents to be present at CDS's business
locations to observe the business and operations of CDS. CDS acknowledges that
MEDY does not and will not waive any rights it may have under this Agreement as
a result of such consultations nor shall MEDY be responsible for any decisions
made by CDS's officers and directors with respect to matters which are the
subject of such consultation.
5.2 Conduct of Business by MEDY. From the date hereof to the Effective
Date, MEDY will, and will cause CADI and each of CADI to, except as required in
connection with the Merger and the other transactions contemplated by this
Agreement and except as otherwise disclosed in the schedules hereto or consented
to in writing by CDS:
(a) Carry on its businesses in the ordinary and regular course in
substantially the same manner as heretofore conducted and not engage in any new
line of business or enter into any agreement, transaction or activity or make
any commitment except in the ordinary and regular course of business and not
otherwise prohibited under this Section 5.2;
(b) Neither change nor amend its Articles of Incorporation or Bylaws;
Agreement and Plan of Merger - CADI, CDS Page 21
April 17, 1998 (12:17PM)
(c) Not make any changes (by split-up, combination, reorganization or
otherwise) in the capital structure of MEDY, CADI or CDS;
(d) Not declare, pay or set aside for payment any dividend or other
distribution in respect of the capital stock or other equity securities of MEDY
and not redeem, purchase or otherwise acquire any shares of the capital stock or
other securities of MEDY or CADI, or rights or obligations convertible into or
exchangeable for any shares of the capital stock or other securities of MEDY,
CADI or CDS ,or obligations convertible into such, or any options, warrants or
other rights to purchase or subscribe to any of the foregoing;
(e) Not acquire or enter into any agreement to acquire, by merger,
consolidation or purchase of stock or assets, any business or entity which would
have a MEDY Material Adverse Effect; and
(f) Use its reasonable efforts to preserve intact the corporate
existence, goodwill and business organization of MEDY and CADI, to keep the
officers and employees of MEDY and CADI available to MEDY and to preserve the
relationship of MEDY and CADI with suppliers, customers and others having
business relations with any of them, except for such instances which would not
have a MEDY Material Adverse Effect;
5.3 Notice of any Material Change. Each of CDS and MEDY shall, promptly
after the first notice or occurrence thereof but not later than the Closing
Date, advise the other in writing of any event or the existence of any state of
facts that (i) would make any of its representations and warranties in this
Agreement untrue in any material respect, or (ii) would otherwise constitute
either a CDS Material Adverse Effect or a MEDY Material Adverse Effect.
5.4 Inspection and Access to Information.
(a) Between the date of this Agreement and the Effective Date, CDS
will provide to CADI and MEDY and their accountants, counsel and other
authorized representatives reasonable access, during normal business hours to
its premises, properties, contracts, commitments, books, records and other
information (including tax returns filed and those in preparation) and will
cause its officers to furnish to MEDY and CADI and their authorized
representatives such financial, technical and operating data and other
information pertaining to its business, as CADI and MEDY shall from time to time
reasonably request.
(b) Between the date of this Agreement and the Effective Date, MEDY
will, and will cause CADI to, provide to CDS, the CDS Shareholders, and their
respective accountants, counsel and other authorized representatives reasonable
access, during normal business hours to its premises, properties, contracts,
commitments, books, records and other information (including tax returns filed
and those in preparation) and will cause its officers to furnish to CDS and the
CDS Shareholders and their authorized representatives such financial, technical
and operating data and other information pertaining to its business, as CDS or
any CDS Shareholder may from time to time reasonably request.
(c) Each of the parties hereto and their respective representatives
shall maintain the confidentiality of all information (other than information
which is generally available to the public) concerning the other parties hereto
Agreement and Plan of Merger - CADI, CDS Page 22
April 17, 1998 (12:17PM)
acquired pursuant to the transactions contemplated hereby in the event that the
Merger is not completed. Each of the parties hereto and their representatives
shall not use such information so obtained. All files, records, documents,
information, data and similar items relating to the confidential information of
CDS, whether prepared by MEDY or otherwise coming into MEDY's possession, shall
remain the exclusive property of CDS and shall be promptly delivered to CDS,
together with all copies thereof, upon termination of this Agreement. All files,
records, documents, information, data and similar items relating to the
confidential information of MEDY, whether prepared by CDS or otherwise coming
into CDS's possession, shall remain the exclusive property of MEDY and shall be
promptly delivered to MEDY, together with all copies thereof, upon termination
of this Agreement.
5.5 MEDY Exchange Act Reports. CDS acknowledges that MEDY will be required
to reports its acquisition of CDS promptly following the Effective Date. CDS
agrees to provide as promptly as practicable to MEDY such information concerning
its business and financial statements and affairs as, in the reasonable judgment
of MEDY, may be required or appropriate for inclusion in the required report, or
in any amendments or supplements thereto, and to cause its counsel and auditors
to cooperate with MEDY's counsel and auditors in the preparation of such report.
5.6 Nasdaq Notification. MEDY will file a notification with the Nasdaq
SmallCap Market for the issuance of the shares of MEDY Common Stock to be issued
in the Merger.
5.7 Reasonable Efforts; Further Assurances; Cooperation. Subject to the
other provisions of this Agreement, the parties hereby shall each use their
reasonable efforts to perform their obligations herein and to take, or cause to
be taken or do, or cause to be done, all things reasonably necessary, proper or
advisable under applicable law to obtain all regulatory approvals and satisfy
all conditions to the obligations of the parties under this Agreement and to
cause the Merger and the other transactions contemplated herein to be carried
out promptly in accordance with the terms hereof. The parties agree to use their
reasonable best efforts to complete the transactions contemplated hereby by the
date specified in Section 9.1(b) hereof. The parties shall cooperate fully with
each other and their respective officers, directors, employees, agents, counsel,
accountants and other designees in connection with any steps required to be
taken as a part of their respective obligations under this Agreement, including
without limitation:
(a) In the event any claim, action, suit, investigation or other
proceeding by any governmental body or other person is commenced which questions
the validity or legality of the Merger or any of the other transactions
contemplated hereby or seeks damages in connection therewith, the parties agree
to cooperate and use all reasonable efforts to defend against such claim,
action, suit, investigation or other proceeding and, if an injunction or other
order is issued in any such action, suit or other proceeding, to use all
reasonable efforts to have such injunction or other order lifted, and to
cooperate reasonably regarding any other impediment to the completion of the
transactions contemplated by this Agreement.
(b) Each party shall give prompt written notice to the other of (i)
the occurrence, or failure to occur, of any event which occurrence or failure
would be likely to cause any representation or warranty of CDS or MEDY, as the
case may be, contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the Effective Date or that
will or may result in the failure to satisfy the conditions specified in Article
6 or 7 and (ii) any failure of CDS or MEDY, as the case may be, to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder.
Agreement and Plan of Merger - CADI, CDS Page 23
April 17, 1998 (12:17PM)
5.8 Public Announcements. The timing and content of all announcements
regarding any aspect of this Agreement or the Merger to the financial community,
government agencies, employees or the general public shall be mutually agreed
upon in advance (unless MEDY or CDS is advised by counsel that any such
announcement or other disclosure not mutually agreed upon in advance is required
to be made by law or applicable SmallCap Market rule and then only after making
a reasonable attempt to comply with the provisions of this Section).
5.9 No Solicitations. From the date hereof until the Effective Date or
until this Agreement is terminated or abandoned as provided in this Agreement,
CDS shall not directly or indirectly (i) solicit or initiate discussion with or
(ii) enter into negotiations or agreements with, or furnish any information to,
any corporation, partnership, person or other entity or group (other than MEDY,
an affiliate of MEDY or their authorized representatives pursuant to this
Agreement) concerning any proposal for a merger, sale of substantial assets,
sale of shares of stock or securities or other takeover or business combination
transaction (the "Acquisition Proposal") involving CDS, and CDS will instruct
its officers, directors, advisors and its financial and legal representatives
and consultants not to take any action contrary to the foregoing provisions of
this sentence; provided, however, that CDS, its officers, directors, advisors
and its financial and legal representatives and consultants will not be
prohibited from taking any action described in (ii) above to the extent such
action is taken by, or upon the authority of, the Board of Directors of CDS in
the exercise of good faith judgment as to its fiduciary duties to the
shareholders of CDS, which judgment is based upon the advice of independent,
outside legal counsel that a failure of the Board of Directors of CDS to take
such action would be likely to constitute a breach of its fiduciary duties to
such shareholders. CDS will notify MEDY promptly if CDS becomes aware that any
inquiries or proposals are received by, any information is requested from or any
negotiations or discussions are sought to be initiated with, CDS with respect to
an Acquisition Proposal, and CDS shall promptly deliver to MEDY any written
inquiries or proposals received by CDS relating to an Acquisition Proposal.
ARTICLE 6
Conditions Precedent to Obligations of CDS
------------------------------------------
Except as may be waived by CDS, the obligations of CDS to complete the
transactions contemplated by this Agreement shall be subject to the satisfaction
on or before the Closing Date of each of the following conditions:
6.1 Compliance. MEDY shall have, or shall have caused to be, satisfied or
complied with and performed in all material respects all terms, covenants and
conditions of this Agreement to be complied with or performed by MEDY on or
before the Closing Date.
6.2 Representations and Warranties. All of the representations and
warranties made by MEDY in this Agreement shall be true and correct in all
material respects at and as of the Closing Date with the same force and effect
as if such representations and warranties had been made at and as of the Closing
Date, except for changes permitted or contemplated by this Agreement.
Agreement and Plan of Merger - CADI, CDS Page 24
April 17, 1998 (12:17PM)
6.3 Material Adverse Changes. Subsequent to December 31, 1997, there shall
have occurred no MEDY Material Adverse Effect other than any such change that
affects both MEDY and CDS in a substantially similar manner. MEDY affirmatively
advises CDS of the completion of its acquisition of Information Presentation
Systems, Inc., of Marietta, Georgia, which acquisition was completed in February
1998.
6.4 Certificates. CDS shall have received a certificate or certificates,
executed on behalf of MEDY by an executive officer of MEDY, to the effect that
the conditions contained in Sections 6.1, 6.2 and 6.3 hereof have been
satisfied.
6.5 Stockholder Approval. This Agreement shall have been approved and
adopted by the affirmative vote of the holders of a majority of all of the
outstanding shares of CDS Common Stock.
6.6 Consents; Litigation. Other than the filing of Articles of Merger as
described in Article 1, all authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations or terminations of waiting periods
imposed by any governmental entity, and all required third-party consents, the
failure to obtain which would have a MEDY Material Adverse Effect, shall have
been obtained. In addition, no preliminary or permanent injunction or other
order shall have been issued by any court or by any governmental or regulatory
agency, body or authority which prohibits the completion of the Merger and the
transactions contemplated by this Agreement and which is in effect at the
Effective Date.
6.7 Employment and Non-Competition Agreements. The Employment Agreement, in
the forms of Schedule 6.7 hereto, between CDS and Xxxxx Xxxxxxxx shall be
executed and delivered by the parties thereto.
6.8 Stock Option Agreements. In connection with the Employment Agreement
described in Section 6.7 hereof, MEDY shall issue to Xx. Xxxxxxxx options to
purchase 150,000 shares of MEDY Common Stock, such options to be represented by
an option agreement in the form of Schedule 6.8.
ARTICLE 7
Conditions Precedent to Obligations of MEDY
-------------------------------------------
and CADI
--------
Except as may be waived by MEDY and CADI, the obligations of MEDY and CADI
to complete the transactions contemplated by this Agreement shall be subject to
the satisfaction, on or before the Closing Date, of each of the following
conditions:
7.1 Compliance. CDS shall have, or shall have caused to be, satisfied or
complied with and performed in all material respects all terms, covenants, and
conditions of this Agreement to be complied with or performed by it on or before
the Closing Date.
7.2 Representations and Warranties. All of the representations and
warranties made by CDS in this Agreement shall be true and correct in all
material respects at and as of the Closing Date with the same force and effect
as if such representations and warranties had been made at and as of the Closing
Date.
Agreement and Plan of Merger - CADI, CDS Page 25
April 17, 1998 (12:17PM)
7.3 Material Adverse Changes. Since September 30, 1997, except as set forth
in this Agreement or on the schedules hereto, there shall have occurred no CDS
Material Adverse Effect other than any such change that affects both MEDY and
CDS in a substantially similar manner.
7.4 Certificates. MEDY shall have received a certificate or certificates,
executed on behalf of CDS by an executive officer of CDS, to the effect that the
conditions in Sections 7.1, 7.2 and 7.3 hereof have been satisfied.
7.5 Consents; Litigation. Other than the filing of the Articles of Merger
as described in Article 1, all authorizations, consents, orders or approvals of,
or declarations or filings with, or expirations or terminations of waiting
periods imposed by, any governmental entity, and all required third-party
consents, the failure to obtain which would have a CDS Material Adverse Effect
or a MEDY Material Effect, shall have been obtained. In addition, no preliminary
or permanent injunction or other order shall have been issued by any court or by
any governmental or regulatory agency, body or authority which prohibits the
completion of the Merger and the transactions contemplated by this Agreement and
which is in effect at the Effective Date.
7.6 Employment and Non-Competition Agreements. The Employment and
Non-Competition Agreement, in the form of Schedule 6.7 hereto, between CDS and
Xxxxx Xxxxxxxx shall be executed and delivered by the parties thereto.
7.7 Investment Representations. Each of the CDS Shareholders and each
person entitled to receive an option to acquire MEDY Common Stock shall have
conducted such investigation into MEDY as such person may have desired and
shall, on or before the Effective Date, execute and deliver to MEDY an
Investment Letter in the form of Schedule 7.7 hereto.
ARTICLE 8
Indemnification
---------------
8.1 Indemnification. In the event of any threatened or actual claim,
action, suit, proceeding or investigation (including any claims regarding
securities law matters), whether civil, criminal or administrative, including,
without limitation, any such claim, action, suit, proceeding or investigation in
which any of the present or former officers or directors (the "Managers") of CDS
is, or is threatened to be, made a party by reason of the fact that he or she is
or was a stockholder, director, officer, employee or agent of CDS, or is or was
serving at the request of CDS as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
whether before or after the Effective Date,
CDS shall indemnify and hold harmless, and from and after the
Effective Date each of the Surviving Corporation and MEDY, and
MEDY shall indemnify and hold harmless, as and to the full extent
permitted by applicable law (including by advancing expenses promptly as
statements therefor are received), each such Manager against any losses, claims,
Agreement and Plan of Merger - CADI, CDS Page 26
April 17, 1998 (12:17PM)
damages, liabilities, costs, expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement in connection with any such claim, action,
suit, proceeding or investigation, and in the event of any such claim, action,
suit proceeding or investigation (whether arising before or after the Effective
Date).
Neither the Surviving Corporation nor MEDY shall have any obligation under the
foregoing provisions of this Section 8.1 to any Manager if (x) the
indemnification of such Manager in the manner contemplated hereby is prohibited
by applicable law, and (y) if CDS has breached a representation or warranty
hereunder with respect to the same matters for which indemnification is being
sought by such Manager and such Manager fails to prove that such Manager had no
actual knowledge of such breach at the Effective Date.
(b) Reimbursement. Upon the determination that the Surviving
Corporation or MEDY is not liable for any such indemnification claims, the
Manager will reimburse MEDY and the Surviving Corporation for any fees, expenses
and costs incurred by MEDY or the Surviving Corporation in connection with the
defense of such claims.
(c) Notification. Any Manager wishing to claim indemnification under
this Section 8.1, upon learning of any such claim, action, suit, proceeding or
investigation, shall notify CDS and, after the Effective Date, the Surviving
Corporation and MEDY, thereof (provided that the failure to give such notice
shall not affect any obligations hereunder, except to the extent that the
indemnifying party is actually and materially prejudiced thereby). MEDY and CDS
agree that all rights to indemnification existing in favor of the Managers as
provided in CDS's Articles of Incorporation or Bylaws as in effect as of the
date hereof, and in any agreement between CDS and any Manager with respect to
matters occurring prior to the Effective Date, shall survive the Merger. MEDY
further covenants not to amend or repeal any provisions of the Articles of
Incorporation or Bylaws of CDS in any manner which would adversely affect the
indemnification or exculpatory provisions contained therein.
(d) Inurement. The provisions of this Section 8.1 are intended to be
for the benefit of, and shall be enforceable by, each indemnified party and his
or her heirs and representatives.
ARTICLE 9
Miscellaneous
-------------
9.1 Termination. In addition to the provisions regarding termination set
forth elsewhere herein, this Agreement and the transactions contemplated hereby
may be terminated at any time on or before the Closing Date:
(a) by mutual consent of CDS and MEDY;
(b) by either MEDY or CDS if the transactions contemplated by this
Agreement have not been completed by April 15, 1998, unless such failure of
completion is due to the failure of the terminating party to perform or observe
the covenants, agreements, and conditions hereof to be performed or observed by
it at or before the Closing Date;
Agreement and Plan of Merger - CADI, CDS Page 27
April 17, 1998 (12:17PM)
(c) by either CDS or MEDY if the transactions contemplated hereby
violate any nonappealable final order, decree, or judgment of any court or
governmental body or agency having competent jurisdiction; or
(d) by MEDY if the CDS Board of Directors withdraws or materially
modifies or changes its recommendation to the stockholders of CDS to approve
this Agreement and the Merger if there exists at such time an Acquisition
Proposal.
9.2 Expenses.
(a) Except as provided in (b) below, if the transactions contemplated
by this Agreement are not completed, each party hereto shall pay its own
expenses incurred in connection with this Agreement and the transactions
contemplated hereby.
(b) If, (i) this Agreement is terminated by MEDY pursuant to Section
9.1(d) hereof on or before the date set forth in Section 9.1(b) and while this
Agreement remains in effect, CDS enters into a definitive agreement with respect
to an Acquisition Proposal with any corporation, partnership, person or other
entity or group (other than MEDY or any affiliate of MEDY), and such transaction
(including any revised transaction based upon the Acquisition Proposal) is
thereafter completed (whether before or after such date) then CDS shall pay to
MEDY a fee equal to the sum of the documented fees, costs and expenses,
including legal and accounting fees incurred by MEDY in connection with the
transactions contemplated by this Agreement, which such amounts shall be payable
in same day funds to an account specified by MEDY.
9.3 Entire Agreement. This Agreement and the schedules hereto contain the
complete agreement among the parties with respect to the transactions
contemplated hereby and supersede all prior agreements and understandings among
the parties with respect to such transactions. Section and other headings are
for reference purposes only and shall not affect the interpretation or
construction of this Agreement. The parties hereto have not made any
representation or warranty except as expressly set forth in this Agreement or in
any certificate or schedule delivered pursuant hereto. The obligations of any
party under any agreement executed pursuant to this Agreement shall not be
affected by this section.
9.4 Survival of Representations and Warranties. The representations and
warranties of each party contained herein or in any schedule, certificate,
document or instrument delivered pursuant to this Agreement shall survive the
Closing for three years following the Effective Date.
9.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute only one original.
9.6 Notices. All notices, demands, requests, or other communications that
may be or are required to be given, served, or sent by any party to any other
party pursuant to this Agreement shall be in writing and shall be sent by
facsimile transmission, next-day courier or mailed by first-class, registered or
certified mail, return receipt requested, postage prepaid, or transmitted by
hand delivery, addressed as follows:
Agreement and Plan of Merger - CADI, CDS Page 28
April 17, 1998 (12:17PM)
(i) If to CDS:
D.O.M. Corporation, d/b/a Command Dental Systems
00000 Xxxx Xxx Xxxx Xxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx, CEO
Tel: 000-000-0000
Fax: 000-000-0000
with a copy (which shall not constitute notice) to:
Xxx, Xxxxxxx & Giarmarco, P.C.
Fifth Floor Columbia Center
000 Xxxx Xxx Xxxxxx Xxxx
Xxxx, Xxxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
Tel: 000-000-0000
Fax: 000-000-0000
(ii) If to MEDY or CADI:
Medical Dynamics, Inc.
00 Xxxxxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Van X. Xxxxxxx, President
Tel: 000-000-0000
Fax: 000-000-0000
with a copy (which shall not constitute notice) to:
Norton * Xxxxxxxx & Associates, LLC
The Quadrant, Suite 850
0000 XXX Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Xx., Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
Each party may designate by notice in writing a new address to which any
notice, demand, request, or communication may thereafter be so given, served, or
sent. Each notice, demand, request, or communication that is mailed, delivered,
or transmitted in the manner described above shall be deemed sufficiently given,
served, sent, and received for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery receipt or the affidavit of
messenger being deemed conclusive evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
Agreement and Plan of Merger - CADI, CDS Page 29
April 17, 1998 (12:17PM)
9.7 Successors; Assignments. This Agreement and the rights, interests, and
obligations hereunder shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned, by operation of law or otherwise, by any of the parties hereto without
the prior written consent of the other.
9.8 Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of California (except the choice of law
rules thereof).
9.9 Waiver and Other Action. This Agreement may be amended, modified, or
supplemented only by a written instrument executed by the parties against which
enforcement of the amendment, modification or supplement is sought.
9.10 Severability. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable, such provision shall be fully severable, and
this Agreement shall be construed and enforced as if such illegal, invalid, or
unenforceable provision were never a part hereof; the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance; and in lieu of
such illegal, invalid, or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid, and enforceable.
9.11 No Third Party Beneficiaries. Article 8 is intended for the benefit of
each "Manager" (as defined in Article 8) and may be enforced by such persons,
their heirs and representatives. Other than as expressly set forth in this
Section 9.11, nothing expressed or implied in this Agreement is intended, or
shall be construed, to confer upon or give any person, firm or corporation other
than the parties hereto and their stockholders, any rights, remedies,
obligations or liabilities under or by reason of this Agreement or result in
such person, firm or corporation being deemed a third party beneficiary of this
Agreement, even if such person is specifically named herein.
9.12 Mutual Contribution. The parties to this Agreement have mutually
contributed to the drafting of this Agreement and the completion of the
transactions contemplated herein. Consequently, no provision of this Agreement
shall be construed against any party on the ground that such party drafted the
provision or caused it to be drafted or the provision contains a covenant of
such party. Furthermore, each party represents, warrants, and acknowledges to
each other party that such party has sought and obtained such advice from its
legal, financial, accounting, and investment advisors in connection with the
negotiation and preparation of this Agreement and the completion of the
transactions herein contemplated as such party has deemed necessary or
appropriate.
9.13 Arbitration. Any controversy or dispute among the parties arising in
connection with this Agreement shall be submitted to a panel of three
arbitrators and finally settled by arbitration in accordance with the commercial
arbitration rules of the American Arbitration Association. Each of the disputing
parties shall appoint one arbitrator, and these two arbitrators shall
independently select a third arbitrator. Arbitration shall take place in Denver,
Colorado. The prevailing party in such arbitration shall be entitled to the
award of all costs and attorneys' fees in connection with such action. Any award
for monetary damages resulting from nonpayment of sums due hereunder shall bear
interest from the date on which such sums were originally due and payable.
Judgment upon the award rendered may be entered in any court having jurisdiction
or application may be made to such court for judicial acceptance of the award
and an order of enforcement, as the case may be.
Agreement and Plan of Merger - CADI, CDS Page 30
April 17, 1998 (12:17PM)
9.14 Schedules. The following Schedules constitute a part of, and
incorporated into, this Agreement.
Schedule Description
-------- -----------
1.1 Form of Promissory Note
3.2 CDS Subsidiaries and Investments
3.9 CDS Liabilities
3.13 Material Contracts
3.17 Employment Agreements and Plans
4.9 Changes
6.7 Employment Agreement - Xxxxxxxx
6.8 Form of Executive Stock Option Agreement
7.7 Investment Letter
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MEDICAL DYNAMICS, INC.
By:__________________________________ ____________________________________
Van X. Xxxxxxx, President Assistant Secretary
COMPUTER AGE DENTIST, INC.
By:__________________________________ ____________________________________
Van X. Xxxxxxx, Vice President Secretary
D.O.M. Corporation, d/b/a COMMAND DENTAL SYSTEMS
By:___________________________________ ____________________________________
Xxxxxx Xxxxxxxx, President Secretary
Agreement and Plan of Merger - CADI, CDS Page 31
April 17, 1998 (12:17PM)
SCHEDULE 1.1
Form of Promissory Note
-----------------------
In the form delivered at the Closing
Agreement and Plan of Merger - CADI, CDS Page 32
April 17, 1998 (12:17PM)
SCHEDULE 3.2
CDS Subsidiaries and Investments
--------------------------------
None
Agreement and Plan of Merger - CADI, CDS Page 33
April 17, 1998 (12:17PM)
SCHEDULE 3.9
CDS Liabilities (as of 3/31/98)
-------------------------------
CDS Litigation
Agreement and Plan of Merger - CADI, CDS Page 34
April 17, 1998 (12:17PM)
SCHEDULE 3.13
CDS Material Contracts
----------------------
1.
2.
3.
4.
5.
Agreement and Plan of Merger - CADI, CDS Page 35
April 17, 1998 (12:17PM)
SCHEDULE 3.17
CDS Employee Benefit Plans
--------------------------
Agreement and Plan of Merger - CADI, CDS Page 36
April 17, 1998 (12:17PM)
SCHEDULE 4.9
MEDY Changes
------------
None, except as disclosed in the Agreement or
in the reports filed pursuant to the Securities Exchange
Act of 1934.
Agreement and Plan of Merger - CADI, CDS Page 37
April 17, 1998 (12:17PM)
SCHEDULE 6.7
Xxxxxxxx Employment Agreement
-----------------------------
In the form delivered at the Closing
Agreement and Plan of Merger - CADI, CDS Page 38
April 17, 1998 (12:17PM)
SCHEDULE 6.8
Form of Executive Stock Option Agreement
----------------------------------------
In the form delivered at the Closing
Agreement and Plan of Merger - CADI, CDS Page 39
April 17, 1998 (12:17PM)
SCHEDULE 7.7
Form of Investment Letter
-------------------------
In the form delivered at the Closing
Agreement and Plan of Merger - CADI, CDS Page 40
April 17, 1998 (12:17PM)
