AGREEMENT AND PLAN OF MERGER
AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of February 21,
2000 (the "Agreement"), among x-XxxXxxx.xxx, a corporation organized and
existing under the laws of the State of Nevada ("Parent"), VirTx Acquisition
Corporation, a corporation organized and existing under the laws of the State
of Delaware ("Merger Sub") and a direct wholly owned subsidiary of Parent, and
VirTx, Inc., a corporation organized and existing under the laws of the State
of Delaware (the "Company");
W I T N E S S E T H:
WHEREAS, the boards of directors of Parent, Merger Sub and the Company
have each determined that it is consistent with and in furtherance of their
respective long-term business strategies and fair to and in the best interests
of their respective stockholders to combine the respective businesses of
Parent and the Company by means of a merger (the "Merger") of Merger Sub with
and into the Company upon the terms and subject to the conditions set forth
herein and in accordance with the Delaware Corporation Law (the "Delaware
Corporation Law"); and
WHEREAS, for United States Federal income tax purposes, it is intended
that the Merger qualify as a reorganization under the provisions of Section
368 of the Internal Revenue Code of 1986, as amended (together with the rules
and regulations promulgated thereunder, the "Code");
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
THE MERGER
1. The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the Delaware Corporation Law, at the
Effective Time, Merger Sub shall be merged with and into the Company. As a
result of the Merger, the separate corporate existence of Merger Sub shall
cease and the Company shall continue as the surviving corporation of the
Merger (the "Surviving Corporation").
1.2 Closing. Unless this Agreement shall have been terminated and the
Merger shall have been abandoned pursuant to Section 7.1 and subject to the
satisfaction or waiver of the conditions set forth in Article VII, the
consummation of the Merger shall take place as promptly as practicable (and in
any event within three business days) after satisfaction or waiver of the
conditions set forth in Article VII, at a closing (the "Closing") to be held
at the offices of x-XxxXxxx.xxx, 00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx
Xxxxx, Xxxxxxxxxx 00000, unless another date, time or place is agreed to by
the Company and Parent.
1.3 Effective Time. At the time of the Closing, the parties shall
cause the Merger to be consummated by filing articles of merger (the "Articles
of Merger") with the Secretary of State of the State of Delaware in such form
as required by, and executed in accordance with the relevant provisions of,
the Delaware Corporation Law (the date and time of such filing, or such later
time as may be agreed by the parties hereto and specified in the Articles of
Merger, being the "Effective Time").
1.4 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the Delaware
Corporation Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, except as otherwise provided herein, all the
property, rights, privileges, powers and franchises of the Company and Merger
Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation, and the Parent shall own all of the
issued and outstanding stock of the Surviving Corporation and shall have full
legal control over the Surviving Corporation.
1.5 Articles of Incorporation; Bylaws; Directors and Officers of
Surviving Corporation. Unless otherwise agreed by the Company and Parent
prior to the Effective Time, at the Effective Time:
(a) the articles of incorporation and bylaws of the Company, as in
effect immediately prior to the Effective Time, shall be the articles of
incorporation and bylaws of the Surviving Corporation until thereafter amended
as provided by Law and such articles of incorporation or bylaws;
(b) the officers of Merger Sub immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation until their
successors are elected or appointed and qualified or until their resignation
or removal; and
(c) the directors of Merger Sub immediately prior to the Effective
Time shall be the initial directors of the Surviving Corporation until
February 28, 2000, at which time the directors shall become Xxxx X. Xxxxxxx,
Xxxxxx X. Xxxxxxxxx and Xxxxxxxx X. Xxxxx until otherwise directed by the
Parent.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.1 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, the Company or the
holders of any of the following securities:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than any Dissenting Shares) and
all rights in respect thereof shall forthwith cease to exist and shall be
converted into and become exchangeable for the number of shares of Parent
Common Stock equal to the product of (x) one divided by the number of shares
of the Company's Common Stock issued and outstanding immediately prior to the
Effective Time and (y) the quotient of twenty-three million eight hundred
ninety-one thousand forty-five dollars ($23,891,045) divided by the average
closing price of the Parent's Common Stock on the American Stock Exchange
during the thirty (30) trading days ending two days before the Effective Time
(the "Common Exchange Ratio"). As of the date of execution hereof and
pursuant to this formula, this would result in a total number of shares
calculated as set forth on Schedule 2 attached hereto.
(b) Each share of common stock, no par value, of Merger Sub issued
and outstanding immediately prior to the Effective Time and all rights in
respect thereof shall forthwith cease to exist and shall be converted into and
become exchangeable for one newly and validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation.
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2.2 Exchange of Shares Other than Dissenting Shares. Subject to the
terms and conditions hereof, at or prior to the Effective Time, Parent shall
appoint an exchange agent to effect the exchange of shares of Company Common
Stock (other than Dissenting Shares) for Parent Common Stock in accordance
with the provisions of this Article II (the "Exchange Agent"). From time to
time after the Effective Time, Parent shall deposit, or cause to be deposited,
certificates representing Parent Common Stock for conversion of shares of
Company Common Stock (other than Dissenting Shares) in accordance with the
provisions of Section 2.1 (such certificates being herein referred to as the
"Exchange Fund"). Commencing immediately after the Effective Time and until
the appointment of the Exchange Agent shall be terminated, each holder of a
certificate or certificates theretofore representing shares of Company Common
Stock (other than Dissenting Shares) may surrender the same to the Exchange
Agent and, after the appointment of the Exchange Agent shall be terminated,
any such holder may surrender any such certificate to Parent. Such holder
shall be entitled upon such surrender to receive in exchange therefor a
certificate or certificates representing the number of full shares of Parent
Common Stock into which the shares of Company Common Stock theretofore
represented by the certificate or certificates so surrendered shall have been
converted in accordance with the provisions of Section 2.1, in accordance with
Section 2.4, and all such shares of Parent Common Stock shall be deemed to
have been issued at the Effective Time. Until so surrendered and exchanged,
each outstanding certificate which, prior to the Effective Time, represented
issued and outstanding shares of Company Common Stock shall be deemed for all
corporate purposes of Parent to evidence ownership of the number of full
shares of Parent Common Stock into which the shares of Company Common Stock
theretofore represented thereby shall have been converted at the Effective
Time. Notwithstanding the foregoing provisions of this Section 2.2, risk of
loss and title to such certificates representing shares of Company Common
Stock shall pass only upon proper delivery of such certificates to the
Exchange Agent, and neither the Exchange Agent nor any party hereto shall be
liable to a holder of shares of Company Common Stock for any Parent Common
Stock or dividends or distributions thereon delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law or to a
transferee pursuant to Section 2.3. In the event that this Agreement shall
have been terminated pursuant to Section 7.1 hereof, the Company and Parent
shall cause the Exchange Agent to use its commercially reasonable efforts to
effect the prompt return of stock certificates representing shares of Company
Common Stock to the holders thereof.
2.3 Stock Transfer Books. At the Effective Time, the stock transfer
books of the Company with respect to shares of Company Common Stock shall be
closed, and there shall be no further registration of transfers of shares of
Company Common Stock thereafter on the records of any such stock transfer
books. In the event of a transfer of ownership of shares of Company Common
Stock that is not registered in the stock transfer records of the Company, at
the Effective Time, a certificate or certificates representing the number of
full shares of Parent Common Stock into which such shares of Company Common
Stock shall have been converted shall be issued to the transferee in
accordance with Section 2.4, if the certificate or certificates representing
such shares of Company Common Stock is or are surrendered as provided in
Section 2.2, accompanied by all documents required to evidence and effect such
transfer and by evidence of payment of any applicable stock transfer tax.
2.4 No Fractional Share Certificates. Unless Parent otherwise
determines, no scrip or fractional share certificates for Parent Common Stock
shall be issued upon the surrender for exchange of certificates evidencing
shares of Company Common Stock. In lieu of fractional shares, each holder of
shares of Company Common Stock who would be entitled to receive a fractional
share of Parent Common Stock shall, upon surrender of the certificate or
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certificates representing shares of Company Common Stock, be entitled to
receive one full share of Parent Common Stock for any fractional share
interest.
2.5 Dissenting Shares. Notwithstanding any provision of Section 2.1
hereof to the contrary, shares of Company Common Stock which are held by
holders of such shares who have not voted in favor of the Merger, who are
entitled to dissent and who have delivered a written notice of intent to
demand payment for such shares in the manner provided in Section 262 of the
Delaware Corporation Law ("Dissenting Shares"), shall not be converted into or
exchanged for or represent the right to receive any shares of Parent Common
Stock, unless such holder fails to perfect or effectively withdraws or loses
such rights to payment. If, after the Effective Time, such holder fails to
perfect or effectively withdraws or loses such right to payment, then such
Dissenting Shares shall thereupon be deemed to have been converted into and
exchanged pursuant to Section 2.1 hereof, as of the Effective Time, for the
right to receive shares of Parent Common Stock issued in the Merger to which
the holder of such shares of Company Common Stock is entitled, without any
interest thereon. The Company shall give Parent prompt notice of any notices
and demands received by the Company for payment for shares of Company Common
Stock, and Parent shall have the right to participate in all negotiations and
proceedings with respect to such notices and demands. The Company shall not,
except with the prior written consent of Parent, make any payment with respect
to, or settle or offer to settle, any such demands. Prior to the Effective
Time, the Company shall establish an escrow account with a financial
institution and the Company shall fund such escrow account with cash or cash
equivalents in an amount sufficient to make all payments to holders of
Dissenting Shares. Such escrow account shall survive the Merger. All payments
to holders of Dissenting Shares shall be made out of such escrow account, and
no such payments shall be made or otherwise funded by Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in Schedule 3 which is attached hereto and
incorporated herein by reference, the Company hereby represents and warrants
to Parent and Merger Sub that:
3.1 Organization. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of Delaware, has all necessary
corporate powers to own its properties and to carry on its business as now
owned and operated by it, and is duly qualified to do business and is in good
standing in each of the jurisdictions where its business requires
qualification.
3.2 Capital. The authorized Common Stock of the Company consists of
10,000,000 shares of Common Stock, $.0001 par value, of which 6,763,334 are
currently issued and outstanding. All of the issued and outstanding shares of
the Company are duly authorized, validly issued, fully paid, and
nonassessable. There are no outstanding subscriptions, options, rights,
warrants, debentures, instruments, convertible securities, or other agreements
or commitments obligating the Company to issue or to transfer from treasury
any additional shares of its Common Stock of any class.
3.3 Subsidiaries. The Company does not have any subsidiaries or own
any interest in any other enterprise (whether or not such enterprise is a
corporation) except as disclosed in Schedule 3.
3.4 Directors and Officers. Schedule 3 contains the names and titles
of all directors and officers of the Company as of the date of this Agreement.
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3.5 Financial Statements. The Company has delivered to Parent unaudited
balance sheets and statements of operations for the year ended December 31,
1999 (the "Financial Statements"). The Financial Statements fairly present
the financial condition of the Company, subject to normal year-end
adjustments. The Financial Statements fairly accurately set out and describe
the financial condition of the Company as of December 31, 1999.
3.6 Pro Forma Financials. Attached hereto as Schedule 3.6 are pro
forma financial statements for the year ended December 31, 2000 and 2001,
which include projected revenues, expenses and income for the Company. These
pro forma financials have been prepared by the Company in good faith based in
part (i) on the projected revenues from the contracts listed on Schedule 3
along with business opportunities in the pipeline, and (ii) on information the
management of the Company believed to be reliable at the time such financials
were prepared.
3.7 Absence of Changes. Since December 31, 1999, except for changes in
the ordinary course of business which have not in the aggregate been
materially adverse, to the best of the Company's knowledge, the Company has
conducted its business only in the ordinary course and has not experienced or
suffered any material adverse change in the condition (financial or
otherwise), results of operations, properties, business or prospects of the
Company or waived or surrendered any claim or right of material value.
3.8 Absence of Undisclosed Liabilities. Neither the Company nor any of
its properties or assets are subject to any material liabilities or
obligations of any nature, whether absolute, accrued, contingent or otherwise
and whether due or to become due, that are not reflected in the financial
statements presented to Parent or have otherwise been disclosed to Parent.
3.9 Tax Returns. Within the times and in the manner prescribed by law,
the Company has filed all federal, state and local tax returns required by
law, or has filed extensions which have not yet expired, and has paid all
taxes, assessments and penalties due and payable.
3.10 Trade Names and Rights. Schedule 3 sets forth a complete and
accurate schedule of (i) all registered trademarks and service marks and all
trademark and service xxxx applications, including country of filing, filing
number, date of issue and expiration date used in the business of the Company;
and (ii) all registered copyrights owned by the Company. Except as set forth
in such schedule, to the Company's knowledge, no third party has asserted, or
threatened to assert against The Company or any of its officers or directors,
any conflicting rights to any such intellectual property and the Company has
no knowledge of facts that the Company believes could reasonably be expected
to give rise to such a claim.
3.11 Compliance with Laws. To the best of the Company's knowledge, the
Company has complied with, and is not in violation of, applicable federal,
state or local statutes, laws and regulations (including, without limitation,
any applicable building, zoning or other law, ordinance or regulation)
affecting its properties or the operation of its business, except for matters
which would not have a material affect on the Company or its properties.
3.12 Litigation. The Company is not a party to any suit, action,
arbitration or legal, administrative or other proceeding, or governmental
investigation pending or, to the best knowledge of the Company, threatened
against or affecting the Company or its business, assets or financial
condition, except for matters which would not have a material affect on the
Company or its properties. The Company is not in default with respect to any
order, writ, injunction or decree of any federal, state, local or foreign
court, department, agency or instrumentality applicable to it. The Company is
not engaged in any lawsuit to recover any material amount of monies due to it.
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3.13 Authority. The Company has full corporate power and authority to
enter into this Agreement. The board of directors of the Company has taken
all action required to authorize the execution and delivery of this Agreement
by or on behalf of the Company and the performance of the obligations of the
Company under this Agreement. No other corporate proceedings on the part of
the Company are necessary to authorize the execution and delivery of this
Agreement by the Company in the performance of its obligations under this
Agreement. This Agreement is, when executed and delivered by the Company, and
will be a valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by general principles of equity, bankruptcy, insolvency, moratorium
and similar laws relating to creditors' rights generally.
3.14 Ability to Carry Out Obligations. Neither the execution and
delivery of this Agreement, the performance by the Company of its obligations
under this Agreement, nor the consummation of the transactions contemplated
under this Agreement will to the best of the Company's knowledge: (a)
materially violate any provision of the Company's articles of incorporation or
bylaws; (b) with or without the giving of notice or the passage of time, or
both, violate, or be in conflict with, or constitute a material default under,
or cause or permit the termination or the acceleration of the maturity of, any
debt, contract, agreement or obligation of the Company, or require the payment
of any prepayment or other penalties; (c) require notice to, or the consent
of, any party to any agreement or commitment, lease or license, to which the
Company is bound; (d) result in the creation or imposition of any security
interest, lien, or other encumbrance upon any material property or assets of
the Company; or (e) violate any material statute or law or any judgment,
decree, order, regulation or rule of any court or governmental authority to
which the Company is bound or subject.
3.15 Full Disclosure. None the representations and warranties made by
the Company in this Agreement and the Schedules and Exhibits to this Agreement
prepared by the Company contained, contains, or will contain at the time it
was or is so furnished any untrue statement of a material fact or omitted,
omits or will omit at such time to state any material fact necessary in order
to make the statements made herein and therein, in light of the circumstances
under which they were made, not misleading. Except as disclosed on Schedule
3.15, there has been no material adverse change and no material adverse
development in the business, properties, operations, condition (financial or
otherwise), assets, liabilities or results of operations or, insofar as can
reasonably be foreseen, prospects of the Company. The Company has not taken
any steps, and does not currently expect to take any steps, to seek protection
pursuant to any bankruptcy law nor does the Company have any knowledge or
reason to believe that its creditors intend to initiate involuntary bankruptcy
proceedings.
3.16 Assets and Technology. The Company has good and marketable title
to all of its tangible properties and such tangible properties are not subject
to any material liens or encumbrances. The telemedicine technology as
described in more detail on Schedule 3 has been developed by the Company and
is 100% owned by the Company. There are no existing rights granted to anyone
to use or license the technology and there are no known claims by anyone else
to any rights to the technology.
3.17 Material Contracts and Obligations. Attached hereto on Schedule 3
is a list of all agreements, contracts, indebtedness, liabilities and other
obligations to which the Company is a party or by which it is bound that are
material to the conduct and operations of its business and properties, which
provide for payments to or by the Company in excess of $25,000; or which
involve transactions or proposed transactions between the Company and its
officers, directors, affiliates or any affiliate thereof. Copies of such
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agreements and contracts and documentation evidencing such liabilities and
other obligations have been made available for inspection by Parent and its
counsel. All of such agreements and contracts are valid, accurate, binding
and in full force and effect in all material respects, and there have been, to
the knowledge of the Company, no breaches or anticipatory repudiation of such
agreements and contracts.
3.18 Approval of Clients. The Company has contacted each of its
clients listed in Schedule 3.18 regarding this transaction and each client has
consented to the change in ownership of the Company and agreed that the
contracts would remain in full force and effect after the Closing. In
addition, all of the clients and persons mentioned in the draft press release
attached hereto as Schedule 3.18 have approved of the use of their names in
the draft press release. The Company shall not be deemed to be in breach of
this provision in the event the Company obtains the requisite approvals from
its clients on or before the Effective Time.
3.19 Consents and Approvals. No consent, approval or authorization of,
or declaration, filing or registration with, any governmental or regulatory
authority is required to be made or obtained by the Company in connection
with: (a) the execution and delivery by the Company of this Agreement; (b) the
performance by the Company of its obligations under this Agreement; or (c) the
consummation by the Company of the transactions contemplated under this
Agreement.
3.20 No Debts. Except as set forth on Schedule 3.20, at the Closing of
this transaction, the Company shall have no outstanding debts or liabilities,
absolute or contingent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in Schedule 4 which is attached hereto and
incorporated herein by reference, Parent and Merger Sub hereby jointly and
severally represent and warrant to the Company that:
4.1 Organization and Qualification; Subsidiaries.
(a) Each of Parent, Merger Sub and all other subsidiaries of
Parent (the "Parent Subsidiaries") has been duly organized and is validly
existing and in good standing (to the extent applicable) under the laws of the
jurisdiction of its incorporation or organization, as the case may be, and has
the requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its
business as it is now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power, authority and
governmental approvals could not reasonably be expected to have, individually
or in the aggregate, a material adverse effect. Parent, Merger Sub and each
other Parent Subsidiary is duly qualified or licensed to do business, and is
in good standing (to the extent applicable), in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of
its business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that could not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect.
(b) Section 4.1 of Schedule 4 sets forth, as of the date of this
Agreement, a true and complete list of each Parent Subsidiary. Except as set
forth in Section 4.1 of Schedule 4, neither Parent nor any Parent Subsidiary
owns an equity interest in any partnership or joint venture arrangement or
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other business entity that is material to the financial condition, results of
operations, business or prospects of Parent and the Parent Subsidiaries, taken
as a whole.
4.2 Capitalization. The authorized Common Stock of Parent consists of
100,000,000 shares of Common Stock of which 68,229,893 are currently issued
and outstanding, all of which are validly issued, fully paid and
nonassessable. Except as set forth in Schedule 4, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character to which Parent is a party or by which Parent is bound relating to
the issued or unissued Common Stock of Parent, Merger Sub or any other Parent
Subsidiary or obligating Parent, Merger Sub or any other Parent Subsidiary to
issue or sell any shares of Common Stock of, or other equity interests in,
Parent, Merger Sub or any other Parent Subsidiary. Each outstanding share of
Common Stock of each Parent Subsidiary is duly authorized, validly issued,
fully paid and nonassessable and each such share owned by Parent or another
Parent Subsidiary is free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on Parent's
or such other Parent Subsidiary's voting rights, charges and other
encumbrances of any nature whatsoever, except where the failure to own such
shares free and clear could not reasonably be expected to have, individually
or in the aggregate, a material adverse effect.
4.3 Directors and Officers. Schedule 4 contains the names and titles
of all directors and officers of Parent and Merger Sub as of the date of this
Agreement.
4.4 Financial Statements. Parent has delivered to the Company its
audited balance sheet and statements of operations and cash flows as of and
for the period ended March 31, 1999, and its unaudited balance sheet and
statements of operations and cash flows as of and for the period ended
December 31, 1999 (collectively the "Financial Statements"). The Financial
Statements are complete and correct in all material respects and have been
prepared in accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods indicated. The Financial
Statements accurately set out and describe the financial condition and
operating results of the Company as of the dates, and for the periods,
indicated therein.
4.5 Absence of Changes. Since December 31, 1999, except for changes in
the ordinary course of business which have not in the aggregate been
materially adverse, to the best of Parent's knowledge, Parent has not
experienced or suffered any material adverse change in its condition
(financial or otherwise), results of operations, properties, business or
prospects or waived or surrendered any claim or right of material value.
4.6 Absence of Undisclosed Liabilities. Neither Parent nor any of its
properties or assets are subject to any liabilities or obligations of any
nature, whether absolute, accrued, contingent or otherwise and whether due or
to become due, that are not reflected in the financial statements presented to
the Company.
4.7 Tax Returns. Within the times and in the manner prescribed by law,
Parent has filed all federal, state and local tax returns required by law and
has paid all taxes, assessments and penalties due and payable.
4.8 Trade Names and Rights. Parent does not use any trademark, service
xxxx, trade name, or copyright in its business, or own any trademarks,
trademark registrations or applications, trade names, service marks,
copyrights, copyright registrations or applications.
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4.9 Compliance with Laws. To the best of Parent's knowledge, Parent
has complied with, and is not in violation of, applicable federal, state or
local statutes, laws and regulations (including, without limitation, any
applicable building, zoning, or other law, ordinance, or regulation) affecting
its properties or the operation of its business or with which it is otherwise
required to comply.
4.10 Litigation. There is no legal action, suit, arbitration or other
legal, administrative or other governmental investigation, inquiry or
proceeding (whether federal, state, local or foreign) pending or threatened
against or affecting (i) Parent or any of its subsidiaries or any of their
respective properties, assets or business (existing or contemplated) or (ii)
any employee of Parent or any such subsidiary, before any court or
governmental department, commission, board, bureau, agency or instrumentality
or any arbitrator, except for suits, arbitrations, investigations, inquiries
and proceedings which, if decided adversely to Parent would not a have
material adverse effect on Parent, its operations, assets or prospects. After
reasonable investigation, neither Parent nor any employee or agent of nor
attorney for Parent is aware of any fact that might result in or form the
basis for any such action, suit, arbitration, investigation, inquiry or other
proceeding. Neither Parent nor any employee is in default with respect to any
order, writ, judgment, injunction, decree, determination or award of any court
or of any governmental agency or instrumentality (whether federal, state,
local or foreign).
4.11 No Pending Investigation. Parent is not aware of any pending
investigations or legal proceedings by the SEC, any state securities
regulatory agency, or any other governmental agency regarding Parent or any
officers or directors of Parent or any shareholders or controlling persons of
such shareholders.
4.12 Authority Relative to this Agreement. Parent and Merger Sub have
all necessary corporate power and authority to execute and deliver this
Agreement, to perform their respective obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Merger Sub and the consummation by Parent and Merger
Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action, and no other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize
this Agreement or to consummate such transactions (other than the filing and
recordation of the Articles of Merger as required by the Delaware Corporation
Law). This Agreement has been duly executed and delivered by Parent and Merger
Sub and, assuming the due authorization, execution and delivery by the
Company, constitutes the legal, valid and binding obligation of Parent and
Merger Sub, enforceable against Parent and Merger Sub in accordance with its
terms.
4.13 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and
Merger Sub do not, and the performance by Parent and Merger Sub of their
obligations hereunder and the consummation of the Merger will not, (i)
conflict with or violate any provision of the certificate or articles of
incorporation, as the case may be, or bylaws of Parent or Merger Sub or any
equivalent organizational documents of any other Parent Subsidiary, (ii)
assuming that all consents, approvals, authorizations and permits described in
Section 4.14(b) have been obtained and all filings and notifications described
in Section 4.14(b) have been made, conflict with or violate any Law applicable
to Parent or any other Parent Subsidiary or by which any property or asset of
Parent, Merger Sub or any other Parent Subsidiary is bound or affected or
(iii) except as set forth in Section 4.14(a) of the Schedule 4, result in any
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breach of or constitute a default (or an event which with the giving of notice
or lapse of time or both could reasonably be expected to become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on
any property or asset of Parent, Merger Sub or any other Parent Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation, except, with
respect to clauses (ii) and (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which could not reasonably be
expected, individually or in the aggregate, (A) to have a material adverse
effect or (B) to prevent or materially delay the performance by Parent or
Merger Sub of its obligations pursuant to this Agreement or the consummation
of the Merger.
(b) The execution and delivery of this Agreement by Parent and
Merger Sub do not, and the performance by Parent and Merger Sub of their
respective obligations hereunder and the consummation of the Merger will not,
require any consent, approval, authorization or permit of, or filing by Parent
or Merger Sub with or notification by Parent or Merger Sub to, any
Governmental Entity, except (i) pursuant to applicable requirements of the
Exchange Act, the Securities Act, Blue Sky Laws, the rules and regulations of
the American Stock Exchange, and the filing and recordation of the Articles of
Merger as required by the Delaware Corporation Law and (ii) where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, could not reasonably be expected, individually or in
the aggregate, (A) to have a material adverse effect or (B) to prevent or
materially delay the performance by Parent or Merger Sub of its obligations
pursuant to this Agreement or the consummation of the Merger.
4.14 Validity of Parent Shares. The shares of Parent Common Stock to
be delivered pursuant to this Agreement, when issued in accordance with the
provisions of this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable.
4.15 Full Disclosure. None the representations and warranties made by
Parent in this Agreement, the Schedules and Exhibits to this Agreement
prepared by Parent, any filings made by Parent with the Securities and
Exchange Commission (the "Commission") (including all the exhibits and
appendixes thereto) (the "SEC Documents") contained, contains, or will contain
at the time it was or is so furnished any untrue statement of a material fact
or omitted, omits or will omit at such time to state any material fact
necessary in order to make the statements made herein and therein, in light of
the circumstances under which they were made, not misleading. Except as
disclosed in any SEC Document filed on XXXXX at least five (5) business days
prior to the date hereof, since January 1, 1999, there has been no material
adverse change and no material adverse development in the business,
properties, operations, condition (financial or otherwise), assets,
liabilities or results of operations or, insofar as can reasonably be
foreseen, prospects of Parent or any of its subsidiaries. Parent has not
taken any steps, and does not currently expect to take any steps, to seek
protection pursuant to any bankruptcy law nor does Parent or any of its
subsidiaries have any knowledge or reason to believe that their respective
creditors intend to initiate involuntary bankruptcy proceedings. No event,
liability, development or circumstance has occurred or exists, or is
contemplated to occur, with respect to the Parent or its subsidiaries or their
respective businesses, properties, operations, condition (financial or
otherwise), assets, liabilities or results of operations or, insofar as can
reasonably be foreseen, prospects, that would be required to be disclosed by
Parent under applicable securities laws on a registration statement (including
by way of incorporation by reference) filed with the Commission, on the date
this representation is made or deemed to be made, relating to an issuance and
sale by Parent of the Common Stock and which has not been publicly disclosed.
10
4.16 Assets. Parent has good and marketable title to all of its
tangible properties and such tangible properties are not subject to any liens
or encumbrances except as disclosed in Parent's Financial Statements.
ARTICLE V
COVENANTS
5.1 Investigative Rights. From the date of this Agreement until the
Closing Date, each party shall provide to the other party, and such other
party's counsels, accountants, auditors, and other authorized representatives,
full access during normal business hours and upon reasonable advance written
notice to all of each party's properties, books, contracts, commitments, and
records for the purpose of examining the same. Each party shall furnish the
other party with all information concerning each party's affairs as the other
party may reasonably request. If the transaction contemplated hereby is not
completed, all documents received by each party and/or its attorneys and
accountants, auditors or other authorized representatives shall be returned to
the other party who provided same upon request. The parties hereto, their
directors, employees, agents and representatives shall not disclose any of the
information described above unless such information is already disclosed to
the public, without the prior written consent of the party to which the
confidential information pertains. Each party shall take such steps as are
necessary to prevent disclosure of such information to unauthorized third
parties.
5.2 Conduct of Business. Prior to the Closing, Parent and the Company
shall each conduct its business in the normal course, and shall not sell,
pledge, or assign any assets, without the prior written approval of the other
party, except in the regular course of business or as contemplated in
previously disclosed contractual obligations. Neither Parent nor the Company
shall amend its Articles of Incorporation or Bylaws, declare dividends, redeem
or sell stock or other securities, incur additional or newly-funded
liabilities, acquire or dispose of fixed assets, change employment terms,
enter into any material or long-term contract, guarantee obligations of any
third party, settle or discharge any balance sheet receivable for less than
its stated amount, pay more on any liability than its stated amount, or enter
into any other transaction other than in the regular course of business except
as otherwise contemplated herein.
5.3 Plan of Reorganization. This Agreement is intended to constitute a
"plan of reorganization" within the meaning of Section 1.368-2(g) of the
income tax regulations promulgated under the Code. From and after the date of
this Agreement, each party hereto shall use all reasonable efforts to cause
the Merger to qualify, and shall not, without the prior written consent of the
other parties hereto, knowingly take any actions or cause any actions to be
taken which could reasonably be expected to prevent the Merger from qualifying
as a reorganization under the provisions of Section 368 of the Code. In the
event that the Merger shall fail to qualify as a reorganization under the
provisions of Section 368 of the Code, then the parties hereto agree to
negotiate in good faith to restructure the Merger in order that it shall
qualify as tax-free transaction under the Code. Following the Effective Time,
and consistent with any such consent, neither the Surviving Corporation nor
Parent nor any of their respective affiliates knowingly and voluntarily shall
take any action or cause any action to be taken which could reasonably be
expected to cause the Merger to fail to qualify as a reorganization under
Section 368 of the Code.
11
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to the Obligations of Each Party to Consummate the
Merger. The obligations of the parties hereto to consummate the Merger, or to
permit the consummation of the Merger, are subject to the satisfaction or, if
permitted by applicable Law, waiver of the following conditions:
(a) this Agreement and the Merger shall have been duly approved by
the requisite vote of stockholders of the Company in accordance with the
Delaware Corporation Law;
(b) no court of competent jurisdiction shall have issued or
entered any order, writ, injunction or decree, and no other governmental
entity shall have issued any order, which is then in effect and has the effect
of making the Merger illegal or otherwise prohibiting its consummation;
(c) all consents, approvals and authorizations legally required to
be obtained to consummate the Merger shall have been obtained from all
governmental entities, except where the failure to obtain any such consent,
approval or authorization could not reasonably be expected to result in a
change in or have an effect on the business of the Company or Parent that is
materially adverse to the business, assets, liabilities (contingent or
otherwise), condition (financial or otherwise) or results of operations of
Parent and its subsidiaries, taken as a whole; and
(d) the shares of Parent Common Stock into which the shares of
Company Common Stock will be converted pursuant to Article I shall have been
authorized for listing on the American Stock Exchange.
6.2 Conditions to the Obligations of the Company. The obligations of
the Company to consummate the Merger, or to permit the consummation of the
Merger, are subject to the satisfaction or, if permitted by applicable Law,
waiver of the following further conditions:
(a) each of the representations and warranties of Parent contained
in this Agreement shall be true, complete and correct on and as of the
Effective Time as if made at and as of the Effective Time and the Company
shall have received a certificate of the President and Chief Financial Officer
of Parent to such effect;
(b) Parent shall have performed or complied in all material
respects with all material agreements and covenants required by this Agreement
to be performed or complied with by it on or prior to the Effective Time and
the Company shall have received a certificate of the President and Chief
Financial Officer of Parent to that effect;
(c) Employment Agreements. Parent and each of Xxxxxx X. Xxxxxxxxx
and Xxxxxx X. Xxxxxxx shall have entered into an employment agreement
substantially in the forms of Exhibit A and B hereto, respectively.
6.3 Conditions to the Obligations of Parent. The obligations of Parent
to consummate the Merger, or to permit the consummation of the Merger, are
subject to the satisfaction or, if permitted by applicable Law, waiver of the
following further conditions:
(a) each of the representations and warranties of the Company
contained in this Agreement shall be true, complete and correct on and as of
the Effective Time as if made at and as of the Effective Time and Parent shall
have received a certificate of the Chairman or President and Chief Financial
Officer of the Company to such effect;
12
(b) the Company shall have performed or complied in all material
respects with all material agreements and covenants required by this Agreement
to be performed or complied with by it on or prior to the Effective Time and
Parent shall have received a certificate of the Chairman or President and
Chief Financial Officer of the Company to that effect;
(c) there shall not be pending or threatened any action,
proceeding, claim or counterclaim which seeks to or would, or any order,
decree or injunction (whether preliminary, final or appealable) which would,
require Parent to hold separate or dispose of any of the stock or assets of
the Company or the Company Subsidiaries or imposes material limitations on the
ability of Parent to control in any material respect the business, assets or
operations of either Parent or the Company;
(d) The Company shall provide a letter from its auditors stating
that its financial statements for the period from inception through December
31, 1999, can be audited in accordance with SEC rules and that the audit can
be completed within 75 days after the Closing.
(e) Parent shall have been provided letters signed by each of the
clients listed in Schedule 3 in which such clients in substance agree to the
change of ownership of the Company and agree that their contracts will remain
in full force and effect after the change in control and further that they
have approved of the use of their names on the draft press release attached
hereto as Schedule 3.18.
(f) Parent shall have received a fairness opinion from its
Investment Banker in which the Investment Banker concludes that the terms of
this transaction are fair to the shareholders of the Company.
(g) Parent shall have received evidence that all of the Company's
outstanding warrants have been cancelled or exercised.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, notwithstanding any
requisite adoption and approval of this Agreement, as follows:
(a) by mutual written consent duly authorized by the boards of
directors of each of Parent and the Company;
(b) by either Parent or the Company, if the Effective Time shall
not have occurred on or before February 25, 2000; provided, however, that the
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement shall have caused, or resulted in, the failure of the Effective Time
to occur on or before such date;
(c) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this Agreement,
or if any representation or warranty of the Company shall have become untrue,
incomplete or incorrect, in either case such that the conditions set forth in
Section 6.3 would not be satisfied (a "Terminating Company Breach"); provided,
however, that if such Terminating Company Breach is curable by the Company
through the exercise of its reasonable efforts within 10 days and for so long
as the Company continues to exercise such reasonable efforts, Parent may not
terminate this Agreement under this Section 7.1(c); and provided further that
the preceding proviso shall not in any event be deemed to extend any date set
forth in paragraph (b) of this Section 7.1.
13
7.2 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 7.1, this Agreement shall forthwith become void,
there shall be no liability under this Agreement on the part of any party
hereto or any of its affiliates or any of its or their officers or directors,
and all rights and obligations of each party hereto shall cease; provided,
however, that nothing herein shall relieve any party hereto from liability for
the willful or intentional breach of any of its representations and warranties
or the willful or intentional breach of any of its covenants or agreements set
forth in this Agreement.
7.3 Amendment. This Agreement may be amended by the parties hereto by
action taken by or on behalf of their respective boards of directors at any
time prior to the Effective Time. This Agreement may not be amended except by
an instrument in writing signed by the parties hereto.
7.4 Waiver. At any time prior to the Effective Time, any party hereto
may (a) extend the time for or waive compliance with the performance of any
obligation or other act of any other party hereto or (b) waive any inaccuracy
in the representations and warranties contained herein or in any document
delivered pursuant hereto. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
7.5 Expenses. All Expenses incurred in connection with this Agreement
and the Merger shall be paid by the party incurring such Expenses, whether or
not the Merger is consummated.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-survival of Representations and Warranties. The
representations and warranties in this Agreement shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to Section
7.1, as the case may be. Each party agrees that, except for the
representations and warranties contained in this Agreement and the Disclosure
Schedules, no party hereto has made any other representations and warranties,
and each party hereby disclaims any other representations and warranties made
by itself or any of its officers, directors, employees, agents, financial and
legal advisors or other representatives, with respect to the execution and
delivery of this Agreement or the Merger contemplated herein, notwithstanding
the delivery or disclosure to any other party or any party's representatives
of any documentation or other information with respect to any one or more of
the foregoing.
8.2 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by
telecopy or facsimile, by registered or certified mail (postage prepaid,
return receipt requested) or by a nationally recognized courier service to the
respective parties at their addresses set forth on the signature pages to this
Agreement (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 8.2).
8.3 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of Law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Merger is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
14
intent of the parties as closely as possible in a mutually acceptable manner
to the fullest extent permitted by applicable Law in order that the Merger may
be consummated as originally contemplated to the fullest extent possible.
8.4 Assignment; Binding Effect; Benefit. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of Law or otherwise) without the
prior written consent of the other parties hereto. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
Notwithstanding anything contained in this Agreement to the contrary, nothing
in this Agreement, expressed or implied, is intended to confer on any person
other than the parties hereto or their respective successors and permitted
assigns any rights or remedies under or by reason of this Agreement.
8.5 Incorporation of Exhibits. The Disclosure Schedules and all
Exhibits attached hereto and referred to herein are hereby incorporated herein
and made a part of this Agreement for all purposes as if fully set forth
herein.
8.6 Choice of Law. This Agreement shall be construed and governed by
the laws of the State of California without regard to conflicts of interest
principles. The parties hereto consent to the jurisdiction of the federal and
state courts located in Los Angeles, California, for any action or suit
arising out of this Agreement, and waive any defense to such jurisdiction,
including, without limitation, any defense based on venue or inconvenient
forum.
8.7 Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
8.8 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
8.9 Entire Agreement. This Agreement (including the Exhibits, the
Disclosure Schedules) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings among the parties with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding upon any
party hereto unless made in writing and signed by all parties hereto.
8.10 Further Assurances. Each party shall do and perform or cause to
be done or performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other parties may reasonably request in order to carry out the intent and
accomplish the purpose of this Agreement and the consummation of the
transactions contemplated hereby; provided, however, that no party shall be
obligated in any way to do anything that would conflict with, contradict or
otherwise contravene any term or condition set forth prior to this Section
8.10.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
15
AGREED TO AND ACCEPTED as of the date first above written.
X-XXXXXXX.XXX VIRTX, INC.
By /s/ Xxxx X. Xxxxxxx By /s/ Xxxxxx X. Xxxxxxxxx
Xxxx X. Xxxxxxx, President Xxxxxx X. Xxxxxxxxx, Ph.D., President
0000 Xxxxx Xxxxxxx Xxxxxxx, #000 000 Xxxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxx 00000 Xxxxxxxxx, Xxxxxxxxxx 00000
VirTx ACQUISITION CORPORATION
By /s/ Xxxx X. Xxxxxxx
Xxxx X. Xxxxxxx, President
0000 Xxxxx Xxxxxxx Xxxxxxx, #000
Xxxxxxxxxxxx, Xxxxxxx 00000
16
SCHEDULE 1
Number of
Shares of Number of
Name of VirTz Warrants
Xxxxxx X. Xxxxxxxxx, Ph.D. 1,705,000
Xxxxxx X. Xxxxxxx 1,600,000
Xxxxx X. Xxxxx 1,600,000
Xxxxxxx Viejo 250,000
Mid-Ohio Securities Corp.
FBO Xxxxxxx Viejo XXX 250,000
Xxxx Xxxx & Xxxxxx Xxxxx 145,000
Devenshire Management Corp. 10,000
Xxxxxx Xxxxxxxx 10,000
Xxxx Xxxx 10,000
Rock Bay Management Group 10,000
The Augustine Fund L.P. 40,000
Strategic Capital Consultants, Inc. 533,334
6,163,334
SCHEDULE 2
Purchase Price Including Earn Out Provisions
VirTx purchase price shall be paid with 1,854,276 restricted shares of common
stock valued at $23,891,045 and 250,000 shares shall have piggyback
registration rights.
Targets for Earn Out Portion of Purchase Price:
Bonus to VirTx shareholders (all bonuses are cumulative meaning that each
milestone met as referenced below yields the additional consideration
referenced):
1. VirTx generates $6,000,000 in gross sales by end of MED Fiscal Year
(3/31/01) - 50,000 shares or shares valued at $1,000,000, whichever is
greater.*
2. VirTx generates $8,000,000 in gross sales by end of MED Fiscal Year
(3/31/01) - 50,000 shares or shares valued at $1,000,000, whichever is
greater.*
3. VirTx generates $10,000,000 in gross sales by end of MED Fiscal Year
(3/31/01) - 50,000 shares or shares valued at $3,000,000, whichever is
greater.*
4. VirTx generates $20,000,000 in gross sales by end of 18 months after
closing, VirTx receives bonus of 250,000 shares or shares valued at
$6,000,000, whichever is greater.*
5. VirTx generates $40,000,000 in gross sales by end of 18 months after
closing, VirTx receives bonus of 500,000 shares or shares valued at
$12,000,000, whichever is greater.*
6. In no event shall the number of shares issued under the provisions
of paragraphs 1 through 5 above, together with the 1,854,276 shares to be
issued at the closing, exceed 5% of the shares outstanding as of February 21,
2000.
* All shares of restricted stock and all shares are issued and valued as
of the date the performance hurdle has first been satisfied by VirTx.
SCHEDULE 3
VIRTX, INC.
("VirTx")
3.4 The Officers and Directors of VirTx are as follows:
Name Position
Xxxxxx X. Xxxxxxxxx, Ph.D. Chairman, President and CEO
Xxxxxx X. Xxxxxxx Vice President, COO
Xxxxx X. Xxxxx Vice President, Sales
3.10 Trade Names and Rights.
VirTx, Inc. has applied for trademark registration of the following 3
marks:
1. Collaborative Medical Network
2. MedSafe
3. @ the intersection of healthcare and technology
These applications have been accepted by the US Patent and Trademark
Office, but are still pending.
3.16 Assets and Technology.
VirTx, Inc. has developed and also purchased technology to be used to
support its Collaborative Medical Networks . VirTx purchased the intellectual
and physical property of Carespace, LLC in 1999, which included the
CyberOptions store-and-forward software application. This package has a
graphical user interface that was well recognized as the best of breed by
industry analysts in the store-and-forward telemedicine arena. VirTx intends
to further develop this software to make it web-enabled and then combine its
features with other web-based healthcare applications to distribute as part of
its Applications Services Portal (ASP) to the healthcare community.
VirTx has developed an integrated telemedicine workstation (ITW) that
combines clinical diagnostic instrumentation, computer technology, video
conferencing technology and high-bandwidth network technology to permit
primary care providers to consult with medical specialists at great distances.
The technologies developed allow ITWs to be placed in virtually any country in
the world to permit physicians to consult with United States' and other
medical specialists. This technology permits a "supply side" distribution of
healthcare to the patients, wherever they are.
VirTx has specialized in network technology to permit secure exchange of
patient multimedia diagnostic information over a variety of telecommunications
pathways, allowing collaborative networks to operate regardless of the
telecommunications connectivity present at each of the network endpoints.
This allows the network to adapt itself to the variety of developing
telecommunications technologies, as they become available. For example,
VirTx's existing Collaborative Medical Networks presently use POTS, ISDN
(both BRI and PRI), and fractional-T connectivity and can add xDSL, satellite,
wireless and cable as they become available.
VirTx's Collaborative Medical Networks are designed as private, or
virtually private, wide area networks with secure transmission out over the
Internet to provide remote privileged access. The networks are centrally
managed from VirTx's headquarters so that telecommunications and other
problems may be diagnosed and remedied before the users are even aware of the
trouble. This central management permits VirTx to offer another technology
service it has developed, MedSafe . MedSafe securely catalogs and stores
multimedia information from the network for later remote retrieval from
authorized parties. This protects patient information from loss or
compromise. MedSafe is an example of ASP technology that runs over our
Collaborative Medical Networks seamlessly, without special software on the
user end.
VirTx's ASP technology permits distribution of applications over other
networks, such as the Internet, as well as over Collaborative Medical
Networks. Some of this technology includes medical scheduling, Continuing
Medical Education (CME) and other high quality multimedia content, clinical
pathology and radiology applications, and pharmacological formularies.
3.17 Material Contracts and Obligations (Obligations attached hereto)
1. Blue Cross of California
2. Children's Hospital, Los Angeles
3. View Tech/University of New Mexico Health Sciences Center
4. St. Jude Children's Research Hospital
3.18 Draft Press Release (attached hereto)
3.17 and 3.20 Obligations and Debts.
Accounts payable (as of 2/10/00)
Xxxxxxxxx, Xxxxx & Xxxxxxxxxx 36,145.50
One World Software Solutions, Inc. 38,927.21
Troop Xxxxxxx Pasich Reddick & Xxxxx, LLP 86,998.13
Accounts payable under $25,000 at 2/10/00 76,662.46 238,733.30
Accrued payroll and payroll taxes
Xxxxxx Xxxxxxx 109,453.33
Xxx Xxxxx 102,612.49
Xxxxxx Xxxxxxxxx 95,884.37 307,950.19
Accrued interest expense - accrued salaries
Xxxxxx Xxxxxxx 2,577.11
Xxx Xxxxx 2,416.05
Xxxxxx Xxxxxxxxx 2,157.09 7,150.25
Notes payable - shareholders
Xxxxxx Xxxxxxx 93,911.20
Xxx Xxxxx 16,886.68
Xxxxxx Xxxxxxxxx 48,978.05 159,775.93
Accrued interest expense - notes payable
Xxxxxx Xxxxxxx 2,440.31
Xxx Xxxxx 233.77
Xxxxxx Xxxxxxxxx 1,980.39
Devonshire Group 3,800.00
Xxxxxx Xxxxxxxx 3,333.33
Xxxx Xxxx 3,333.33
Rock Bay Management Group 2,916.67
The Augustine Fund, L.P. 11,666.67 29,704.47
743,314.14
FOR IMMEDIATE RELEASE
For Investor Relations Contact:
FOR WELLPOINT HEALTH NETWORKS, BLUE CROSS
FOR X-XXXXXXX.XXX: OF CALIFORNIA:
Xxxxxxx Xxxxxxx, Principal Xxxx Xxx-Xxxxxxxxxx
Magnum Financial Group, LLC Blue Cross of California
Los Angeles, CA Thousand Oaks, CA
000-000-0000 000-000-0000
xxxxxxxxx@xxxxxxxxxxxxxxx.xxx [replace with e mail address]
BLUE CROSS CHOOSES X-XXXXXXX.XXX TO POWER MULTI-MEDIA NETWORK
Jacksonville Beach, Florida and Thousand Oaks, California, February 23, 2000:
x-XxxXxxx.xxx (AMEX:MED) and WellPoint Health Plans, Inc., through its
subsidiary Blue Cross of California (NYSE:WLP), today announced their plan to
jointly manage and implement Blue Cross of California's award winning
telemedicine network.
Blue Cross of California is changing the face of health care with the
implementation of a telemedicine demonstration project designed to
significantly increase access to care. The network, to be designed, managed
and implemented by x-XxxXxxx.xxx and its newly acquired and wholly-owned
subsidiary Virtx, Inc., a company which has agreed to be acquired by
x-XxxXxxx.xxx, will enable Blue Cross' physicians to expand access to quality
healthcare and erode the barriers of distance, time, cost and language that
have prevented people in medically under-served rural areas from receiving
state-of-the-art diagnosis and treatment. The proprietary Blue Cross of
California telemedicine network received national recognition from the Blue
Cross Blue Shield Association, honoring WellPoint Health Networks, Inc., Blue
Cross of California for its Innovations and Best Practice in medical
management. The Collaborative Medical Network program was dubbed, "See a
Specialist Across the Street or Across the State."
According to Xxxx Xxxxxxx, General Manager, WellPoint Health Networks, Inc.,
Blue Cross of California State Sponsored Programs, the telemedicine
demonstration program exemplifies Blue Cross of California's goal to be on the
cutting edge of re-architecting healthcare delivery: "With the assistance of
x-XxxXxxx.xxx, we believe this is now the first program that brings together
the state, the medical community, state-of-the-art technology, patients, and
health plans to utilize e-Healthcare technology to its fullest capabilities."
Xxxxxxx concluded: "This project will substantiate the need for similar
programs throughout California and across the nation and we are delighted to
have x-XxxXxxx.xxx as our technology partner and manager to help us see this
to its full fruition."
The original funds for the project were awarded through a grant from the
Managed Risk Medical Insurance Board as part of the Healthy Families Program,
the state-sponsored insurance program offering low-cost health, dental and
vision coverage to children of low-income working families. Phase I of the
program, officially kicked-off in July of 1999, augmented 16 existing
telemedicine sites and established 22 new telemedicine facilities in 18
counties. Phase II, which began this month, will establish three additional
telemedicine sites with expanded functionality. While Blue Cross reimburses
for its Healthy Families Program and Medi-Cal plan members, access to
telemedicine services is open to all of the clinics' patients. Blue Cross will
utilize x-XxxXxxx.xxx's technical expertise as the implementation of its
network increases in size and scope.
Concurrently with x-XxxXxxx.xxx's acquisition of Virtx, Inc., Xxxxxx X.
Xxxxxxxxx, Ph.D. has been appointed the President of the Company's Multi-Media
Division.
Xx. Xxxxxxxxx, who works closely with Blue Cross, observed that the Blue Cross
of California proprietary telemedicine network is the first instance of a
healthcare plan making such a large-scale commitment to leverage emerging
technology into a healthcare delivery system. Xx. Xxxxxxxxx went on to say
that "this represents the architecture of a truly innovative delivery paradigm
to increase access and quality while at the same time introducing efficiencies
and economies. The Blue Cross of California Telemedicine Network will be an
important influence on how medicine is practiced in the future. We applaud
Blue Cross' vision and are privileged to have been selected as its technology
partner. With x-XxxXxxx.xxx's sophisticated Java-based application and its
depth of resources, we are confident that this project will serve as a model
for the rest of the country as providers and health plans strive to deliver
affordable, world-class healthcare."
Xxxx X. Xxxxxxx, CEO of x-XxxXxxx.xxx, described the transaction as "another
major step in the Company's overall health care connectivity strategy."
ABOUT WELLPOINT HEALTH NETWORKS, INC., BLUE CROSS OF CALIFORNIA
Headquartered in Thousand Oaks, California, WellPoint Health Networks, Inc. is
one of the nation's largest publicly traded health care companies (NYSE: WLP).
WellPoint has been named to FORBES magazine's Platinum list as one of
America's best large companies, and selected by FORTUNE magazine as the
nation's most admired healthcare company.
WellPoint Health Networks, Inc., serves the health care needs of nearly 7.2
million medical and approximately 30.6 million specialty members nationally
through Blue Cross of California in California and UNICARE throughout other
parts of the country. WellPoint offers a broad spectrum of quality
network-based health products including open access PPO, POS and hybrid
products, HMO and specialty products. Special products include pharmacy
benefit management, dental, utilization management, vision, mental health,
life and disability insurance, long term care insurance, flexible spending
accounts, COBRA administration, and Medicare supplements. Blue Cross of
California is a subsidiary of WellPoint Health Networks, Inc. Serving the
needs of Californians since 0000, Xxxx Xxxxx xx Xxxxxxxxxx, together with its
branded affiliates, currently provides
ABOUT X-XXXXXXX.XXX:
x-XxxXxxx.xxx, with its core medical software product, is leading a transition
in the medical industry, as it is the first subscription-based healthcare
management system available for delivery through the Internet. Users of the
software are charged a small up front installation fee, and an ongoing
subscription fee based on transaction volume. The medical software is a
complete healthcare management system. Through the Internet and its Java-based
integrator which utilizes Sun Microsystems, Inc.'s (NASDAQ:SUNW) Java
technology, x-XxxXxxx.xxx's software facilitates communication across diverse
platforms and languages in unlimited capacity, allowing for the inter link of
doctors, hospitals, clinics, HMO's, insurance companies, financiers and
government agencies. The ease and low cost with which it can be implemented,
its Internet-based ASP model which reduces the need to build internal IT
infrastructures, and its ability to allow for the exchange of information
across diverse platforms and systems bode well for its widespread adoption by
the medical community.
x-XxxXxxx.xxx also operates the e-Net Technology group of companies, which
includes e-Net Systems Ltd. (formerly Relay Business Systems Ltd.), IFA
Systems Ltd., and e-Net Software. The e-Net group focuses on removing the
complexity of Web-enabling business processes by providing a complete range of
Internet Managed Services and Information Technology solutions, and by
utilizing strategic partners Sun Microsystems, Oracle Corporation and Cisco
Systems Ltd.
x-XxxXxxx.xxx's products are built on the foundations of speed, ease of use,
security, scalability, and resilience. For more information, see
xxxx://xxx.x-xxxxxxx.xxx, xxx.xxxxxxxxx.xx.xx, and
xxxx://xxx.xxxxxxxxxxxxxxxxxxx.xxx/xxxxxxxx/x/xxxx.xxxx.
Statements in this news release that relate to management's expectations,
intentions or beliefs concerning future plans, expectations, events and
performance are "forward-looking" within the meaning of the federal securities
laws. These forward-looking statements include assumptions, beliefs and
opinions relating to the Company's business and growth strategy based upon
management's interpretation and analysis of its own contractual and legal
rights, of management's ability to satisfy industry and consumer needs with
its technologies, of healthcare industry trends, and of management's ability
to successfully develop, implement, market and/or sell its network transaction
processing services, software programs, clinical and financial transaction
services, and e-commerce systems to its clientele. Management's
forward-looking statements further assume that the Company will be able to
successfully develop and execute on its strategic relationships. Many known
and unknown risks, uncertainties and other factors, including general economic
conditions and risk factors detailed from time to time in press releases and
the Company's filings with the Securities and Exchange Commission, may cause
these forward-looking statements to be incorrect in whole or in part. The
Company expressly disclaims any intent or obligation to update any
forward-looking statements. Actual results or events could differ materially
from those anticipated in the forward-looking statements due to a variety of
factors set out above, including, without limitation, acceptance by customers
of the company's products, changing technology, competition in the health-care
market, government regulation of health care, the company's limited operating
history, general economic conditions, availability of capital and other
factors.
Java and 100% Pure Java are trademarks of Sun Microsystems, Inc. in the United
States and other countries. All other trademarks, tradenames, registered
trademarks or registered tradenames are the property of their respective
holders.
###
FOR IMMEDIATE RELEASE
For Investor Relations Contact:
FOR X-XXXXXXX.XXX: FOR VIRTX:
Xxxxxxx Xxxxxxx, Principal Xxxxxx Xxxxxxxxx, Ph.D
Magnum Financial Group, LLC President and CEO
Los Angeles, CA Camarillo, CA
000-000-0000 000-000-0000
xxxxxxxxx@xxxxxxxxxxxxxxx.xxx xxxxxxxxxx@xxxxx.xxx
X-XXXXXXX.XXX TO ACQUIRE VIRTX
Jacksonville Beach, Florida and Camarillo, California, February 23, 2000:
x-XxxXxxx.xxx (AMEX:MED) has announced its execution of a definitive merger
documentsagreement to acquire privately held VirTx, Inc. for restricted common
stock valued at $23,100,000. in a stock exchange transaction.
Virtx, Inc. is a leader in the newly emerging model of healthcare delivery now
possible in the "Digital Age" by building Collaborative Medical Networks[TM]
in partnership with "key influencers" within the healthcare industry. VirTx's
healthcare portal is designed to facilitate the exchange of multimedia,
clinical data and information and to enable eCommerce among all constituents
of naturally-occurring healthcare communities through the continuum from
health plan to consumer, globally. Health plans and healthcare Centers for
Excellence use VirTx-hosted applications to export their clinical services and
intellectual property to existing trading partners, irrespective of time or
distance. VirTx's networks enable new customers to be reached on a nationwide
and, indeed, a world wide basis.
Among other relationships including Blue Cross of California, VirTx is
building a worldwide Collaborative Medical Network[TM] for St. Jude Children's
Research Hospital. The synergy of the acquisition includes the need of VirTx
to add x-XxxXxxx.xxx's robust technology to accelerate the expansion of the
multimedia network nationally and internationally.
VirTx's management team brings unique domain expertise within healthcare and
practice management as well as video and network technologies. The following
senior officials of VirTx have all signed exclusive five year employment
agreements with x-XxxXxxx.xxx: Xxxxxx X. Xxxxxxxxx, Ph.D, Chairman, President
and CEO, Xxxxxx X. Xxxxxxx, Chief Operating Officer and Xxxxx X. Xxxxx, Vice
President of Sales. Following the completion of the transaction, Xx.
Xxxxxxxxx will assume the role of President of Multi-Media Division and Xx.
Xxxxxxx will come on as the Division's Chief Operating Officer. Xx. Xxxxx
will continue in a senior sales position for the Company after the merger.
VirTx provides the Advanced (Clinical/Multi-Media) Electronic Data Interchange
on the "front end" of x-XxxXxxx.xxx's management application suite thereby
completing the seamless support of healthcare delivery on a global basis.
VirTx-hosted applications support the actual practice of medicine, extending
x-XxxXxxx.xxx's eHealthcare connectivity to the actual point of care.
Xxxx X. Xxxxxxx described VirTx as one of the quiet leaders in the
connectivity and healthcare technology service industry and then commented:
"People must always remember that this new industry that is being forged is as
much a question of human capital and relationships as it is of technology.
The Company is very excited to have Xx. Xxxxxxxxx, Xx. Xxxxxxx and Xx. Xxxxx
come aboard on a long term basis to assist us in managing the continued
proliferation of the Company's products on a national and international
basis."
The closing of the transaction is subject to various conditions including
approval of the board of directors of both companies and the listing of the
additional shares with the American Stock Exchange.
ABOUT VIRTX, INC.:
VirTx (xxx.xxxxx.xxx), a privately held company, is the leading provider of
secure Collaborative Medical Networks . The name VirTx connotes the virtual
treatment that occurs in the new carespace created at the intersection of
healthcare and technology. Web-enabled, multi-media, clinical applications,
including live-interactive video conferencing, are hosted via ASP to
facilitate the emerging models for the delivery of healthcare in the Digital
Age.
Having established a worldwide presence, VirTx's Collaborative Medical Network
solutions are able to support multi-media telemedicine, telehealth and
telescience collaboration, end-to-end across the bandwidth spectrum as well as
the continuum of care, anywhere in the world. The VirTx solution set is
flexible and scalable, capable of supporting patient and user centric
information access.
ABOUT X-XXXXXXX.XXX:
x-XxxXxxx.xxx, with its core medical software product, is leading a transition
in the medical industry, as it is the first subscription-based healthcare
management system available for delivery through the Internet. Users of the
software are charged a small up front installation fee, and an ongoing
subscription fee based on transaction volume. The medical software is a
complete healthcare management system. Through the Internet and its Java-based
integrator which utilizes Sun Microsystems, Inc.'s (NASDAQ:SUNW) Java
technology, x-XxxXxxx.xxx's software facilitates communication across diverse
platforms and languages in unlimited capacity, allowing for the inter link of
doctors, hospitals, clinics, HMO's, insurance companies, financiers and
government agencies. The ease and low cost with which it can be implemented,
its Internet-based ASP model which reduces the need to build internal IT
infrastructures, and its ability to allow for the exchange of information
across diverse platforms and systems bode well for its widespread adoption by
the medical community.
x-XxxXxxx.xxx also operates the e-Net Technology group of companies, which
includes e-Net Systems Ltd. (formerly Relay Business Systems Ltd.), IFA
Systems Ltd., and e-Net Software. The e-Net group focuses on removing the
complexity of Web-enabling business processes by providing a complete range of
Internet Managed Services and Information Technology solutions, and by
utilizing strategic partners Sun Microsystems, Oracle Corporation and Cisco
Systems Ltd.
x-XxxXxxx.xxx's products are built on the foundations of speed, ease of use,
security, scalability, and resilience. For more information, see
xxxx://xxx.x-xxxxxxx.xxx, xxx.xxxxxxxxx.xx.xx, and
xxxx://xxx.xxxxxxxxxxxxxxxxxxx.xxx/xxxxxxxx/x/xxxx.xxxx.
Statements in this news release that relate to management's expectations,
intentions or beliefs concerning future plans, expectations, events and
performance are "forward-looking" within the meaning of the federal securities
laws. These forward-looking statements include assumptions, beliefs and
opinions relating to the Company's business and growth strategy based upon
management's interpretation and analysis of its own contractual and legal
rights, of management's ability to satisfy industry and consumer needs with
its technologies, of healthcare industry trends, and of management's ability
to successfully develop, implement, market and/or sell its network transaction
processing services, software programs, clinical and financial transaction
services, and e-commerce systems to its clientele. Management's
forward-looking statements further assume that the Company will be able to
successfully develop and execute on its strategic relationships. Many known
and unknown risks, uncertainties and other factors, including general economic
conditions and risk factors detailed from time to time in press releases and
the Company's filings with the Securities and Exchange Commission, may cause
these forward-looking statements to be incorrect in whole or in part. The
Company expressly disclaims any intent or obligation to update any
forward-looking statements. Actual results or events could differ materially
from those anticipated in the forward-looking statements due to a variety of
factors set out above, including, without limitation, acceptance by customers
of the company's products, changing technology, competition in the health-care
market, government regulation of health care, the company's limited operating
history, general economic conditions, availability of capital and other
factors.
Java and 100% Pure Java are trademarks of Sun Microsystems, Inc. in the United
States and other countries. All other trademarks, tradenames, registered
trademarks or registered tradenames are the property of their respective
holders.
###
SCHEDULE 4
x-XxxXxxx.xxx
("e-Med")
4.1 Subsidiaries.
E-Net Technologies LTD and its wholly-owned UK subsidiaries
4.2 Capitalization:
Schedule of Warrants and Options Outstanding
as of February 10, 2000
Price
Number of Number Date of Per
Warrant Holder Warrants of Shares Issue Share Term
Magnum Financial 50,000 50,000 1/11/99 $0.25 5 Years
Xxxxxxx Investors 250,000 250,000 3/19/99 $3.85 5 Years
Xxx Xxxxx 250,000 250,000 3/19/99 $3.85 5 Years
Xxx Xxxxx 150,000 150,000 6/14/99 $5.01 5 Years
Xxxxxxx Xxxx 50,000 50,000 8/23/99 $2.00 5 Years
Sutro & Co. 350,000 350,000 5/23/99 $5.00 5 Years
Sutro & Co. 1,300,000 1,300,000 5/23/99 $0.01 5 Years
Warrants in December
private offering 3,568,000 3,568,000 12/31/99 $4.00 5 Years
--------- ---------
Outstanding 5,968,000 5,968,000
Price
Number of Number Date of Per
Option Holder Options of Shares Issue Share
Xxx XxXxxxxxx 100,000 100,000 8/31/99 $1.00
UK employees 202,500 202,500 various $1.00
Stock Option Plan 426,000 426,000 various various
--------- ---------
Outstanding 728,500 728,500
Total Options and
Warrants 6,696,500 6,696,500
4.4 Directors and Officers of e-Med:
Name Position
Xxxx X. Xxxxxxx Chairman, President and Chief Executive Officer
Xxxxxxxx X. Xxxxxx Chief Financial Officer
Xxx XxXxxxxxx Managing Director, e-Net Technology Limited
Xxxxxxxx Xxxxx Chief Technology Officer and Executive Vice
President
Xxxxxx Xxxxxx Director
San X.X. Xxxxx Director
Xxxxxxxx X. Xxxxx Director
Xxxxxx X. Xxxxx Director
