AGREEMENT AND PLAN OF MERGER
BY
AND AMONG
MEDICA SYSTEMS, INC.,
THE STOCKHOLDERS OF MEDICA SYSTEMS, INC.
AND
AMERICAN NET CLAIMS, INC.
AND
ANC HOLDINGS, INC.,
a wholly owned subsidiary of
AMERICAN NET CLAIMS, INC.
June 2, 1997
Table of Contents
Page
1. Definitions ......................................................... 1
2. Basic Transaction ................................................... 4
3. Representations and Warranties of the Target and the Stockholders ... 5
4. Representations and Warranties of the Parent and Sub ................ 16
5. Covenants ........................................................... 17
6. Conditions to Obligation to Close ................................... 19
7. Indemnity Agreements ................................................ 21
8. Miscellaneous ....................................................... 24
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is entered into as
hereinafter described, 1997, by and among American Net Claims, Inc., a Texas
corporation (the "Parent"), ANC Holdings, Inc., a wholly owned subsidiary of
American Net Claims, Inc, a Texas Corporation (the "Sub"), Medica Systems, Inc.,
a Texas corporation (the "Target"), Xxxxxxx X. Xxxxxxx, individually, Xxxxxxxx
X. Xxxxxxx, individually, and K. Xxxxx Xxxxxxxx, individually (the
"Stockholders", or individually, a "Stockholder"). The Parent, the Sub, the
Target and the Stockholders are referred to collectively herein as the
"Parties."
This Agreement contemplates a tax-free merger of the Target with and into
the Sub in a reorganization pursuant to Code ss. 368(a)(2)(D). The Stockholders
will receive capital stock in the Parent in exchange for their capital stock in
the Target. The Parties expect that the Merger will further certain of their
business objectives, including, without limitation, the elimination of the
relationship of the Parent and the Target as licensor and licensee, vendor and
vendee, etc., the creation of a synergistic relationship whereby the Target will
have greater access to the markets tapped by the Parent for its products and
services, the Parent, through the Sub will have the ownership interest in
certain medical claims software which it has heretofore had to license and the
combination of resources which, without the Merger would require the Parent, the
Sub and/or the Target to purchase certain goods and services at a considerable
premium.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. Definitions.
a. "Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
b. "Cash Payment" has the meaning set forth in Article 2(b) below.
c "Certificate of Merger" has the meaning set forth in Article 2(g)
below.
d. "Closing" has the meaning set forth in Article 2(f) below.
e. "Closing Date" has the meaning set forth in Article 2(f) below.
f. "Code" means the Internal Revenue Code of 1986, as amended.
AGREEMENT AND PLAN OF MERGER PAGE 1
g. "Confidential Information" means any information concerning the
businesses and affairs of the Target and its Subsidiaries, if any, that is not
already generally available to the public.
h. "Contingent Cash Payments" has the meaning set forth in Article 2(c)
below.
i. "Contingent Note(s)" has the meaning set forth in Article 2(d) below.
j. "Conversion Ratio" has the meaning set forth in Article 2(f)(v) below.
k. "Disclosure Schedule" has the meaning set forth in Article 3 below.
l. "Dissenting Share" means any Target Share which any stockholder who or
which has exercised his or its appraisal rights under the Texas Business
Corporation Act holds of record.
m. "Effective Time" has the meaning set forth in Article 2(d)(i) below.
n. "Environmental, Health and Safety Requirements" shall mean all federal,
state, local and foreign statutes, regulations, ordinances and similar
provisions having the force or effect of law, all judicial and administrative
orders and determinations, and all common law concerning public health and
safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation.
o. "GAAP" means United States generally accepted accounting principles as
in effect from time to time.
p. "IPO" means the first sale of any securities issued by the Parent
pursuant to a registration statement filed with the SEC or any state agency. For
purposes of Article 2(c) and (d) of this Agreement pertaining to the Contingent
Cash Payments and the Contingent Notes, an IPO shall be deemed to have occurred
at the time that any registration statement filed by the Parent with the SEC is
declared effective or the Parent issues any of its securities in violation of
the requirements of the Securities Act or the securities laws of any state. The
parties anticipate that an IPO will occur pursuant to the letter of intent dated
January 27, 1997, (the "Letter of Intent") whereby National Securities
Corporation has agreed to act as the Managing Underwriter for the initial public
offering of the Parent's common capital stock pursuant to the terms and subject
to the conditions contained therein, a copy of which letter of intent the Target
and the Stockholders acknowledge as having been received by them.
q. "IRS" means the Internal Revenue Service.
AGREEMENT AND PLAN OF MERGER PAGE 2
r. "Knowledge" means actual knowledge after reasonable investigation.
s. "Merger" has the meaning set forth in Article 2(a) below.
t. "Most Recent Fiscal Quarter End" has the meaning set forth in Article
3(f) below.
u. "Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
v. "Parent" has the meaning set forth in the preface above.
w. "Parent Share(s)" means any share of the Common Stock, no par value per
share, of the Parent.
x. "Party" has the meaning set forth in the preface above.
y. "Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
z. "Requisite Sub Stockholder Approval" means the affirmative vote of the
holders of two thirds of the Parent Shares in favor of this Agreement and the
Merger.
aa. "Requisite Stockholder Approval" means the affirmative vote of the
holders of two thirds of the Target Shares in favor of this Agreement and the
Merger.
bb. "SEC" means the Securities and Exchange Commission.
cc. "Securities Act" means the Securities Act of 1933, as amended.
dd. "Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
ee. Security Interest means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than liens for taxes not yet due and
payable or for taxes that the taxpayer is contesting in good faith through
appropriate proceedings, and for which the taxpayer has set up the appropriate
reserve.
ff. "Stockholder" means any Person who or which holds any Target Shares.
gg. "Sub" has the meaning set forth in the preface above.
AGREEMENT AND PLAN OF MERGER PAGE 3
hh. "Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
ii. "Surviving Corporation" has the meaning set forth in Article 2(a)
below.
jj. "Target" has the meaning set forth in the preface above.
kk. "Target Share" means any share of the Common Stock, no par value per
share, of the Target.
ll. "Texas Business Corporation Act" means the general corporation law of
the State of Texas, as amended.
2. Basic Transaction.
a. The Merger. On and subject to the terms and conditions of this
Agreement, the Target will merge with and into the Sub (the "Merger") at the
Effective Time. The Sub shall be the corporation surviving the Merger (the
"Surviving Corporation").
b. The Cash Payment. In addition to the exchange of Parent Shares for the
Target Shares as described below and the other consideration as provided for in
this Article 2., the Stockholders shall be paid a Cash Payment of ONE HUNDRED
THOUSAND AND NO/100 DOLLARS ($100,000.00) on the Closing Date, paid as follows:
i. To Xxxxxxx X. Xxxxxxx - $69,860.00;
ii. To Xxxxxxxx X. Xxxxxxx - $2,740.00; and
iii. To K. Xxxxx Xxxxxxxx - $27,400.00.
c. The Contingent Cash Payments. In addition to the exchange of Parent
Shares for the Target Shares as described below and the other consideration as
provided for in this Article 2., the Stockholders shall be paid Contingent Cash
Payments of ONE HUNDRED TWENTY-FIVE THOUSAND AND NO/100 DOLLARS ($125,000.00) on
or before SIXTY (60) days after the first IP0 of the Parent. Notwithstanding the
foregoing, in the event that an IP0 has not occurred within FIVE (5) years of
the Effective Time, the Target and the Stockholders understand and agree that
the Stockholders will have no right or claim to, and will not be entitled to
receive the $1 25,000.00 Contingent Cash Payments. If and when the Contingent
Cash Payments are to be made, they will be paid as follows:
AGREEMENT AND PLAN OF MERGER PAGE 4
i. To Xxxxxxx X. Xxxxxxx - $87,325.00;
ii. To Xxxxxxxx X. Xxxxxxx - $3,425.00; and
iii. To K. Xxxxx Xxxxxxxx - $34,250.00.
d. The Contingent Notes. In addition to the exchange of Parent Shares for
the Target Shares as described below and the other consideration as provided for
in this Article 2., on the Closing Date, the Stockholders shall receive
Contingent Notes in the collective principal sum of TWO HUNDRED TWENTY-FIVE
THOUSAND AND NO/l00 DOLLARS ($225,000.00) in the form attached hereto as
Exhibits "A", "Al" and "A2". Notwithstanding the foregoing, the parties
understand and agree that in the event that an IPO does not occur within FIVE
(5) years of the Effective Time, the Target and the Stockholders understand and
agree that the Contingent Notes will be of no value, void and of no force and
effect.
e. Payments With Respect to Accounts Receivable. In addition to the Parent
Shares for the Target Shares as described below and the other consideration as
provided for in this Article 2., the Stockholders shall be paid FIFTY PERCENT
(50%) of all amounts, if any, collected relating to the accounts receivable of
the Target existing on the Closing Date. The Stockholders shall be afforded the
right to inspect the accounts receivable records of the Sub for a period of
EIGHTEEN (18) months after the Closing Date to monitor the amounts, if any,
collected relating to the accounts receivable of the Target existing on the
Closing Date. The Parent and Sub shall use good faith efforts in attempting to
collect all such receivables and will not release, cancel, or in any way modify
any such receivable or portion thereof, unless there is a valid complaint by the
customer to which the receivable related. The amounts, if any, collected
relating to the accounts receivable of the Target shall be paid to the
Stockholders within thirty (30) days of the collection of those accounts
receivable and shall be paid to the Stockholders in the following proportions:
i. To Xxxxxxx X. Xxxxxxx -69.86%;
ii. To Xxxxxxxx X. Xxxxxxx - 2.74%; and
iii. To K. Xxxxx Xxxxxxxx - 27.4%.
f. The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of XxXxxxxx Xxxxxx
Xxxxxx, PC., 00000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000,
commencing at 9:00 a.m. local time on the fifth business day following the
satisfaction of, or waiver of, all conditions to the obligations of the Parties
to consummate the transactions contemplated hereby (other than conditions with
respect to actions the respective Parties will take at the Closing itself) or
such other date as the Parties may mutually determine (the "Closing Date");
provided however, that the Closing Date shall be no later than May 30, 1997.
AGREEMENT AND PLAN OF MERGER PAGE 5
g. Actions at the Closing. At the Closing, (i) the Target will deliver to
the Sub the various certificates, instruments, and documents referred to in
Article 6(a) below, (ii) the Parent and/or the Sub will deliver to the Target
the various certificates, instruments, and documents referred to in Article 6(b)
below and (iii) the Parent, Sub and the Target will cause to be filed with the
Secretary of State of the State of Texas a Certificate of Merger in the form
attached hereto as Exhibit "B" (the "Certificate of Merger").
h. Effect of Merger.
i. General. The Merger shall become effective at the time (the
"Effective Time") the Parent, Sub and the Target file the Certificate of
Merger with the Secretary of State of the State of Texas. The Merger shall
have the effect set forth in the Texas Business Corporation Act. The
Surviving Corporation may, at any time after the Effective Time, take any
action (including executing and delivering any document) in the name and
on behalf of either the Parent, Sub and/or the Target in order to carry
out and effectuate the transactions contemplated by this Agreement.
ii. Certificate of Incorporation, Bylaws, Directors and Officers.
The Certificate of Incorporation and the Bylaws of the Sub in effect as of
the Effective Time will remain the Certificate of Incorporation and the
Bylaws of the Surviving Corporation without any modification or amendment
by reason of the Merger. The Directors and the Officers of the Sub shall
retain their respective positions and terms of office without any
modification by reason of the Merger.
iii. Conversion of Target Shares. At and as of the Effective Time,
each Target Share shall be converted into 410.9589041 Parent Shares (the
ratio of 410.9589041 Parent Shares to one Target Share is referred to
herein as the "Conversion Ratio"). No Target Share shall be deemed to be
outstanding or to have any rights other than those 730 presently issued
and outstanding in the hands of the Stockholders.
iv. Parent Shares. Each Parent Share issued and outstanding at and
as of the Effective Time will remain issued and outstanding.
i. Transfer of the Parent Shares. Immediately after the Effective Time,
(A) the Parent will furnish to each of the Stockholders, a stock certificate
representing that number of Parent Shares equal to the product of (I) the
Conversion Ratio times (II) the number of outstanding Target Shares owned by
each Stockholder and (B) Each Stockholder will surrender his/her Target Shares
to the Parent for cancellation.
j. Closing of Transfer Records. Upon the signing of this Agreement and
pending the Effective Time, transfers of Target Shares shall not be made on the
stock transfer books of the Target.
AGREEMENT AND PLAN OF MERGER PAGE 6
3. Representations and Warranties of the Target and the Stockholders. Each of
the Target and the Stockholders, jointly and severally, represents and warrants
to the Parent and the Sub that the statements contained in this Article 3 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Article 3),
except as set forth in the disclosure schedule accompanying this Agreement and
initialed by the Parties (the "Disclosure Schedule"). The Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Article 3.
a. Organization of the Target. The Target is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation. The Target has no Subsidiaries.
b. Authorization of Transaction. Each of the Target and the Stockholders
has full power and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations hereunder.
Without limiting the generality of the foregoing, the board of directors of the
Target and the Stockholders have duly authorized the execution, delivery, and
performance of this Agreement by the Target. This Agreement constitutes the
valid and legally binding obligation of the Target and the Stockholders,
enforceable in accordance with its terms and conditions.
c. Non-contravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby will (i)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which any of the Target and/or the Stockholders
is subject or any provision of the charter or bylaws of any of the Target or
(ii) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which any of the Target and/or the
Stockholders is a party or by which it or they is/are bound or to which any of
its assets is subject (or result in the imposition of any Security Interest upon
any of its assets), except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to give notice,
or Security Interest would not have a material adverse effect on the business,
financial condition, operations, results of operations, or future prospects of
the Target or on the ability of the Parties to consummate the transactions
contemplated by this Agreement. None of the Stockholders or the Target needs to
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement, except where the
failure to give notice, to file, or to obtain any authorization, consent, or
approval would not have a material adverse effect on the business, financial
condition, operations, results of operations, or future prospects of the Target
or on the ability of the Parties to consummate the transactions contemplated by
this Agreement.
AGREEMENT AND PLAN OF MERGER PAGE 7
d. Brokers' Fees. The Target and the Stockholders each has no liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which the Parent
or the Sub could become liable or obligated.
e. Title to Assets. The Target has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by it, located on
its premises, free and clear of all Security Interests, except for properties
and assets disposed of in the Ordinary Course of Business. Without limiting the
generality of the foregoing, the Target has good and marketable title to all of
the assets used by it, free and clear of any Security Interest or restriction on
transfer.
f. Subsidiaries. The Target has no Subsidiary.
g. Liabilities. The total liabilities of the Target at Closing will not
exceed $100,000. No representation or warranty is made as to the components of
such liabilities.
h. Events Subsequent to Most Recent Fiscal Year End. Since December 31,
1996, there has not been any material adverse change in the business, financial
condition, operations, results of operations, or future prospects of the Target
taken as a whole. Without limiting the generality of the foregoing, since that
date:
i. the Target has not sold, leased, transferred, or assigned any
material assets, tangible or intangible, outside the ordinary course of
business;
ii. the Target has not entered into any material agreement,
contract, lease, or license outside the ordinary course of business;
iii. no party (including any of the Target) has accelerated,
terminated, made material modifications to, or canceled any material
agreement, contract, lease, or license to which any of the Target is a
party or by which any of them is bound;
iv. the Target has not imposed any Security Interest upon any of its
assets, tangible or intangible;
v. the Target has not made any material capital expenditures outside
the Ordinary Course of Business;
vi. the Target has not made any material capital investment in, or
any material loan to, any other Person outside the Ordinary Course of
Business;
vii. the Target has not created, incurred, assumed, or guaranteed
any indebtedness for borrowed money and capitalized lease obligations;
AGREEMENT AND PLAN OF MERGER PAGE 8
viii. the Target has not granted any license or sublicense of any
material rights under or with respect to any Intellectual Property;
ix. there has been no change made or authorized in the charter or
bylaws of the Target;
x. the Target has not issued, sold, or otherwise disposed of any of
its capital stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any
of its capital stock;
xi. Target has not declared, set aside, or paid any dividend or made
any distribution with respect to its capital stock (whether in cash or in
kind) or redeemed, purchased, or otherwise acquired any of its capital
stock;
xii. the Target has not experienced any material damage,
destruction, or loss (whether or not covered by insurance) to its
property;
xiii. the Target has not made any loan to, or entered into any other
transaction with, any of its directors, officers, and employees outside
the Ordinary Course of Business;
xiv. the Target has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms of
any existing such contract or agreement;
xv. the Target has not granted any increase in the base compensation
of any of its directors, officers, and employees outside the Ordinary
Course of Business;
xvi. the Target has not adopted, amended, modified, or terminated
any bonus, profit-sharing, incentive, severance, or other plan, contract,
or commitment for the benefit of any of its directors, officers, and
employees (or taken any such action with respect to any other Employee
Benefit Plan);
xvii. the Target has not made any other material change in
employment terms for any of its directors, officers, and employees; and
xviii. the Target has not committed to any of the foregoing.
i. Liabilities. The Target does not have any aggregate liabilities at the
date of this Agreement in excess of $100,000, provided that no representation or
warranty is made as to the components of such amount.
AGREEMENT AND PLAN OF MERGER PAGE 9
j. Legal Compliance. To the knowledge of the Stockholders and the Target,
the Target has complied with all applicable laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all agencies
thereof), and to the knowledge of the Stockholders no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against the Target alleging any failure so to comply, except
where the failure to comply would not have a material adverse effect on the
business, financial condition, operations, results of operations, or future
prospects of the Target.
k. Tax Matters.
i. The Target has filed all Income Tax Returns that it was required
to file. All such Income Tax Returns were correct and complete in all
material respects. All Income Taxes owed by the Target (whether or not
shown on any Income Tax Return) have been paid. The Target currently is
not the beneficiary of any extension of time within which to file any
Income Tax Return.
ii. There is no material dispute or claim concerning any Income Tax
liability of the Target either (A) claimed or raised by any authority in
writing or (B) as to which any of the Stockholders and the directors and
officers of the Target has Knowledge.
iii. The Target has not waived any statute of limitations in respect
of Income Taxes or agreed to any extension of time with respect to an
Income Tax assessment or deficiency.
iv. The Target is not a collapsible corporation. The Target has not
been a United States real property holding corporation within the meaning
of Code ss.897(c)(2) during the applicable period specified in Code
ss.897(c)(1)(A)(ii). The Target is not a party to any tax allocation or
sharing agreement.
v. The unpaid Income Taxes of the Target (A) did not, as of the Most
Recent Fiscal Month End, exceed by any material amount the reserve for
Income Tax liability (rather than any reserve for deferred taxes
established to reflect timing differences between book and tax income) set
forth on the face of the Most Recent Balance Sheet (rather than in any
notes thereto) and (B) will not exceed by any material amount that reserve
as adjusted for operations and transactions through the Closing Date in
accordance with the past custom and practice of the Target in filing their
Income Tax Returns.
l. Real Property. The Target owns no interest in any real property except
for its lease of its business premises, a copy of which is attached hereto as
Exhibit "D". With respect to the lease in Exhibit "D":
AGREEMENT AND PLAN OF MERGER PAGE 10
(1) the lease is legal, valid, binding, enforceable, and in
full force and effect in all material respects;
(2) no party to the lease is in material breach or default,
and no event has occurred which, with notice or lapse of time, would
constitute a material breach or default or permit termination,
modification, or acceleration thereunder;
(3) no party to the lease has repudiated any material
provision thereof;
(4) there are no material disputes, oral agreements, or
forbearance programs in effect as to the lease;
(5) the Target has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold; and
(6) all facilities leased thereunder have received all
approvals of governmental authorities (including material licenses
and permits) required in connection with the operation thereof, and
have been operated and maintained in accordance with applicable
laws, rules, and regulations in all material respects.
m. Intellectual Property.
i. The Target has not interfered with, infringed upon,
misappropriated, or violated any material Intellectual Property rights of
third parties in any material respect, and none of the Stockholders, the
directors and/or officers of the Target has ever received any charge,
complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that any
of the Target must license or refrain from using any Intellectual Property
rights of any third party). To the Knowledge of any of the Stockholders
and the directors and officers of the Target, no third party has
interfered with, infringed upon, misappropriated, or violated any material
Intellectual Property rights of any of the Target in any material respect.
ii. ss.3(m)(ii) of the Disclosure Schedule identifies each patent or
registration which has been issued to any of the Target with respect to
any of its Intellectual Property, identifies each pending patent
application or application for registration which any of the Target has
made with respect to any of its Intellectual Property, and identifies each
material license, agreement, or other permission which any of the Target
has granted to any third party with respect to any of its Intellectual
Property (together with any exceptions). The Target has delivered to the
Parent correct and complete copies of all such patents, registrations,
applications, licenses, agreements, and permissions (as amended to date).
ss.3(m)(ii) of the Disclosure Schedule also identifies each material trade
name or unregistered trademark used by any of the Target in connection
with any of its businesses. With respect
AGREEMENT AND PLAN OF MERGER PAGE 11
to each item of Intellectual Property required to be identified in
ss.3(m)(ii) of the Disclosure Schedule:
(1) the Target possess all right, title, and interest in and
to the item, free and clear of any Security Interest, license, or
other restriction;
(2) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(3) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the Knowledge
of any of the Stockholders, the directors and officers of the
Target, is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(4) the Target has not ever agreed to indemnify any Person for
or against any interference, infringement, misappropriation, or
other conflict with respect to the item.
iii. ss.3(m)(iii) of the Disclosure Schedule identifies each
material item of Intellectual Property that any third party owns and that
the Target uses pursuant to license, sublicense, agreement, or permission.
The Target has delivered to the Parent correct and complete copies of all
such licenses, sublicenses, agreements, and permissions (as amended to
date). With respect to each such item of used Intellectual Property
required to be identified in ss.3(m)(iii) of the Disclosure Schedule:
(1) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force
and effect in all material respects;
(2) no party to the license, sublicense, agreement, or
permission is in material breach or default, and no event has
occurred which with notice or lapse of time would constitute a
material breach or default or permit termination, modification, or
acceleration thereunder;
(3) no party to the license, sublicense, agreement, or
permission has repudiated any material provision thereof; and
(4) the Target has not granted any sublicense or similar right
with respect to the license, sublicense, agreement, or permission.
n. Tangible Assets. The buildings, machinery, equipment, and other
tangible assets that the Target and its Subsidiaries own and lease are free from
material defects (patent and latent), have
AGREEMENT AND PLAN OF MERGER PAGE 12
been maintained in accordance with normal industry practice, and are in good
operating condition and repair (subject to normal wear and tear).
o. Contracts. ss.3(o) of the Disclosure Schedule contains every material
written contract to which the Target is a party, and/or any material oral or
written contract to which the Target is a party regarding a partnership or joint
venture, any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any material indebtedness for borrowed
money, or any material capitalized lease obligation, or under which it has
imposed a Security Interest on any of its assets, tangible or intangible, any
agreement concerning confidentiality or non-competition, any agreement involving
any of the Stockholders and their Affiliates (including any buy-sell agreement),
any profit sharing, stock option, stock purchase, stock appreciation, deferred
compensation, severance, or other material plan or arrangement for the benefit
of its current or former directors, officers, and employees, any collective
bargaining agreement, any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing material severance
benefits, any agreement under which it has advanced or loaned any amount to any
of its directors, officers, and employees outside the Ordinary Course of
Business, or any agreement under which the consequences of a default or
termination could have a material adverse effect on the business, financial
condition, operations, results of operations, or future prospects of the Target.
"Material" for the purposes of this section, shall be deemed to mean any item
requiring the expenditure of in excess of THREE THOUSAND AND NO/l00 DOLLARS
($3,000.00) per month, or an annual expenditure of in excess of THIRTY THOUSAND
AND NO/100 DOLLARS ($30,000.00).
The Target has delivered to the Parent a correct and complete copy of each
written agreement listed in ss.3(o) of the Disclosure Schedule (as amended to
date) with respect to each such agreement: (A) the agreement is legal, valid,
binding, enforceable, and in full force and effect in all material respects; (B)
no party is in material breach or default, and no event has occurred which with
notice or lapse of time would constitute a material breach or default, or permit
termination, modification, or acceleration, under the agreement; and (C) no
party has repudiated any material provision of the agreement.
p. Notes and Accounts Receivable. All accounts receivable of the Target
are reflected on the books and records, are valid receivables subject to no
set-off or counterclaims, are current and collectible, and to the knowledge of
Stockholders will be collected in accordance with their terms at their recorded
amounts, subject to only a reserve for bad debts of $30,000.
x. Xxxxxx of Attorney. To the Knowledge of any of the Stockholders, the
directors and officers of the Target and its Subsidiaries, there are no
outstanding powers of attorney executed on behalf of any of the Target.
r. Insurance. ss. Target maintains no insurance policies.
AGREEMENT AND PLAN OF MERGER PAGE 13
s. Litigation. The Target is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or, to the
Knowledge of any of the Stockholders, the directors and officers of the Target,
is threatened to be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator.
t. Product Warranty. To the Knowledge of the Stockholders and the Target,
substantially all of the products manufactured, sold, leased, and delivered by
the Target have conformed in all material respects with all applicable
contractual commitments and all express and implied warranties, and the Target
does not have any material liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due) for
replacement or repair thereof or other damages in connection therewith, subject
only to the reserve for product warranty claims set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto) as adjusted for
operations and transactions through the Closing Date in accordance with the past
custom and practice of the Target. No products manufactured, sold, leased, and
delivered by the Target are subject to any terms or conditions which are out of
the Ordinary Course of Business.
u. Product Liability. To the Knowledge of the Stockholders and the Target,
the Target does not have any material liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due) arising out of any injury to individuals or property as a result of the
ownership, possession, or use of any product manufactured, sold, leased, or
delivered by the Target.
v. Employees. To the Knowledge of any of the Stockholders and the
directors and officers of the Target, no executive, key employee, or significant
group of employees plans to terminate employment with any of the Target and its
Subsidiaries during the next 12 months. The Target is not a party to or bound by
any collective bargaining agreement, nor has experienced any strike or material
grievance, claim of unfair labor practices, or other collective bargaining
dispute. The Target has not committed any material unfair labor practice. None
of the Stockholders and the directors and officers of the Target has any
Knowledge of any organizational effort presently being made or threatened by or
on behalf of any labor union with respect to employees of any of the Target.
w. Employee Benefits. The Target has no Employee Benefit Plan or to which
the Target contributes or has any obligation to contribute and the Target has
never maintained any qualified or non-qualified Employee Benefit Plan.
x. Guaranties. The Target is not a guarantor or otherwise is responsible
for any liability or obligation (including indebtedness) of any other Person.
AGREEMENT AND PLAN OF MERGER PAGE 14
y. Environmental, Health, and Safety Matters.
i. To the knowledge of the Stockholders, the Target and its
Affiliates has complied and is in compliance, in each case in all material
respects, with all Environmental, Health, and Safety Requirements.
ii. Without limiting the generality of the foregoing, to the
knowledge of the Stockholders, each of the Target and its respective
Affiliates, has obtained, has complied, and is in compliance with, in each
case in all material respects, all material permits, licenses and other
authorizations that are required pursuant to Environmental, Health, and
Safety Requirements for the occupation of its facilities and the operation
of its business.
iii. The Target and its respective Affiliates has not received any
written or oral notice, report or other information regarding any actual
or alleged material violation of Environmental, Health, and Safety
Requirements, or any material liabilities or potential material
liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise), including any material investigatory, remedial or corrective
obligations, relating to any of them or its facilities arising under
Environmental, Health, and Safety Requirements.
iv. None of the following exists at any property or facility owned
or operated by the Target: (1) underground storage tanks, (2)
asbestos-containing material in any friable and damaged form or condition,
(3) materials or equipment containing polychlorinated biphenyls, or (4)
landfills, surface impoundments, or disposal areas.
v. The Target, or any or its Affiliates has not treated, stored,
disposed of, arranged for or permitted the disposal of, transported,
handled, or released any substance, including without limitation any
hazardous substance, or owned or operated any property or facility (and no
such property or facility is contaminated by any such substance) in a
manner that has given or would give rise to material liabilities,
including any material liability for response costs, corrective action
costs, personal injury, property damage, natural resources damages or
attorney fees, pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA") or the Solid
Waste Disposal Act, as amended ("SWDA") or any other Environmental,
Health, and Safety Requirements.
vi. Neither this Agreement nor the consummation of the transaction
that is the subject of this Agreement will result in any material
obligations for site investigation or cleanup, or notification to or
consent of government agencies or third parties, pursuant to any of the
so-called "transaction-triggered" or "responsible property transfer"
Environmental, Health, and Safety Requirements.
AGREEMENT AND PLAN OF MERGER PAGE 15
z. Certain Business Relationships With the Target. None of the
Stockholders and their Affiliates has been involved in any material business
arrangement or relationship with any of the Target within the past 12 months,
and none of the Stockholders and their Affiliates owns any material asset,
tangible or intangible, which is used in the business of the Target.
aa. Disclosure. The representations and warranties contained in this
Article 3 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Article 3 not misleading.
bb. Investment. Each of the Target and the Stockholders (i) understands
that the Parent Shares and the Contingent Notes have not been, and will not be,
registered under the Securities Act, or under any state securities laws, and are
being offered and sold in reliance upon federal and state exemptions for
transactions not involving any public offering, (ii) is acquiring the Parent
Shares and the Contingent Notes solely for the Stockholders' own account for
investment purposes, and not with a view to the distribution thereof, (iii) is a
sophisticated investor with knowledge and experience in business and financial
matters, (iv) has received certain information concerning the Parent and has had
the opportunity to obtain additional information as desired in order to evaluate
the merits and the risks inherent in holding the Parent Shares and the
Contingent Notes and (v) is able to bear the economic risk and lack of liquidity
inherent in holding the Parent Shares and the Contingent Notes.
cc. Continuity of Stockholder Interests. No Stockholder has any present
plan, intention, or arrangement to dispose of any of the Parent Shares received
in the merger if such disposition would reduce the fair value of the Parent
Shares (with such fair value measured as of the Effective Date) retained by the
Stockholder to an amount less than Sixty Percent (60) percent of the fair value
of all consideration received by the Stockholder pursuant to the Merger. In
addition, the Stockholders represent and warrant, covenant and agree that the
Stockholders as a group will not dispose of any of the Parent Shares received in
the merger within eighteen (18) months of the Merger if such disposition would
reduce the aggregate fair value of the Parent Shares (with such fair value
measured as of the Effective Date) retained by the Stockholders to an amount
less than Sixty Percent (60) of the aggregate fair value of the all
consideration received by the Stockholders pursuant to the Merger, unless the
Stockholders obtain an opinion of counsel reasonably satisfactory to the Parent
and Sub that such transfer will not violate the continuity of shareholder
interest requirement set forth in Reg. ss. 1.368-1. Any Stockholder wishing to
dispose of any Parent Shares received in the Merger that are subject to the
limit of this section 3(cc) shall provide written notice to Parent, not less
than 60 days prior to the intended date of disposition, specifying the number of
Parent Shares of which the Stockholder proposes to dispose.
dd. The Target and the Stockholders understand and agree that the Parent
Shares received pursuant to the transactions contemplated by this Agreement will
not be registered for resale under the Securities Act of 1933 (the "Securities
Act"). As such, these shares will be subject to resale restrictions as set forth
in Rule 144 of the Securities Act and certain other resale limitations as
provided for in this Agreement.
AGREEMENT AND PLAN OF MERGER PAGE 16
4. Representations and Warranties of the Parent and Sub. The Parent and Sub each
represents and warrants to the Target that the statements contained in this
Article 4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Article 4), except as set forth in the Disclosure Schedule. The Disclosure
Schedule will be arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this Article 4.
a. Organization. The Sub is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation.
b. Capitalization. As of the Effective Date, the entire authorized capital
stock of the Parent shall consist of FORTY-FIVE MILLION (45,000,000) having no
par value, of which SEVEN MILLION FIVE HUNDRED THOUSAND (7,500,000) Parent
Shares will be then issued and outstanding and no Parent Shares will be then
held in treasury. As of the Effective Date, the Parent will have FIVE MILLION
(5,000,000) authorized shares of preferred capital stock, of which none will be
outstanding or held in treasury. As of the Effective Date, SEVEN HUNDRED FIFTY
THOUSAND (750,000) Parent Shares will be reserved for an incentive stock option
plan for employees, officers, directors, and consultants of the Company to
purchase, with such options to be granted at the sole discretion of the Board of
Directors. None of the 750,000 shares referenced above has been issued to or
reserved for and employee, officer, director or consultant as of the Closing
Date. All of the Parent Shares to be issued in the Merger have been duly
authorized and, upon consummation of the Merger, will be validly issued, fully
paid, and nonassessable. At the Closing Date the Parent Shares received by the
Stockholders pursuant to this Agreement shall constitute no less than 3.84615%
of the issued and outstanding capital stock of the Parent. At the date hereof
and at the Closing Date the Parent will not have any shares of preferred stock
outstanding or any options, warrants, conversion rights, subscription rights, or
any rights of any nature whatsoever to acquire, in any way, common stock or
preferred stock of the Parent, except as described in the Letter of Intent.
c. Authorization of Transaction. The Parent and Sub each has full power
and authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Parent and Sub,
enforceable in accordance with its terms and conditions.
d. Non-contravention. To the Knowledge of any director or officer of the
Parent and Sub, neither the execution and the delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which the Parent and Sub each is subject or any provision of the
charter or bylaws of the Parent or Sub or (ii) conflict with, result in a breach
of, constitute a default
AGREEMENT AND PLAN OF MERGER PAGE 17
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to which
the Parent or Sub is a party or by which it is bound or to which any of its
assets is subject, except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, or failure to give notice
would not have a material adverse effect on the ability of the Parties to
consummate the transactions contemplated by this Agreement. To the Knowledge of
any director or officer of the Parent and Sub, and other than in connection with
the applicable provisions of the Texas Business Corporation Act, the Securities
Exchange Act, the Securities Act, and the state securities laws, the Parent and
Sub each does not need to give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government or governmental agency
in order for the Parties to consummate the transactions contemplated by this
Agreement, except where the failure to give notice, to file, or to obtain any
authorization, consent, or approval would not have a material adverse effect on
the ability of the Parties to consummate the transactions contemplated by this
Agreement.
e. Brokers' Fees. The Parent and Sub each does not have any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which any of the
Target and its Subsidiaries could become liable or obligated.
f. Continuity of Business Enterprise. It is the present intention of the
Parent and Sub each to continue at least one significant historic business line
of the Target, or to use at least a significant portion of the Target's historic
business assets in a business, in each case within the meaning of Reg.
ss.1.368-1(d).
g. Piggy-Back Registration Rights. The Parent Shares received pursuant to
the transactions contemplated by this Agreement will not be registered for
resale under the Securities Act and will not be included in the IPO. However,
subject to the restrictions contained in Article 3(cc), or as otherwise
restricted by this Agreement, the Parent will use its reasonable best efforts to
ensure that the Parent Shares received by the Target pursuant to the
transactions contemplated by this Agreement be included in any registration of
Parent Shares under the Securities Act which occurs after the date the IPO is
declared effective by the SEC, if any. The piggy-back registration rights hereby
granted shall be subject to the Stockholders furnishing such information
regarding themselves as shall be required to effect the registration of their
Parent Shares, the Stockholders entering into and performing the obligations
under an underwriting agreement, in usual and customary form satisfactory to the
Parent and the managing underwriter of such offering. Further, in the event any
Parent Shares of the Stockholders are included in a registration statement as
contemplated by this subsection, to the extent permitted by law, the
Stockholders and each of them will indemnify and hold harmless the Parent, each
of its directors, each of its officers who have signed the registration
statement, each person, if any, who controls the Parent, within the meaning of
the Securities Act, any underwriter and any other selling shareholder in such
registration statement or any of its directors or officers or any person which
controls any such selling shareholder against
AGREEMENT AND PLAN OF MERGER PAGE 18
any losses, claims, damages or liabilities (jointly and severally) to which the
Parent or any such director, officer, controlling person or underwriter or
controlling person, or other selling shareholder, director, officer or
controlling person may become subject, under the Securities Act, the Securities
Exchange Act, or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereto) arise out of or are
based upon any of the following statements, omissions or violations
(collectively, a "Violation"):
i. any untrue statement or alleged untrue statement of a material
fact with respect to a Stockholder or that Stockholder's Parent Shares
contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto,
ii. the omission or alleged omission to state therein a material
fact with respect to a Stockholder or that Stockholder's Parent Shares
required to be stated therein, or necessary to make the statements therein
not misleading, or
iii. any violation or alleged violation by the Stockholder of the
Securities Act, the Securities Exchange Act, any state securities law or
any rule or regulation promulgated under the Securities Act, the
Securities Exchange Act or any state securities law;
in each case to the extent (and only to the extent) that such Violation occurs
in reliance upon and in conformity with written information furnished by such
Stockholder expressly for use in connection with such registration; and such
Stockholder will reimburse any legal or other expenses reasonably incurred by
the Parent or any such director, officer, controlling person, underwriting or
controlling person or other shareholder, officer, director or controlling person
in connection with investigating or defending such loss, claim, damage,
liability, or action.
Further, In the event any Parent Shares of the Stockholders are included in a
registration statement as contemplated by this subsection, to the extent
permitted by law, the Parent will indemnify and hold harmless the Stockholders
against any losses, claims, damages or liabilities (jointly and severally) to
which the Stockholders may become subject with respect to any (i) untrue
statement or alleged untrue statement of a material fact in the registration
statement or any preliminary or final prospectus; (ii) any omission or alleged
omission of a material fact required to make the statements contained in the
registration statement or any preliminary or final prospectus not misleading;
and (iii) any violation or alleged violation by the Parent of the Securities
Act, the Securities Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Securities Exchange Act or
any state securities law. The Parent will reimburse any legal or other expenses
reasonably incurred by any Stockholder in connection with investigating or
defending such loss, claim, damage, liability, or action. In addition, the
Parent shall at its own expense prepare an file all required pre-effective and
post-effective amendments and supplements and revised propsectuses that the SEC
may require and it shall furnish a reasonable number of preliminary, final,
supplemental and revised prospectuses to the Stockholders.
AGREEMENT AND PLAN OF MERGER PAGE 19
h. Post Closing Obligations with Respect to an IPO. The Parent and the Sub
shall use reasonable business efforts to pursue an IPO after the Closing for a
period of FIVE (5) years.
i. Post Closing Payment of Certain Debt. As soon as practical after the
Closing Date and in no event more than THIRTY (30) days after the Closing Date,
the Parent will cause the Sub to pay all amounts outstanding under that certain
promissory note issued by the Target, dated April 28, 1997, payable to the order
of Vision Software, Inc., in the original principal amount of $35,556, with the
outstanding balance as of the Closing Date being approximately $32,000.
j. Post Closing Directorship of the Sub. As soon as practical after the
Closing Date and in no event more than THIRTY (30) days after the Closing Date,
the Parent will cause the Sub to elect Xxxxxxx X. Xxxxxxx as one of its
Directors.
5. Covenants. The Parties agree as follows with respect to the period from and
after the execution of this Agreement.
a. General. Each of the Parties will use its reasonable best efforts to
take all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Article 6 below).
b. Notices and Consents. The Target will give any notices to third
parties, and will use its reasonable best efforts to obtain any third party
consents, that the Parent reasonably may request in connection with the matters
referred to in Article 3(c) above.
c. Regulatory Matters and Approvals. Each of the Parties will give any
notices to, make any filings with (if any are required), and use its reasonable
best efforts to obtain any authorizations, consents, and approvals of
governments and governmental agencies in connection with the matters referred to
in Article 3(c) and Article 4(d) above (if any are required). Without limiting
the generality of the foregoing, the Target will call a special meeting of its
stockholders (the "Special Target Meeting") as soon as reasonably practicable in
order that the stockholders may consider and vote upon the adoption of this
Agreement and the approval of the Merger in accordance with the Texas Business
Corporation Act.
d. Listing of Parent Shares. The Parent will use its reasonable best
efforts to cause the Parent Shares that will be issued in the Merger to the
Stockholders, to be approved for listing within and pursuant to the next public
offering, if any, after the IPO of the Parent.
e. Operation of Business. The Target will not engage in any practice, take
any action, or enter into any transaction outside the Ordinary Course of
Business. Without limiting the generality of the foregoing:
AGREEMENT AND PLAN OF MERGER PAGE 20
i. the Target will not authorize or effect any change in its charter
or bylaws;
ii. the Target will not grant any options, warrants, or other rights
to purchase or obtain any of its capital stock or issue, sell, or
otherwise dispose of any of its capital stock (except upon the conversion
or exercise of options, warrants, and other rights currently outstanding);
iii. the Target will not declare, set aside, or pay any dividend or
distribution with respect to its capital stock (whether in cash or in
kind), or redeem, repurchase, or otherwise acquire any of its capital
stock;
iv. the Target will not issue any note, bond, or other debt security
or create, incur, assume, or guarantee any indebtedness for borrowed money
or capitalized lease obligation;
v. the Target will not impose any Security Interest upon any of its
assets;
vi. the Target will not make any capital investment in, make any
loan to, or acquire the securities or assets of any other Person;
vii. the Target will not make any change in employment terms for any
of its directors, officers, and employees other than the severance payment
agreement with Xxxxxxxxx Xxxxxx, in the amount of $7,000; and
viii. the Target will not commit to any of the foregoing.
f. Full Access. The Target will permit representatives of the Parent to
have full access to all premises, properties, personnel, books, records
(including tax records), contracts, and documents of or pertaining to each of
the Target. The Parent and Sub each will treat and hold as such any Confidential
Information it receives from any of the Target in the course of the reviews
contemplated by this Article 5(f), will not use any of the Confidential
Information except in connection with this Agreement, and, if this Agreement is
terminated for any reason whatsoever, agrees to return to the Target all
tangible embodiments (and all copies) thereof which are in its possession.
g. Notice of Developments. Each Party will give prompt written notice to
the other of any material adverse development causing a breach of any of its own
representations and warranties in Article 3 and Article 4 above. No disclosure
by any Party pursuant to this Article 5(g), however, shall be deemed to amend or
supplement the Disclosure Schedule or to prevent or cure any misrepresentation,
breach of warranty, or breach of covenant.
AGREEMENT AND PLAN OF MERGER PAGE 21
h. Exclusivity. The Target will not solicit, initiate, or encourage the
submission of any proposal or offer from any Person relating to the acquisition
of all or substantially all of the capital stock or assets of any of the Target
(including any acquisition structured as a merger, consolidation, or share
exchange). The Target shall notify the Parent immediately if any Person makes
any proposal, offer, inquiry, or contact with respect to any of the foregoing.
i. Continuity of Business Enterprise. The Sub will continue at least one
significant historic business line of the Target, or use at least a significant
portion of the Target's historic business assets in a business, in each case
within the meaning of Reg. ss.1.368-1(d).]
6. Conditions to Obligation to Close.
a. Conditions to Obligation of the Sub. The obligation of the Sub to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
i. this Agreement and the Merger shall have received the Requisite
Stockholder Approval to the Merger;
ii. the Target shall have procured all of the third party consents
specified in Article 5 above;
iii. the representations and warranties set forth in Article 3 above
shall be true and correct in all material respects at and as of the
Closing Date;
iv. the Target shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
v. no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, (C)
affect adversely the right of the Surviving Corporation to own the former
assets, to operate the former businesses, and to control the former
Subsidiaries of the Target, or (D) affect adversely the right of any of
the former Subsidiaries of the Target to own its assets and to operate its
businesses (and no such injunction, judgment, order, decree, ruling, or
charge shall be in effect);
vi. the Target shall have delivered to the Sub a certificate to the
effect that each of the conditions specified above in Article 6(a)(i)-(v)
is satisfied in all respects;
AGREEMENT AND PLAN OF MERGER PAGE 22
vii. the Parties shall have received all other authorizations,
consents, and approvals of governments and governmental agencies referred
to in this Agreement or required by law;
viii. the Sub shall have received from counsel to the Target an
opinion to be attached to this Agreement as Exhibit "E", in a form
mutually agreeable to the parties hereto attached hereto, addressed to the
Sub, and Dated as of the Closing Date;
ix. the Sub shall have received the resignations, effective as of
the Closing Date, of each director and officer of the Target other than
those whom the Sub shall have specified in writing at Closing; and
x. all actions to be taken by the Target in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Sub.
The Sub may waive any condition specified in this Article 6(a) if it
executes a writing so stating at or prior to the Closing.
b. Conditions to Obligation of the Target. The obligation of the Target to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
i. the Target shall have received a copy of the Requisite Sub
Stockholder Approval;
ii. the representations and warranties set forth in Article 4 above
shall be true and correct in all material respects at and as of the
Closing Date;
iii. the Sub and the Parent shall have performed and complied with
all of its covenants hereunder in all material respects through the
Closing, including to mean the tendering of the Cash Payment and the
Contingent Notes;
iv. no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, (C)
affect adversely the right of the Surviving Corporation to own the former
assets, to operate the former businesses, and to control the former
Subsidiaries of the Target, or (D) affect adversely the right of any of
the former
AGREEMENT AND PLAN OF MERGER PAGE 23
Subsidiaries of the Target to own its assets and to operate its
businesses (and no such injunction, judgment, order, decree, ruling, or
charge shall be in effect);
v. the Sub shall have delivered to the Target a certificate to the
effect that each of the conditions specified above in Article 6(b)(i)-(iv)
is satisfied in all respects;
vi. this Agreement and the Merger shall have received the Requisite
Stockholder Approval;
vii. the Parties shall have received all other authorizations,
consents, and approvals of governments and governmental agencies referred
to in this Agreement or legally required;
viii. the Target shall have received from counsel to the Parent and
the Sub, an opinion attached to this Agreement as Exhibit "F", in a form
mutually agreeable to the parties hereto, addressed to the Target, and
dated as of the Closing Date;
ix. the Stockholders shall have received the Cash Payment and the
Contingent Notes;
x. the Parent shall have entered into employment agreements with
Xxxxxxx Xxxxxxx and Xxxxx Xxxxxxxx in a form and on terms acceptable to
the parties thereto; and
xi. all actions to be taken by the Parent and the Sub in connection
with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Target.
The Target may waive any condition specified in this Article 6(b) if it
executes a writing so stating at or prior to the Closing.
7. Indemnity Agreements.
a. Target and Stockholders' Agreement to Indemnify. Subject to the
provisions of Section 7(d) of this Agreement, the Target and the Stockholders,
jointly and severally, shall indemnify and hold harmless the Parent and the Sub,
jointly and severally, from and against;
i. Any and all liabilities, obligations and/or losses resulting from
any breach of any representation and warranty or nonfulfillment of any
covenant on the part of the Target or the Stockholders to the Parent or
the Sub contained in this Agreement, or any other agreement, certificate
or other instrument furnished or to be furnished to the Parent or the Sub
by the Stockholders or by the Target pursuant to this Agreement, other
than the employment agreements.
AGREEMENT AND PLAN OF MERGER PAGE 24
ii. Any and all liabilities, obligations and/or losses incurred or
imposed in connection with or based upon any provision of any federal,
state or local law or regulation or common law, including Environmental,
Health, and Safety Requirements, pertaining to health, safety or
environmental protection and arising out of any act or omission of Target,
Target's employees, agents or representatives or Target's predecessors in
interest occurring on or prior to the Closing Date or arising out of the
ownership, use, handling, control or operation of any plant, equipment,
container, facility, site, area or property from which any substance was
released into the environment on or prior to the Closing Date. The term
"release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing
into the environment. The term "environment" means any surface or ground
water, drinking water supply, land, surface or subsurface strata, or the
ambient air.
iii. Any and all liabilities, obligations and/or losses directly or
indirectly accrued or accruing, or arising out of or resulting from or
based upon or related to or under ERISA or under Subparts A, B, or D of
Part I of Subchapter D of Chapter 1 of Subtitle A of the Internal Revenue
Code (the "Code"), attributable to acts or ommissions occurring prior to
the Closing Date.
iv. To the extent that taxes with respect to any period or portion
thereof up to and including the Closing Date exceed $75,000.
v. All actions, suits, proceedings, demands, assessments, judgments,
costs and expenses, including fees and disbursements of counsel, incident
to any of the foregoing.
b. Parent's and the Sub's Indemnity Agreement. Subject to the provisions
of Section 7(d) of this Agreement, the Parent and the Sub, jointly and
severally, shall indemnify, defend and hold harmless the Target from and
against:
i. Any and all liabilities and obligations (including without
limitation, federal, state or other taxes of whatever kind, but excluding
any sales or use taxes resulting from this transaction or any assessments,
interest and penalties thereon) of, or claims or causes of action,
including products liability, against the Parent, the Sub, or the Target
which arise with respect to any acts or omissions occurring in periods of
operation of the Sub by the Parent or the Sub beginning after the Closing
Date.
ii. Any and all liabilities, obligations and/or losses resulting
from any breach of any representation and warranty or nonfulfillment of
any covenant on the part of the Parent or the Sub to Target or the
Stockholders contained in this Agreement.
iii. All actions, suits, proceedings, demands, assessments,
judgments, costs and expenses, including fees and disbursements of
counsel, incident to any of the foregoing.
AGREEMENT AND PLAN OF MERGER PAGE 25
c. Indemnification Procedure.
i. The indemnified party shall give the indemnifying party prompt
written notice of the assertion of any third party claim of which the
indemnified party has knowledge, which is covered by the indemnity
agreement set forth above and, if the indemnifying party notifies the
indemnified party of its desire to do so, the indemnifying party may
undertake the defense thereof by representatives chosen by the
indemnifying party, but acceptable to the indemnified party in its
reasonable discretion.
ii. If the indemnifying party, within a reasonable time after notice
of any such claim fails to defend or states that it will not defend, the
indemnified party may and will have the right to undertake the defense,
compromise or settlement of such claim on behalf of and for the account
and risk of the indemnifying party, subject to the right of the
indemnifying party to assume the defense of such claim at any time prior
to settlement, compromise or final determination thereof. Notwithstanding
anything contained herein to the contrary, in no event shall Target or any
of the Stockholders have any obligation or duty to defend Parent, Sub, or
any other person. No person entitled to indemnification under this
Agreement may settle any claim without the consent of the indemnifying
party.
iii. After any final judgment or award shall have been rendered by a
court, arbitration board or administrative agency of competent
jurisdiction, or a settlement shall have been consummated, or the parties
to the claim shall have arrived at a mutually binding agreement with
respect to each separate third party claim indemnified hereunder, the
indemnified party shall forward to the indemnifying party notice of any
sums due and owing by the indemnifying party with respect to such claim
and the indemnifying party shall pay such sums to the indemnified party in
cash or by certified check, within thirty (30) days after the date of such
notice.
d. Liability Limitations.
i. No party shall have any liability under this Agreement, or be
subject to any claim for indemnification under this Article 7, unless
notice of such claim is given on or before the latter of (i) the fourth
anniversary of the Closing Date, or (ii) the fourth anniversary of the
date on which such claim accrued; provided, however, that claims may be
asserted with respect to tax matters, environmental matters or ERISA
matters at any time on or before the date upon which the loss or liability
to which any such claim may relate it barred by all applicable statutes of
limitation.
ii. Notwithstanding anything contained in this Agreement to the
contrary, no party to this Agreement shall be required to indemnify any
other party with respect to any
AGREEMENT AND PLAN OF MERGER PAGE 26
liability, obligation or loss unless the amount of such liability,
obligation or loss, when aggregated with all other liabilities,
obligations, and/or losses sustained by the party to be indemnified, shall
equal or exceed Five Thousand Dollars ($5,000.00), at which time claims
may be asserted by the indemnified party against any indemnifying party
for all liabilities, obligations, and/or losses sustained without any
deduction for the Five Thousand Dollar ($5,000.00) limit stated above.
Moreover, notwithstanding anything contained in this Agreement to the
contrary, in no event shall the Stockholders obligations on the one hand,
nor the Parent's or the Sub's obligations on the other hand, under this
Article 7. exceed the following amounts, under the following
circumstances:
(1) In the event that the Parent is still a private company at
the time the claim for indemnity is made, a sum not to exceed in the
aggregate $100,000.00, plus the amounts paid to the Stockholders
under Article 2(e) of this Agreement, with each Stockholder being
obligated only for his or her Pro Rata Share of such amount; or
(2) In the event that the Parent is a public company at the
time the claim for indemnity is made, the sum of THREE MILLION AND
NO/100 DOLLARS ($3,000,000.00) in the aggregate, with each
Stockholder being obligated only for his or her Pro Rata Share of
such amount.
iii. Notwithstanding anything contained in this Agreement to the
contrary, in no event shall a Stockholder be obligated to pay more than
his or her Pro Rata Share of any indemnification obligation. For the
purposes of this Agreement, the term "Pro Rata Share" with respect to each
Stockholder shall mean:
(1) Xxxxxxx X. Xxxxxxx -69.86%;
(2) Xxxxxxxx X. Xxxxxxx - 2.74%; and
(3) K. Xxxxx Xxxxxxxx - 27.4%.
iv. Notwithstanding anything contained in this Agreement to the
contrary, in the event that the Parent is a public company at the time the
claim for indemnity accrues, neither the Parent, nor the Sub may attempt
to collect any sum due or owing pursuant to the indemnity contained in
this Article 7., unless and until the Rule 144 of the Securities Act
restrictions on resale are removed from the Parent Shares received by the
Stockholders pursuant to this Agreement.
8. Miscellaneous.
a. Survival. The representations, warranties, and covenants of the Parties
will survive the Effective Time for a period of four (4) years, except any
representation or warranty regarding
AGREEMENT AND PLAN OF MERGER PAGE 27
taxes, which shall survive for the applicable statute of limitations. Further,
the obligations, if any, of the Parent and/or the Sub to make the Contingent
Cash Payments, the payments pursuant to the Contingent Notes and/or the payments
with respect to the accounts receivable of the Target, shall survive the
Closing.
b. Press Releases and Public Announcements. No Party shall issue any press
release or make any public announcement relating to the subject matter of this
Agreement without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by applicable law (in which case the disclosing Party will use its
best efforts to advise the other Party prior to making the disclosure).
c. No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
d. Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
e. Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party.
f. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
g. Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
h. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below or such other address as specified by a party:
If to the Target or the Stockholders:
Xxxxxxx X. Xxxxxxx
0000X Xxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
AGREEMENT AND PLAN OF MERGER PAGE 28
Xxxxxxxx X. Xxxxxxx
0000X Xxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
K. Xxxxx Xxxxxxxx
0000 Xxx Xxx
Xxxxxx, XX 00000
Copy to:
Xxxxx, Xxxxx & Xxxxxxxxxx, P.C.
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
ATTN: Xxxx XxXxxxxx
If to the Parent or the Sub:
American Net Claims, Inc.
Xx X. Xxxxx, President
00000 X. Xxxxxxx Xxxx #0000
Xxxxxx, Xxxxx 00000
Copy to:
XxXxxxxx Xxxxxx Xxxxxx, PC.
Attn.: Xxxx X. Xxxxxxx, III
00000 Xxxxx xxxxxxx Xxxxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
i. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Texas. The choice of law
provision of this Agreement shall be applied with no effect given to the
principles of conflicts of law, and without regard to the Choice of Law rules of
the State of Texas.
AGREEMENT AND PLAN OF MERGER PAGE 29
j. Amendments and Waivers. The Parties may mutually amend any provision of
this Agreement at any time prior to the Effective Time with the prior
authorization of their respective boards of directors; provided, however, that
any amendment effected subsequent to stockholder approval will be subject to the
restrictions contained in the Texas Business Corporation Act. No amendment of
any provision of this Agreement shall be valid unless the same shall be in
writing and signed by both of the Parties. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
k. Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
l. Settlement of Disputes. The following agreements are made with respect
to the settlement of disputes arising under the terms and conditions of this
Agreement:
i. If a dispute arises out of or relates to this Agreement,
including to mean any of its Exhibits, or the breach or default of this
Agreement, the parties shall first, in good faith, attempt to negotiate a
settlement of that dispute, breach or default.
ii. If the dispute, breach or default cannot be settled through
negotiation, the parties agree and shall proceed to binding arbitration
through the American Arbitration Association in accordance with its
Commercial Arbitration Rules under the Federal Arbitration Act, and
judgment upon the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction thereof.
iii. Any provisional remedy (including injunctive relief) which a
party to this Agreement may want to elect, shall be available
notwithstanding the provisions relating to arbitration of disputes. Any
party may seek such provisional remedy from the appropriate court of law
pending arbitration, and such proceeding in which the provisional remedy
was sought will then be stayed pending the final award of the arbitration.
iv. The expenses of arbitration conducted pursuant to this paragraph
shall be born by the parties in such proportions as the arbitrator(s)
shall decide.
m. Expenses. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby. Notwithstanding the foregoing, the
Parent has agreed to pay FIVE THOUSAND AND NO/l00 DOLLARS ($5,000.00) of the
Target's attorneys fees in connection with this Agreement and the transactions
contemplated hereby, payable at the Closing.
AGREEMENT AND PLAN OF MERGER PAGE 30
n. Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
o. Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
p. In the event that this Agreement is not executed by all parties on or
before June 2, 1997, this Agreement shall be null and void and any offer
contained herein shall be withdrawn. Time is of the essence in construing this
Section 8p.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on as
on this the 2 day of June, 1997.
PARENT:
American Net Claims, Inc.
By: /s/ Xx X. Xxxxx
--------------------------
Xx X. Xxxxx, President
SUB.
ANC Holdings, Inc.
By: /s/ Xx X. Xxxxx
--------------------------
Xx X. Xxxxx, President
TARGET:
Medica Systems, Inc.
AGREEMENT AND PLAN OF MERGER PAGE 31
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxx, President
THE STOCKHOLDERS:
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxx, Individually
/s/ Xxxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxxx X. Xxxxxxx, Individually
/s/ K. Xxxxx Xxxxxxxx
-----------------------------------
K. Xxxxx Xxxxxxxx, Individually
AGREEMENT AND PLAN OF MERGER PAGE 32
EXHIBIT AND SCHEDULE LIST
Exhibit A -- Contingent Note in the principal sum of ONE HUNDRED
FIFTY-SEVEN THOUSAND ONE HUNDRED EIGHTY-FIVE AND NO/100 DOLLARS
($157,185.00)
Exhibit Al -- Contingent Note in the principal sum of SIX THOUSAND ONE
HUNDRED SIXTY-FIVE AND NO/100 DOLLARS ($6,165.00)
Exhibit A2 -- Contingent Note in the principal sum of SIXTY-ONE THOUSAND
SIX HUNDRED FIFTY AND NO/100 DOLLARS ($61,650.00)
Exhibit B -- [RESERVED]
Exhibit C -- [RESERVED]
Exhibit D -- Lease of Target's Business Premises [INCLUDED IN EXHIBIT 3o
TO DISCLOSURE SCHEDULE]
Exhibit E -- Opinion of Counsel to the Target
Exhibit F -- Opinion of Counsel to Parent and Sub
Disclosure Schedule -- Exceptions to Representations and Warranties
AGREEMENT AND PLAN OF MERGER PAGE 33
EXHIBIT "A"
CONTINGENT NOTE
Date: May __, 1997
Maker: American Net Claims, Inc.
Maker's Mailing Address (including county): 00000 X. Xxxxxxx Xxxx #0000, Xxxxxx,
Xxxxxx Xxxxxx, Xxxxx 00000
Payee: Xxxxxxx X. Xxxxxxx
Place for Payment (including county):
Principal Amount: ONE HUNDRED FIFTY-SEVEN THOUSAND ONE HUNDRED EIGHTY-FIVE AND
NO/100 DOLLARS ($157,185.00)
Annual Interest Rate on Unpaid Principal which shall begin to accrue from the
date of the occurrence of the initial "IPO" as that term is defined in that one
certain Agreement and Plan of Merger by and among American Net Claims, Inc., ANC
Holdings, Inc., a wholly owned subsidiary of American Net Claims, Inc., Medica
Systems, Inc., Xxxxxxx X. Xxxxxxx, Xxxxxxxx X. Xxxxxxx, and K. Xxxxx Xxxxxxxx
(the "Agreement"): EIGHT PERCENT (8%)
Annual Interest Rate on Matured, Unpaid Amounts: The highest amount allowed by
law
Terms of Payment (principal and interest): Maker's obligation to pay principal
and interest is contingent upon the occurrence of an IPO. All principal and
accrued interest hereunder shall be due and payable on or before ONE (1) year
after the occurrence of the initial IPO.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note, the unpaid principal balance and
earned interest on this note shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentation for payment, notices of intention to accelerate maturity,
notices of acceleration of maturity, protests, and notices of protest.
UNSECURED NOTE PAGE 1
If this note is given to an attorney for collection, or if suit is brought
for collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees and court costs, in addition to other
amounts due. Reasonable attorney's fees shall be 10.0% of all amounts due unless
either party pleads otherwise.
Interest on the debt evidenced by this note shall not exceed the maximum
amounts of nonusurious interest that may be contracted for, taken, reserved,
charged, or received under law; any interest in excess of that maximum amount
shall be credited on the principal of the debt or, if that has been paid,
refunded. On any acceleration or required or permitted prepayment, any such
excess shall be canceled automatically as of the acceleration or prepayment or,
if already paid, credited on the principal of the debt or, if the principal of
the debt has been paid, refunded. This provision overrides other provisions in
this and all other instruments concerning the debt.
This Note is subject to and expressly contingent upon the terms and
conditions contained in the Agreement, specifically meaning to include, but not
be limited to the provisions contained in Article 2(d) of the Agreement.
When the context requires, singular noun and pronouns include the plural.
Maker may prepay any amounts due under this note at any time, without
penalty.
American Net Claims, Inc.
By: ___________________________
Xx X. Xxxxx, President
Maker
UNSECURED NOTE PAGE 2
EXHIBIT "A1"
CONTINGENT NOTE
Date: May , 1997
Maker: American Net Claims, Inc.
Maker's Mailing Address (including county): 00000 X. Xxxxxxx Xxxx #0000, Xxxxxx,
Xxxxxx Xxxxxx, Xxxxx 00000
Payee: Xxxxxxxx X. Xxxxxxx
Place for Payment (including county):
Principal Amount: SIX THOUSAND ONE HUNDRED SIXTY-FIVE AND NO/100 DOLLARS
($6,165.00)
Annual Interest Rate on Unpaid Principal which shall begin to accrue from the
date of the occurrence of the initial "IPO" as that term is defined in that one
certain Agreement and Plan of Merger by and among American Net Claims, Inc., ANC
Holdings, Inc., a wholly owned subsidiary of American Net Claims, Inc., Medica
Systems, Inc., Xxxxxxx X. Xxxxxxx, Xxxxxxxx X. Xxxxxxx, and K. Xxxxx Xxxxxxxx
(the "Agreement"): EIGHT PERCENT (8%)
Annual Interest Rate on Matured, Unpaid Amounts: The highest amount allowed by
law
Terms of Payment (principal and interest): Maker's obligation to pay principal
and interest is contingent upon the occurrence of an IPO. All principal and
accrued interest shall be due and payable on or before ONE (1) year after the
occurrence of the initial IPO.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note, the unpaid principal balance and
earned interest on this note shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentation for payment, notices of intention to accelerate maturity,
notices of acceleration of maturity, protests, and notices of protest.
If this note is given to an attorney for collection, or if suit is brought
for collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees and court costs, in addition to other
amounts due. Reasonable attorney's fees shall be 10.0% of all amounts due unless
either party pleads otherwise.
Interest on the debt evidenced by this note shall not exceed the maximum
amounts of nonusurious interest that may be contracted for, taken, reserved,
charged, or received under law; any interest in excess of that maximum amount
shall be credited on the principal of the debt or, if that has been paid,
refunded. On any acceleration or required or permitted prepayment, any such
excess shall be canceled automatically as of the acceleration or prepayment or,
if already paid, credited on the principal of the debt or, if the principal of
the debt has been paid, refunded. This provision overrides other provisions in
this and all other instruments concerning the debt.
This Note is subject to and expressly contingent upon the terms and
conditions contained in the Agreement, specifically meaning to include, but not
be limited to the provisions contained in Article 2(d) of the Agreement.
When the context requires, singular noun and pronouns include the plural.
Maker may prepay any amounts due under this note at any time, without
penalty.
American Net Claims, Inc.
By: ___________________________
Xx X. Xxxxx, President
Maker
EXHIBIT "A2"
CONTINGENT NOTE
Date: May __, 1997
Maker: American Net Claims, Inc.
Maker's Mailing Address (including county): 00000 X. Xxxxxxx Xxxx #0000, Xxxxxx,
Xxxxxx Xxxxxx, Xxxxx 00000
Payee: K. Xxxxx Xxxxxxxx
Place for Payment (including county):
Principal Amount: SIXTY-ONE THOUSAND SIX HUNDRED FIFTY AND NO/100 DOLLARS
($61,650.00)
Annual Interest Rate on Unpaid Principal which shall begin to accrue from the
date of the occurrence of the initial "IPO" as that term is defined in that one
certain Agreement and Plan of Merger by and among American Net Claims, Inc., ANC
Holdings, Inc., a wholly owned subsidiary of American Net Claims, Inc., Medica
Systems, Inc., Xxxxxxx X. Xxxxxxx, Xxxxxxxx X. Xxxxxxx, and K. Xxxxx Xxxxxxxx
(the "Agreement"): EIGHT PERCENT (8%)
Annual Interest Rate on Matured, Unpaid Amounts: The highest amount allowed by
law
Terms of Payment (principal and interest): Maker's obligation to pay principal
and interest is contingent upon the occurrence of an IPO. All principal and
accrued interest shall be due and payable on or before ONE (1) year after the
occurrence of the initial IPO.
Maker promises to pay to the order of Payee at the place for payment and
according to the terms of payment the principal amount plus interest at the
rates stated above. All unpaid amounts shall be due by the final scheduled
payment date.
On default in the payment of this note, the unpaid principal balance and
earned interest on this note shall become immediately due at the election of
Payee. Maker and each surety, endorser, and guarantor waive all demands for
payment, presentation for payment, notices of intention to accelerate maturity,
notices of acceleration of maturity, protests, and notices of protest.
UNSECURED NOTE PAGE 1
If this note is given to an attorney for collection, or if suit is brought
for collection, or if it is collected through probate, bankruptcy, or other
judicial proceeding, then Maker shall pay Payee all costs of collection,
including reasonable attorney's fees and court costs, in addition to other
amounts due. Reasonable attorney's fees shall be 10.0% of all amounts due unless
either party pleads otherwise.
Interest on the debt evidenced by this note shall not exceed the maximum
amounts of nonusurious interest that may be contracted for, taken, reserved,
charged, or received under law; any interest in excess of that maximum amount
shall be credited on the principal of the debt or, if that has been paid,
refunded. On any acceleration or required or permitted prepayment, any such
excess shall be canceled automatically as of the acceleration or prepayment or,
if already paid, credited on the principal of the debt or, if the principal of
the debt has been paid, refunded. This provision overrides other provisions in
this and all other instruments concerning the debt.
This Note is subject to and expressly contingent upon the terms and
conditions contained in the Agreement, specifically meaning to include, but not
be limited to the provisions contained in Article 2(d) of the Agreement.
When the context requires, singular noun and pronouns include the plural.
Maker may prepay any amounts due under this note at any time, without
penalty.
American Net Claims, Inc.
By: ___________________________
Xx X. Xxxxx, President
Maker
UNSECURED NOTE PAGE 2
EXHIBIT E
May _______, 1997
Re: Agreement and Plan of Merger (the "Agreement") by and among
American Net Claims, Inc (the "Parent"), ANC Holdings, Inc. (the
"Sub"), Medical Systems, Inc. (the "Target"), Xxxxxxx X. Xxxxxxx,
Individually, Xxxxxxxx X. Xxxxxxx, Individually and K. Xxxxx
Xxxxxxxx, Individually (the "Stockholders," or Individually, a
"Stockholder")
Gentlemen:
We have acted as legal counsel for the Target and the Stockholders in
connection with the Agreement, including to mean all of the Agreement's exhibits
and schedules.
In our capacity as counsel to the Target and the Stockholders, we have
been asked to render certain opinions in connection with the Agreement. All
capitalized terms used herein but not otherwise defined herein shall have the
meaning set forth in the Agreement.
As to various questions of fact material to our opinion, we have relied
exclusively on the representations contained in the Agreement and on
certificates provided by officers of the Target and the Stockholders. A matter
stated in this opinion that is "to our knowledge," as to which we "know" or are
"aware," or "known to us" refers only to our actual knowledge in providing
legal services to the Target and the Stockholders in connection with the
Agreement and the transactions contemplated therein, and is so stated to reflect
the fact that, while we have not been informed that the matters stated are
factually inaccurate (based on information we have as a result of representing
the Parent and Sub in connection with the Agreement and the transactions
contemplated therein) we have made no independent factual investigation with
respect to such statement or matter and no inference relative thereto should be
taken, other than to make a due inquiry of the officers of the Target and the
Stockholders with respect to the matters at issue.
These opinions are given as of the date of this letter. In rendering these
opinions, we have examined the Agreement, and the corporate resolutions of the
shareholders and directors of the Target and the Stockholders authorizing and
approving the Agreement with the Target and the Stockholders, and the
transactions contemplated thereby.
Based on the foregoing and having regard for such legal considerations as
we deem relevant, it is our opinion that:
1. The Target is a corporation validly existing and in good standing under
the laws of the State of Texas. The Target has the corporate power and corporate
authority to own, lease and operate its property, and to carry on its business
as now conducted.
2. The Target has the corporate power and corporate authority to enter
into, execute, deliver and perform its obligation under the terms of the
Agreement. The execution, delivery and performance of each of the Agreement and
the related documents has been duly authorized by all necessary corporate action
on the part of Target and the Stockholders. Each officer of the Target and each
Stockholder executing the Agreement and the related documents has been duly
authorized to execute and deliver the Agreement and the related documents on
behalf of the Target and/or the Stockholders as the case may warrant.
3. The Agreement has been duly executed and delivered by Target and the
Stockholders, and constitutes the valid and binding obligation of Target and the
Stockholders. The Agreement is enforceable against Target and Stockholders in
accordance with its terms.
4. The Stockholders each have all requisite power, authority and, to the
undersigned's best knowledge, capacity to enter into, execute, deliver and
perform their obligations under the Agreement.
5. The Agreement has been executed and delivered by Stockholders and
constitutes the valid and binding obligation of each of the Stockholders and is
enforceable against each Stockholder in accordance with its terms.
6. To our knowledge, there are no actions, suits, arbitration proceedings
or claims pending or threatened against Target at law or in equity or before any
federal, state or other governmental authority or regulatory body. To our
knowledge, there are no actions, suits, arbitration proceedings or claims
pending or threatened against the Stockholders, at law or in equity or before
any federal, state or other governmental authority or regulatory body which
would affect the enforceability of the Agreement.
7. No consent or waiver of, filing with, authorization, approval or other
action by Shareholders, or any federal or Texas governmental authority or
regulatory body, which has not already been obtained or done, is required in
connection with the execution, delivery and performance by Target or the
Stockholders of the Agreement, or is required as a condition to the validity or
enforceability of the Agreement, other than filing the Articles of Merger.
8. The execution, delivery and performance by The Target of the Agreement
does not (a) to our knowledge result in a breach or violation of the Certificate
of Incorporation or By-Laws of Target; (b) to our knowledge, result in a
violation of any judgment, order, writ, injunction or decree to which Parent or
the Sub are subject; (c) result in the creation of any lien on any of the
collateral, except as contemplated by the Agreement; or (d) to our knowledge,
conflict with,
2
constitute an event of default under, or result in a breach or violation of the
provisions of any agreement under which either Target Sub has borrowed money.
The opinions set forth herein are qualified as stated therein and are
qualified further by the following:
(a) In rendering the opinions set forth above, we have relied, to the
extent we believe appropriate, as to matters of fact, (i) upon certificates or
statements of public officials and of the officers of the Target as appropriate,
and (ii) upon representations and warranties of Target contained in the
Agreement and the related documents and we have made no independent
investigation or verification of said facts. No opinion is being expressed as to
the effect of any event, fact or circumstance of which we have no actual
knowledge.
(b) We have assumed the competency of the signatories to the documents
other than our clients', the genuineness of all signatures other than our
clients', the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies, and the accuracy and completeness of all records made
available to us.
(c) We have assumed that (i) with respect to any parties other than Target
and Stockholders, the documents have been duly authorized, executed and
delivered by the parties thereto, are within their corporate or individual
powers as the case may warrant, and that they are in compliance with all
applicable laws, rules and regulations governing the conduct of their respective
businesses and this transaction, (ii) with respect to any parties other than
Target and Stockholders, the documents are their legal, valid and binding
obligations, (iii) the documents will be enforced in circumstances and in a
manner which are commercially reasonable, (iv) with respect to any parties other
than Target and Stockholders, the parties to the documents are not subject to
any statute, rule or regulation or any impediment that requires them or our
clients to obtain the consent, or to make any declaration or filing with any
governmental authority in connection with the transactions contemplated by the
documents, and (v) the terms, provisions and conditions relating to the
transaction referred to in this opinion letter are reflected solely in the
documents described above and there are no other agreements or understandings
between the parties except as reflected in such documents.
(d) The opinions herein expressed are qualified to the extent that: (i)
the enforceability, of any rights or remedies in, any agreement or instrument
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or transfer, equitable subordination, or similar laws and
doctrines affecting the rights of creditors generally and general equitable
principles; (ii) the availability of specific performance, injunctive relief or
any other equitable remedy is subject to the discretion of a court of competent
jurisdiction and (iii) the provisions of any document, agreement or instrument
that may require indemnification or contribution for liabilities under the
provisions of any federal or state securities laws or in respect of the
negligence or wrongful conduct of the indemnified party.
3
We express no opinion as to the enforceability of(i) any indemnification
obligation under which a party is to be indemnified for its own actions; or (ii)
any employment agreements contemplated by the Agreement. No opinions other than
those expressed herein may be implied or inferred from this letter. This letter
is provided solely for your benefit and may not be relied upon by any third
party without our written consent. The opinions expressed herein are limited to
matters of Texas law. This letter and opinions expressed herein incorporate by
reference the Common Exceptions contained in the State Bar of Texas Business Law
Section Legal Opinions Committee Report on Opinions in business Transactions.
[SUBJECT TO REVISIONS AND QUALIFICATIONS REQUIRED BY XXXXX, XXXXX &
XXXXXXXXXX, P.C. OPINION COMMITTEE]
Very truly yours,
XXXXX, XXXXX & WERKENTHIN, P.C.
cc:
4
EXHIBIT F
(Date)
Small Xxxxx & Werkenthin
Suite 1100, 000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Re: Agreement and Plan of Merger (the "Agreement") by and among American
Net Claims, Inc (the "Parent"), ANC Holdings, Inc. (the "Sub"), Medica Systems,
Inc. (the "Target"), Xxxxxxx X. Xxxxxxx, individually, Xxxxxxxx X. Xxxxxxx,
individually, and K. Xxxxx Xxxxxxxx, individually (the "Stockholders", or
individually, a "Stockholder")
Gentlemen:
We have acted as legal counsel for the Parent and the Sub in connection
with the Agreement, including to mean all of the Agreement's exhibits and
schedules.
In our capacity as counsel to the Parent and the Sub, we have been asked
to render certain opinions in connection with the Agreement. All capitalized
terms used herein but not otherwise defined herein shall have the meaning set
forth in the Agreement.
As to various questions of fact material to our opinion, we have relied
exclusively on the representations contained in the Agreement and on
certificates provided by officers of the Parent and Sub. A matter stated in this
opinion that is "to our knowledge", as to which we "know" or are "aware", or
"known to us" refers only to my actual knowledge in providing legal services to
the Parent and Sub in connection with the Agreement and the transactions
contemplated therein, and is so stated to reflect the fact that, while we have
not been informed that the matters stated are factually inaccurate (based on
information we have as a result of representing the Parent and Sub in connection
with the Agreement and the transactions contemplated therein) we have made no
independent factual investigation with respect to such statement or matter and
no inference relative thereto should be taken, other than to make a due inquiry
of the officers of the Parent and the Sub with respect to the matters at issue.
These opinions are given as of the date of this letter. In rendering these
opinions, we have examined the Agreement, and the corporate resolutions of the
shareholders and directors of the Parent and the Sub authorizing and approving
the Agreement with the Target and the Stockholders, and the transactions
contemplated thereby.
Based on the foregoing and having regard for such legal considerations as
we deem relevant, it is our opinion that:
1. Each of the Parent and the Sub is a corporation validly existing and in
good standing under the laws of the State of Texas. Each of the Parent and the
Sub has the corporate
Small Xxxxx & Werkenthin
May 17, 1997
Page 2
power and corporate authority to own, lease and operate its property, and to
carry on its business as now conducted.
2. Each of the Parent and the Sub has the corporate power and corporate
authority to enter into, execute, deliver and perform its obligations under the
terms of the Agreement. The execution, delivery and performance of each of the
Agreement has been duly authorized by all necessary corporate action on the part
of Parent and Sub. Each officer of the Parent and the Sub executing the
Agreement and the related documents has been duly authorized to execute and
deliver the Agreement and the related documents on behalf of Parent and/or the
Sub as the case may warrant.
3. The Agreement has been duly executed and delivered by Parent and Sub,
and constitutes the valid and binding obligation of Parent and Sub. The
Agreement is enforceable against Parent and Sub in accordance with its terms.
4. To our best knowledge, there are no actions, suits, arbitration
proceedings or claims pending or threatened against Parent or the Sub at law or
in equity or before any federal, state or other governmental authority or
regulatory body which would affect the enforceability of the Agreement.
5. No consent or waiver of, filing with, authorization, approval or other
action by the Parent or the Sub, or any federal or Texas governmental authority
or regulatory body, which has not already been obtained or done, is required in
connection with the execution, delivery and performance by Parent or the Sub of
the Agreement, or is required as a condition to the validity or enforceability
of the Agreement.
6. The execution, delivery and performance by each of the Parent and the
Sub of the Agreement does not (a) to our best knowledge result in a breach or
violation of the Certificate of Incorporation or By-Laws of either the Parent or
the Sub; (b) to our best knowledge, result in a violation of any judgment,
order, writ, injunction or decree to which Parent or the Sub are subject; or (c)
to our best knowledge, conflict with, constitute an event of default under, or
result in a breach or violation of the provisions of any agreement under which
either the Parent or the Sub has borrowed money.
The opinions set forth herein are qualified as stated therein and are
qualified further by the following:
Small Xxxxx & Werkenthin
May 17, 1997
Page 3
(a) In rendering the opinions set forth above, we have relied, to the
extent we believe appropriate, as to matters of fact. (i) upon certificates or
statements of public officials and of the officers of the Parent and/or the Sub
as appropriate, and (ii) upon representations and warranties of Parent and Sub
contained in the Agreement and the related documents and we have made no
independent investigation or verification of said facts. No opinion is being
expressed as to the effect of any event, fact or circumstance of which we have
no actual knowledge.
(b) We have assumed the competency of the signatories to the documents
other than our clients', the genuineness of all signatures other than our
clients', the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies, and the accuracy and completeness of all records made
available to us.
(c) We have assumed that (i) with respect to any parties other than Parent
and Sub, the documents have been duly authorized, executed and delivered by the
parties thereto, are within their corporate or individual powers as the case may
warrant, and that they are in compliance with all applicable laws, rules and
regulations governing the conduct of their respective businesses and this
transaction, (ii) with respect to any parties other than Parent and Sub, the
documents are their legal, valid and binding obligations, (iii) the documents
will be enforced in circumstances and in a manner which are commercially
reasonable, (iv) with respect to any parties other than Parent and Sub, the
parties to the documents are not subject to any statute, rule or regulation or
any impediment that requires them or my clients to obtain the consent, or to
make any declaration or filing with any governmental authority in connection
with the transactions contemplated by the documents, and (v) the terms,
provisions and conditions relating to the transaction referred to in this
opinion letter are reflected solely in the documents described above and there
are no other agreements or understandings between the parties except as
reflected in such documents.
(d) The opinions herein expressed are qualified to the extent that: (i)
the enforceability, of any rights or remedies in, any agreement or instrument
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or transfer, equitable subordination, or similar laws and
doctrines affecting the rights of creditors generally and general equitable
principles; (ii) the availability of specific performance, injunctive relief or
any other equitable remedy is subject to the discretion of a court of competent
jurisdiction and (iii) the provisions of any document, agreement or instrument
that (a) may require indemnification or contribution for liabilities under the
provisions of any federal or state securities laws or in respect of the
negligence or wrongful conduct of the indemnified party or
Xxxx X Xxxxxxx, III
cc: clients
DISCLOSURE SCHEDULE
Pursuant to Section 3 of that certain Agreement and Plan of Merger by and among
Medica Systems, Inc., the Stockholders of Medica Systems, Inc. and American Net
Claims, Inc. and ANC Holdings, Inc., a wholly owned subsidiary of American Net
Claims, Inc. (the "Agreement") this Disclosure Schedule qualifies certain
representations and warranties contained in Section 3 of the Agreement and shall
be construed as part of the Agreement. In the event of any conflict between the
Agreement and this Disclosure Schedule, this Disclosure Schedule shall control.
o 3c. Articles of Merger must be filed to effectuate the merger.
o 3e. Target has granted a Security Interest in the following assets to secure
the note described in Section 3h(i) below:
(a) All accounts;
(b) all unbilled work-in-progress;
(c) all contract rights for services performed or for computer software
sold or licensed;
(d) all extensions, alterations, substitutions, replacements, renewals, and
rights belonging or in any way appertaining to all or any part of the
foregoing or acquired for use in connection herewith;
(e) all right, title, and interest of Target to and under all agreements
now existing or hereafter entered into for the use, assignment,
transfer, sale, or other disposition of the whole or any part of the
foregoing;
(f) all proceeds of any of the foregoing.
o 3e. Target uses certain office furniture and equipment owned by certain
Stockholders.
o 3g. Target does not maintain financial statements prepared in accordance with
generally accepted accounting principles. Target has certain obligations
described in License Agreements that are not referenced in Section 3g. Target
has incurred obligations and payables in the ordinary course of business and
obligations for professional fees, including accounting and attorneys fees.
o 3h(i). Target has issued a Note to Vision Software, Inc. in the original
principal amount of $35,556 which is secured by the assets described above in
3e.
o 3h(ii) Target has agreed to pay certain legal and accounting fees.
o 3h(iii) Target terminated a license agreement with Reimbursement Assurance
Corporation, and Medinet EDI Solutions, LLC. Target has added program work to
a License Agreement with United Medicorp and MDIP.
Page 1 of 3
o 3h(iv) Target has granted a Security Interest in certain assets described in
3e above to secure the note described in 3(h)(i).
o 3h(viii). Target has granted licenses to Intellectual Property which are
contained in EXHIBIT 3m(ii) of this Disclosure Schedule.
o 3h(xiii), (xiv) and (xvii). Target has entered into a severance agreement
with Xxxxxxxxx Xxxxxx under which she will be entitled to thirty (30) days
prior notice and two months salary in the event her employment is terminated
within two years of closing. The severance agreement is oral. Such severance
agreement is included in EXHIBIT 3o of this Disclosure Schedule.
o 3i. Target has certain obligations under its License Agreements which are not
included in the amount stated in Section 3(i).
o 3m(i) Target was sued by Vision Software, Inc. alleging misappropriation of
Intellectual Property rights. Such suit was settled and Target was released.
o 3m(i). The Target believes that one company may have infringed,
misappropriated, or violated Intellectual Property rights of the Target.
o 3m(ii) The License Agreements granted by the Target are attached as EXHIBIT
3m(ii).
o 3m(ii) The Target uses the trade name "Cyber Claim."
o 3m(iii) Target uses various third-party software under authority granted by
shrinkwrap license agreements provided by the owners of such software. These
agreements are attached as EXHIBIT 3m(iii).
o 3o. Attached hereto as EXHIBIT 3(o) are all material written contracts to
which the Target is a party. The Target has oral agreements to pay for (i)
accounting services with Xx Xxxxx; (ii) legal services with Xxxxx, Xxxxx &
Werkenthin, P.C.; (iii) agreements to pay employees one week vacation after
six months and two weeks after one year; and (iv) the Severance Agreement
with Xxxxxxxxx Xxxxxx, described above.
o 3t. The Target has certain obligations under the License Agreements to which
it is a party, which include repair, enhancements and updates.
Page 2 of 3
o 3z Certain Stockholders have allowed Target to use certain office furniture
and equipment owned by such Stockholders.
INITIALS:
/s/ [ILLEGIBLE]
----------------
/s/ [ILLEGIBLE]
----------------
/s/ [ILLEGIBLE]
----------------
/s/ [ILLEGIBLE]
----------------
/s/ [ILLEGIBLE]
----------------
/s/ [ILLEGIBLE]
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Page 3 of 3
AMENDMENT TO AGREEMENT AND PLAN OF MERGER
This Amendment (the "Amendment") to the Agreement and Plan of Merger dated
as of May 30, 1997, (the "Merger Agreement") is entered into by and among
American Net Claims, Inc., a Texas corporation (the "Parent"), ANC Holdings,
Inc., a wholly owned subsidiary of American Net Claims, Inc., a Texas
Corporation (the "Sub"), Medica Systems, Inc., a Texas corporation (the
"Target"), Xxxxxxx X. Xxxxxxx, individually, Xxxxxxxx X. Xxxxxxx, individually,
and K. Xxxxx Xxxxxxxx, individually (the "Stockholders", or individually, a
"Stockholder") the same parties that entered into the Merger Agreement, and is
intended to amend and supplement the terms and conditions of such Merger
Agreement.
WITNESSETH:
WHEREAS, the parties to this Amendment are entering into this Amendment
concurrently with the execution of the Merger Agreement; and
WHEREAS FURTHER, the parties hereto intend this Amendment to amend and
supplement the Merger Agreement, without which amendments and supplements,
neither party would have entered into the Merger Agreement.
NOW, THEREFORE, for and in consideration of the foregoing and mutual
promises and conditions contained herein, in the Merger Agreement and for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto covenant and agree as follows:
1. All capitalized terms used herein shall be deemed to have the same meaning as
defined in the Merger Agreement.
2. The parties hereto wish to add to the definitions contained in Article 1. of
the Merger Agreement by adding the following definition as Article 1(nn) of the
Merger Agreement:
"mm. "Intellectual Property" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names, and corporate names,
together with all translations, adaptations, derivations, and combinations
thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations
and renewals in connection therewith, (d) all mask works and all
applications, registrations and renewals in connection therewith, (e) all
trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing
and production processes and techniques, technical data, designs,
drawings,
AMENDMENT TO AGREEMENT AND PLAN OF MERGER PAGE 1
source codes, specifications, customer and supplier lists, pricing and
cost information, and business and marketing plans and proposals), (f) all
computer software (including data, source codes and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium)."
3. The parties hereto wish to amend Article 3(i) of the Merger Agreement by
deleting Article 3(i) of the Merger Agreement and putting in its place the
following Article 3(i):
"i. Liabilities. The Target does not have any aggregate liability
(whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated
or unliquidated, and whether due or to become due, in excess of
$100,000.00, provided that no warranty is made as to the components of
such amount."
4. The parties hereto wish to add to Article 7(d) of the Merger Agreement by
adding the following subparagraph to Article 7(d) of the Merger Agreement:
"v. Notwithstanding anything contained in this Agreement to the
contrary, each party understands and agrees that there may be instances
where each party may have liability for an indemnity claim under this
Agreement relating to the same series of facts. The parties fully intend
that in such instances, if any, the trier(s) of fact will apportion such
liability to each party as the trier(s) of fact deem appropriate given the
proportionate culpability of each party."
6. The parties hereto wish to add to Disclosure Schedule of the Merger Agreement
by stating that notwithstanding anything in the Merger Agreement or the
Disclosure statement to the contrary, the attorneys fees owed to the law firm of
Xxxxx, Xxxxx & Xxxxxxxxxx, P.C. shall not exceed the total sum of EIGHTEEN
THOUSAND AND NO/100 DOLLARS ($18,000.00), inclusive of the FIVE THOUSAND AND
NO/100 DOLLARS ($5,000.00) agreed as being paid in cash at the Closing.
7. Except to the extent specifically amended and modified herein, the Merger
Agreement shall remain in full force and effect and shall be unchanged. To the
extent that the terms and conditions of this Amendment conflicts with any of the
terms and conditions of the Merger Agreement, this Amendment shall prevail.
8. The parties agree that the Closing Date Shall be extended to June 2, 1997.
AMENDMENT TO AGREEMENT AND PLAN OF MERGER PAGE 2
9. This Amendment shall, for all purposes, be incorporated in the Merger
Agreement by reference as if set out therein verbatim and shall become a part
thereof form the date hereof. To the extent that this Amendment conflicts with
or modifies the Merger Agreement, this Amendment shall control.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on May
30, 1997.
PARENT:
American Net Claims, Inc.
By: /s/ Xx X. Xxxxx
-----------------------------------
Xx X. Xxxxx, President
SUB:
ANC Holdings, Inc.
By: /s/ Xx X. Xxxxx
-----------------------------------
Xx X. Xxxxx, President
TARGET:
Medica Systems, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxx, President
THE STOCKHOLDERS:
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxx, Individually
/s/ Xxxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxxx X. Xxxxxxx, Individually
/s/ K. Xxxxx Xxxxxxxx
-----------------------------------
K. Xxxxx Xxxxxxxx, Individually
AMENDMENT TO AGREEMENT AND PLAN OF MERGER PAGE 3
