EXHIBIT 2.1
MERGER AGREEMENT
VantageMed Corporation
VM1 Acquisition Corp.
Mariner Systems, Inc.
This Merger Agreement (this "Agreement"), dated July 23, 1999 (the
"Signature Date"), is among VantageMed Corporation, a company incorporated in
the State of Delaware ("VMC"); VM1 Acquisition Corp., a company incorporated
in the State of Delaware and wholly-owned subsidiary of VMC ("VMAC"); and
Mariner Systems, Inc., a company incorporated in the State of Colorado (the
"Company"), with all of the foregoing collectively termed the "parties."
BACKGROUND
The Board of Directors of each of VMC, VMAC and the Company have determined
that it is advisable and in the best interests of their respective
corporations and the shareholders thereof to cause the Company to merge with
and into VMAC (the "Merger"), upon the terms and conditions set forth in this
Agreement.
The parties intend, by signing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code
of 1986, as amended (the "Code"), and to cause the Merger to qualify as a
tax-free ("type A") reorganization under the provisions of Section
368(a)(1)(A) of the Code. Therefore, in consideration of the mutual
representations, warranties and agreements set forth in this Agreement
(including the schedules prepared by the Company, and the schedules and
exhibits prepared by VMC and VMAC), the parties hereby agree as follows:
ARTICLE 1 - THE MERGER
1.1 THE MERGER. Subject to the terms and conditions set forth in this
Agreement, and in accordance with the General Corporation Law of the State of
Delaware (the "Delaware Corporation Law"), and the Colorado Business
Corporations Act applicable to the Company (the "CBCA"), at the effective
time described in Section 1.2 below (the "Effective Time"), the Company shall
be merged with and into VMAC. At the Effective Time, the separate corporate
existence of the Company shall cease, and VMAC shall continue as the
surviving corporation of the Merger.
1.2 EFFECTIVE TIME OF THE MERGER. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article V below, the
parties shall cause the Merger to be consummated by filing (i) a properly
signed certificate of merger in the form attached as Exhibit 1.2 with the
Secretary of State of the State of Delaware, as provided in the Delaware
Corporation Law ("Delaware Certificate of Merger"), and (ii) properly signed
certificate of merger in the form attached as Schedule 1.2 with the Secretary
of State of the State of Colorado, as provided in the CBCA ("Colorado
Certificate of Merger"), as soon as practicable on or after the "Time of
Closing" referred to in Section 4.1 below (the "Time of Closing"). The
MSI - MERGER AGREEMENT - PAGE 1
Merger shall become effective upon the latest to occur of the filing of the
Delaware Certificate of Merger by the Secretary of State of the State of
Delaware, and of the filing of the Colorado Certificate of Merger by the
Secretary of State of the State of Colorado, or at such later time thereafter
as is provided in such certificates of merger.
1.3 EFFECTS OF THE MERGER. The Merger shall have the effects provided by
applicable law, including the provisions of the Delaware Corporation Law and
the CBCA. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the properties, rights, privileges,
immunities, powers and franchises of the Company shall vest in VMAC, and all
debts, liabilities and duties of the Company shall become the debts,
liabilities and duties of VMAC.
1.4 DIRECTORS AND OFFICERS OF VMAC AFTER THE MERGER. The directors and
officers of VMAC shall continue as the directors and officers of VMAC at and
after the Effective Time, except that Xxxxx X. Xxxxxx have been duly elected
to the Board of Directors of VMAC and shall have been appointed as the Chief
Executive Officer of VMAC.
1.5 CERTIFICATE OF INCORPORATION, BYLAWS AND NAME OF SURVIVING CORPORATION.
The certificate of incorporation of VMAC in effect immediately prior to the
Effective Time shall be amended to change the name of VMAC to "Mariner
Systems, Inc." as provided in, and by the filing with the Delaware Secretary
of State of, the Delaware Certificate of Merger. Such certificate of
incorporation, as so amended, shall continue to be the certificate of
incorporation of VMAC at and after the Effective Time, and shall continue as
such until thereafter duly amended in accordance with applicable law. The
bylaws of VMAC in effect immediately prior to the Effective Time shall be
the bylaws of VMAC, and shall continue as such until thereafter duly amended
in accordance with applicable law.
1.6 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holders of shares of common
stock of the Company (the "Company's Common Stock"), each share of the
Company's Common Stock which is issued and outstanding immediately prior to
the Merger shall be converted into shares of the common stock, par value
$.001 per share, of VMC ("VMC's Common Stock"), in accordance with Section
1.7(a) below. VMC shall not issue any fractional shares of VMC's Common
Stock. Any fractional shares of VMC's Common Stock resulting from the
application of the conversion ratios set forth in Section 1.7(a) shall be
rounded up to the nearest whole number. As of the Effective Time, all such
shares of the Company's Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such shares shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration in accordance with Section 1.7 below, upon the surrender of
such certificates in accordance with Section 1.8 below.
MSI - MERGER AGREEMENT - PAGE 2
1.7 MERGER CONSIDERATION.
(a) At the Effective Time, and subject to Section 1.8 below, the
holders of the Company's Common Stock shall receive the following
consideration (the "Merger Consideration"):
(1) An aggregate of two million five hundred seventy two thousand
six hundred thirty nine (2,572,639) (subject to adjustment at the Time of
Closing to take into account any changes in the issued and outstanding shares
of the Company's Common Stock) shares of VMC's Common Stock shall be issued
by VMC to the Company's shareholders in respect of the five million three
hundred eighty six thousand two hundred thirty eight (5,386,238) shares of
issued and outstanding shares of the Company's Common Stock, and in the
amounts, set forth on Exhibit 1.7(a)(1) (the "Stock Payment"); and
(2) VMC shall assume all outstanding and unexercised options to
purchase shares of the Company's Common Stock pursuant to the terms and
conditions under which such options were granted, and any amendments thereto,
subject to conversion as set forth in Exhibit 1.7(a)(2). These are current
outstanding and unexercised options to purchase five hundred six thousand
three hundred eighteen (506,318) shares of the Company's Common Stock which
shall result in the issuance of options to purchase two hundred forty one
thousand eight hundred thirty four (241,834) shares of VMC's Common Stock, as
provided on Exhibit 1.7(a)(2).
(b) The Company acknowledges and agrees that the shares issued by VMC
to the Company's shareholders as the Stock Payment are characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired in a transaction not involving a public offering, and that
under such laws and applicable regulations such securities may be resold
without registration under the Act (as defined in Section 3.8(a) below) only
in certain limited circumstances.
(c) VMC hereby discloses to the Company as follows:
(1) There shall be no disposition of all or any portion of the
shares to be issued to the Company's shareholders other than that identified
in this Section 1.7(b), unless and until the transferee has agreed in writing
for the benefit of VMC to be bound by the restrictions set forth in this
Section 1.7(b), provided and to the extent such restrictions are then
applicable, and: (i) there is then in effect a Registration Statement under
the Act covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or (ii) the transferor of any
such securities shall have notified VMC of the proposed disposition and shall
have furnished VMC with a detailed statement of the circumstances surrounding
the proposed disposition, and, if reasonably requested by VMC, the transferee
shall have furnished VMC with an opinion of counsel, reasonably satisfactory
to VMC, that such disposition will not require registration of such shares
under the Act; provided, it is agreed that VMC will not require opinions of
counsel for transactions made pursuant to SEC Rule 144 except in unusual
circumstances.
MSI - MERGER AGREEMENT - PAGE 3
(2) The following legend will be placed on any certificate(s) or
other document(s) evidencing the shares of VMC Common Stock: (1) "The
securities represented by this certificate have not been registered and may
not be transferred unless (i) the stockholder wishing to transfer such
securities provides an opinion of counsel reasonably concurred in by counsel
for VantageMed Corporation stating that the proposed transfer of VantageMed
Corporation's securities is exempt from the registration provisions of all
applicable federal and state securities laws; or (ii) said securities have
been registered pursuant to the Securities Act of 1933, as amended."; and (2)
Any legend required by the laws of the State of Colorado or the State of
California, including any legend required by the California Department of
Corporations and Sections 417 and 418 of the California Corporations Code.
THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS AGREEMENT HAS NOT
BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF
ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION
IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY
SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS
OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH
QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
1.8 SURRENDER OF CERTIFICATES; EXCHANGE FOR MERGER CONSIDERATION. To the
extent practical, the Company shall use its best efforts to cause to be
surrendered to VMAC at the Time of Closing all certificates and other
instruments evidencing all shares of the Company's Common Stock owned by all
shareholders of the Company (collectively, the "Company's Share Documents").
VMC will not require a bond for lost Company Share Documents. VMC may require
that the record owner of any Company Share Documents which have been lost or
destroyed execute a lost instrument affidavit. Following the Time of Closing,
VMC shall escrow the certificates evidencing the Stock Payment and shall
deliver to each former shareholder of the Company a stock certificate of VMC
evidencing such shareholder's portion of the Stock Payment, conditioned upon
such shareholder providing to VMC investor representations and related
documentation as VMC may reasonably require for purposes of compliance with
applicable state and federal securities laws.
1.9 STATUS OF VMAC SHARES. At the Effective Time, by virtue of the Merger
and without any action on the part of any holder of any capital stock of VMAC,
each issued and outstanding share of common stock of VMAC shall continue
unchanged and remain outstanding as a share of common stock of VMAC.
ARTICLE II - REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to VMAC and VMC, as of the date of this Agreement and
as of the Time of Closing, to the truth, accuracy and completeness of each
statement as set forth in Sections 2.1(a) through 2.1(q) below including the
exceptions to such statements set forth on a schedule of
MSI - MERGER AGREEMENT - PAGE 4
exceptions to each such Section, and attached to and made part of this
Agreement ("Company's Exceptions Schedule"). For the purposes of this
Agreement, the term "knowledge" with respect to (i) an individual means that
such person will be deemed to have "knowledge" of a particular fact or other
matter if: (a) such individual is actually aware of such fact or other
matter; or (b) a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the course of
conducting a reasonably comprehensive investigation concerning the existence
of such fact or other matter; and (ii) a person (other than an individual)
means that such person will be deemed to have "knowledge" of a particular fact
or other matter if any individual who is serving as a director, officer,
partner, executor or trustee of such person (or in any similar capacity) has,
or at any time had, knowledge of such fact or other matter.
(a) ORGANIZATION AND STANDING. The Company is a corporation duly
organized, validly existing and in good standing, all under the laws of the
State of Colorado, and has all requisite power and authority to own, operate
or lease the properties and assets now owned, operated or leased by it and to
conduct its business in the place and in the manner as it has been and is
currently conducted. The Company is duly qualified or licensed to do business
in each of the jurisdictions in which the operation of the Company's business
requires such qualification or licensing, and where the failure to be so
qualified would have a material adverse effect on the Company or its
business.
(b) AUTHORITY OF THE COMPANY. The Company has the full legal right,
power, capacity and authority to enter into this Agreement and all other
agreements, instruments and documents to be signed and delivered by the
Company in connection herewith (the "Company's Documents"), and to carry out
its obligations hereunder and thereunder. The Company has taken, or prior to
the Time of Closing, will have taken, all actions necessary to authorize it
to enter into and perform its obligations under this Agreement and the
Company's Documents, and to consummate the transactions contemplated hereby
and thereby. This Agreement has been duly signed and delivered by the
Company, and this Agreement and the Company's Documents constitute the legal,
valid and binding obligations of the Company enforceable against the Company
in accordance with their respective terms.
(c) CAPITAL STOCK OF THE COMPANY; OWNERSHIP OF THE COMPANY COMMON
STOCK. The authorized capital stock of the Company consists of six million
(6,000,000) shares of common stock, no par value per share. As of the date
hereof, 1,514,761 shares of the Company's Common Stock are issued and
outstanding. All such shares are validly issued, fully paid and
non-assessable, and they constitute all of the issued and outstanding shares
of the capital stock of the Company. None of the issued and outstanding
shares of the Company's stock was issued in violation of any preemptive
rights. Except as otherwise set forth in the Company's Exceptions Schedule,
there are (a) no options, warrants, convertible securities or other rights,
agreements, arrangements or commitments of any character obligating the
Company to issue or sell any shares of the Company's Common Stock, or other
interest in the Company; (b) no outstanding contractual obligations
requiring the Company to repurchase, redeem or otherwise acquire any shares
of the Company's Common Stock or to provide funds to, or make any investment
(in the form of a loan, capital contribution, or
MSI - MERGER AGREEMENT - PAGE 5
otherwise) in, any other person; or (c) no voting trusts, stockholder
agreements, proxies or other agreements or understandings in effect with
respect to the voting or transfer of any of the shares of the Company's Common
Stock and to which the Company is a party or is aware. Schedule 2.1(c)(2)
accurately sets forth the name and address of each person owning shares of
the Company's Common Stock, the certificate number of each certificate
evidencing shares of the Company's Common Stock, the number of shares
evidenced by each such certificate, the date of issuance thereof, and, in the
case of cancellations, the date of cancellation.
(d) FINANCIAL STATEMENTS. The Company has delivered to VMAC and VMC
the unaudited balance sheet (the "Balance Sheet") of the Company as of
June 30, 1999 (the "Balance Sheet Date"), and the unaudited income statement
of the Company for the fiscal year then ended (together with the Balance
Sheet, the "Financial Statements"). The Financial Statements are not
prepared in accordance with generally accepted accounting principles. Subject
to the foregoing qualification, the Financial Statements (i) are in
accordance with the books and records of the Company, and (ii) fairly and
accurately present the financial condition of the Company at the respective
dates therein indicated and the results of operations for the respective
periods therein specified. The Company has no material debt, liability or
obligation of any nature, whether accrued, absolute, contingent or otherwise,
and whether due or to become due, that is not reflected, reserved against or
disclosed in the Financial Statements, except for those that may have been
incurred after the Balance Sheet Date in the ordinary course of its business
consistent with past practice, and which are disclosed by the Company on the
Company's Exceptions Schedule. Since the Balance Sheet Date, and except as set
forth on the Company's Exceptions Schedule, there has not been:
(1) Any material adverse change in the financial condition,
results of operation, assets or liabilities of the Company or any occurrence,
circumstance or combination thereof which reasonably could be expected to
result in such a material adverse change;
(2) Any change, other than in the ordinary course of business,
made by the Company in its method of operating its business or its accounting
practices relating thereto;
(3) Any sale, lease, or disposition of, or any agreement to
sell, lease or dispose of any of the Company's assets or properties, other
than sales, leases or dispositions in the usual and ordinary course of its
business and other than pursuant to this Agreement;
(4) Any modification, waiver, change, amendment, release,
rescission, accord and satisfaction, or termination of, or with respect to,
any term, condition or provision of any material contract relating to or
affecting the Company, its business, assets or properties, other than any
satisfaction by performance in accordance with the terms thereof in the usual
and ordinary course of the operations of the Company;
(5) Any adverse relationships or conditions with vendors,
suppliers or customers that may have a material adverse effect on the
Company, its business, assets or properties;
MSI - MERGER AGREEMENT - PAGE 6
(6) Any return of any of the Company's products by a purchaser
or user thereof, and the Company is not aware of any (i) pending warranty
claims for such products (other than for minor nonrecurring warranty
problems), (ii) right to return such products (other than units under
customary evaluation terms), or (iii) evaluation units expected to be
returned after their evaluation period;
(7) Any borrowing or lending of money by the Company, but
excluding for this purpose sales made on ordinary trade terms;
(8) Any sale or issuance of any capital stock, notes, bonds,
or other securities, or any option, warrant or other right to acquire same,
of the Company;
(9) Any redemption of any of the capital stock or declaration
or payment of any dividends, distributions, bonuses or fees (whether in cash,
securities or property) to the holders of the shares of the Company's Common
Stock;
(10) Any other event or condition of any character that has had
a material adverse effect, or could reasonably be expected to have a material
adverse effect, on the Company, its assets or properties and/or the operation
of its business; or
(11) Any agreement by the Company to do, cause or effect any
of the foregoing events, set forth in sections (1) through (10) above.
(e) UNDISCLOSED LIABILITIES. There are no material debts, claims,
liabilities or obligations of the Company or to which the Company, its
business, assets or properties are subject, liquidated, unliquidated,
accrued, absolute, contingent or otherwise, that are not identified and
quantified in the Financial Statements or on the Company's Exceptions Schedule.
(f) COMPLIANCE WITH LAW. The Company has materially complied, and is
in material compliance, with all applicable federal, state and local laws,
statutes, licensing requirements, rules and regulations, and judicial or
administrative decisions applicable to the Company for the operation of its
business and the use of its properties as presently operated or used, except
where failure to be in compliance therewith would not have a material adverse
affect upon the Company and/or such operation of its business and/or use of
its properties. To the best knowledge of the Company, the Company has been
granted all permits from federal, state, and local government regulatory
bodies necessary to carry on its business and own its properties, all of
which are currently valid and in full force and effect. Schedule 2.1(f)
contains a complete and accurate list of all claims and rights under all
franchises, licenses, permits, consents, authorizations, certificates and
approvals of any federal, state, or local regulatory, administrative, or
other governmental agency or body issued to or held by the Company to the
extent they are necessary, related or incidental to the Company and/or the
operation of its business and/or the use of its properties (collectively,
the "Permits"). There is no order issued, investigation or proceeding pending
or, to the best of
MSI - MERGER AGREEMENT - PAGE 7
the Company's knowledge, threatened, or notice served with respect to any
violation of any law, ordinance, order, writ, decree, rule or regulation
issued by any federal, state, local or foreign court or governmental or
regulatory agency or instrumentality applicable to the Company, the conduct
of its business and/or the ownership of its properties.
(g) REQUIRED APPROVALS, NOTICES AND CONSENTS. Except for (i) the
required approval of the Merger by the Board of Directors and the
shareholders of the Company, (ii) the filing of the Colorado Certificate of
Merger with and acceptance thereof by the Secretary of State of the State of
Colorado, (iii) the filing of the Delaware Certificate of Merger with and
acceptance thereof by the Secretary of State of the State of Delaware, and
(iv) as set forth on the Company's Exceptions Schedule, no consent or approval
of, other action by, or notice to, any governmental body or agency, domestic
or foreign, or any third party is required in connection with the
consummation of the transactions contemplated by this Agreement.
(h) INTELLECTUAL PROPERTY.
(1) Except as set forth in the Company's Exceptions Schedule,
the Company is licensed or is otherwise entitled to exercise, without
restriction, all rights, title and interest to all patents, trademarks,
patent applications, trademark rights, trade secrets, information,
proprietary rights, license rights, service marks, inventions, tradenames,
fictitious business names, copyrights, and any applications therefor,
processes, technical information, software, licenses, designs and
confidentiality agreements, logos, and customer and supplier lists, and all
other tangible and intangible information or material in any form
(collectively, the "Intellectual Property"), as used or are currently
proposed to be used in the business of the Company as currently conducted or
as proposed to be conducted by the Company within the United States, without
any conflict with or infringement of the rights of others.
(2) Listed on Schedule 2.1(h)(2) are all trade or service marks
and business or fictitious names owned, claimed or used by the Company,
whether registered or not;
(3) Listed on Schedule 2.1(h)(3) are: (i) all software
(including source code and object code), copyright registrations,
applications to register copyrights, patents, patent applications, patent
disclosures, trademarks, service marks, trade names, trademark and service
xxxx registrations, applications to register trademarks or service marks, and
other company, product or service identifiers owned by or exclusively
licensed to the Company (collectively, the "Company's Intellectual Property
Rights"); (ii) the jurisdiction(s) in which an application for patent or
application for registration of each of the Company's Intellectual Property
Rights has been made, including the respective application numbers and dates;
(iii) the jurisdiction(s) in which each of the Company's Intellectual
Property Rights has been patented or registered, including the respective
patent or registration numbers and dates; (iv) for each piece of software,
whether such software has been published and whether such software has a
copyright notice; (v) all licenses, sublicenses and other agreements to which
the Company is a party and pursuant to which any other party is authorized to
use, exercise, or receive any benefit from any of the Company's Intellectual
Property Rights; and (vi) all parties to whom the Company has delivered
copies of the Company's source code or object
MSI - MERGER AGREEMENT - PAGE 8
code material to the current business of the Company, whether pursuant to an
escrow arrangement or otherwise, or parties who have the right to receive
such source code or object code. The Company has delivered to VMC or VMC's
counsel copies of all licenses, sublicenses and other agreements identified
pursuant to clause (v) of this section.
(4) The Company is the owner or exclusive licensee of, with all
right, title and interest in and to, free and clear of any Liens (as such
term is defined in Section 2.1(j)(5) hereof), the Company's Intellectual
Property Rights, and has the exclusive rights to use, sell, license, assign,
transfer, convey or dispose thereof or the products, processes and materials
covered thereby.
(5) All patents and unregistered and registered trademarks,
service marks, and other company, product or service identifiers and all
registered copyrights held by the Company are valid and enforceable in the
United States.
(6) Except as set forth in the Company's Exceptions Schedule,
there has not been, and there is not now, any unauthorized use, infringement
or misappropriation of any of the Company's Intellectual Property Rights by
any third party service provider of the Company or by any other third party.
(7) Except as set forth on the Company's Exceptions Schedule,
no person has asserted or threatened to assert any claims with respect to any
of the Company's Intellectual Property Rights (i) contesting the right of the
Company to use, exercise, sell, license, transfer or dispose of any of the
Company's Intellectual Property Rights or any products, processes or
materials covered thereby, or (ii) challenging the ownership, validity or
enforceability of any of the Company's Intellectual Property Rights. None of
the Company's Intellectual Property Rights is subject to any outstanding
order, judgment, decree, stipulation or agreement related to or restricting
in any manner the licensing, assignment, transfer or conveyance thereof by
the Company.
(8) Schedule 2.1(h)(8) separately lists: (i) all software
(including all computer source code and computer object code), copyright
registrations, applications to register copyright, patents, patent
applications, patent disclosures, trademarks, service marks, trade names,
trademark and service xxxx registrations, applications to register trademarks
or service marks, and other company, product or service identifiers
non-exclusively licensed to the Company, or that the Company has otherwise
been granted permission to use (collectively, the "Licensed Intellectual
Property Rights"), and which are material to the operations of the Company's
business, and (ii) all material licenses, sublicenses and other agreements to
which the Company is a party and pursuant to which the Company is authorized
to use, exercise, or receive any benefit from any of the Licensed
Intellectual Property Rights. The Company has delivered to VMC or VMAC's
counsel copies of all licenses, sublicenses, and other agreements identified
pursuant to clause (ii) above. The Company is in material compliance with
the terms and conditions of all such licenses, sublicenses and other
agreements. The Company has no knowledge of any assertion, claim or
threatened claim that the Company has breached any terms or conditions of
such licenses, sublicenses or other agreements.
MSI - MERGER AGREEMENT - PAGE 9
(9) To the knowledge of the Company, none of the Licensed
Intellectual Property Rights is subject to any outstanding order, judgment,
decree, stipulation or agreement related to or restricting in any manner the
use by or licensing thereof to the Company.
(10) The Company is not, nor will it, as a result of the signing
and delivery of this Agreement or the performance of its obligations
hereunder, be in violation of, nor shall it lose or in any way impair, any
material rights pursuant to any license, sublicense or agreement described on
Schedule 2.1(h)(3). If required by the terms of any material licenses,
sublicenses or other agreements with respect to the Licensed Intellectual
Property Rights, the Company has secured or shall promptly secure valid
written consents from the licensors of such Licensed Intellectual Property
Rights to the Merger pursuant to this Agreement and the consummation of the
transactions contemplated hereby with respect to such Licensed Intellectual
Property Rights and the licenses, sublicenses or other agreements governing
such Licensed Intellectual Property Rights.
(11) Except as set forth in the Company's Exceptions Schedule,
the Company knows of no claims to the effect that the manufacture, marketing,
license, sale or use of any product or service as now used or offered or
proposed for use or sale by the Company infringes any copyright, patent,
trademark, service xxxx, trade secret or other intellectual property right of
any third party or violates any license or agreement with any third party.
The Company has not been sued or charged in writing as a defendant in any
claim, suit, action or proceeding which involves a claim of infringement of
any patents, trademarks, service marks, trade secret rights, copyrights or
other intellectual property rights and which has not been finally terminated
prior to the date hereof; there are no such charges or claims outstanding;
and the Company does not have any known outstanding restrictions or
infringement liability with respect to any patent, trade secret, trademark,
service xxxx, copyright or other intellectual property right of another.
(12) Other than reseller agreements, licensee agreements,
associate agreements, and agreements with commissioned sales agents entered
into by the Company in the ordinary course of business, the Company has not
entered into any agreement to indemnify any other person against any charge
of infringement of any third party intellectual property right, the Company's
Intellectual Property Rights or the Licensed Intellectual Property Rights.
(13) The Company has taken all reasonably necessary and
appropriate steps to protect and preserve the confidentiality of all
inventions, algorithms, formulas, schematics, technical drawings, ideas,
know-how, all other processes not otherwise protected by patents or patent
applications, source code, object code, program listings and trade secrets
related to the Company and which are material to the conduct of its business
(collectively, the "Confidential Information"), including, where possible,
the marking of all such Confidential Information with appropriate
"Proprietary" or "Confidential" legends, the establishment of policies for
the handling, disclosure and use of Confidential Information, and the
acquisition
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of valid written nondisclosure agreements from any party receiving
Confidential Information. All Confidential Information is presently and as of
the Time of Closing will be located at the Company's address as set forth in
this Agreement. All use, disclosure or appropriation of Confidential
Information owned by the Company by or to a third party has been pursuant to
the terms of a written agreement between the Company and such third party.
All use, disclosure or appropriation of Confidential Information not owned by
the Company has been pursuant to the terms of a written agreement between the
Company and the owner of such Confidential Information, or is otherwise
lawful. The Company has delivered to VMAC or VMAC's counsel copies of all
nondisclosure agreements or other agreements relating to the handling,
disclosure and use of Confidential Information, and the Company knows of no
breaches or claims relating to such agreements.
(i) CONTRACTS AND COMMITMENTS.
(1) Schedule 2.1(i)(1) lists all outstanding agreements,
contracts, contract rights, licenses, purchase and sale orders, quotations,
and other executory commitments (oral or written), related to the Company
(collectively, the "Contracts"), excluding routine purchase orders, setting
forth the parties thereto and the dates thereof, whether or not in writing,
to which the Company is a party.
(2) The Company has performed all of its obligations under the
terms of each material Contract, and is not in default thereunder. No event
or omission has occurred which, but for the giving of notice or lapse of time
or both, would constitute a default by any party thereto under any such
Contract, where such default by any party could have a material adverse
effect on the Company, its business or its assets. Each such Contract is in
full force and effect and valid and binding on all parties thereto. The
Company has not received any notice of default, cancellation or termination
in connection with any such Contract, and is not aware that any such action
is currently contemplated or threatened.
(3) Schedule 2.1(i)(3) lists all Contracts that require a
consent to the transactions contemplated by this Agreement prior to the Time
of Closing (the "Contracts Requiring Consent to Merger"). Such listing is
complete, accurate and includes every Contract of which the failure to obtain
such consent to merger would have a material adverse effect on VMAC's ability
to conduct the business of the Company in the same manner as operated by the
Company prior to the Time of Closing.
(j) ASSETS AND PROPERTIES.
(1) Schedule 2.1(j)(1) contains a complete and accurate list of
all software developed or used by and material to the business of the Company
(the "Products").
(2) Schedule 2.1(j)(2) contains a complete and accurate list of
all equipment, instruments, computer hardware and software documentation and
manuals (whether stored on a computer or in written form), software tools,
furniture, fixtures, motor vehicles, production supplies, spare parts, other
miscellaneous supplies, tools and stores, repair and
MSI - MERGER AGREEMENT - PAGE 11
maintenance parts and fixed assets used by and material to the Company and
its business (collectively, the "Related Property").
(3) The Company owns no real property. Schedule 2.1(j)(3)
contains a complete and accurate list of all leases for personal or real
property or other interest in real or personal property held by the Company.
The Company has previously delivered to VMAC true and correct copies of all
leases relating to such personal or real property.
(4) All assets and properties (real and personal) that the
Company purports to own on its books and records are in good working order
and condition (ordinary wear and tear and retirement excepted), are used or
usable in the current conduct of the Company's business and constitute all of
the assets and properties necessary to conduct the Company's business in
substantially the same manner as such business was operated by the Company
prior to the Time of Closing.
(5) Except as set forth on the Company's Exceptions Schedule,
the Company has good and marketable title to all assets and properties
(whether real, personal, or mixed and whether tangible or intangible) that it
purports to own on its books and records, free and clear of any pledges,
liens, encumbrances, security interests, equities, charges and restrictions
of any nature whatsoever (collectively, the "Liens").
(k) LITIGATION. Except as set forth on the Company's Exceptions
Schedule, there is no claim, litigation, action, suit or proceeding,
administrative or judicial, pending or, to the Company's knowledge,
threatened against or affecting the Company, the business of the Company or
any of the Company's properties, assets or rights, at law or in equity,
before any federal, state, local or foreign court, regulatory agency, other
governmental authority or any arbitration or mediation forum, including any
unfair labor practice or grievance proceedings or otherwise.
(l) NO CONFLICT OR DEFAULT. Neither the signing and delivery of this
Agreement nor compliance with the terms and provisions hereof, including the
consummation of the transactions contemplated hereby, will conflict with or
result in the breach of any term, condition or provision of either the
Company's articles of incorporation or bylaws, or any agreement, deed,
contract, mortgage, indenture, writ, order, decree, legal obligation or
instrument to which the Company is a party or by which the Company or any of
the Company's assets or properties are or may be bound or constitute a
default (or an event which, with the lapse of time or the giving of notice,
or both, would constitute a default) thereunder or, to the Company's
knowledge, violate any statute, regulation or ordinance of any governmental
authority.
(m) BROKERS' AND FINDERS' FEES. Except as set forth in the Company's
Exceptions Schedule, the Company is not obligated to pay any fees or expenses
of any broker or finder in connection with the origin, negotiation or signing
of this Agreement or in connection with any transactions contemplated hereby.
MSI - MERGER AGREEMENT - PAGE 12
(n) CUSTOMERS. Schedule 2.1(n) lists all customers of the Company.
Prior to the date of this Agreement, the Company has furnished VMAC with
complete and accurate copies or descriptions of all current agreements with
such customers. The Company is not aware of any event, happening or fact
which would lead it to believe that any significant customer of the Company
has ceased, or shall cease, to use the products, equipment, goods or services
of the Company, or has substantially reduced, or shall substantially reduce,
the use of such products, equipment, goods or services.
(o) BOOKS AND RECORDS. The books and records of the Company to which
VMC and VMAC and its accountants and attorneys have been given access are the
true books and records of the Company, and truly and fairly reflect the
underlying facts and transactions in all respects.
(p) YEAR 2000 COMPLIANCE. The products sold and/or licensed by the
Company in the conduct of its business will be capable of accurately
processing date data between the 20th and 21st centuries including the years
1999 and 2000, and February 29, 2000, provided that all other products (e.g.
Microsoft operating system software, third party hardware and firmware) used
in combination with the products sold and/or licensed by the Company properly
exchange date data. The Company does not make any representations about other
products used with the products sold and/or licensed by the Company such as
the Xxxxxxx XX for Windows Accounting System and Seagate Crystal Reports for
Windows.
(q) TAXES. All Tax returns, statements, reports and forms (including
estimated Tax returns and reports and information returns and reports)
required to be filed with any Tax authority with respect to any Taxable
period ending on or before the Time of Closing by or on behalf of the Company
(collectively, the "Company Returns"), have been or will be completed and
filed when due (including any extensions of such due date), and all amounts
shown due thereon have been or will be paid on or before such due date. To the
best knowledge of the Company, the Company has withheld and paid to the
applicable financial institution or Tax authority all amounts required to be
withheld. To the best knowledge of the Company, there is no material claim,
audit, action, suit, proceeding or investigation now pending or threatened
against or with respect to the Company in respect of any Tax or assessment
nor is there any basis therefor. No notice of deficiency or similar document
of any Tax authority has been received by the Company for any material amount.
2.2 REPRESENTATIONS AND WARRANTIES OF VMAC AND VMC. VMAC and VMC hereby
represent and warrant to the Company, as of the date of this Agreement and as
of the Time of Closing, to the truth, accuracy and completeness of each
statement as set forth in Sections 2.2(a) through 2.2(m) below, except as set
forth on an exhibit of exceptions, dated as of the date set forth on that
exhibit ("VMAC Exceptions Exhibit"):
(a) ORGANIZATION AND STANDING. Each of VMAC and VMC is a corporation
duly organized, validly existing and in good standing, all under the laws of
the State of Delaware, and has all requisite power and authority to conduct
its business in the place where that business is now being conducted, to own
or use the properties and assets that it purports to
MSI - MERGER AGREEMENT - PAGE 13
own or use. VMAC amd VMC is each duly qualified or licensed to do business in
each of the jurisdictions in which the nature of its business or location of
its assets requires such qualification or licensing, and where the failure to
be so qualified would have a material adverse effect on its business. True
and correct copies of VMAC's certificate of incorporation filed on October
14, 1997 with the Delaware Secretary of State, and bylaws dated October 14,
1997 have been provided to the Company by VMAC, and each continues to be in
effect on the date of this Agreement. True and correct copies of VMC's
certificate of incorporation dated July 15, 1997, as amended and restated,
and bylaws dated April 9, 1997 have been provided to the Company by VMC, and
each continues to be in effect on the date of this Agreement.
(b) AUTHORITY OF VMAC AND VMC. Each of VMAC and VMC has the full
legal right, power, capacity and authority to enter into this Agreement,
together with all other agreements, instruments and documents to be signed
and delivered by either in connection herewith (the "VMAC Documents"), and to
carry out its obligations hereunder and thereunder. VMAC and VMC has taken,
or will prior to the Time of Closing have taken, all actions necessary to
authorize it to enter into and perform its obligations under this Agreement
and the VMAC Documents, and to consummate the transactions contemplated
hereby. This Agreement has been duly signed and delivered by VMAC and VMC,
and this Agreement and the VMAC Documents constitute legal, valid and binding
obligations of VMAC and VMC enforceable against both in accordance with their
terms.
(c) CAPITAL STOCK OF VMC. The authorized capital stock of VMC
consists of 20,000,000 shares of common stock, par value $.001 per share (the
"VMC Common Stock"), and 5,000,000 shares of preferred stock, par value $.001
per share (the "VMC Preferred Stock"). The VMAC Exceptions Exhibit sets
forth the number of shares of VMC Common Stock, and of VMC Preferred Stock,
that are issued and outstanding, as of the effective date of that exhibit.
All such shares are validly issued, fully paid and non-assessable, and they
constitute all of the issued and outstanding shares of the capital stock of
VMC, as of the date of the VMAC Exceptions Exhibit. None of the issued and
outstanding shares of VMC stock was issued in violation of any preemptive
rights. Except as set forth on the VMAC Exception Exhibit, as of the
effective date of that exhibit, there are (i) no options, warrants,
convertible securities or other rights, agreements, arrangements or
commitments of any character obligating VMAC or VMC to issue or sell any
shares of VMC Common Stock or VMC Preferred Stock, or other interest in VMC;
(ii) no outstanding contractual obligations requiring VMC to repurchase,
redeem or otherwise acquire any shares of VMC Common Stock or to provide
funds to, or make any investment (in the form of a loan, capital contribution
or otherwise) in, any other person; or (iii) no voting trusts, stockholder
agreements, proxies or other agreements or understandings in effect with
respect to the voting or transfer of any of the shares of VMC Common Stock or
VMC Preferred Stock and to which VMC is a party. A true and correct copy of
VMC's Disclosure Statement dated July 9, 1999 (the "VMC Disclosure
Statement") has been provided to the Company, and by this reference is made
part of, and shall be deemed to be set forth on, the VMAC Exceptions Exhibit.
Notwithstanding anything to the contrary in this Agreement, the parties
acknowledge that VMC's Disclosure
MSI-MERGER AGREEMENT-PAGE 14
Statement is not intended to modify or supercede the representations and
warranties by VMC and VMAC made herein, as qualified by the VMAC Exceptions
Exhibit.
(d) VMC FINANCIAL STATEMENTS. VMAC has previously furnished the
Company with the unaudited balance sheet of VMC for the year ended December
31, 1998, and the unaudited balance sheet for the six (6) months ended June
30, 1999, and the related statements of income and retained earnings for the
periods then ended (collectively, the "VMC Financial Statements"). The VMC
Financial Statements have been prepared in accordance with generally accepted
accounting principles consistently applied, are true and correct in all
material respects, and fairly and accurately present the financial condition
and results of operations of VMAC as of the date thereof. Except as set forth
on the VMAC Exceptions Exhibit, and as of the date of that exhibit, (i) the
VMC Financial Statements reflect all claims against and all debts and
liabilities of VMC, fixed or contingent, required to be shown on the VMC
Financial Statements; and (ii) since the date of the VMC Financial
Statements, there have been no material adverse changes in the assets or
liabilities, or in the condition (financial or otherwise), or in the results
of operations, or in the prospects of VMC and, to the best knowledge of VMC,
no fact or condition exists which might cause a material adverse change in
the future.
(e) NO UNDISCLOSED LIABILITIES. There are no material liabilities of
VMAC or VMC other than liabilities (i) reflected or reserved against in the
VMC Financial Statements, (ii) disclosed in the VMAC Exceptions Exhibit, or
(iii) incurred by VMAC or VMC since the date of this Agreement in the
ordinary course of business, consistent with past practice, and which do not
and are not reasonably likely to have a material adverse effect on VMAC or
VMC.
(f) TAXES. All Tax returns, statements, reports and forms (including
estimated Tax returns and reports and information returns and reports)
required to be filed with any Tax authority with respect to any Taxable
period ending on or before the Time of Closing by or on behalf of VMC
(collectively, the "VMC Returns"), have been or will be completed and filed
when due (including any extensions of such due date), and Taxes thereon have
been or will be paid on or before such due date. To the best knowledge of
VMC, VMC has withheld and paid to the applicable financial institution or Tax
authority all amounts required to be withheld. To the best knowledge of VMAC
and VMC, there is no material claim, audit, action, suit, proceeding or
investigation now pending or threatened against or with respect to VMAC or
VMC in respect of any Tax or assessment nor is there any basis therefor. No
notice of deficiency or similar document of any Tax authority has been
received by VMAC or VMC for any material amount.
(g) COMPLIANCE WITH LAWS. Each of VMAC and VMC has materially
complied, and is in material compliance, with all applicable federal, state
and local laws, statutes, licensing requirements, rules and regulations, and
judicial or administrative decisions applicable to its business, except where
failure to be in compliance therewith would not have a material adverse
effect upon VMAC or VMC. To the best knowledge of VMAC or VMC, VMAC and VMC
has been granted all permits from federal, state, and local government
regulatory bodies necessary to carry on its business, all of which are
currently valid and in full force and effect.
MSI-MERGER AGREEMENT-PAGE 15
There is no order issued, investigation or proceeding pending or, to the best
knowledge of VMAC or VMC, threatened, or notice served with respect to any
violation of any law, ordinance, order, writ, decree, rule or regulation
issued by any federal, state, local or foreign court or governmental or
regulatory agency or instrumentality applicable to VMAC or VMC.
(h) REQUIRED APPROVALS, NOTICES AND CONSENTS. Except for (i) the
required approval of the Merger by the shareholder of VMAC, (ii) the filing
of the Colorado Certificate of Merger with and acceptance thereof by the
Secretary of State of the State of Colorado, (iii) the filing of the Delaware
Certificate of Merger with and acceptance thereof by the Secretary of State
of the State of Delaware, and (iv) as set forth on the VMAC Exceptions
Exhibit, no consent or approval of, other action by, or notice to, any
governmental body or agency, domestic or foreign, or any third party is
required in connection with the consummation of the transactions contemplated
by this Agreement.
(i) INTELLECTUAL PROPERTY. To the best knowledge of VMAC and VMC,
(i) VMAC or VMC owns, or is licensed or otherwise possesses legally
enforceable rights to use, all material Intellectual Property that is used
in the business of VMAC or VMC; (ii) there is no material unauthorized use,
disclosure, infringement or misappropriation of any Intellectual Property
rights of VMAC or VMC, any trade secret material to VMAC or VMC, or any
Intellectual Property right of any third party to the extent licensed by or
through VMAC or VMC, and VMAC and VMC has not entered into any agreement to
indemnify any other person against any charge of infringement of any
Intellectual Property, other than indemnification provisions contained in
sales invoices arising in the ordinary course of business; and (iii) VMAC and
VMC are not, nor will they be as a result of the signing and delivery of this
Agreement or the performance of its obligations hereunder, in breach of any
license, sublicense or other agreement relating to their Intellectual
Property.
(j) LITIGATION. Except as set forth on the VMAC Exceptions Exhibit,
there is no claim, litigation, action, suit or proceeding, administrative or
judicial, pending or, to VMAC's or VMC's knowledge, threatened against VMAC
or VMC relating to this Agreement or the transactions contemplated hereunder,
at law or in equity, before any federal, state, local or foreign court,
regulatory agency, or other governmental authority, which could result in the
institution of legal proceedings to prohibit or restrain the consummation or
performance of this Agreement or the transactions contemplated hereby, or
claim damages as a result of this Agreement or the transactions contemplated
hereby.
(k) NO CONFLICT OR DEFAULT. Neither the signing and delivery of this
Agreement, nor compliance with the terms and provisions hereof, including the
consummation of the transactions contemplated hereby, will conflict with or
result in the breach of any term, condition or provision of either VMAC's or
VMC's certificate of incorporation or bylaws, or of any agreement, deed,
contract, mortgage, indenture, writ, order, decree, legal obligation or
instrument to which VMAC or VMC is a party, constitute a default (or an event
which, with the lapse of time or the giving or notice, or both, would
constitute a default) thereunder, or to VMAC's or VMC's knowledge, violate
any statute, regulation or ordinance of any governmental authority. VMC and
VMAC are in compliance in all material respects with all
MSI-MERGER AGREEMENT-PAGE 16
applicable terms and requirements of each material contract under which VMAC
or VMC has any obligation or liability or by which VMAC or VMC or any asset
owned or used by VMAC or VMC is bound.
(l) BROKERS' AND FINDERS' FEES. Neither VMAC nor VMC is obligated to
pay any fees or expenses of any broker or finder in connection with the
origin, negotiation or signing of this Agreement or in connection with any
transactions contemplated hereby.
(m) YEAR 2000 COMPLIANCE. The "Ridgemark" and the "DentalMate"
products sold and/or licensed by VMC in the conduct of its business will be
capable of accurately processing date data between the 20th and 21st
centuries including the years 1999 and 2000, and February 29, 2000, provided
that all other products (e.g. Microsoft operating system software, third
party hardware and firmware) used in combination with the "Ridgemark" and the
"DentalMate" products sold and/or licensed by VMC properly exchange date
data. VMC does not make any representations about other products used with
the "Ridgemark" and the "DentalMate" products sold and/or licensed by VMC
such as the Xxxxxxx XX for Windows Accounting System and Seagate Crystal
Reports for Windows.
ARTICLE III - COVENANTS
3.1 APPROVAL OF MERGER.
(a) VMC, as the sole shareholder of VMAC, hereby approves the Merger
and the consummation of all of the transactions contemplated by this
Agreement.
(b) The Company shall use its best efforts to effect approval of the
Merger and the consummation of all of the transactions contemplated by this
Agreement by the outstanding shareholders holding all of the outstanding
shares of the Company.
3.2 REORGANIZATION. The parties shall each use their best efforts to cause
the business combination to be effected by the Merger to be qualified as a
"reorganization" described in Section 368(a)(1)(A) of the Code and shall not
take or cause to be taken any actions inconsistent with such qualification.
3.3 CONFIDENTIALITY.
(a) Each party agrees that it shall not (i) disclose to any person,
association, firm, corporation or other entity in any manner, directly or
indirectly, any Confidential Information or data relevant to the operation of
the business of the other party, whether of a technical or commercial nature,
or (ii) use, or permit or assist, by acquiescence or otherwise, any person,
association, firm, corporation or other entity to use, directly or
indirectly, any such Confidential Information or data in any manner which
reasonably would be deemed to be competitive with the operation of the
business of the other party prior to the Time of Closing. Each Party agrees
that it shall take reasonable precautions to keep such information
MSI - MERGER AGREEMENT - PAGE 17
confidential. Each party agrees that it shall maintain the confidentiality of
this Agreement, and all discussions and negotiations regarding the Merger. If
the Merger does not close as provided herein, all Confidential Information
and all copies thereof will be promptly returned to the disclosing party.
(b) Prior to the Time of Closing, neither party shall disseminate any
press release or announcement concerning the transactions contemplated by
this Agreement, or identifying the parties, without the prior written consent
of the other party.
3.4 ACCESS TO INFORMATION.
(a) After signing this Agreement, the Company shall give VMAC and VMC
and their "Representatives" (as such term is defined below) full access,
during normal business hours, to all of the properties, books, contracts,
commitments and records relating to the Company, its assets and properties,
provided that such access shall not unreasonably interfere with the normal
operations of the business of the Company. Further, the Company shall furnish
to VMAC and VMC and its officers, directors, employees, agents and/or
representatives (collectively, the "Representatives") all such information
concerning the Company, its business or its assets and/or properties as VMC
may reasonably request; provided, however, that any furnishing of such
information pursuant hereto or any investigation by VMAC or VMC shall not
affect VMAC's and VMC's right to rely on the representations, warranties,
agreements and covenants made by the Company in this Agreement.
(b) After signing this Agreement, VMAC and VMC shall give the Company
and their "Representatives" (as such term is defined below) full access,
during normal business hours, to all of the properties, books, contracts,
commitments and records relating to VMAC and VMC, its assets and properties,
provided that such access shall not unreasonably interfere with the normal
operations of the business of VMAC or VMC. Further, VMAC and VMC shall
furnish to the Company and its officers, directors, employees, agents and/or
representatives (collectively, the "Representatives") all such information
concerning VMAC and/or VMC, its business or its assets and/or properties as
the Company may reasonably request; provided, however, that any furnishing of
such information pursuant hereto or any investigation by the Company shall
not affect the Company's right to rely on the representations, warranties,
agreements and covenants made by VMAC and VMC in this Agreement.
3.5 CONSENTS TO MERGER. The Company agrees to use all reasonable efforts
with VMAC and VMC to obtain consents to Merger, as necessary, for all
Contracts Requiring Consent to Merger prior to or as soon as practicable
after the Time of Closing.
3.6 TAX RETURNS. If necessary, the Company shall properly file all returns,
statements, reports, forms or other documents (collectively, the "Tax
Returns") that are required by any applicable law to file with respect to
Taxes arising in or related to periods ending on or prior to the Time of
Closing or related to transactions or events occurring prior to the Time of
Closing and shall pay all such Taxes when due; provided, however, that VMAC
shall be responsible for all filings with respect to, and the payment of any
transfer tax related to, the
MSI - MERGER AGREEMENT - PAGE 18
issuance of its Common Stock. Any payment of Taxes due from one party to the
other pursuant to this Section 3.6 shall be paid at the Time of Closing.
Following the Time of Closing, VMAC shall properly file all Tax Returns that
VMAC is required by any applicable law to file with respect to Taxes arising
in or related to periods commencing on Time of the Closing or related to
transactions or events occurring subsequent to the Time of Closing, and
shall pay all such Taxes when due.
3.7 NOTICES TO COMPANY'S SHAREHOLDERS AND OPTION HOLDERS.
(a) In connection with obtaining approval of the Company's shareholders
to the Merger, the Company shall disclose to such shareholders the
restrictions and qualifications applicable to the Stock Payment as
described in Section 1.7(b) and Section 1.7(c) above and shall take such
actions as may be reasonably required to assure that such shareholders
maintain the confidentiality of the information included in the VMC
Disclosure Statement.
(b) VMC will provide to the Company a notice to be sent by the Company
to all holders of unexpired options of the Company's stock that, conditioned
upon closing of the Merger as provided herein, VMC will assume such options
as described in Section 1.7(a)(2) above.
3.8 PIGGYBACK REGISTRATION RIGHTS.
(a) For purposes of this Section 3.8:
(1) The term "Act" means the Securities Act of 1933, as amended.
(2) The term "Form S-3" means such form under the Act as in effect
on the date hereof or any registration form under the Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by VMC with the SEC.
(3) The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
(4) The term "Holder" or "Holders" shall mean the recipients of
the Stock Payment and any successor or assign thereof who holds Registrable
Securities.
(5) The term "Initial Public Offering" shall mean the closing of a
firm-commitment underwritten public offering pursuant to an effective
registration statement under the Act, covering the offer and sale of VMC
Common Stock to the public with aggregate gross proceeds to VMC of at least
Ten Million Dollars ($10,000,000).
(6) The term "register", "registered" and "registration" refer to
a registration effected by preparing and filing a registration statement or
similar document in compliance
MSI - MERGER AGREEMENT - PAGE 19
with the Act, and the declaration or ordering of effectiveness of such
registration statement or document.
(7) The term "Registrable Securities" shall mean (A) any and all
VMC Common Stock held by Holder, and (B) any VMC Common Stock issuable upon
conversion or exercise of any warrant, right or other security that is issued
as a dividend or other distribution with respect to, or in exchange for or in
replacement of the shares referenced in the preceding clause (A), excluding
in all cases, however, any Registrable Securities sold by a person in a
transaction in which such person's rights were not assigned. The rights
granted hereunder to the Holders shall be freely assignable, in whole or in
part, by the Holders.
(8) The term "SEC" shall mean the United States Securities and
Exchange Commission.
(b) If (but without any obligation to do so) VMC proposes to register
(including for this purpose a registration effected by VMC for stockholders
other than the Holders) any of its stock or other securities under the Act in
connection with the public offering of such securities solely for cash (other
than a registration statement on Form S-4 or S-8 or any successor form), VMC
shall, at such time, promptly give Holders written notice of such
registration. Upon the written request of Holders given within forty (40)
days after mailing of such notice by VMC in accordance with the notice
provisions of this agreement, VMC shall, subject to the provisions of Section
3.8, cause to be registered under the Act all of the shares of Registrable
Securities that Holders have requested to be registered.
(c) VMC shall use its best efforts to qualify for registration on Form
S-3 or any successor form thereto. After VMC has qualified for the use of
Form S-3, the Holder of the outstanding Registrable Securities shall have the
right to request two registrations on Form S-3. The number of shares of
Registrable Securities that may be included on the Form S-3 shall be
allocated among all Holders in proportion to the respective amount of
Registrable Securities entitled to inclusion in such registration at the time
of filing the registration statement. Notwithstanding the foregoing:
(1) VMC shall not be required to effect a registration statement
pursuant to this section (c) within one hundred eighty (180) days of the
effective date of any registration statement filed pursuant to section (b)
hereof; and
(2) VMC shall not be required to effect a registration statement
pursuant to this section (c) unless the shares of Registrable Securities for
which the Holder is requesting registration demonstrate to VMC a reasonably
anticipated aggregate price to the public (before deduction of any
underwriting discounts and expenses) of at least One Million Dollars
($1,000,000).
(d) VMC shall promptly give written notice to all Holders of
Registrable Securities of the receipt of a request for registration pursuant
to section (c) above and shall provide a reasonable opportunity for other
Holders to participate in the registration, provided that if the
MSI - MERGER AGREEMENT - PAGE 20
registration is for an underwritten offering, the terms of section (g) shall
apply to all participants in such offering. Subject to the foregoing, VMC
shall use its best efforts to file a registration statement on Form S-3
covering the Registrable Securities so requested to be registered as soon as
reasonably practicable after receipt of the written request from the Holders.
(e) Whenever required under this Section 3.8 to effect the registration
of any shares of VMC Common Stock, VMC shall, as expeditiously as reasonably
possible:
(1) prepare and file with the SEC a registration statement with
respect to such shares of VMC Common Stock and use its best efforts to cause
such registration statement to become effective and keep such registration
effective for a period of up to one hundred eighty (180) days or until the
distribution contemplated in the Registration Statement has been completed;
provided, however, that (i) such 180-day-period shall be extended for a
period of time equal to the period the Holder refrains from selling any
securities included in such registration at the request of an underwriter of
VMC Common Stock (or other securities) of VMC; and (ii) in the case of any
registration of shares of VMC Common Stock on Form S-3 which are intended to
be offered on a continuous or delayed basis, such 180-day period shall be
extended, if necessary, to keep the registration statement effective until
all such shares of VMC Common Stock are sold;
(2) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of
the Act with respect to the disposition of all securities covered by such
registration statement;
(3) furnish to the Holders of shares of VMC Common Stock such numbers
of copies of a prospectus, including a preliminary prospectus, in conformity
with the requirements of the Act, and such other documents as they may
reasonably request in order to facilitate the disposition of shares of VMC
Common Stock owned by them;
(4) use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Company;
provided that VMC shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, except as may be
required by the Act or such Blue Sky laws;
(5) in the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering;
(6) notify each Holder of shares of VMC Common Stock covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a
result of which the prospectus
MSI - MERGER AGREEMENT - PAGE 21
included in such registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing;
(7) cause all such shares of VMC Common Stock registered pursuant
hereunder to be listed on each securities exchange or market on which similar
securities issued by VMC are then listed; and
(8) provide a transfer agent and registrar for all shares of VMC
Common Stock registered pursuant hereto and a CUSIP number for all such
shares of VMC Common Stock, in each case not later than the effective date of
such registration.
(f) VMC shall bear and pay all reasonable expenses incurred in
connection with any registration, filing or qualification of shares of VMC
Common Stock with respect to the registrations pursuant to Section 3.8(b) for
each Holder, including (without limitation) all registration, filing, and
qualification fees, reasonable printers and accounting fees relating or
apportionable thereto, but excluding underwriting discounts and commissions
relating to shares of Common Stock.
(g) In connection with any offering involving an underwriting of shares
of VMC's capital stock, VMC shall not be required under this Section 3.8 to
include a Holder's securities in such underwriting unless such Holder accepts
the terms of the underwriting applicable to such Holder as agreed upon
between VMC and the underwriters selected by it, which terms shall be the
usual and customary terms applicable to selling shareholders. Notwithstanding
any other provision of this Section, if the managing underwriter of a
proposed public offering shall advise VMC in writing that, in its opinion,
marketing factors require a limitation on the number of shares to be
underwritten, the managing underwriter may (subject to the limitations set
forth below) exclude all of the Holders share and all shares of other holders
having registration rights from, or limit the number of such shares to be
included in, the registration and underwriting. The Company shall so advise
all holders of securities requesting registration, and the number of shares
of securities that are entitled to be included in the registration and
underwriting shall be allocated first to the Company for securities being
sold for its own account and thereafter among all such Holders and other
holders having equivalent registration rights on a pro rata basis. For
purposes of the preceding sentence concerning apportionment, for any selling
shareholder which is a Holder of shares of VMC Common Stock and which is a
partnership or corporation, the partners, retired partners and shareholders
of such Holder, or the estates and family members of any such partners and
retired partners and any trusts for the benefit of any of the foregoing
persons shall be deemed to be a single "selling shareholder," and any
pro-rata reduction with respect to such "selling shareholder" shall be based
upon the aggregate amount of shares carrying registration rights owned by all
entities and individuals included in such "selling shareholder," as defined
in this sentence.
(h) With a view to making available to the Holders the benefits of Rule
144 promulgated under the Act ("SEC Rule 144") and any other rule or
regulation of the SEC that
MSI - MERGER AGREEMENT - PAGE 22
may at any time permit the Company to sell securities of VMC to the public
without registration or pursuant to a registration on Form S-3, VMC agrees to:
(1) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by VMC for
the offering of its securities to the general public;
(2) file with the SEC in a timely manner all reports and other
documents required of VMC under the Act and the 1934 Act; and
(3) furnish to the Holders, so long as the Holders own any shares
of VMC Common Stock, forthwith upon request (i) a written statement by VMC
that it has complied with the reporting requirements of SEC Rule 144 (at any
time after ninety (90) days after the effective date of the first
registration statement filed by VMC), the Act and the 1934 Act (at any time
after it has become subject to such reporting requirements) or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of VMC and such other reports and documents so filed by VMC
and (iii) such other information as may be reasonably requested in availing
the Holders of any rule or regulation of the SEC which permits the selling of
any such securities without registration or pursuant to such form.
(i) VMC agrees to indemnify and hold harmless each Holder, and each of
its officers and directors and partners, and such Holder's legal counsel and
independent accountants, if any, and any underwriter (as defined in the Act)
for such Holder and each person, if any, who controls any such persons within
the meaning of Section 15 of the Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement,
against any losses, claims, damages or liabilities, joint or several, to
which any of such persons may be subject, under the Act or otherwise,
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened, and to reimburse any of such persons for any
reasonable legal or other expenses incurred in connection with investigating
or defending against any such losses, claims, damages, or liabilities,
insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or alleged untrue statement of a material fact contained in
any registration statement under which such securities were registered under
the Act pursuant to this Agreement, any prospectus contained therein, or any
amendment or supplement thereto, or arising out of or based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statement therein not misleading or any
violation by VMC of any rule or regulation promulgated under the Act or any
state securities laws applicable to VMC and relating to action or inaction by
VMC in connection with any such registration, qualification or compliance,
except insofar as such losses, claims, damages or liabilities arise out of or
are based upon information included in the prospectus in reliance upon and in
conformity with information furnished to VMC in writing by such Holder
expressly for use therein or are based on the authority of an expert within
the meaning of that term as defined in the Act or are based on (i) the
failure of such Holder or underwriter to furnish a copy of the preliminary
MSI - MERGER AGREEMENT - PAGE 23
prospectus or the prospectus after receipt thereof as required by the Act or
the rules and regulations promulgated thereunder, or (ii) the use of a
preliminary prospectus or a prospectus by such Holder after receipt from VMC
of notice that such prospectus should no longer be used. Such indemnity
shall remain in full force and effect regardless of any investigation made by
or on behalf of such Holder, and shall survive transfer of such securities by
such Holder.
(j) Each Holder agrees, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification
or compliance is being effected, to indemnify and hold harmless VMC, each of
its officers and directors, and VMC's legal counsel and independent
accountants, if any, against any expenses, losses, claims, damages or
liabilities, several and not joint, to which VMC or such persons may be
subject, under the Act or otherwise, and to reimburse VMC or such persons for
any reasonable legal or other expenses incurred in connection with
investigating or defending against any such expenses, losses, claims, damages
or liabilities, insofar as such expenses, losses, claims, damages or
liabilities are caused by any untrue statement or alleged untrue statement of
a material fact furnished by such Holder to VMC for inclusion in a
registration statement, if such untrue statement was made in reliance upon
and in conformity with written information furnished by such Holder and is
contained in any registration statement under which VMC Common Stock is held
by such Holder was registered under the Act pursuant to this Agreement, any
prospectus contained therein, or any amendment or supplement thereto.
Notwithstanding the foregoing, however, no representation, warranty,
acknowledgment or agreement made herein by Holder shall in any manner be
deemed to constitute a waiver of any rights granted to Holder under federal
or state securities laws; and, provided further, that the obligations of such
Holders hereunder shall be limited to an amount equal to the net proceeds to
each such Holder of Registrable Securities sold pursuant to such registration
statement.
(k) In the event VMC or any Holder receives a complaint, claim or other
notice of any loss, claim or damage, liability or action, giving rise to a
claim for indemnification under sections (h) or (l), the person claiming
indemnification under any such section shall promptly notify the person
against whom indemnification is sought of such complaint, notice, claim,
damage, liability or action, and such indemnifying person shall have the
right to investigate and defend any such loss, claim, damage, liability or
action. The person claiming indemnification shall have the right to employ
separate counsel in any such action and to participate in the defense thereof
but the fees and expenses of such counsel shall not be at the expense of the
person against whom indemnification is sought; provided, however, that if
there exists or shall exist a material conflict of interest that would make
it inappropriate for the same counsel to represent both the indemnified
person and such indemnifying person or any affiliate or associate thereof,
the indemnified person shall be entitled to retain its own counsel at the
expense of such indemnifying person, provided that VMC shall not be liable
for the fees and expenses of more than one such counsel for all the Holders.
In no event shall a person against whom indemnification is sought be obligated
to indemnify any person for any settlement of any claim or action effected
without the indemnifying person's consent, which consent may not be
unreasonably withheld. The failure of any indemnified party to give notice
as provided herein shall not relieve the indemnifying party of its
obligations under
MSI - MERGER AGREEMENT - PAGE 24
this Agreement, unless such failure is prejudicial to the ability of the
indemnifying party to defend the action.
(l) In any event, VMC's undertakings under this Section 3.8 shall
expire seven (7) years after the date of this Agreement.
(m) Each Holder hereby agrees that it shall not, without the prior
written consent of the managing underwriter selected by VMC, during the
period commencing on the date of the final prospectus relating to VMC's
Initial Public Offering, if any, and ending on the date specified by VMC and
the managing underwriter (such period not to exceed one hundred eighty (180)
days or such shorter period as is imposed on the officers and/or directors of
VMC) (i) offer, pledge, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of VMC Common Stock or any securities convertible into
or exercisable or exchangeable for VMC Common Stock (whether such shares or
any such securities are then owned by the Holder or are thereafter acquired),
or (ii) enter into any swap or other arrangement that transfers to another,
in whole or in part, any of the economic consequences of ownership of VMC
Common Stock, whether any such transaction described in clauses (i) or (ii)
above is to be settled by delivery of VMC Common Stock or such other
securities, in cash or otherwise. The underwriters in connection with VMC's
Initial Public Offering are intended third party beneficiaries of this
section (m) and shall have the right, power and authority to enforce the
provisions hereof as though they were parties hereto. In order to enforce
the foregoing covenant, VMC may impose stop-transfer instructions with
respect to the Registrable Securities of each Holder (and the shares or
securities of every other person subject to the foregoing restriction) until
the end of such period, or such other shorter period as is commensurate with
that imposed upon other members of senior management.
3.9 POST CLOSING COVENANT OF VMC. Following the finalization of the Merger,
VMC shall use its best efforts to obtain directors' and officers' liability
insurance provided that such insurance is available to VMC at commercially
reasonable rates.
ARTICLE IV - CLOSING
4.1 SCHEDULING.
(a) The "Closing" shall mean the deliveries to be made by the parties
in accordance with this Article IV. The Closing shall take place by mail at
the offices of Xxxxxx Xxxxxx Xxxxx Xxxxxxxxxx LLP, 0000 X Xxxxxx, 0xx Xxxxx,
Xxxxxxxxxx, Xxxxxxxxxx 00000, at a date and time specified by that firm, or
at such other place or date as may be agreed to by VMC and the Company, but
in no event later than thirty (30) business days after the Signature Date.
(b) The transactions contemplated by this Agreement shall be completed,
as between the parties, on the first VMAC business day on which the last of
the deliveries
MSI - MERGER AGREEMENT - PAGE 25
referenced in Sections 4.2 and 4.3 below occurs or is fulfilled or waived
(the "Time of Closing"), with the expectation that the Time of Closing shall
occur within thirty (30) business days of the Signature Date.
4.2 DELIVERIES BY THE COMPANY. At the Closing, the Company shall make, or
cause to be made, the following deliveries:
(a) Colorado Certificate of Merger, duly signed by the Company, for
filing with the Colorado Secretary of State in accordance with Section 1.2
above;
(b) The Company's Share Documents in the possession of the Company;
(c) All written consents or waivers of all parties required pursuant to
Section 2.1(i)(3);
(d) All the relevant books and records of the Company related to the
Company's business and/or assets and properties;
(e) A legal opinion addressed to VMC and VMAC from the Company's
counsel, Xxxxxxxx, Xxxxx & Xxxxxxx, P.C., dated as of the Closing, and which
shall include the opinions described in Exhibit 4.2(e) and shall otherwise be
in form and substance satisfactory to VMC and VMAC;
(f) A certificate of the Company in the form of that attached as
Exhibit 4.2(f) certifying (i) that the conditions specified in sections (a)
through (d) and (f) through (p) of Section 5.1 have been satisfied, (ii) that
there shall have been no material adverse change in the Company, its
business, assets or properties, or the financial condition of the Company,
since the date of this Agreement, (iii) that the representations and
warranties of the Company are still valid as of the Time of Closing; (iv)
that the Financial Statements fairly reflect the financial condition and
results of operations of the Company as of such dates and for the periods
indicated in the respective Financial Statements; and (v) that the Company
has received copies of VMC's certificate of incorporation and bylaws, as
referenced in Section 2.2(a), and a copy of VMC's Disclosure Statement, as
referenced in Section 2.2(c);
(g) A certificate of the Company, dated as of the Time of Closing, as
to (i) the incumbency and signatures of those of its officers or individuals,
as the case may be, authorized to act on its behalf with respect to any
exhibit or schedule or any certificate, financial statement or report or
other document delivered pursuant to this Agreement or in connection with the
transactions contemplated hereby (collectively, the "Merger Documents") to
which it is a party, (ii) resolutions then in full force and effect
authorizing the appropriate officer(s) of the Company to sign, deliver and
perform each Merger Document to which it is a party, (iii) its articles of
incorporation certified as to their accuracy by its Secretary and the
Colorado Secretary of State; (iv) its bylaws certified as to their accuracy
by its Secretary; (v) a good standing certificate from the Colorado Secretary
of State, dated not more than thirty
MSI - MERGER AGREEMENT - PAGE 26
(30) days prior to the Time of Closing, showing that the Company is in
good standing in the State of Colorado; and
(h) Employment agreement and Employee Proprietary Information and
Invention Agreement in the form attached hereto as Exhibit 4.2(h) for the
employment of Xxxxx X. Xxxxxx as Chief Executive Officer of VMC
(collectively, the "Employment Agreement"), duly signed by Xxxxx X. Xxxxxx;
(i) Non-competition agreement and related documents in form and
substance reasonably acceptable to the Company and VMC duly signed by Xxxxx
X. Xxxxxx (the "Xxxxxx Non-Competition Agreement");
(j) Non-competition agreement and related documents in form and
substance reasonably acceptable to the Company and VMC duly signed by Xxxxxxx
X. Xxxxxx (the "Xxxxxx Non-Competition Agreement");
(k) Evidence of the Additional Investment (as defined below);
(l) The Canceled Warrants (as defined below); and
(m) Consulting Agreement in form and substance reasonably acceptable to
the Company and VMC, duly signed by Xxxxx Xxxxxxx of Xxxxxxx Corporate
Finance (the "Consulting Agreement").
4.3 DELIVERIES BY VMC AND VMAC. At the Closing, VMAC and/or VMC shall make,
or cause to be made, the following deliveries:
(a) In accordance with Section 1.2 above, (i) Delaware Certificate of
Merger, duly signed by VMAC, for filing with the Delaware Secretary of State,
and (ii) Colorado Certificate of Merger, duly signed by VMAC, if required by
the Colorado Secretary of State;
(b) To legal counsel for the Company, the Stock Payment from VMC,
together with written instructions to hold such certificates in trust until
the Effective Time;
(c) A legal opinion addressed to the Company from VMAC's and VMC's
counsel, Xxxxxx Xxxxxx Xxxxx Xxxxxxxxxx LLP of Sacramento, California and/or
Xxxxxxx Phleger & Xxxxxxxx LLP of Palo Alto, California, dated as of the
Closing, and which shall include the opinions described in Exhibit 4.3(c) and
shall otherwise be in form and substance satisfactory to the Company;
(d) An Officer's Certificate signed by the President of VMC in the form
of that attached as Exhibit 4.3(d) certifying (i) that the conditions
specified in sections (a) through (c) of Section 5.2 have been satisfied;
(ii) that there shall have been no material adverse change in the business of
VMC or VMAC since the date of this Agreement, and (iii) that the
representations and warranties of VMC and VMAC are still valid as of the Time
of Closing;
MSI - MERGER AGREEMENT - PAGE 27
(e) A certificate of each of VMAC and VMC, dated as of the Time of
Closing, as to (i) the incumbency and signatures of those of its officers or
individuals, as the case may be, authorized to act on its behalf with respect
to each Merger Document to which it is a party, (ii) resolutions then in full
force and effect authorizing the appropriate officer(s) of such company to
sign, deliver and perform each Merger Document to which it is a party, (iii)
its certificate of incorporation certified as to their accuracy by its
Secretary and the Delaware Secretary of State; (iv) its bylaws certified as
to their accuracy by its Secretary; (v) a good standing certificate from the
Delaware Secretary of State, dated not more than thirty (30) days prior to
the Time of Closing, showing that such company is in good standing in the
State of Delaware;
(f) The Employment Agreement, duly signed by VMC;
(g) The Consulting Agreement, duly signed by VMC;
(h) The VMC Warrants (as defined below); and
(i) Termination of VMC Shareholder Agreements (as defined below).
4.4 FURTHER ASSURANCES. After the Time of Closing, each party shall each
prepare, sign and deliver, at the preparer's expense, such further
instruments or cause to be taken such other or further action as any party
shall reasonably request of any other party at any time or from time to time
in order to consummate, in any manner, the terms and provisions of this
Agreement.
ARTICLE V - CONDITIONS PRECEDENT TO OBLIGATIONS
5.1 CONDITIONS TO OBLIGATIONS OF VMAC AND VMC. Each and every obligation of
VMAC and VMC to be performed at the Closing shall be subject to the
satisfaction as of or before the Time of Closing of the following conditions
(unless waived in writing by VMC and VMAC):
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations and
warranties of the Company set forth in Section 2.1 of this Agreement shall
have been true and correct when made and shall be true and correct as updated
at and as of the Time of Closing as if such representations and warranties
were made as of such date and time other than such representations and
warranties made as of a set date, which shall be true and correct as of such
date; the covenants and agreements contained in this Agreement to be complied
with by the Company on or before the Time of Closing shall have been complied
with in all material respects; and VMAC and VMC shall have received a
certificate from the Company to such effect signed by a duly authorized
officer of the Company.
(b) PERFORMANCE OF AGREEMENT. All covenants, conditions and other
obligations under this Agreement which are to be performed or complied with
by the Company shall
MSI - MERGER AGREEMENT - PAGE 28
have been fully performed and complied with at or prior to the Time of Closing,
including the delivery of the instruments and documents in accordance with
Section 4.2 above.
(c) NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the financial condition, the business of the Company, the
Intellectual Property or properties of the Company which materially adversely
affects the conduct of the business of the Company, as currently being
conducted.
(d) ABSENCE OF GOVERNMENTAL OR OTHER OBJECTION. There shall be no pending
or threatened investigation, action, suit or proceeding challenging the
transaction by any body or agency of the federal, state or local government or
by any third party, and the consummation of the transaction shall not have been
enjoined by a court of competent jurisdiction as of the Time of Closing and any
applicable waiting period under any applicable federal law shall have expired.
(e) APPROVAL OF DOCUMENTATION. The form and substance of all
certificates, instruments and other documents delivered or to be delivered to
VMAC under this Agreement shall be reasonably satisfactory to VMAC and VMC and
their counsel in all respects.
(f) CONSENTS. The Company shall have received all material consents and
approvals of all lenders, lessors and other third parties whose consent or
approval is required in order for the Company to consummate the transactions
contemplated by this Agreement.
(g) OPERATION OF BUSINESS. Since June 30, 1999, the Company shall have
operated the business of the Company in the ordinary course consistent with
past practices.
(h) CHANGES. Since June 30, 1999, there shall not have been any material
adverse change in the assets or the financial condition, results of operations,
prospects, properties or business of the Company, except as disclosed on the
Company's Exceptions Schedule.
(i) EMPLOYMENT AGREEMENT. VMC and Xxxxx Xxxxxx shall have executed and
delivered the Employment Agreement.
(j) XXXXXX NON-COMPETITION AGREEMENT. VMC shall have received the
executed Xxxxxx Non-Competition Agreement.
(k) XXXXXX NON-COMPETITION AGREEMENT. VMC shall have received the
executed Xxxxxx Non-Competition Agreement.
(l) CONSULTING AGREEMENT WITH XXXXXXX CORPORATE FINANCE. VMC and Xxxxxxx
Corporate Finance shall have executed and delivered the Consulting Agreement.
(m) APPROVAL OF COMPANY SHAREHOLDERS. The Company shall have received
approval of the shareholders holding such percentage of the outstanding shares
as may be satisfactory to VMC in its sole and absolute discretion.
MSI - MERGER AGREEMENT - PAGE 29
(n) ADDITIONAL INVESTMENT BY VENTURETEC IN THE COMPANY. Venturetec shall
have made an additional investment in the Company in cash in an amount not less
than Three Million Three Hundred Thirty Thousand Dollars ($3,330,000) (the
"Additional Investment") and VMC shall have received evidence reasonably
satisfactory to it that such Additional Investment has been received.
(o) CANCELED WARRANTS. VMC shall have received evidence reasonably
satisfactory to it that all of the fifty five thousand (55,000) outstanding
warrants for purchase of the Company's stock (twenty thousand (20,000) of which
such outstanding warrants are held by Xxxxx Ltd. and thirty five thousand
(35,000) of which are held by Pine Inc.) have been canceled (the "Canceled
Warrants").
(p) SUBSCRIPTION AGREEMENTS. Not less than two (2) business days prior to
the Time of Closing, VMC shall have received subscription agreements and
investor representation letters in forms(s) reasonably satisfactory to VMC from
shareholders of the Company owning in the aggregate no less than seventy five
percent (75%) of the issued and outstanding stock of the Company.
(q) DUE DILIGENCE. Each of VMAC and VMC shall have completed to their
satisfaction, and in their sole and absolute discretion be satisfied with the
results of, all due diligence with respect to the Company that they deem
necessary in their sole and absolute discretion.
(r) TAX-FREE REORGANIZATION. Each of VMAC and VMC shall be satisfied that
the Merger qualifies as a tax-free reorganization under Section 368(a)(1)(A) of
the Code.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. Each and every obligation of
the Company to be performed at the Time of Closing shall be subject to the
satisfaction as of or before such time of the following conditions (unless
waived in writing by the Company):
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
VMAC and VMC set forth in Section 2.2 of this Agreement shall have been true and
correct when made and shall be true and correct at and as of the Time of Closing
as if such representations and warranties were made as of such date and time,
other than such other representations and warranties as are made as of another
date, which shall be true and correct in all material respects as of such other
date; and the covenants and agreements contained in this Agreement to be
complied with by VMAC or VMC on or before the Time of Closing shall have been
complied with in all material respects.
(b) PERFORMANCE OF AGREEMENT. All covenants, conditions and other
obligations under this Agreement which are to be performed or complied with by
VMAC or VMC shall have been fully performed and complied with at or prior to
the Time of Closing, including the delivery of the instruments and documents in
accordance with Section 4.3 hereof.
MSI - MERGER AGREEMENT - PAGE 30
(c) ABSENCE OF GOVERNMENTAL OR OTHER OBJECTION. There shall be no
pending or threatened lawsuit challenging the transaction by any body or
agency of the federal, state or local government or by any third party, and
the consummation of the transaction shall not have been enjoined by a court
of competent jurisdiction as of the Time of Closing and any applicable
waiting period under any applicable federal law shall have expired.
(d) APPROVAL OF DOCUMENTATION. The form and substance of all
certificates, instruments, opinions and other documents delivered or to be
delivered to the Company under this Agreement shall be reasonably satisfactory
to the Company and its counsel in all respects.
(e) MERGER CONSIDERATION. VMC shall have delivered the Stock Payment to
legal counsel for the Company.
(f) COMPOSITION OF VMC BOARD OF DIRECTORS. The number of directors on
VMC's Board of Directors shall have been set at five (5), any necessary
resignations of directors on VMC's Board of Directors shall have been received
by the Board of Directors of VMC, and Xxxxx X. Xxxxxx and Xxxxx Xxxxxxx shall
have been duly elected to the Board of Directors of VMC.
(g) EMPLOYMENT OF XXXXX X. XXXXXX. VMC shall employ Xxxxx X. Xxxxxx as
its Chief Executive Officer.
(h) EMPLOYMENT AGREEMENT. VMC and Xxxxx Xxxxxx shall have executed and
delivered the Employment Agreement.
(i) CONSULTING AGREEMENT WITH XXXXXXX CORPORATE FINANCE. VMC and Xxxxxxx
Corporate Finance shall have executed and delivered the Consulting Agreement.
(j) VMC WARRANTS. VMC shall have delivered to legal counsel for the
Company warrants for the purchase by Xxxxxxx Corporate Finance of ninety
thousand (90,000) of VMC Common Stock at a price equal to $3.70 per share for a
term of four (4) years following the Time of Closing (the "VMC Warrants").
(k) TERMINATION OF SHAREHOLDER AGREEMENTS. The Company shall have
received evidence reasonably satisfactory to it that all shareholder agreements
between VMC and any of its shareholders have been terminated ("Termination of
VMC Shareholder Agreements").
(l) DUE DILIGENCE. The Company shall have completed to its satisfaction,
and in its sole and absolute discretion be satisfied with the results of, all
due diligence with respect to VMC and its subsidiaries that it deems necessary
in its sole and absolute discretion.
(m) TAX-FREE REORGANIZATION. The Company shall be satisfied that the
Merger qualifies as a tax-free reorganization under Section 368(a)(1)(A) of the
Code.
MSI - MERGER AGREEMENT - PAGE 31
(n) SHAREHOLDER APPROVAL. The Merger and this Agreement shall have been
approved by holders of a majority of the outstanding Company's Common Stock.
5.3 TERMINATION. This Agreement may be terminated as provided herein at any
time prior to the Effective Time of the Merger, whether before or after
approval of the shareholders of VMAC and the Company.
ARTICLE VI - LIMITATION ON REMEDIES
6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in this Agreement, along with all exhibits, schedules
and certificates delivered pursuant hereto, shall survive only to the Time of
Closing, and shall thereafter terminate and be of no further force and effect.
ARTICLE VII - CONCLUDING PROVISIONS
7.1 NOTICE. All notices and other communications required or permitted under
this Agreement shall be delivered to the parties at the address set forth
below their respective signature blocks, or at such other address that they
hereafter designate by notice to all other parties in accordance with this
Section 7.1. Any party delivering notice to the Company shall deliver a copy
to Xxxxxxxx, Xxxxx & Xxxxxxx, P.C. (Attn: G. Xxxxx Xxxxxxxx, Jr.), 0000
Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000. Any party delivering notice to
VMAC or VMC shall deliver a copy to VantageMed Corporation (Attn: Xxxx
Xxxxxx), 0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxx Xxxxxxx, Xxxxxxxxxx 00000, with
a copy to Xxxxxx Xxxxxx Xxxxx Xxxxxxxxxx LLP (Attn: Xxxxxxx Xxxxxx), 0000 X
Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxx 00000. All notices and
communications shall be deemed to be received in accordance with the
following: (i) in the case of personal delivery, on the date of such
delivery; (ii) in the case of facsimile transmission, on the date on which
the sender receives confirmation by facsimile transmission that such notice
was received by the addressee, provided that a copy of such transmission is
additionally sent by mail as set forth in (iv) below; (iii) in the case of
overnight air courier, on the second business day following the day sent,
with receipt confirmed by the courier; and (iv) in the case of mailing by
first class certified mail, postage prepaid, return receipt requested, on the
fifth business day following such mailing.
7.2 ASSIGNMENT. This Agreement and the various rights and obligations
arising hereunder shall inure to the benefit of and be binding upon the
Company, their successors and permitted assigns, and VMAC, VMC and their
respective successors and permitted assigns. VMC and VMAC may assign the
rights and obligations of VMAC hereunder to any other wholly owned subsidiary
of VMC. Except as otherwise provided in this Section 7.2, neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
transferred or assigned (by operation of law or otherwise) by any of the
parties hereto without the prior written consent of the other parties.
MSI - MERGER AGREEMENT - PAGE 32
7.3 EXPENSES. VMAC, VMC, and the Company shall each bear and pay all costs
and expenses respectively incurred by each of them on their behalf in
connection with this Agreement, including fees and expenses of their own
financial consultants, accountants and legal counsel. The Company shall pay
all applicable sales, use, excise, transfer, documentary and any other
similar taxes arising out the this Agreement, or in relation to the
transactions referenced herein.
7.4 WAIVER; CONSENT. This Agreement may not be changed, amended, terminated,
augmented, rescinded, or discharged (other than by performance), in whole or
in part, except by a writing signed by the parties hereto, and no waiver of
any of the provisions or conditions of this Agreement or any of the rights of
a party shall be effective or binding unless such waiver shall be in writing
and signed by the party claimed to have given or consented thereto. Except to
the extent that a party may have otherwise agreed in writing, no waiver by
that party of any condition of this Agreement or breach by the other party of
any of its obligations or representations hereunder or thereunder shall be
deemed to be a waiver of any other condition or subsequent or prior breach of
the same or any other obligation or representation by the other party, nor
shall any forbearance by the first party to seek a remedy for any
noncompliance or breach by the other party be deemed to be a waiver by the
first party of its rights and remedies with respect to such noncompliance or
breach.
7.5 COUNTERPARTS. This Agreement may be signed simultaneously in multiple
counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument. Facsimile
signatures will be considered the same as original signatures and will be
binding on the parties.
7.6 GOVERNING LAW AND SEVERABILITY. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of California. If one or
more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement to the
extent of its unenforceability, and the balance of the Agreement shall be
interpreted as if such unenforceable provision (to the extent of its
unenforceability) was so excluded, but shall otherwise be enforceable in
accordance with its terms.
7.7 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No provisions of this
Agreement are intended, nor shall be interpreted, to provide or create any
third party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, stockholder, partner or employee of any party or any
other person or entity unless specifically provided otherwise herein, and,
except as so provided, all provisions hereof shall be personal solely between
the parties to this Agreement. Notwithstanding the foregoing, and subject to
all of the other terms and conditions of this Agreement, the Holders and the
Company's option holders can enforce payment of the Merger Consideration
after the Effective Time.
7.8 COOPERATION AND TAX RECORDS RETENTION. The Company and VMAC shall (i)
each provide the other with such assistance as may reasonably be requested by
the other in connection with the preparation of any Tax Returns, or in
connection with any audit or other
MSI - MERGER AGREEMENT - PAGE 33
examination by any taxing authority or any judicial or administrative
proceedings relating to liability for Taxes, (ii) each retain and provide the
other, with any records or other information which may be relevant to any
such Tax Return, audit or examination, proceeding or determination, and (iii)
each provide the other with any final determination of any such audit or
examination, proceeding or determination that affects any amount required to
be shown on any Tax Return of the other for any period. Without limiting the
generality of the foregoing, the Company and VMAC shall use reasonable
efforts to retain, until the applicable statute of limitations (including any
extensions) has expired, copies of all Tax Returns, supporting work schedules
and other records or information which may be relevant to such Tax Returns
for all tax periods or portions thereof ending before or including the Time
of Closing and shall not destroy or otherwise dispose of any such records
without first providing the other party with a reasonable opportunity to
review and copy the same. VMAC shall keep the original copies of the records
at its facilities in California and elsewhere, if applicable, and, at the
Company's expense, shall provide copies of the records to the Company upon
the Company's request.
7.9 VENUE AND LEGAL FEES. Any controversy, claim and/or dispute arising out
of or relating to this Agreement or the breach hereof or subject matter
hereof (including any action in tort) shall be finally and exclusively
settled by any court having applicable jurisdiction. If the proceedings are
commenced by VMC, venue shall be in Denver, Colorado, and if the proceedings
are commenced by the Company, venue shall be in Sacramento, California. Each
of the parties hereto hereby irrevocably and unconditionally waives any
objection to the laying of venue of any litigation arising out of this
Agreement or the transactions contemplated hereby in the courts of the state
in which the party against whom such claim is brought resides, and hereby
further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such litigation brought in any such court
has been brought in an inconvenient forum. The prevailing party shall be
entitled to its reasonable attorneys' fees, costs and disbursements in
addition to any other relief to which it may be entitled.
7.10 SPECIFIC PERFORMANCE. Notwithstanding Section 7.9, the parties agree
that irreparable damage would occur in the event any provision of this
Agreement is not performed in accordance with the terms hereof, and that the
Company and VMAC shall be permitted to access the court system to obtain
injunctive relief and/or specific performance of the terms hereof.
7.11 FURTHER ACTION. VMAC shall have the right to setoff sums due it
hereunder from sums due the Company hereunder. Each of the parties shall use
all reasonable efforts to take, or cause to be taken, all appropriate action,
do or cause to be done all things reasonably necessary, proper or advisable
under applicable laws, and sign and deliver such documents and other papers,
as may be reasonably required to carry out the provisions of this Agreement,
and consummate and make effective the transactions contemplated by this
Agreement.
7.12 INTERPRETATION. As used in this Agreement, the term "person" shall mean
and include any individual, partnership, joint venture, corporation, trust,
unincorporated organization,
MSI - MERGER AGREEMENT - PAGE 34
and government or other department or agency thereof. Except to the extent
the context otherwise requires: (i) any reference to an Article, Section,
Schedule or Exhibit is a reference to an article, section, schedule or
exhibit of this Agreement; (ii) any reference to a section or a clause is,
unless otherwise stated, a reference to a section or a clause of the Section
or subsection in which the reference appears; (iii) the words "hereof",
"herein", "hereto" and the like mean and refer to this Agreement as a whole,
and not merely to the specific Article, Section, subsection, paragraph or
clause in which the respective word appears; (iv) the meaning of defined
terms shall be equally applicable to both the singular and plural forms of
the terms defined; (v) the words "including", "includes" and "include" shall
be deemed to always be followed by the words "without limitation"; (vi)
references to agreements and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications thereto; (vii)
references to statutes or regulations are to be construed as including all
statutory and regulatory provisions consolidating, amending or replacing the
statute or regulation referred to; (viii) any table of contents, captions and
headings are for convenience of reference only, and shall not affect the
construction of this Agreement; and (ix) in the computation of periods of
time from a specified date to a later specified date, the word "from" means
"from and including"; the words "to" and "until" each mean "to but
excluding"; and the word "through" means "to and including". No provision of
this Agreement shall be construed against or interpreted to the disadvantage
of any of the parties by any court or other authority by reason of that party
having drafted or proposed such provision.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
MSI - MERGER AGREEMENT - PAGE 35
7.13 ENTIRE AGREEMENT. This Agreement shall be deemed to include the
exhibits and schedules referred to herein. This Agreement, together with the
documents referred to herein, and the documents to be signed and delivered
hereunder contemporaneously with the Time of Closing embody the entire
agreement and understanding of the parties with respect to the subject matter
hereof, and supersede and extinguish all prior agreements, drafts,
representations and understandings, oral or written, relative to such subject
matter. Each of the parties hereby acknowledges that no representations,
inducements, promises or agreements, verbally or otherwise, have been made by
any of the parties, or anyone acting on behalf of any of the parties, which
are not embodied in this Agreement, and that no other agreement, statement or
promise not contained in this Agreement shall be valid or binding. Each of
the parties represents and warrants that it has fully familiarized itself
with this Agreement, and that such party has been fully authorized to sign
this Agreement, and all related documents. The parties agree that this
Agreement shall only be binding when signed by the parties in the blanks
immediately below. If the pages of this Agreement are initialed, such
initialing shall be solely for the purpose of identification. If initialing
is on some, but not all, of the pages of this Agreement, that absence of
initialing shall not affect the validity of this Agreement, to the extent it
is signed in the blanks immediately below.
* * *
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed and
delivered as of the day and year first above written.
VM1 Acquisition Corp. Mariner Systems, Inc.
/s/ Xxxx Xxxxxx /s/ Xxxxx X. Xxxxxx
-------------------------------- ------------------------------
Xxxx Xxxxxx Xxxxx X. Xxxxxx
President and CEO President
0000 Xxxxxxx Xxxx, Xxxxx 000 0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx Xxxxxxx, XX 00000 Xxxxxxx, Xxxxxxxx 00000
VantageMed Corporation
/s/ Xxxx Xxxxxx
--------------------------------
Xxxx Xxxxxx
President and CEO
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx Xxxxxxx, XX 00000
MSI - MERGER AGREEMENT - PAGE 34
7.13 ENTIRE AGREEMENT. This Agreement shall be deemed to include the
exhibits and schedules referred to herein. This Agreement, together with the
documents referred to herein, and the documents to be signed and delivered
hereunder contemporaneously with the Time of Closing embody the entire
agreement and understanding of the parties with respect to the subject matter
hereof, and supersede and extinguish all prior agreements, drafts,
representations and understandings, oral or written, relative to such subject
matter. Each of the parties hereby acknowledges that no representations,
inducements, promises or agreements, verbally or otherwise, have been made by
any of the parties, or anyone acting on behalf of any of the parties, which
are not embodied in this Agreement, and that no other agreement, statement or
promise not contained in this Agreement shall be valid or binding. Each of
the parties represents and warrants that it has fully familiarized itself
with this Agreement, and that such party has been fully authorized to sign
this Agreement, and all related documents. The parties agree that this
Agreement shall only be binding when signed by the parties in the blanks
immediately below. If the pages of this Agreement are initialed, such
initialing shall be solely for the purpose of identification. If initialing
is on some, but not all, of the pages of this Agreement, that absence of
initialing shall not affect the validity of this Agreement, to the extent it
is signed in the blanks immediately below.
* * *
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed and
delivered as of the day and year first above written.
VM1 Acquisition Corp. Mariner Systems, Inc.
_______________________________ __________________________________
Xxxx Xxxxxx Xxxxx X. Xxxxxx
President and CEO President
0000 Xxxxxxx Xxxx, Xxxxx 000 0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx Xxxxxxx, XX 00000 Xxxxxxx, Xxxxxxxx 00000
VantageMed Corporation
_______________________________
Xxxx Xxxxxx
President and CEO
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx Xxxxxxx, XX 00000
MSI - MERGER AGREEMENT - PAGE 36
