AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (hereinafter referred to
as the "Agreement")
is entered into this ___ day of February, 1996 by and among
CUSA
Technologies, Inc., a Nevada corporation ("CTI"), New
Medical Clearing
Corporation, a Utah corporation ("NewCo"), Medical Clearing
Corporation, an
Arizona corporation ("MCC"), and Xxxxxxx X. Brothers,
Xxxxxxx X. XxXxxxxxx,
Xxxxxx X. Xxxxxxxxx, and Xxxxxxx X. Brothers (collectively,
the
"Shareholders") based on the following:
PREMISES
A. CTI is a publicly-held corporation, involved, among
other things, in the
business of providing proprietary software systems to credit
unions and the
health care industry. MCC is a privately-held corporation
that develops and
markets software systems for the health care industry.
B. The Shareholders own one hundred percent (100%) of the
issued and
outstanding stock of MCC.
C. The parties have agreed that MCC will be acquired as a
wholly-owned
subsidiary of CTI, on the terms and conditions set forth in
this Agreement.
D. The acquisition of MCC by CTI shall be effected through
the merger of MCC
with and into NewCo, a newly formed, wholly-owned subsidiary
of CTI, with
NewCo as the surviving entity. In connection with the
transaction, the
outstanding shares of common stock of MCC will be canceled
in exchange for
shares of restricted common voting stock of CTI, cash, and a
note, all for the
purposes of accomplishing a "reorganization" pursuant to
Sections 368(a)(1)(A)
and 368 (a)(2)(D) of the Code. After consummation of the
transaction, NewCo
shall succeed to the business, assets, and liabilities of
MCC and shall
thereafter continue business as a wholly-owned subsidiary of
CTI.
AGREEMENT
NOW, THEREFORE, based on the stated premises, and for and in
consideration of
the mutual covenants and agreements hereinafter set forth
and the mutual
benefits to the parties to be derived therefrom, it is
hereby agreed as
follows:
ARTICLE I
DEFINITIONS
When used herein, the following terms shall have the
meanings indicated:
Section 1.01 Agreement. This Agreement and Plan of
Merger, all Schedules
and Exhibits hereto and all amendments, modifications, and
supplements hereto.
Section 1.02 Closing. The consummation of the transactions
contemplated by
this Agreement.
Section 1.03 Closing Date. The date on which Closing
occurs.
Section 1.04 Code. The Internal Revenue Code of 1986, as
amended.
Section 1.05 CTI Common Stock. The authorized common
stock, par value $0.001
per share, of CTI.
Section 1.06 CTI Preferred Stock. The authorized
preferred stock, par value
$0.001 per share, of CTI.
Section 1.07 Effective Date. The date as set forth in the
closing memorandum
between the parties.
Section 1.08 Exchange Act. The Securities Exchange Act of
1934, as amended.
Section 1.09 Exchanged CTI Stock. The shares of CTI Common
Stock to be
issued and delivered by CTI to the Shareholders pursuant to
this Agreement.
Section 1.10 GAAP. Generally accepted accounting
principles, as in effect on
the Effective Date, applied on a consistent basis.
Xxxxxxx 0.00 XXX. Xxx Xxxxxx Xxxxxx Securities and
Exchange Commission.
Section 1.12 Securities Act. The Securities Act of 1933,
as amended.
Section 1.13 MCC Stock. The 2,500 shares of common stock
of MCC, owned by
the shareholders, no par value, currently issued and
outstanding, which are
to be converted into shares of Exchanged CTI Stock pursuant
to the terms of
this Agreement.
Section 1.14 Shareholders. Xxxxxxx X. Brothers, Xxxxxxx X.
XxXxxxxxx, Xxxxxx
X. Xxxxxxxxx, and Xxxxxxx X. Brothers, who own one hundred
percent (100%) of
the issued and outstanding shares of MCC Stock that will be
converted into
shares of Exchanged CTI Stock pursuant to the terms of this
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF MCC
AND THE SHAREHOLDERS
As an inducement to, and to obtain the reliance of CTI and
NewCo, MCC and the
Shareholders each represent and warrant that the following
are true to the
best of their knowledge:
Section 2.01. Organization. MCC is a corporation duly
organized, validly
existing, and in good standing under the laws of the State
of Arizona and has
the corporate power to own all of its properties and assets
and to carry on
its business in all material respects as it is now being
conducted, and there
is no jurisdiction in which it is not qualified in which the
character and
location of the assets owned by it or the nature of the
business transacted by
it requires qualification, except where failure to do so
would not have a
material adverse effect on the business or properties of
MCC. Included in the
MCC Schedules (as hereinafter defined) are complete and
correct copies of the
articles of incorporation and bylaws of MCC as in effect on
the date hereof.
The execution and delivery of this Agreement does not, and
the consummation of
the transactions contemplated by this Agreement in
accordance with the terms
hereof will not, violate any provision of MCC's articles of
incorporation or
bylaws.
Section 2.02 Approval of Agreement. The board of directors
of MCC and the
Shareholders have authorized the execution and delivery of
this Agreement by
MCC and have approved the consummation of the transactions
contemplated
hereby. Included in the MCC Schedules is a copy of the
resolutions duly
adopted by the board of directors of MCC and the
Shareholders evidencing such
approval. Such consent has not been amended, modified,
rescinded or
superseded and remains in full force and effect. MCC has
full power,
authority, and legal right, and has taken all action
required by law, its
articles of incorporation and bylaws, and otherwise, to
execute and deliver
this Agreement and to consummate the transactions
contemplated hereby.
Section 2.03 Authority of Shareholders. Each of the
Shareholders has the
right and authority, without the prior consent of any other
person or entity,
to enter into this Agreement and consummate the transactions
contemplated
hereby. There is no lien, encumbrance or claim by any third
person with
respect to the MCC Stock owned by the Shareholders.
Section 2.04 Capitalization of MCC. The entire authorized
capital stock of
MCC consists of 10,000,000 shares of common stock, no par
value, of which
2,500 shares are validly issued and outstanding. All of
the issued and
outstanding MCC Stock is owned by the Shareholders. No
shares of MCC Stock
are reserved for issuance on the exercise of warrants or the
conversion of
other securities or the exercise of any other call,
commitment or right to
which MCC or any of the Shareholders are a party or to which
any of them are
subject. All issued and outstanding shares have been duly
authorized and
validly issued, are fully paid, and nonassessable, and have
not been issued in
violation of any preemptive or other right of any person.
Section 2.05 Subsidiaries and Predecessor. MCC has no
subsidiaries or any
predecessor corporation as that term is defined by GAAP.
Section 2.06 Financial Statements.
(a) Included in the MCC Schedules are the unaudited balance
sheets of MCC as
of December 31, 1995 and 1994, and the related unaudited
statements of income
and retained earnings for the years then ended.
(b) Such financial statements have been prepared in
accordance with GAAP,
except as disclosed in the MCC Schedules. MCC did not have,
as of the date of
any of such balance sheets, except as and to the extent
reflected or reserved
against therein, any labilities or obligations (absolute or
contingent) which
should have been reflected in a combined balance sheet
prepared in accordance
with GAAP and all assets reflected therein present fairly
the assets of MCC,
in accordance with GAAP. The statements of income fairly
present the
information required to be set forth therein in accordance
with GAAP. MCC
maintains a standard system of accounting established and
maintained in a
manner permitting the preparation of financial statements in
accordance with
GAAP.
(c) The books and records of MCC and its accounting
practices are sufficient
to permit the preparation of audited financial statements
for the periods
subsequent to December 31, 1993, in accordance with GAAP and
Regulation S-B
adopted under the Exchange Act. MCC will maintain and
preserve its books and
records in such a fashion so as to permit the preparation of
historical
audited financial statements as may be required by the
Exchange Act and the
rules and regulations adopted thereunder. MCC and the
Shareholders will each
cooperate fully and assist in the preparation of any such
financial
statements, at the cost of CTI.
(d) MCC has filed all tax returns and all reports required
by law. All such
returns and reports are accurate and correct in all material
respects. There
are no income taxes currently due to the federal or state
governments that
have not been paid. MCC does not have any liabilities with
respect to the
payment of any federal, state, county, local or other taxes
(including any
deficiencies, interest or penalties) accrued for or
applicable to the period
ended on the date of the most recent balance sheet included
in the MCC
Schedules and all such dates and years and periods prior
thereto and for which
MCC may at said date have been liable in its own right or as
transferee of the
assets of, or as a successor to, any other corporation or
other entity, except
for taxes accrued but not yet due and payable. None of such
federal income
returns have been audited or is currently being audited by
the Internal
Revenue Service. MCC has not made any election pursuant to
the Code (other
than elections which relate solely to methods of accounting,
depreciation or
amortization) which would have a material adverse effect on
MCC, its financial
conditions, its business as presently conducted or as
proposed to be conducted
or any of its properties or material assets. There are no
outstanding
agreements or waivers extending the statutory period of
limitations applicable
to any tax returns of MCC.
(e) The books and records, financial and otherwise, of MCC
are in all
material respects complete and correct and have been made
and maintained in
accordance with sound business and bookkeeping practices
and, in reasonable
detail, accurately and fairly reflect the transactions
involving the assets of
MCC. MCC has maintained a system of internal accounting
controls sufficient
to provide reasonable assurance that (i) transactions have
been and are
executed in accordance with management's general or specific
authorization;
(ii) transactions are recorded as necessary to permit the
preparation of
financial statements in conformity with GAAP or any other
criteria applicable
to such statements and to maintain accountability for
assets; (iii) access to
assets is permitted only in accordance with management's
general or specific
authorization; and (iv) the recorded accountability for
assets is compared
with the existing assets at reasonable intervals, and
appropriate action is
taken with respect to any differences.
(f) Except as set forth in the MCC Schedules, the latest of
the balance
sheets included in the MCC Schedules or in the notes
thereto, MCC (i) has good
and marketable title to its accounts receivable, and other
debts due or
recorded in the records and books of account of MCC, free of
any security
interests or liens and free of any material defenses,
counterclaims, and set-
offs, and all of such accounts receivable, invoices, and
debts are actual and
bona fide amounts due MCC for the total dollar amount
thereof shown on the
books of MCC and resulted from the regular course of
business; and (ii) the
accounts receivable, invoices, and debts set forth on the
MCC balance sheets
arose in the ordinary course of business and are, net of any
reserves shown on
the balance sheet, collectible in full in all material
respects on the
continuation of reasonable collection efforts by MCC or
successor personnel
and without resorting to litigation and in any event not
later than one
hundred eighty (180) days after the date billed.
Section 2.07 Information. The information concerning MCC
set forth in this
Agreement and in the MCC Schedules is accurate in all
material respects and
does not contain any untrue statement of a material fact or
omit to state a
material fact required to make the statements made, in light
of the
circumstances under which they were made, not misleading.
Section 2.08 Options or Warrants. There are no existing
warrants, calls,
commitments or other rights of any character relating to
authorized and
unissued MCC Stock or other securities of MCC.
Section 2.09 Absence of Certain Changes or Events. Except
as set forth in
this Agreement or in the MCC Schedules, since the date of
the most recent
balance sheet included in the MCC Schedules:
(a) There has not been (i) any material adverse change in
the business,
operation, assets or financial condition of MCC; or (ii) any
damage,
destruction or loss to MCC (whether or not covered by
insurance) materially
and adversely affecting the business, operations, assets or
financial
condition of MCC;
(b) MCC has not (i) amended its article of incorporation or
bylaws; (ii)
declared or made, or agreed to declare and make, any payment
of dividends or
distributions of any assets of any kind whatsoever to
shareholders or
purchased or redeemed, or agreed to purchase or redeem, any
of its capital
stock; (iii) waived any rights of value which in the
aggregate are
extraordinary or material considering the business of MCC;
(iv) made any
material change in its method of management, operation or
accounting; (v)
entered into any other material transactions; (vi) made any
accrual or
arrangement for or payment of bonuses or special
compensation of any kind or
any severance or termination pay to any present or former
officer, employee or
shareholder; (vii) increased the rate of compensation
payable or to become
payable by it to any of its officers or directors or any of
its employees
whose monthly compensation exceeds Five Thousand Dollars
($5,000); or (viii)
made any increase in any profit sharing, bonus, deferred
compensation,
insurance, pension, retirement or other employee benefit
plan, payment or
arrangement made to, for, or with its officers, directors or
employees;
(c) MCC has not (i) granted or agreed to grant any options,
warrants or other
rights for its stocks, bonds or other corporate securities
calling for the
issuance thereof; (ii) borrowed or agreed to borrow any
funds or incurred, or
become subject to, any material obligation or liability
(absolute or
contingent) except liabilities incurred in the ordinary
course of business;
(iii) paid any material obligation or liability (absolute or
contingent) other
than current liabilities; (iv) sold or transferred, or
agreed to sell or
transfer, any of its assets, properties or rights (except
assets, properties
or rights not used or useful in its business which, in the
aggregate have a
value of less than Five Thousand Dollars ($5,000) or assets,
properties or
rights disposed of in the ordinary course of business); (v)
made or permitted
any amendment or termination of any contract, agreement or
license to which it
is a party if such amendment or termination is material,
considering the
business of MCC; or (vi) issued, delivered or agreed to
issue or deliver any
stock, bonds or other corporate securities including
debentures (whether
authorized and unissued or held as treasury stock); and
(d) MCC has not become subject to any law or regulation
which materially and
adversely affects the business, operation, properties,
assets or financial
condition of MCC.
Section 2.10 Title to Personal and Real Property.
(a) Except as disclosed in the most recent balance sheet
included in the MCC
Schedules, MCC has title to all of its properties,
inventory, know-how,
interests in properties, and assets, which are reflected in
such balance sheet
or acquired after that date (except those sold or otherwise
disposed of since
such date in the ordinary course of business) or are used in
MCC's business,
free and clear of all material mortgages, security
interests, royalties,
liens, pledges, charges or encumbrances, except (i)
statutory liens or claims
not yet delinquent; (ii) such imperfections of title and
easements as do not
and will not materially detract from or interfere with the
present or proposed
use of the properties subject thereto or affected thereby or
otherwise
materially impair present business operations on such
properties; and (iii) as
described on the MCC Schedules. All personal property held
by MCC is in a
state of good maintenance and repair, excepting reasonable
wear and tear, and
is adequate and suitable for the purposes for which it is
presently being
used.
(b) MCC does not own any real property in fee simple.
(c) Included in the MCC Schedules is an accurate and
complete list of all
personal property owned by MCC or used in its business and
having a purchase
price of over Five Thousand Dollars ($5,000), together with
a description of
any mortgages, financing instruments or other encumbrances
to the title to
such properties. Also included in the MCC Schedules are
copies of all leases
for real and personal property to which MCC is a party.
Except as disclosed
in the MCC Schedules, each such lease is in full force and
effect; all rents
and additional fees due to date on each such lease have been
paid; in each
case, the lessee has been in peaceable possession since the
commencement of
the original term of such lease and is not in default
thereunder and no
waiver, indulgence of postponement of the lessee's
obligations thereunder has
been granted by the lessor; and there exists no event of
default or event,
occurrence, condition or act, which, with the giving of
notice, the lapse of
time or the happening of any further event or condition,
would become a
default under such lease, the occurrence of which would have
a material
adverse affect on MCC. Except as set forth in the MCC
Schedules, MCC has not
violated any of the terms or conditions under any such lease
in any material
respect, and all of the material covenants to be performed
by any other party
under any such lease have been fully performed. The
property leased by MCC is
in a state of good maintenance and repair, excepting
reasonable wear and tear,
and is suitable for the purposes for which it is presently
being used.
Section 2.11 Intellectual Property. MCC owns the entire
right, title and
interest in and to its proprietary intellectual property
listed in the MCC
Schedules, including all of the trade secrets, technology,
know-how, trade
names, trademarks, service marks, copyrights, patents,
patent applications,
registrations, and applications with respect thereto, and
other proprietary
information owned or used in connection with its
business(collectively, the
("Intellectual Property"). Except as set forth in the MCC
Schedules, such
Intellectual Property is not subject to the payment of
royalties or the
performance of any other obligation owed to any person or
entity. Neither the
Shareholders nor any other employee or former employee of
MCC owns, directly
or indirectly, any right, title or interest in or to the
Intellectual
Property. None of the Intellectual Property is subject to
any material order,
decree, judgment, stipulation, settlement, encumbrance or
attachment. There
are no pending or threatened proceedings, litigation or
other adverse claims
of which MCC is aware, affecting or with respect to the
Intellectual Property.
The Intellectual Property does not infringe on the
copyright, patent, trade
secret, know-how or other proprietary right of any other
person or entity and
comprises all such rights necessary to permit the operation
of the business of
MCC as now being conducted and as proposed to be conducted.
Section 2.12 Litigation and Proceedings. There are no
actions, suits or
proceedings pending or, to the knowledge of MCC and the
Shareholders,
threatened by or against MCC or affecting MCC or its
properties, at law or in
equity, before any court or other governmental agency or
instrumentality,
domestic or foreign, or before any arbitrator of any kind.
MCC is not in
material default with respect to any judgment, order, writ,
injunction,
decree, award, rule or regulation of any court, arbitrator,
governmental
agency or instrumentality.
Section 2.13 Contracts.
(a) Included in the MCC Schedules is a description of every
contract,
agreement, distributorship, franchise, license or other
agreement, arrangement
or commitment to which MCC is a party or by which its assets
or properties are
bound, which calls for the payment by MCC of more than Two
Thousand Dollars
($2,000) per month, or Twenty-Four Thousand Dollars
($24,000) in the
aggregate;
(b) Except as described in this Agreement or the MCC
Schedules, MCC is not a
party to or bound by, and the properties of MCC are not
subject to, any
contract, agreement, other commitment or instrument or other
corporate
restriction or any judgment, order, writ, injunction, decree
or award which
materially and adversely affects, or in the future may (as
far as MCC can now
reasonably foresee) materially and adversely affect, the
business operations,
properties, assets or financial condition of MCC; and
(c) Except as included or described in the MCC Schedules or
reflected in the
most recent MCC balance sheet, MCC is not a party to any
oral or written (i)
contract for the employment of any officer, director or
employee, whose
compensation is greater than Five Thousand Dollars ($5,000)
per month, which
is not terminable on thirty (30) days (or less) notice; (ii)
profit sharing,
bonus, deferred compensation, stock option, severance pay,
pension benefit or
retirement plan, agreement or arrangement covered by Title
IV of the Employee
Retirement Income Security Act, as amended; (iii) agreement,
contract or
indenture relating to the borrowing of money in amounts
greater than One
Thousand Dollars ($1,000) in the aggregate; (iv) guarantee
of any obligation
for the borrowing of money or otherwise, excluding
endorsements made for
collection and other guarantees of obligations, which, in
the aggregate, do
not exceed One Thousand Dollars ($1,000); (v) consulting or
other similar
contracts with an unexpired term of more than one (1) year
or providing for
payments in excess of One Thousand Dollars ($1,000) in the
aggregate; (vi)
collective bargaining agreement; (vii) agreement with any
present or former
officer or director of MCC whose compensation was or is
greater that Five
Thousand Dollars ($5,000) per month; or (viii) other
contract, agreement or
other commitment involving payments by it in the future of
more than Ten
Thousand Dollars ($10,000) in the aggregate per agreement.
Section 2.14 Material Contract Defaults. MCC is not in
default in any
material respect under the terms of any outstanding
contract, agreement, lease
or other commitment which is material to the business,
operations, properties,
assets or financial condition of MCC, and there is no event
of default or
other event which, with notice or the lapse of time or both,
would constitute
a default in any material respect under any such contract,
agreement, lease or
other commitment in respect of which MCC has not taken
adequate steps to
prevent such default occurring.
Section 2.15 Insurance Claims. During the last (3) three
years, MCC has not
filed any claims for damages, whether or not covered by
insurance, for amounts
greater than Five Thousand Dollars ($5,000). MCC and the
Shareholders are not
currently aware of any pending or unasserted claims.
Section 2.16 No Conflict with Other Instruments. The
execution of this
Agreement and the consummation of the transactions
contemplated by this
Agreement will not result in the breach of any term or
provision of, or
constitute an event of default under, any material
indenture, mortgage, deed
of trust or other material contract, agreement or instrument
to which MCC is a
party or to which any of its properties or operations are
subject, which would
have a material adverse affect on MCC.
Section 2.17 Governmental Authorizations. MCC has all
licenses, franchises,
permits, and other governmental authorizations that are
legally required to
enable it to conduct its business in all material respects
as conducted on the
date hereof or as presently contemplated. Except for
compliance with federal
and state securities and corporation laws, as hereinafter
provided, no
authorization, approval, consent or order of, or
registration, declaration or
filing with, any court or other governmental body is
required in connection
with the execution and delivery by MCC of this Agreement and
the consummation
by MCC of the transactions contemplated hereby.
Section 2.18 Compliance with Laws and Regulations. MCC has
complied with all
applicable statutes and regulations of all federal, state or
other
governmental entity or agency thereof, except to the extent
that noncompliance
would not materially and adversely affect the business,
operations,
properties, assets or financial condition of MCC or except
to the extent that
noncompliance would not result in the incurrence of any
material liability of
MCC. Included in the MCC Schedules is a copy of each letter
of inquiry,
review or investigation or other writing from or to any
governmental
authority, evidencing a violation or possible or alleged
violation of any of
the foregoing.
Section 2.19 Insurance. Included in the MCC Schedules is a
complete list of
all business liability, casualty, automobile, extended
coverage, and other
insurance policies which MCC maintains respecting its
products, services,
business, properties, and employees, showing for each type
of coverage the
policy limits, principal exclusions, deductibles, insurer,
premiums, term, and
other relevant information. Such policies are in full force
and effect and
are free from any right of termination by the insurance
carriers. All of the
insurable properties of MCC are insured for its benefit in
the amount of their
full replacement value (subject to reasonable deductibles)
against losses due
to fire and other casualty, with extended coverage, and
other risks
customarily insured against by persons operating similar
properties in the
localities where such properties are located and under valid
and enforceable
policies issued by insurers of recognized responsibility.
Section 2.20 Transactions with Affiliates. Set forth in
the MCC Schedules is
a description of every contract, agreement or arrangement
between MCC and any
person who is or has ever been during the previous three (3)
years an officer
or director of MCC or person owning of record, or known to
MCC to own
beneficially, five percent (5%) or more of the issued and
outstanding common
stock of MCC and which is to be performed in whole or in
part after the date
hereof. In all of such circumstances, the contract,
agreement or arrangement
was for a bona fide business purpose of MCC and the amount
paid or received,
whether in cash, services or in kind, was, has been during
the full term
thereof, and is required to be during the unexpired portion
of the term
thereof, no less favorable to MCC than terms available from
otherwise
unrelated parties in arms' length transactions. Except as
set forth in the
MCC Schedules or otherwise disclosed herein, no officer or
director of MCC or
five percent (5%) shareholder of MCC has, or has had since
the inception of
MCC, any interest, directly or indirectly, in any material
transaction with
MCC. The MCC Schedules also include a description of any
commitment by MCC,
whether written or oral, to lend any funds to, borrow any
money from, or enter
into any other material transaction with, any such
affiliated person.
Section 2.21 Labor Agreements and Actions. MCC is not
bound by or subject to
(and none of its assets or properties is bound by or subject
to) any written
or oral, express or implied, contract, commitment or
arrangement with any
labor union, and no labor union has requested or sought to
represent any of
the employees, representatives or agents of MCC. There is
no strike or other
labor dispute involving MCC pending or threatened, which
could have a material
adverse effect on the assets, properties, financial
condition, operating
results or business of MCC or (as such business is presently
conducted and it
is proposed to be conducted), and MCC is not aware of any
labor organization
activity involving its employees. MCC is not aware that any
officer or key
employee, or that any group of key employees, intends to
terminate their
employment with MCC, nor does MCC have a present intention
to terminate the
employment of any of the foregoing. Except as set forth in
the MCC Schedules,
the employment of each officer and employee of MCC is
terminable at the will
of MCC.
Section 2.22 Pension Reform Act of 1974. Except as set
forth in the MCC
Schedules, MCC does not have any unfunded pension liability
to the Pension
Benefit Guaranty Corporation or any other person or entity
in connection with
any retirement, pension plan or similar arrangement.
Section 2.23 Hazardous Substances.
(a) The following words and phrases shall have the meanings
indicated:
(i) "Current Actual Knowledge" shall mean that no
information that would give
MCC actual knowledge of the inaccuracy of any statements has
come to the
attention of MCC and/or its directors and officers; however,
no special or
independent investigation has been undertaken to determine
the accuracy of
such statements.
(ii) "Environment" shall mean soil, surface waters, ground
waters, land,
stream sediments, surface or subsurface strata, ambient air,
and any
environmental medium.
(iii) "Environmental Law" shall mean any environmental
related law,
regulation, rule, ordinance or bylaw at the federal, state
or local level
existing as of the date hereof.
(iv) "Hazardous Material" shall mean any pollutant, toxic
substance,
hazardous waste, hazardous material, hazardous substance or
oil as currently
defined in the ReMCC Conservation and Recovery Act, as
amended, the
Comprehensive Environmental Response, Compensation, and
Liability Act, as
amended, the Federal Clean Water Act, as amended, and any
other federal, state
or local environmental law, regulation, ordinance, rule or
bylaw existing as
of the date hereof.
(v) "Permit" shall mean any environmental permit, license,
approval, consent
or authorization issued by a federal, state or local
governmental authority.
(vi) "Release" shall mean any releasing, spilling, leaking,
pumping, pouring,
emitting, emptying, discharging, injecting, escaping,
leaching, disposing or
dumping into the Environment.
(vii) "Threat of Release" shall mean a substantial
likelihood of a Release
which requires action to prevent or mitigate damage to the
Environment which
may result from such Release.
(b) To MCC's Current Actual Knowledge, MCC:
(i) Does not have any material liability under any
Environmental Laws
applicable to its operations;
(ii) Possesses all Permits that are applicable to its
operations; and
(iii) Has not been involved in a Release or Threat of
Release involving any
Hazardous Material.
(c) MCC has not violated any Environmental Laws applicable
to its operation,
the violation or noncompliance with which would have a
material adverse effect
on MCC.
(d) MCC has not:
(i) Entered into or been subject to any consent decree,
compliance order or
administrative order with respect to its properties or any
facilities or
operation thereon:
(ii) Received written notice under the citizen suit
provision of any
violation of any Environmental Law in connection with its
properties or any
facilities of operation thereon;
(iii) Received any written request for information, notice,
demand letter,
administrative inquiry or claim with respect to a violation
of any
Environmental Law relating to its properties or any
facilities or operation
thereon; or
(iv) Been subject to or threatened in writing with any
governmental or
citizen enforcement action with respect to a violation of
any Environmental
Law on its properties or at any facilities or operation
thereon.
Section 2.24 MCC Schedules. MCC has delivered to CTI the
following
schedules, which are collectively referred to as the "MCC
Schedules." The MCC
Schedules shall be updated through the Closing Date and
shall be certified by
the chief executive officer of MCC as complete, true, and
accurate:
(a) A schedule including copies of the articles of
incorporation and bylaws
of MCC in effect as of the date of this Agreement referred
to in Section 2.01;
(b) A schedule containing copies of resolutions adopted by
the board of
directors of MCC and the Shareholders approving this
Agreement and the
transactions herein contemplated as referred to in Section
2.02;
(c) A schedule including the financial statements
identified in Section 2.06;
(d) A schedule including copies of all federal income tax
returns filed for
the year ended December 31, 1994, identified in Section
2.06;
(e) A schedule listing the accounts receivable and notes
and other
obligations receivable of MCC as of the date of the most
recent balance sheet
included in the MCC Schedules or that arose thereafter other
than in the
ordinary course of business, indicating the debtor and
amount, classifying the
accounts to show in reasonable detail the length of time, if
any, overdue, and
stating the nature and amount of any refunds, set-offs,
reimbursements,
discounts or other adjustments, which in the aggregate are
greater that
$1,000, due to or claimed by such debtors;
(f) A schedule listing the accounts payable and notes and
other obligations
payable of MCC as of the date of the most recent balance
sheet included in the
MCC Schedules or that arose thereafter other than in the
ordinary course of
business of MCC, indicating the creditor and amount,
classifying the accounts
to show in reasonable detail the length of time, if any,
overdue, and stating
the nature and amount of any refunds, set-offs,
reimbursements, discounts or
other adjustments, which in the aggregate are greater than
One Thousand
Dollars ($1,000), payable by MCC to any one such creditor;
(g) A schedule setting forth a description of any material
adverse change in
the business, operations, property, assets or financial
condition of MCC since
the most recent balance sheet included in the MCC Schedules,
required to be
provided pursuant to Section 2.09 hereof;
(h) Copies of all agreements or arrangements and all
written statements of
practice followed with regard to the payment of
compensation, bonuses,
deferred compensation, profit sharing, pension, vacation,
retirement or other
compensation benefits to officers, directors or employees
whose monthly
compensation exceeds Five Thousand Dollars ($5,000) ( and
descriptions of any
such agreements, arrangements or practices which are not in
writing), together
with a schedule setting forth the name and identification of
each officer,
director or employee whose monthly compensation exceeds Five
Thousand Dollars
($5,000) and of each former officer or former employee of
MCC who is currently
being paid or who is entitled to, or may become entitled to,
compensation in
amounts greater than Five Thousand Dollars ($5,000) per
month of any of such
compensation benefits and the rate or amounts thereof and
showing the nature
of any family relationship of such person to each
Shareholder;
(i) A schedule containing a description of all personal
property owned by MCC
and used in its business and having a purchase price of over
Ten Thousand
Dollars ($10,000), including a description of every material
mortgage,
financing instrument or encumbrance to which such personal
property of MCC is
subject (except statutory liens or claims not yet delinquent
and except liens,
claims, encumbrances or equities which do not or in the
future will not
materially detract from or interfere with the present or
proposed use of the
property subject thereto or affected thereby);
(j) A schedule containing a description of each lease,
rental agreement or
similar instrument, including a description of each oral
arrangement;
(k) A schedule setting forth the litigation and proceedings
as referred to in
Section 2.12;
(l) A schedule listing all material contracts, agreements,
franchises,
license agreements or other commitments to which MCC is a
party or by which
its properties are bound, as referred to in Section 2.14,
but excluding those
with affiliates which are described in Section 2.21;
(m) A schedule of any insurance claims as referred to in
Section 2.15;
(n) Copies of all licenses, permits, and other governmental
authorizations
(or requests or applications therefor) pursuant to which MCC
carries on or
proposes to carry on its business (except those which are
immaterial to the
present or proposed business of MCC), as referred to in
Section 2.17;
(o) A schedule describing the matters regarding compliance
with laws and
regulations, as referred to in Section 2.18;
(p) A schedule showing details of all insurance coverage as
referred to in
Section 2.19;
(q) A schedule containing a description of all material
contracts, leases,
agreements, and other instruments between MCC and any
affiliates, as referred
to in Section 2.20;
(r) A schedule showing the name and location of each bank
or other
institution in which MCC has an account or safe deposit box,
and the names of
all persons authorized to draw thereon or to have access
thereto;
(s) Copies of all powers of attorney given by MCC now in
effect or to be in
effect; and
(t) A schedule setting forth any other information,
together with any
required copies of documents, required to be disclosed in
the MCC Schedules by
Sections 2.01 through 2.23.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF CTI AND NEWCO
As an inducement to, and to obtain the reliance of MCC and
the Shareholders,
CTI and NewCo each represent and warrant as follows:
Section 3.01. Organization. CTI and NewCo are corporations
duly organized,
validly existing, and in good standing under the laws of the
States of Nevada
and Utah, respectively, and each has the corporate power to
own all of its
properties and assets and to carry on its business in all
material respects as
it is now being conducted, and there is no jurisdiction in
which either is not
qualified in which the character and location of the assets
owned by either of
them or the nature of the business transacted by either of
them requires
qualification, except where failure to do so would not have
a material adverse
effect on the business or properties of CTI. Included in
the CTI Schedules
(as hereinafter defined) are complete and correct copies of
the articles of
incorporation and bylaws of CTI and NewCo as in effect on
the date hereof.
The execution and delivery of this Agreement does not, and
the consummation of
the transactions contemplated by this Agreement in
accordance with the terms
hereof will not, violate any provision of CTI's or NewCo's
articles of
incorporation or bylaws.
Section 3.02 Approval of Agreement. The boards of
directors of CTI and NewCo
have authorized the execution and delivery of this Agreement
by CTI and NewCo
and have approved the consummation of the transactions
contemplated hereby.
Included in the CTI Schedules are copies of resolutions
duly adopted by the
boards of directors of CTI and NewCo evidencing such
approval. Such
resolutions have not been amended, modified, rescinded or
superseded and
remains in full force and effect. Each of CTI and NewCo has
full power,
authority, and legal right, and has taken all action
required by law, its
articles of incorporation, its bylaws, and otherwise, to
execute and deliver
this Agreement and to consummate the transactions
contemplated hereby.
Section 3.03 Authority of CTI and NewCo. Except as set
forth in the CTI
Schedules, each of NewCo and CTI has the right and
authority, without the
prior consent of any other person or entity, to enter into
this Agreement and
consummate the transactions contemplated hereby.
Section 3.04 Capitalization of CTI The authorized
capitalization of CTI
consists of 5,000,000 shares of preferred stock, par value
$0.001 per share,
of which 1,000,000 shares are issued and outstanding, and
25,000,000 shares of
common stock, par value $0.001 per share, of which 8,654,846
shares are issued
and outstanding. In addition, CTI has reserved 3,008,573
shares of common
stock for issuance on the exercise of outstanding and
committed options,
delivery of shares on a relocation agreement, the conversion
of the issued and
outstanding CTI Preferred Stock, and exercise of options
pursuant to its
Employee Stock Purchase Plan. All issued and outstanding
shares of CTI Common
Stock are validly authorized, legally issued, fully paid,
and nonassessable
and not issued in violation of any preemptive or other right
of any person.
All shares of Exchanged CTI Common Stock to be issued
pursuant to this
Agreement are validly authorized and will be, when issued,
legally issued,
fully paid, and nonassessable and not issued in violation of
any preemptive or
other right of any person.
Section 3.05 Subsidiaries and Predecessor. CTI was
formerly known as
Mountain Surgical Centers, Inc., which was formerly known as
Dimension
Capital. CTI has sixteen (16) wholly-owned subsidiaries,
some of which have
second-tier subsidiaries.
Section 3.06 Financial Statements.
(a) Included in the CTI Schedules is the audited balance
sheet of CTI as of
June 30, 1995, and the related audited statements of
earnings, stockholders'
equity, and cash flows for each of the two (2) fiscal years
ended June 30,
1995, and 1994, including the notes thereto, together with
the related
opinions of the independent certified public accountants of
CTI. Also
included are the unaudited balance sheet as of September 30,
1995, and the
related unaudited statements of earnings and cash flows for
the three months
ended September 30, 1995, and 1994.
(b) All such financial statements have been prepared in
accordance with GAAP
consistently applied throughout the periods involved. The
balance sheets of
CTI present fairly, as of their respective dates, the
financial position of
CTI. CTI did not have, as of the date of any of said CTI
balance sheets,
except as and to the extent reflected or reserved against
therein, any
liabilities or obligations (absolute or contingent) which
should have been
reflected in a balance sheet or the notes thereto prepared
in accordance with
GAAP, and all assets reflected therein present fairly the
assets of CTI, in
accordance with GAAP. The statements of operations,
stockholders' equity, and
cash flows present fairly the information required to be
set forth therein
under GAAP. CTI has maintained and will continue to
maintain a standard
system of accounting established and maintained in a manner
permitting the
preparation of financial statements in accordance with GAAP.
(c) All such financial statements have been prepared in
accordance with
Regulation S-B promulgated by the SEC regarding the form and
content of
requirements for financial statements to be filed with the
SEC.
Section 3.07 Information. The information concerning CTI
set forth in this
Agreement and in the CTI Schedules and in all filings and
reports made by CTI
with and to the SEC is complete and accurate in all material
respects and, as
of the date of such information, does not contain any
untrue statement of a
material fact or omit to state a material fact required to
make the statements
made, in light of the circumstances under which they were
made, not
misleading.
Section 3.08 Options or Warrants. There are no existing
warrants, calls,
commitments or other rights of any character relating to
authorized and
unissued CTI stock, except (a) options, warrants, calls or
commitments, if
any, to which CTI is not a party and by which it is not
bound; (b) options to
acquire an aggregate of not more than 2,000,000 shares of
CTI Common Stock;
(c) conversion rights held by the holders of CTI Preferred
Stock to convert
such stock into an aggregate of 667,000 shares of CTI Common
Stock; and (d) an
aggregate of 483,333 shares of CTI Common Stock for
convertible debt.
Section 3.09 Absence of Certain Changes or Events. Except
as set forth in
this Agreement or in the CTI Schedules, since the date of
the most recent CTI
balance sheet described in Section 3.06 and included in the
CTI Schedules:
(a) There has not been (i) any material adverse change in
the business,
operation, assets or condition of CTI; or (ii) any damage,
destruction or loss
to CTI (whether or not covered by insurance) materially and
adversely
affecting the business, operations, assets or conditions of
CTI;
(b) CTI has not (i) amended its article of incorporation or
bylaws; (ii)
declared or made, or agreed to declare and make, any payment
of dividends or
distributions of any assets of any kind whatsoever to
shareholders or
purchased or redeemed, or agreed to purchase or redeem, more
than 50,000
shares any of its capital stock; (iii) waived any rights of
value which in the
aggregate are extraordinary or material considering the
business of CTI; or
(iv) made any material change in its method of management,
operation or
accounting which is material to CTI;
(c) CTI has not (i) granted or agreed to grant any
options, warrants or
other rights for its stocks, bonds or other corporate
securities calling for
the issuance thereof; (ii) borrowed or agreed to borrow any
funds or incurred,
or become subject to, any material obligation or liability
(absolute or
contingent) except liabilities incurred in the ordinary
course of business;
(iii) paid any material obligation or liability (absolute or
contingent) other
than current liabilities reflected in or shown on the most
recent CTI balance
sheet and current liabilities incurred since that date in
the ordinary course
of business; (iv) sold or transferred, or agreed to sell or
transfer, any of
its assets, properties or rights (except assets, properties
or rights not used
or useful in its business which, in the aggregate have a
value of less than
Ten Thousand Dollars ($10,000) or assets, properties or
rights disposed of in
the ordinary course of business); (v) made or permitted any
amendment or
termination of any contract, agreement or license to which
it is a party if
such amendment or termination is material, considering the
business of CTI; or
(vi) issued, delivered or agreed to issue or deliver any
stock, bonds or other
corporate securities including debentures (whether
authorized and unissued or
held as treasury stock); and
(d) To the best knowledge of CTI, CTI has not become
subject to any law or
regulation which materially and adversely affects, or in the
future may
materially and adversely affect, the business, operation,
properties, assets
or financial condition of CTI.
Section 3.10 Litigation and Proceedings. There are no
actions, suits or
proceedings pending or, to the best knowledge of CTI,
threatened in writing by
or against CTI or affecting CTI or its properties, at law or
in equity, before
any court or other governmental agency or instrumentality,
domestic or
foreign, or before any arbitrator of any kind. CTI is not
in material default
with respect to any judgment, order, writ, injunction,
decree, award, rule or
regulation of any court, arbitrator, governmental agency or
instrumentality.
Section 3.11 No Conflict with Other Instruments. The
execution of this
Agreement and the consummation of the transactions
contemplated by this
Agreement will not result in the breach of any term or
provision of, or
constitute an event of default under, any material
indenture, mortgage, deed
of trust or other material contract, agreement or instrument
to which CTI is a
party or to which any of its properties or operations are
subject, which would
have a material adverse affect on CTI.
Section 3.12 Material Contract Defaults. CTI is not in
default in any
material respect under the terms of any outstanding
contract, agreement, lease
or other commitment which is material to the business,
operations, properties,
assets or financial condition of CTI, and there is no event
of default or
other event which, with notice or the lapse of time or both,
would constitute
a default in any material respect under any such contract,
agreement, lease or
other commitment in respect of which CTI has not taken
adequate steps to
prevent such default occurring.
Section 3.13 Governmental Authorizations. Except as set
forth in the CTI
Schedules, to the best knowledge of CTI, it has all
licenses, franchises,
permits, and other governmental authorizations that are
legally required to
enable it to conduct its business in all material respects
as conducted on the
date hereof or as presently contemplated. Except for
compliance with federal
and state securities and corporation laws, as hereinafter
provided, no
authorization, approval, consent or order of, or
registration, declaration or
filing with, any court or other governmental body is
required in connection
with the execution and delivery by CTI of this Agreement and
the consummation
by CTI of the transactions contemplated hereby.
Section 3.14 Compliance with Laws and Regulations. Except
as set forth in
the CTI Schedules, CTI has complied with all applicable
statutes and
regulations of any federal, state or other governmental
entity or agency
thereof, except to the extent that noncompliance would not
materially and
adversely affect the business, operations, properties,
assets or financial
condition of CTI or except to the extent that noncompliance
would not result
in the incurrence of any material liability of CTI.
Section 3.15 CTI Schedules. CTI has delivered to MCC and
the Shareholders
the following schedules, which are collectively referred to
as the "CTI
Schedules" and which consist of separate schedules dated as
of the date of
execution of this Agreement and updated through the date of
Closing, and
instruments and data as of such date, or the date indicated
on such schedules,
all certified by the chief executive officer of CTI as
complete, true, and
accurate:
(a) A schedule including copies of the articles of
incorporation and bylaws
of CTI and NewCo in effect as of the date of this Agreement,
as referred to in
Section 3.01;
(b) A schedule containing copies of resolutions adopted by
the boards of
directors of CTI and NewCo approving this Agreement and the
transactions
herein contemplated as referred to in Section 3.02.
(c) A schedule containing the annual report of CTI on Form
10-KSB for the
year ended June 30, 1995 and the quarterly report on Form
10-QSB for the
quarter ended September 30, 1995;
(d) A schedule setting forth a description of any material
change in the
business, operations, assets, or condition of CTI since
September 30, 1995,
required to be provided pursuant to Section 3.09 hereof; and
(e) A schedule setting forth any other information,
together with any
required copies of documents, required to be disclosed in
the CTI Schedules by
Sections 3.01 through 3.14.
ARTICLE IV
PLAN OF REORGANIZATION
Section 4.01 Terms of Reorganization. The consideration
for the merger of
MCC into NewCo as a wholly-owned subsidiary of CTI, subject
to all of the
terms, covenants, and conditions set forth in this
Agreement, shall be:
(a) 45,000 shares of CTI's restricted voting common stock;
and
(b) Fifty Thousand Dollars ($50,000) payable at Closing.
The consideration will be distributed to the Shareholders as
follows:
Shareholders' Distribution
Shareholder Shares of Cash at
CTI Stock Closing
Xxxxxxx X. Brothers 12,000 $-0-
Xxxxxxx X.
XxXxxxxxx 11,666 $50,000
Xxxxxx X. Xxxxxxxxx 10,667 $-0-
Xxxxxxx X. Brothers 10,667 $-0-
Section 4.02 The Merger. The articles of merger and plan
of merger shall
provide for the merger of MCC with and into NewCo, with
NewCo as the surviving
entity. The merger shall result in the following:
(a) The MCC Stock shall be converted into an aggregate of
Forty-Five Thousand
(45,000) shares of CTI Common Stock. All shares of common
stock held by MCC
as treasury shares shall be canceled. The shares of CTI
Common Stock to be
issued shall not be registered under the Securities Act or
applicable state
securities laws and the certificates representing such
shares shall contain
the legend set forth in Section 5.07.
(b) Upon the Closing Date of the merger, the Shareholders
shall, on the
surrender of the certificate or certificates representing
the MCC Stock,
receive a certificate or certificates evidencing shares of
the Exchanged CTI
Stock as provided herein.
(c) On the Effective Date of the merger, the MCC Stock
shall be canceled, and
all rights in respect thereof shall cease.
Section 4.03 Tax Obligations. The Shareholders shall be
solely responsible
for any tax due from the Shareholders with respect to the
receipt by the
Shareholders of the consideration set forth in Section 4.01
of the Agreement
and any tax obligation incurred or accrued by MCC or the
Shareholders.
Section 4.04 Closing Events.
(a) The Closing shall take place at the offices of MCC
located at 000 Xxxxx
00xx Xxxxxx, Xxxxx 000, Xxxxx, Xxxxxxx 00000 on or before
February 10, 1996,
or at such other place or at such other time or on such
other date as the
parties hereto may mutually agree.
(b) Subject to the terms and conditions of this Agreement,
at the Closing on
the Closing Date:
(i) The Shareholders shall deliver to CTI share
certificates representing all
of the MCC Stock duly endorsed in blank or accompanied by
duly executed stock
powers (in blank).
(ii) MCC and the Shareholders shall deliver to CTI the
certificates, MCC
Schedules, and other documents and instruments to be
delivered under Section
2.24 and Article VI hereof, together with such other items
as may be
reasonably requested by the parties hereto and their
respective legal counsel
in order to effectuate or evidence the transactions
contemplated hereby.
(iii) CTI shall pay to the Shareholders the amount of cash
which the
Shareholders have the right to receive in respect of the
surrendered MCC Stock
pursuant to Section 4.01(b).
(iv) CTI shall deliver to the Shareholders share
certificates representing
the Exchanged CTI Stock which the Shareholders have the
right to receive in
respect of the surrendered MCC Stock pursuant to Section
4.01(a), issued in
such names and in such denominations as are designated by
the Shareholders not
less than five days before the Closing Date.
(v) CTI shall deliver to MCC and the Shareholders the
certificates, CTI
Schedules, and other documents and instruments to be
delivered under Section
3.15 and Article VII hereof, together with such other items
as may be
reasonably requested by the parties hereto and their
respective legal counsel
in order to effectuate or evidence the transactions
contemplated hereby.
(c) CTI, NewCo, and MCC, respectively, each shall use its
reasonable efforts
to take all such action as may be necessary or appropriate
to effectuate the
merger as provided herein. If, at any time after the
Closing Date, any
further action is necessary or desirable to carry out the
purposes of this
Agreement and to vest NewCo with full right, title and
possession to all
properties, interests, assets, rights, privileges,
immunities, powers and
franchises of MCC, the officers of NewCo are fully
authorized in the name of
MCC and NewCo or otherwise to take, and shall take, all such
lawful and
necessary action.
Section 4.05 Effective Date. The Effective Date of the
merger shall be the
date, as defined in the articles of merger or plan of
merger, on which the
merger of MCC with and into NewCo shall become effective in
accordance with
the laws of the State of Utah.
Section 4.06 Effect of Merger. On the Effective Date of
the merger, NewCo
and MCC shall cease to exist separately, and MCC shall be
merged with and into
NewCo, the surviving corporation, in accordance with the
provisions of this
Agreement, the articles of merger, and the plan of merger,
and in accordance
with the provisions of and with the effect provided in the
corporation laws of
the State of Utah. NewCo, as the surviving corporation,
shall possess all the
rights, privileges, franchises, and trust and fiduciary
duties, powers, and
obligations, of a private as well as of a public nature, and
be subject to all
the restrictions, obligations, and duties of each of NewCo
and MCC; all
property, real, personal, and mixed, and all debts due to
either of NewCo or
MCC on whatever account and all other things belonging to
each of NewCo and
MCC and all property, rights, privileges, powers, and
franchises, and all and
every other interest shall be thereafter the property of
NewCo as they were of
NewCo and MCC; the title to any real estate, whether vested
by deed or
otherwise, in either NewCo or MCC shall not revert or be in
any way impaired
by reason of the merger; provided, however, that all rights
of creditors and
all liens on any property of either NewCo or MCC shall be
preserved
unimpaired, and all debts, liabilities, and duties of NewCo
and MCC shall
thenceforth attach to NewCo and may be enforced against it
to the same extent
as if such debts, liabilities, and duties had been incurred
or contracted by
NewCo.
Section 4.07 Termination.
(a) This Agreement and the merger contemplated hereby may be
terminated at any
time prior to the Effective Date by the mutual consent of
both CTI and MCC
through action of their respective boards of directors. In
the event of
termination pursuant to this Section 4.07(a), no obligation,
right, remedy, or
liability shall arise hereunder, and the parties shall bear
their own costs
incurred in connection with the preparation and execution of
this Agreement,
the preparation and review of financial statements required
to be delivered
pursuant hereto, and the negotiation of the transactions
contemplated hereby.
(b)This Agreement and the merger may be terminated at any
time prior to the
Effective Date by action of CTI's board of directors if MCC
shall fail to
comply in any material respect with any of its covenants or
agreements
contained in this Agreement or if any of the representations
or warranties of
MCC contained herein shall be inaccurate in any material
respect. In the
event of termination pursuant to this Section 4.07(b), no
obligation, right,
remedy, or liability shall arise hereunder, and the parties
shall bear their
own costs incurred in connection with the preparation and
execution of this
Agreement, the preparation and review of financial
statements required to be
delivered pursuant hereto, and the negotiation of the
transactions
contemplated hereby.
(c) This Agreement and the merger may be terminated at any
time prior to the
Effective Date by action of MCC's board of directors if CTI
or NewCo shall
fail to comply in any material respect with any of their
covenants or
agreements contained in this Agreement or if any of the
representations or
warranties of CTI or NewCo contained herein shall be
inaccurate in any
material respect. In the event of termination pursuant to
this Section
4.07(c), no obligation, right, remedy, or liability shall
arise hereunder, and
the parties shall bear their own costs incurred in
connection with the
preparation and execution of this Agreement, the preparation
and review of
financial statements required to be delivered pursuant
hereto, and the
negotiation of the transactions contemplated hereby.
ARTICLE V
THE ACQUISITION OF THE EXCHANGED CTI STOCK
Section 5.01 Sale of Securities. The consummation of this
Agreement and the
issuance of the Exchanged CTI Stock as contemplated herein,
constitutes the
offer and sale of securities as those terms are defined
under the Securities
Act and applicable state statutes. Such transactions shall
be consummated in
reliance on certain exemptions from the registration
requirements of the
Securities Act and applicable state statutes which depend,
among other items,
on the circumstances under which such securities are
acquired.
Section 5.02 Representations by the Shareholders. In order
to provide
documentation for reliance upon such exemptions, the
approval by MCC and the
Shareholders of this Agreement and the transactions
contemplated hereby shall
constitute the parties' acceptance of, and concurrence in,
the following
representations and warranties:
(a) MCC and the Shareholders acknowledge that neither the
SEC nor the
securities commission of any state or other federal agency
has made any
determination as to the merits of acquiring the Exchanged
CTI Stock, and that
the acquisition and ownership of the Exchanged CTI Stock
involves certain
risks.
(b) MCC and the Shareholders have received and read this
Agreement and the
annual report of CTI on Form 10-KSB for the year ended June
30, 1995, and the
quarterly report on Form 10-QSB for the quarter ended
September 30, 1995, and
understand the risks related to the consummation of the
transactions herein
contemplated. MCC and the Shareholders have been given an
opportunity to meet
with and ask questions or management of CTI concerning the
business,
operations, and assets of CTI and the transactions
contemplated by this
Agreement.
(c) The Shareholders have such knowledge and experience in
business and
financial matters that they are capable of evaluating CTI
and its business
operations.
(d) The Shareholders are acquiring the Exchanged CTI Stock
for their own
account and not with a view for resale to others.
Section 5.03 Investment Intent. The Shareholders have not
offered or sold
any securities of CTI or interest in this Agreement and have
no present
intention of dividing the Exchanged CTI Stock to be received
or the rights
under this Agreement with others or of reselling or
otherwise disposing of any
portion of such stock or rights, either currently or after
the passage of a
fixed or determinable period of time or on the occurrence or
nonoccurrence of
any predetermined event or circumstance.
Section 5.04 No Public Solicitation. MCC and the
Shareholders were at no
time solicited by any leaflet, public promotional meeting,
circular, newspaper
or magazine article, radio or television advertisement, or
any other form of
general advertising or solicitation in connection with the
offer, sale, or
purchase of the Exchanged CTI Stock through this Agreement.
Section 5.05 Ability to Bear Risk of Investment. The
Shareholders have
adequate means of providing for their current needs and
possible contingencies
and have no need now, and anticipate no need in the
foreseeable future, to
sell the Exchanged CTI Stock obtained through this
Agreement. The
Shareholders are able to bear the economic risks of this
investment, and
consequently, without limiting the generality of the
foregoing, are able to
hold the Exchanged CTI Stock to be received for an
indefinite period of time
and have a sufficient net worth to sustain a loss of the
entire investment, in
the event such loss should occur.
Section 5.06 No Registration. The Shareholders understand
that the Exchanged
CTI Stock has not been registered, but is being acquired by
reason of a
specific exemption under the Securities Act as well as under
certain state
statutes for transactions by an issuer not involving any
public offering and
that any disposition of the subject Exchanged CTI Stock may,
under certain
circumstances, be inconsistent with this exemption and may
make the
Shareholders "underwriters" within the meaning of the
Securities Act. It is
understood that the definition of "underwriter" focuses upon
the concept of
"distribution" and that any subsequent disposition of the
subject Exchanged
CTI Stock can only be effected in transactions which are not
considered
synonymous with "public offering" or any other offer or sale
involving general
solicitation or general advertising. Under present law, in
determining
whether a distribution occurs when securities are sold into
the public market,
under certain circumstances one must consider the
availability of public
information regarding the issuer, a holding period for the
securities
sufficient to assure that the persons desiring to sell the
securities without
registration first bear the economic risk of their
investment, and a
limitation on the number of securities which the shareholder
is permitted to
sell and on the manner of sale, thereby reducing the
potential impact of the
sale on the trading markets. These criteria are set forth
specifically in
Rule 144 promulgated under the Securities Act, and, after
two years after the
date the Exchanged CTI Stock is fully paid for, as
calculated in accordance
with Rule 144(d), sales of securities in reliance upon Rule
144 can only be
made in limited amounts in accordance with the terms and
conditions of that
rule. After three years from the date the securities are
fully paid for, as
calculated in accordance with Rule 144(d), they can
generally be sold without
meeting those conditions, provided the holder is not (and
has not been or the
preceding three months) an affiliate of the issuer.
Section 5.07 Restrictions on Transfer. The Shareholders
acknowledge that the
shares of Exchanged CTI Stock must be held and may not be
sold, transferred,
or otherwise disposed of for value unless they are
subsequently registered
under the Securities Act or an exemption from such
registration is available.
CTI is under no obligation to register the Exchanged CTI
Stock under the
Securities Act. If Rule 144 is available (and no assurance
is given that it
will be), only sales of such Exchanged CTI Stock in limited
amounts can be
made in reliance upon Rule 144 in accordance with the terms
and conditions of
that rule. CTI is under no obligation to the undersigned to
make Rule 144
available, and in the event Rule 144 is not available,
compliance with
Regulation A or some other disclosure exemption may be
required before the
Shareholders can sell, transfer, or otherwise dispose of
such Exchanged CTI
Stock without registration under the Securities Act. CTI's
registrar and
transfer agent will maintain a stop transfer order against
the registration of
transfer of the Exchanged CTI Stock, and the certificate
representing the
Exchanged CTI Stock will bear a legend in substantially the
following form so
restricting the sale of such securities:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") AND
ARE "RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144
PROMULGATED
UNDER THE SECURITIES ACT. THE SECURITIES HAVE BEEN ACQUIRED
FOR
INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT
COMPLYING WITH
RULE 144 IN THE ABSENCE OF AN EFFECTIVE REGISTRATION OR
OTHER COMPLIANCE
UNDER THE SECURITIES ACT.
Section 5.08 Stop Order. CTI may refuse to register
transfer of the
Exchanged CTI Stock in the absence of compliance with Rule
144 unless the
Shareholders furnish the issuer with an opinion of counsel
reasonably
acceptable to CTI stating that the transfer is permitted
under applicable law.
Section 5.09 Additional Documentation. In order to more
fully document
reliance on the exemptions as provided herein, the
Shareholders agree to
execute and deliver to CTI such further letters of
representation,
acknowledgment, suitability, or the like, as CTI and its
counsel may
reasonably request in connection with reliance on exemptions
from registration
under such securities laws.
Section 5.10 No Legal Opinion. MCC, the Shareholders, and
CTI acknowledge
that the basis for relying on exemptions from registration
or qualifications
are factual, depending on the conduct of the various
parties, and that no
legal opinion or other assurance will be required or given
to the effect that
the transactions contemplated hereby are in fact exempt from
registration or
qualification.
Section 5.11 SEC Filings. CTI agrees that it will file all
reports required
to be filed with the SEC pursuant to Section 13 or 15(d) of
the Exchange Act,
such that the current public information requirement of Rule
144(c)(1),
promulgated under the Securities Act, shall be met.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF
CTI
The obligations of CTI and NewCo under this Agreement are
subject to the
satisfaction, at or before the Closing Date, of the
following conditions:
Section 6.01 Accuracy of Representations. The
representations and warranties
made by MCC and the Shareholders in this Agreement shall be
true as of the
Closing, and MCC and the Shareholders shall have performed
or complied with
all material covenants and conditions required by this
Agreement to be
performed or complied with by MCC or the Shareholders,
respectively, prior to
or at the Closing. CTI and NewCo shall be furnished with a
certificate,
signed by the chief executive officer of MCC and dated the
Closing Date, to
the foregoing effect.
Section 6.02 Officer's Certificate. CTI and NewCo shall
have been furnished
with a certificate dated the Closing Date and signed by the
duly authorized
chief executive officer of MCC to the effect that:
(a) This Agreement has been duly approved by MCC board of
directors and the
Shareholders and has been duly executed and delivered in the
name and on
behalf of MCC by its duly authorized officer is pursuant to,
and in compliance
with, authority granted by MCC's board of directors;
(b) The representations and warranties of MCC set forth in
this Agreement are
true and correct as of the date of the certificate;
(c) There has been no material adverse change since the
date of the balance
sheet included in the MCC Schedules in the financial
condition, business, or
operations of MCC nor has any event occurred which, with the
lapse of time or
giving of notice, may cause or create any material adverse
change in the
financial condition, business, or operations of MCC up to
and including the
date of the certificate, except as authorized by this
Agreement;
(d) All material conditions required by this Agreement to
have been met,
satisfied, or performed by MCC and the Shareholders have
been met;
(e) The consummation of the transactions contemplated by
this Agreement does
not violate any material law, regulation, order, writ,
injunction, or decree
of any court or governmental body or result in the creation
or imposition of
any material mortgage, lien, charge, or encumbrance of any
nature upon any of
the properties of MCC, pursuant to any mortgage, resolution,
agreement, or
instrument to which MCC is a party;
(f) All material authorizations, consents, approvals,
registrations, and/or
filings with any governmental body, agency, or court
required in connection
with the execution and delivery of the documents
contemplated by this
Agreement by MCC and have been obtained and are in full
force and effect or,
if not required to have been obtained will be in full force
and effect by such
time as may be required; and
(g) There is no action, suit, proceeding, inquiry, or
investigation at law or
in equity by any public board or body pending or threatened
in writing against
so, wherein an unfavorable decision, ruling, or finding
would have a material
adverse effect on the financial condition of MCC, the
operations or business
of MCC, the acquisition and reorganization contemplated
herein, or any
material agreement or instrument by which MCC is bound or
would in any way
contest the existence of MCC.
Section 6.03 Good Standing. CTI and NewCo shall have
received a certificate
of good standing with respect to MCC, dated as of a date
within twenty (20)
days prior to the Closing Date, certifying what MCC is in
good standing as a
corporation in Arizona.
Section 6.04 UCC Certificate. CTI shall have received an
Arizona Uniform
Commercial Code certificate dated as of a date within five
(5) days of the
Closing Date to the effect that there are no encumbrances of
record on the
assets of MCC, other than those disclosed in the MCC
Schedules.
Section 6.05 Other Items. CTI and NewCo shall have
received such further
documents, certificates, or instruments relating to the
transactions
contemplated hereby as CTI and NewCo may reasonably request.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS
OF MCC AND THE SHAREHOLDERS
The obligations of MCC and the Shareholders under this
Agreement are subject
to the satisfaction, at or before the Closing Date, of the
following
conditions:
Section 7.01 Accuracy of Representations. The
representations and warranties
made by CTI and NewCo in this Agreement shall be true as of
the Closing and
CTI and NewCo shall have performed and complied with all
material covenants
and conditions required by this Agreement to be performed or
complied with by
CTI and NewCo prior to or at the Closing. MCC shall have
been furnished with
a certificate, signed by the duly authorized chief executive
and principal
financial or accounting officer or officers of CTI and NewCo
and dated the
Closing Date, to the foregoing effect.
Section 7.02 Officer's Certificate. MCC and the
Shareholders shall have been
furnished with certificates dated the Closing Date and
signed by the duly
authorized officer or officers of CTI and NewCo to the
effect that:
(a) This Agreement has been duly approved by CTI's and
NewCo's boards of
directors and has been duly executed and delivered in the
name and on behalf
of CTI and NewCo by duly authorized officers pursuant to,
and in compliance
with, authority granted by CTI's and NewCo's board of
directors;
(b) The representations and warranties of CTI and NewCo set
forth in this
Agreement are true and correct as of the date of the
certificate;
(c) There has been no material adverse change since the
date of the balance
sheet included in the CTI Schedules in the financial
condition, business, or
operations of CTI and NewCo nor has any event occurred
which, with the lapse
of time or giving of notice, may cause or create any
material adverse change
in the financial condition, business, or operations of CTI
and NewCo, up to
and including the date of the certificate;
(d) All material conditions required by this Agreement to
have been met,
satisfied, or performed by CTI and NewCo have been met;
(e) The consummation of the transactions contemplated by
this Agreement does
not violate any material law, regulation, order, writ,
injunction, or decree
of any court or governmental body or result in the creation
or imposition of
any material mortgage, lien, charge, or encumbrance of any
nature upon any of
the properties of CTI and NewCo, pursuant to any mortgage,
resolution,
agreement, or instrument to which CTI and NewCo is a party;
(f) All material authorizations, consents, approvals,
registrations, and/or
filings with any governmental body, agency, or court
required in connection
with the execution and delivery of the documents
contemplated by this
Agreement by CTI and NewCo have been obtained and are in
full force and effect
or, if not required to have been obtained, will be in full
force and effect by
such time as may be required; and
(g) There is no action, suit, proceeding, inquiry, or
investigation at law or
in equity by any public board or body pending or threatened
in writing against
CTI and NewCo, wherein an unfavorable decision, ruling, or
finding would have
a material adverse effect on the financial condition or
operation of CTI and
NewCo, or the merger contemplated herein, or any material
agreement or
instrument by which CTI and NewCo are bound or would in any
way contest the
existence of CTI and NewCo.
Section 7.03 Good Standing. MCC and the Shareholders shall
have received a
certificate of good standing from the Secretary of State of
Nevada with
respect to CTI, dated as of a date within ten (10) days
prior to the date of
this Agreement, certifying that CTI is in good standing as a
corporation in
the State of Nevada.
Section 7.04 Other Items. MCC and the Shareholders shall
have received such
further documents, certificates, or instruments relating to
the transactions
contemplated hereby as MCC and the Shareholders may
reasonably request.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Brokers. CTI and MCC agree that there were no
finders or
brokers involved in bringing the parties together or who
were instrumental in
the negotiation, execution, or consummation of this
Agreement. Further, CTI
and MCC each agree to indemnify the other against any claim
by any third
person for any commission, brokerage, or finder's fee or
other payment with
respect to this Agreement or the transactions contemplated
hereby based on any
alleged agreement or understanding between such party and
such third person,
whether express or implied, resulting from the actions of
such party. The
covenants set forth in this Section 8.01 shall survive the
Closing and the
consummation of the transactions herein contemplated.
Section 8.02 Indemnification by the Shareholders. The
Shareholders agree to
indemnify and hold harmless CTI and NewCo and each of their
respective
directors and officers, and each person, if any, who
controls CTI and NewCo
within the meaning of the Securities Act, from and against
any and all losses,
claims, damages, expenses, liabilities or actions and will
reimburse them for
any legal or other expenses reasonably incurred by them in
connection with
investigating or defending any claims or actions, resulting
in liability of
Ten Thousand Dollars ($10,000) or more, insofar as such
losses, claims,
damages, expenses, liabilities or actions arise directly out
of any breach of
any representation, warranty, covenant, or agreement in this
Agreement by the
Shareholders or MCC. The indemnity agreement contained in
this Section 8.02
shall remain operative and in full force and effect,
regardless of any
investigation made by or on behalf of CTI and NewCo and
shall survive the
consummation of the transactions contemplated by this
Agreement for a period
of three (3) years after the Closing Date.
Section 8.03 Indemnification by CTI and NewCo. CTI and
NewCo agree to
indemnify and hold harmless the Shareholders from and
against any and all
losses, claims, damages, expenses, liabilities, or actions
and will reimburse
them for any legal or other expenses reasonably incurred by
them in connection
with investigating or defending any claims or actions,
resulting in liability,
insofar as such losses, claims, damages, expenses,
liabilities or actions,
resulting in liability of Ten Thousand Dollars ($10,000) or
more, insofar as
such losses, claims, damages, expenses, liabilities or
actions arise directly
out of any breach of any representation, warranty, covenant,
or agreement in
this Agreement by CTI and NewCo. The indemnity agreement
contained in this
Section 8.03 shall remain operative and in full force and
effect, regardless
of any investigation made by or on behalf of the
Shareholders and shall
survive the consummation of the transactions contemplated by
this Agreement
for a period of three (3) years after the Closing Date.
Section 8.04 Tax Treatment. No representation or warranty
is being made or
legal opinion given by any party to any other regarding the
treatment of this
transaction for federal or state income taxation. All
parties intend for the
transaction to be treated as a "tax-free" reorganization
under the provisions
of the Code and agree to take all corporate action
necessary, to file all tax
returns and reports, and prepare financial statements
consistent with the
treatment of the transaction as a reorganization under
Section 368. Although
this transaction has been structured in an effort to qualify
for treatment
under Section 368 of the Code, there is no assurance that
any part of this
transaction in fact meets the requirements for such
qualification. Each party
has relied exclusively on its own legal, accounting, and
other tax advisers
regarding the treatment of this transaction for federal and
state income
taxes.
Section 8.05 Governing Law. This Agreement shall be
governed by, enforced,
and construed under and in accordance with the laws of the
United States of
America and, with respect to matters of state law, with the
laws of the State
of Utah.
Section 8.06 Notices. Any notices or other communications
required or
permitted hereunder shall be in writing and shall be deemed
sufficiently given
if personally delivered, if sent by facsimile or telecopy
transmission or
other electronic communication confirmed by registered or
certified mail,
postage prepaid, or if sent by prepaid overnight courier
addressed as follows:
(a) If to CTI or NewCo, to:
CTI Technologies, Inc.
000 Xxxx Xxxxxxxx Xxxxx
Xxxx Xxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxxx
Fax No: (000) 000-0000
Confirmation (000) 000-0000
With copies to:
Prince, Yeates & Xxxxxxxxxx
000 Xxxx 000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
Fax No: (000) 000-0000
(b) If to MCC or the Shareholders:
000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxx, XX 00000
Attention: Xxxxxxx X. Brothers
Fax No: (000) 000-0000
or such other addresses as shall be furnished in writing by
any party in the
manner for giving notices hereunder, and any such notice or
communication
shall be deemed to have been given as of the date so
delivered or sent by
facsimile or telecopy transmission or other electronic
communication, or one
day after the date so sent by overnight courier.
Section 8.07 Attorneys' Fees. In the event that any party
institutes any
action or suit to enforce this Agreement or to secure relief
from any default
hereunder or breach hereof, the breaching party or parties
shall reimburse the
nonbreaching party or parties for all costs, including
reasonable attorneys'
fees, incurred in connection therewith and in enforcing or
collecting any
judgment rendered therein.
Section 8.08 Costs. Each of the parties shall bear its
respective costs
associated with this Agreement and the transactions
contemplated hereby,
including legal fees, accounting fees, and other costs and
expenses.
Section 8.09 Schedules; Knowledge. Whenever in any section
of this Agreement
reference is made to information set forth in the CTI
Schedules or MCC
Schedules such reference is to information specifically set
forth in such
schedules and clearly referenced to identify the section of
this Agreement to
which the information relates. Whenever any representation
is made to the
"knowledge" of any party, it shall be deemed to be a
representation that such
officer or director has made a reasonable investigation of
such matters.
Section 8.10 Third-Party Beneficiaries. This Agreement is
solely between
CTI, NewCo and MCC and the Shareholders, and no director,
officer,
stockholder, employee, agent, independent contractor, or any
other person or
entity shall be deemed to be a third-party beneficiary of
this Agreement.
Section 8.11 Entire Agreement. This Agreement, together
with the other
agreements entered into between the parties
contemporaneously with this
Agreement (this Agreement and such other documents
collectively referred to as
the "Transaction Documents"), represent the entire agreement
between the
parties relating to the subject matter hereof. All previous
agreement between
the parties, whether written or oral, have been merged into
the Transaction
Documents. The Transaction Documents fully and completely
express the
agreement of the parties relating to the subject matter
hereof. There are no
other courses of dealing, understandings, agreements,
representations, or
warranties, written or oral, except as set forth in the
Transaction Documents.
Section 8.12 Survival. The representations, warranties,
and covenants of the
respective parties shall survive the Closing of the
transactions contemplated
hereby.
Section 8.13 Counterparts. This Agreement may be executed
in multiple
counterparts, each of which shall be deemed an original and
all of which taken
together shall be but a single instrument.
Section 8.14 Amendment or Waiver. Every right and remedy
provided herein
shall be cumulative with every other right and remedy,
whether conferred
herein, at law, or in equity, and may be enforced
concurrently herewith, and
no waiver by any party of the performance of any obligation
by the other shall
be construed as a waiver of the same or any other default
then, theretofore,
or thereafter occurring or existing. This Agreement shall
only be amended by
a writing signed by all parties hereto, with respect to any
of the terms
contained herein, and any term or condition of this
Agreement may be waived or
the time for performance thereof may be extended by a
writing signed by the
party or parties for whose benefit the provision is
intended.
Section 8.15 Severability. If and to the extent that any
court of competent
jurisdiction holds any provision, or any part thereof, of
this Agreement to be
invalid or unenforceable, such holding shall in no way
affect the validity of
the remainder of this Agreement which shall continue in full
force and effect.
Section 8.16 Successors and Assigns. This Agreement shall
insure to the
benefit of and be binding on the parties and their
successors, assigns, heirs,
executors, and administrators.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be
executed by their respective officers, hereunto duly
authorized, as of the
date first above written.
CUSA TECHNOLOGIES, INC.
By_________________________________
Duly Authorized Officer
NEW MEDICAL CLEARING CORPORATION
By________________________________
Duly Authorized Officer
MEDICAL CLEARING CORPORATION
By________________________________
Duly Authorized Officer
THE SHAREHOLDERS:
__________________________________
Xxxxxxx X. Brothers
__________________________________
Xxxxxxx X. XxXxxxxxx
___________________________________
Xxxxxx X. Xxxxxxxxx
__________________________________
Xxxxxxx X. Brothers
