EXHIBIT 10.8
PLAN AND AGREEMENT OF MERGER
BETWEEN
LASERMEDICS, INC.,
LASERMEDICS ACQUISTION NO. 1, INC.,
HEALTH CAREER LEARNING SYSTEMS, INC.
AND ITS
SHAREHOLDERS
DATED AS OF NOVEMBER 27, 1996
PLAN AND AGREEMENT OF MERGER
THIS PLAN AND AGREEMENT OF MERGER (this "Agreement") is entered into as
of November 27, 1996 by and among Lasermedics, Inc., a Texas corporation
("Lasermedics"), Lasermedics Acquisition No. 1, Inc., a Michigan corporation and
a wholly-owned subsidiary of Lasermedics ("Acquisition Sub"), Health Career
Learning Systems, Inc., a Michigan corporation ("HCLS" or the "Surviving
Corporation"), Xxxxx X. Xxxxxxx ("Xxxxx"), Xxxxxxx Xxxxxxx ("Xxxxxxx") and
Xxxxxx X. Xxxxxxxxx ("Xxxxxx"). Xxxxx, Xxxxxxx and Xxxxxx are referred to
individually herein as a "Shareholder" and collectively herein as the
"Shareholders." Acquistion Sub and HCLS are sometimes referred to collectively
herein as the "Merging Corporations."
WITNESSETH :
WHEREAS, Lasermedics is a corporation duly organized and validly
existing under the laws of the State of Texas, with its principal executive
offices at 000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx Xxxx, Xxxxx 00000; and
WHEREAS, Acquistion Sub is a corporation duly organized and validly
existing under the laws of the State of Michigan, with its principal executive
offices at 000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx Xxxx, Xxxxx 00000; and
WHEREAS, HCLS is a corporation duly organized and validly existing
under the laws of the State of Michigan, with its principal executive offices at
00000 Xxxxxxx Xxxxx, Xxxxx X, Xxxxxxxx, Xxxxxxxx 00000; and
WHEREAS, Lasermedics owns 1,000 shares of common stock, par value $.01
per share, of Acquistion Sub ("Acquisition Sub Common Stock"), which constitute
all of the issued and outstanding shares of capital stock of Acquistion Sub; and
WHEREAS, the Shareholders own 12,000 shares of common stock, par value
$1.00 per share, of HCLS ("HCLS Common Stock"), which constitute all of the
issued and outstanding shares of capital stock of HCLS; and
WHEREAS, (i) the board of directors of Lasermedics, (ii) Lasermedics
(in its capacity as Acquistion Sub's sole shareholder) and the board of
directors of Acquistion Sub and (iii) the Shareholders (in their capacity as all
of the shareholders of HCLS) and the board of directors of HCLS desire to merge
Acquistion Sub with and into HCLS in accordance with the provisions of Section
450.1701 ET SEQ. of the Michigan Business Corporation Act (the "MBCA") pursuant
to the terms and provisions of this Agreement, and have approved such merger
(the "Merger") and the other terms and provisions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, and to prescribe the terms and
conditions of the Merger contemplated hereby, the mode of carrying the same into
effect, the manner and basis of converting the presently outstanding shares of
HCLS Common Stock into the right to receive the Merger Consideration
described in Section 1.10.1 hereof, and such other details and provisions as are
deemed necessary or proper, the parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
1.1. SURVIVING CORPORATION. Acquistion Sub and HCLS shall be, upon the
Effective Date, merged into a single surviving corporation, which shall be HCLS,
which shall continue its corporate existence and remain a corporation governed
by and subject to the laws of the State of Michigan.
1.2. EFFECTIVE DATE. The Merger shall become effective upon the filing
of the Certificate of Merger with the Secretary of State of Michigan following
its execution in accordance with Section 450.1707 of the MBCA. This filing shall
be made concurrently on the date hereof or as soon as practicable thereafter.
With the date on which such filings are made being referred to elsewhere herein
as the "Effective Date."
1.3. NAME AND CONTINUED CORPORATE EXISTENCE OF THE SURVIVING
CORPORATION. On the Effective Date, the identity, existence, purposes, powers,
objects, franchises, rights, and immunities of HCLS, the surviving corporation
of the Merger, shall continue unaffected and unimpaired by the Merger, and the
corporate identity, existence, purposes, powers, objects, franchises, rights,
and immunities of Acquisition Sub shall be wholly merged into HCLS, the
surviving corporation, and HCLS shall be fully vested therewith. Accordingly, on
the Effective Date, the separate existence of Acquistion Sub, except insofar as
continued by statute, shall cease.
1.4. GOVERNING LAW AND ARTICLES OF INCORPORATION OF THE SURVIVING
CORPORATION. The laws of Michigan shall continue to govern the Surviving
Corporation. On the Effective Date, the Articles of Incorporation of HCLS shall
be the Articles of Incorporation of the Surviving Corporation until thereafter
amended in the manner provided by law.
1.5. BYLAWS OF THE SURVIVING CORPORATION. On the Effective Date, the
Bylaws of HCLS shall be the Bylaws of the Surviving Corporation until altered,
amended, or repealed, or until new bylaws shall be adopted in accordance with
the provisions of law, the Articles of Incorporation of HCLS, and the Bylaws of
HCLS.
1.6. DIRECTORS OF THE SURVIVING CORPORATION. On the Effective Date,
pursuant to Section 1-B of the Bylaws of HCLS, the number of directors
constituting the entire board of directors shall be fixed at 2. The names of the
persons who, on the Effective Date, shall become the members of the board of
directors of the Surviving Corporation, and who shall hold office until the
first annual meeting of shareholders of the Surviving Corporation next following
the Effective Date, are as follows:
NAME
-----------------------
Xxxxxxx X. Xxxxxxx
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Xxx X. Xxxxxxx
1.7. OFFICERS OF THE SURVIVING CORPORATION.The names of the persons
who, on the Effective Date, shall constitute the officers of the Surviving
Corporation, and who shall hold office, subject to the Bylaws of the Surviving
Corporation, until the first meeting of directors following the next annual
meeting of shareholders thereof, are as follows:
NAME OFFICE
---------------------------- -----------------------------
Xxxxxxx X. Xxxxxxx........................... President and Chief
Executive Officer
Xxxxx Xxxxxxxxxx............................. Secretary and Chief
Financial Officer
Xxx X. Xxxxxxx............................... Assistant Secretary
1.8. VACANCIES. If on or after the Effective Date, a vacancy shall for
any reason exist in the board of directors or in any of the offices of the
Surviving Corporation, such vacancy shall be filled in the manner provided in
the Articles of Incorporation and Bylaws of the Surviving Corporation.
1.9. CAPITAL STOCK OF THE SURVIVING CORPORATION. The authorized number
of shares of capital stock of the Surviving Corporation, and the par value,
designations, preferences, rights, and limitations thereof, and the express
terms thereof, shall be as set forth in the Articles of Incorporation of the
Surviving Corporation.
1.10. CONVERSION OF SECURITIES UPON MERGER.
1.10.1. CONVERSION OF HCLS COMMON STOCK. On the Effective
Date, the 12,000 shares of HCLS Common Stock issued and outstanding, on
the date hereof, all of which are held by the Shareholders (the "HCLS
Shares"), without any action on the part of the Shareholders, shall
automatically become and be converted into the right to receive the
following consideration from Lasermedics (collectively, the "Merger
Consideration"): (i) 82,107 shares of common stock, par value $.01 per
share, of Lasermedics ("Lasermedics Common Stock") to be issued to the
Shareholders on the Effective Date in accordance with the written
instructions executed by each of the Shareholders and delivered to
Lasermedics (the "Lasermedics Shares"); (ii) $100,000 to be paid to the
Shareholders on the Effective Date; and (iii) the Additional Shares (as
defined in Section 1.10.4 hereof), if any, to be issued to the
Shareholders in accordance with Section 1.10.4 hereof.
1.10.2. SURRENDER OF HCLS CERTIFICATES. The Shareholders have
surrendered (and Lasermedics acknowledges its receipt of) all the
certificates representing the HCLS Shares (the "HCLS Certificates"). On
the Effective Date, Lasermedics will cancel the HCLS Certificates, and
the Shareholders will become entitled to receive the Merger
Consideration.
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1.10.3. CONVERSION OF ACQUISTION SUB COMMON STOCK. On the
Effective Date, each share of Acquistion Sub Common Stock then issued
and outstanding, without any action on the part of Lasermedics, shall
automatically become and be converted into the right to receive one
fully paid and nonassessable share of the issued and outstanding HCLS
Common Stock from HCLS upon surrender and cancellation of the
certificate theretofore evidencing shares of Acquisition Sub Common
Stock.
1.10.4. STOCK ADJUSTMENT. If the Market Price on the
Anniversary Date (defined below) is less than $6.0896, then Lasermedics
shall, within on or before December 1, 1997, cause to be issued in the
name of and delivered to the Shareholders, as requested in writing,
that number of Lasermedics Shares (the "Additional Shares") equal to
the difference between (i) the number of Lasermedics Shares determined
by dividing $500,000 by the Market Price of the Lasermedics Common
Stock on the Anniversary Date and (ii) the number of Lasermedics Shares
issued on the Effective Date. The term "Market Price on the Anniversary
Date" means, the average of the closing per share price of Lasermedics
Common Stock on each of the 30 trading days immediately preceding the
one-year anniversary of the Effective Date (the "Anniversary Date") as
reported on (i) the principal securities exchange on which the
Lasermedics Common Stock is listed or admitted to trading, or (ii) if
not so listed or admitted to trading on any securities exchange, the
Nasdaq National Market or the Nasdaq SmallCap Market System, as
applicable, or (iii) if not listed on such system, on the
over-the-counter market by any NASD member firm selected by
Lasermedics; PROVIDED, HOWEVER, that the Market Price on the
Anniversary Date shall not be less than $4.50 or more than $7.50.
1.11. ACQUISITION SUB'S TRANSFER BOOKS CLOSED. Upon the Effective Date,
the stock transfer books of Acquisition Sub shall be deemed closed, and no
transfer of any shares of capital stock of Acquisition Sub shall thereafter be
made or consummated.
1.12. ASSETS AND LIABILITIES OF MERGING CORPORATIONS BECOME THOSE OF
THE SURVIVING CORPORATION. On the Effective Date, all rights, privileges,
powers, and franchises of each of the Merging Corporations, and all property,
real, personal, and mixed, and all debts due on whatever account, as well as
stock subscriptions and all other things in action of or belonging to any of the
Merging Corporations, shall be taken by and deemed to be transferred to and
shall be vested in the Surviving Corporation without further act or deed, and
all such rights, privileges, powers, and franchises, property, debts, or things
in action, and all and every other interest of each of the Merging Corporations
shall be thereafter as effectually the property of the Surviving Corporation as
they were of the respective Merging Corporations, and the title to any real
property, whether vested by deed or otherwise, in either of the Merging
Corporations, shall not revert or be in any way impaired by reason of the
Merger; PROVIDED HOWEVER, that all rights of creditors and all liens upon any
properties of each of the Merging Corporations shall be preserved unimpaired,
and all debts, liabilities and duties of the Merging Corporations shall
thenceforth attach to the Surviving Corporation and may be enforced against and
by it to the same extent as if such debts, liabilities and duties had been
incurred or contracted by it. Any action or proceeding pending by or against
either of the Merging
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Corporations may be prosecuted to judgment as if the Merger had not taken place,
or the Surviving Corporation may be substituted in place of either of the
Merging Corporations.
1.13. CONVEYANCES TO THE SURVIVING CORPORATION. The Merging
Corporations hereby agree, respectively, that from time to time, as and when
requested by the Surviving Corporation, or by its successors and assigns, they
will execute and deliver or cause to be executed and delivered, all such deeds,
conveyances, assignments, and other instruments, and will take or cause to be
taken such further or other action as the Surviving Corporation, its successors
or assigns, may deem necessary or desirable to vest or perfect in or confirm to
the Surviving Corporation, its successors and assigns, title to and possession
of all the property, rights, privileges, powers, immunities, franchises, and
interests referred to in this Section 1.13 and otherwise carry out the intent
and purposes of this Agreement.
1.14. ACCOUNTING TREATMENT. The assets and liabilities of the Merging
Corporations shall be taken up on the books of the Surviving Corporation in
accordance with generally accepted accounting principles, and the capital
surplus and retained earnings accounts of the Surviving Corporation shall be
determined, in accordance with generally accepted accounting principles, by the
board of directors of the Surviving Corporation. Nothing herein shall prevent
the board of directors of the Surviving Corporation from making any future
changes in its accounts in accordance with law.
1.15. FEDERAL INCOME TAX TREATMENT. The Merger is intended to qualify
as a reverse triangular merger transaction described in ss. 368(a)(2)(E) of the
Internal Revenue Code of 1986, as amended (the "Code").
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF SHAREHOLDERS
2.1. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. Each of the
Shareholders jointly and severally represents and warrants to Lasermedics as
follows:
2.1.1. ORGANIZATION AND STANDING. HCLS is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Michigan, has full requisite corporate power and authority to
carry on its business as it is currently conducted, and to own and
operate the properties currently owned and operated by it, and is duly
qualified or licensed to do business and is in good standing as a
foreign corporation authorized to do business in all jurisdictions in
which the character of the properties owned or the nature of the
business conducted by it would make such qualification or licensing
necessary, except where the failure to be so qualified or licensed
would not have a material adverse effect on its financial condition,
properties or business.
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2.1.2. AGREEMENT AUTHORIZED AND ITS EFFECT ON OTHER
OBLIGATIONS. The execution and delivery of this Agreement has been
authorized by the board of directors and all of the holders of capital
stock of HCLS, the consummation of the transactions contemplated hereby
has been duly and validly authorized by all necessary corporate action
on the part of HCLS, and this Agreement is a valid and binding
obligation of HCLS and each of the Shareholders enforceable against
HCLS and each of the Shareholders (subject to normal equitable
principles) in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, debtor relief or
similar laws affecting the rights of creditors generally. The
execution, delivery and performance of this Agreement and the
consummation of the Merger contemplated by this Agreement will not
conflict with or result in a violation or breach of any term or
provision of, nor constitute a default under (i) the Certificate of
Incorporation or Bylaws of HCLS or (ii) any obligation, indenture,
mortgage, deed of trust, lease, contract or other agreement to which
HCLS or any of the Shareholders is a party or by which HCLS or any of
the Shareholders or their respective properties are bound.
2.1.3. CAPITALIZATION. The authorized capitalization of HCLS
consists of 50,000 shares of HCLS Common Stock, of which, as of the
date hereof, 12,000 shares were issued and outstanding and held
beneficially and of record by the Shareholders. On the date hereof,
HCLS does not have any outstanding options, warrants, calls or
commitments of any character relating to any of its authorized but
unissued shares of capital stock. All issued and outstanding shares of
HCLS Common Stock are validly issued, fully paid and non-assessable and
are not subject to preemptive rights. None of the outstanding shares of
HCLS Common Stock is subject to any voting trust, voting agreement or
other agreement or understanding with respect to the voting thereof,
nor is any proxy in existence with respect thereto.
2.1.4. OWNERSHIP OF HCLS SHARES. The Shareholders hold good
and valid title to all of the HCLS Shares, free and clear of all
Encumbrances (as defined in Section 2.1.8.1 hereof). There are no
claims pending or, to the knowledge of any of the Shareholders,
threatened, against HCLS or any of the Shareholders that concern or
affect title to the HCLS Shares, or that seek to compel the issuance of
capital stock or other securities of HCLS.
2.1.5. NO SUBSIDIARIES. There is no corporation, partnership,
joint venture, business trust or other legal entity in which HCLS,
either directly or indirectly through one or more intermediaries, owns
or holds beneficial or record ownership of at least a majority of the
outstanding voting securities.
2.1.6. FINANCIAL STATEMENTS. HCLS has delivered to Lasermedics
and Acquistion Sub copies of HCLS's unaudited balance sheet (the "6/30
Balance Sheet") and related statements of income (collectively, the
"6/30 Financial Statements"), as at and for the six months ended June
30, 1996 (the "Balance Sheet Date"). The 6/30 Financial Statements are
complete in all material respects. The 6/30 Financial Statements
present fairly the financial condition of HCLS as at the dates and for
the periods indicated. The 6/30 Financial Statements have been prepared
in accordance with generally accepted accounting principles applied on
a consistent basis. The accounts receivable reflected in the 6/30
Balance Sheet,
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or which have been thereafter acquired by HCLS, have been collected or
are collectible at the aggregate recorded amounts thereof less
applicable reserves, which reserves are adequate. The inventories of
HCLS reflected in the 6/30 Balance Sheet, or which have thereafter been
acquired by it, consist of items of a quality usable and salable in the
normal course of HCLS's business, and the values at which inventories
are carried are at the lower of cost or market.
2.1.7. LIABILITIES. Except as disclosed on SCHEDULE 2.1.7
hereto, HCLS does not have any liabilities or obligations, either
accrued, absolute or contingent, nor does any of the Shareholders have
any knowledge of any potential liabilities or obligations, which would
materially adversely affect the value and conduct of the business of
HCLS, other than those (i) reflected or reserved against in the 6/30
Balance Sheet or (ii) incurred in the ordinary course of business since
the Balance Sheet Date.
2.1.8. ADDITIONAL HCLS INFORMATION. Attached as SCHEDULE 2.1.8
hereto are true, complete and correct lists of the following items:
2.1.8.1. REAL ESTATE. All real property and
structures thereon owned, leased or subject to a contract of
purchase and sale, or lease commitment, by HCLS, with a
description of the nature and amount of any Encumbrances
(defined below) thereon. The term "Encumbrances" means all
liens, security interests, pledges, mortgages, deed of trust,
claims, rights of first refusal, options, charges,
restrictions or conditions to transfer or assignment,
liabilities, obligations, privileges, equities, easements,
rights-of-way, limitations, reservations, restrictions and
other encumbrances of any kind or nature;
2.1.8.2. MACHINERY AND EQUIPMENT. All machinery,
transportation equipment, tools, equipment, furnishings, and
fixtures owned, leased or subject to a contract of purchase
and sale, or lease commitment, by HCLS with a description of
the nature and amount of any Encumbrances thereon;
2.1.8.3. INVENTORY. All inventory items or groups of
inventory items owned by HCLS, excluding raw materials and
work in process, which raw materials and work in process are
valued on the 6/30 Balance Sheet, together with the amount of
any Encumbrances thereon;
2.1.8.4. RECEIVABLES. All accounts and notes
receivable of HCLS, together with (i) aging schedules by
invoice date and due date, (ii) the amounts provided for as an
allowance for bad debts, (iii) the identity and location of
any asset in which HCLS holds a security interest to secure
payment of the underlying indebtedness, and (iv) a description
of the nature and amount of any Encumbrances on such accounts
and notes receivable;
2.1.8.5. PAYABLES. All accounts and notes payable of
HCLS, together with an appropriate aging schedule;
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2.1.8.6. INSURANCE. All insurance policies or bonds
currently maintained by HCLS, including title insurance
policies, with respect to HCLS, including those covering
HCLS's properties, rigs, machinery, equipment, fixtures,
employees and operations, as well as a listing of any
premiums, audit adjustments or retroactive adjustments due or
pending on such policies or any predecessor policies;
2.1.8.7. CONTRACTS. All contracts, including leases
under which HCLS is lessor or lessee, which are to be
performed in whole or in part after the date hereof;
2.1.8.8. EMPLOYEE COMPENSATION PLANS. All bonus,
incentive compensation, deferred compensation, profit-sharing,
retirement, pension, welfare, group insurance, death benefit,
or other fringe benefit plans, arrangements or trust
agreements of HCLS, together with copies of the most recent
reports with respect to such plans, arrangements, or trust
agreements filed with any governmental agency and all Internal
Revenue Service determination letters that have been received
with respect to such plans (collectively, "Employee Plans");
2.1.8.9. CERTAIN SALARIES. The names and salary rates
of all present employees of HCLS, and, to the extent existing
on the date of this Agreement, all arrangements with respect
to any bonuses to be paid to them from and after the date of
this Agreement;
2.1.8.10. BANK ACCOUNTS. The name of each bank in
which HCLS has an account and the names of all persons
authorized to draw thereon;
2.1.8.11. EMPLOYEE AGREEMENTS. Any collective
bargaining agreements of HCLS with any labor union or other
representative of employees, including amendments,
supplements, and written or oral understandings, and all
employment and consulting and severance agreements of HCLS;
2.1.8.12. INTELLECTUAL PROPERTY. All patents,
trademarks, copyrights and other intellectual property rights
owned, licensed, or used by HCLS;
2.1.8.13. TRADE NAMES. All trade names, assumed names
and fictitious names used or held by HCLS, whether and where
such names are registered and where used;
2.1.8.14. PROMISSORY NOTES. All long-term and
short-term promissory notes, installment contracts, loan
agreements, credit agreements, and any other agreements of
HCLS relating thereto or with respect to collateral securing
the same;
2.1.8.15. GUARANTIES. All indebtedness, liabilities
and commitments of others and as to which HCLS is a guarantor,
endorser, co-maker, surety, or accommodation maker, or is
contingently liable therefor and all letters of credit,
whether stand-by or documentary, issued by any third party;
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2.1.8.16. RESERVES AND ACCRUALS. All accounting
reserves and accruals maintained in the 6/30 Balance Sheet;
2.1.8.17. LEASES. All leases to which HCLS is a
party; and
2.1.8.18. ENVIRONMENT. All environmental permits,
approvals, certifications, licenses, registrations, orders and
decrees applicable to current operations conducted by HCLS and
all environmental audits, assessments, investigations and
reviews conducted by HCLS within the last five years on any
property owned or used by HCLS.
2.1.9. NO DEFAULTS. Except as is specified in SCHEDULE 2.1.9
hereto, HCLS is not a party to, or bound by, any contract or
arrangement of any kind to be performed after the Effective Date, nor
is HCLS in default in any obligation or covenant on its part to be
performed under any obligation, lease, contract, order, plan or other
arrangement.
2.1.10. ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set
forth in SCHEDULE 2.1.10 hereto, other than as a result of the
transactions contemplated by this Agreement, since the Balance Sheet
Date, there has not been:
2.1.10.1. FINANCIAL CHANGE. Any material adverse
change in the financial condition, backlog, operations,
assets, liabilities or business of HCLS;
2.1.10.2. PROPERTY DAMAGE. Any material damage,
destruction, or loss to the business or properties of HCLS
(whether or not covered by insurance);
2.1.10.3. DIVIDENDS. Any declaration, setting aside,
or payment of any dividend or other distribution in respect
of the HCLS Common Stock, or any direct or indirect
redemption, purchase or any other acquisition by HCLS of any
such stock;
2.1.10.4. CAPITALIZATION CHANGE. Any change in the
capital stock or in the number of shares or classes of HCLS's
authorized or outstanding capital stock as described in
Section 2.1.3 hereof;
2.1.10.5. LABOR DISPUTES. Any labor dispute; or
2.1.10.6. OTHER MATERIAL CHANGES. Any other event or
condition known to any of the Shareholders particularly
pertaining to and adversely affecting the operations, assets
or business of HCLS which would constitute a material adverse
change.
2.1.11. TAXES. All federal, state and local income, value
added, sales, use, franchise, gross revenue, turnover, excise, payroll,
property, employment, customs, duties and any and all other tax
returns, reports, and estimates have been filed with appropriate
governmental agencies, domestic and foreign, by HCLS for each period
for which any such returns, reports,
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or estimates were due (taking into account any extensions of time to
file before the date hereof); all taxes shown by such returns to be
payable and any other taxes due and payable have been paid other than
those being contested in good faith by HCLS; and the tax provision
reflected in the 6/30 Balance Sheet is (and the tax provision reflected
in the Final Balance Sheet will be) adequate, in accordance with
generally accepted accounting principles, to cover liabilities of HCLS
at the date thereof for all taxes, including any assessed interest,
assessed penalties and additions to taxes of any character whatsoever
applicable to HCLS or its assets or business. No waiver of any statute
of limitations executed by HCLS with respect to any income or other tax
is in effect for any period. The income tax returns of HCLS have never
been examined by the Internal Revenue Service or the taxing authorities
of any other jurisdiction. There are no tax liens on any assets of HCLS
except for taxes not yet currently due.
2.1.12. INTELLECTUAL PROPERTY. HCLS owns or possesses licenses
to use all patents, patent applications, trademarks and service marks
(including registrations and applications therefor), trade names,
copyrights and written know-how, trade secrets and all other similar
proprietary data and the goodwill associated therewith (collectively,
the "Intellectual Property") that are either material to the business
of HCLS or that are necessary for the rendering of any services
rendered by HCLS and the use or sale of any equipment or products used
or sold by HCLS, including all such Intellectual Property listed in
SCHEDULE 2.1.8 hereto. The Intellectual Property is owned or licensed
by HCLS free and clear of any Encumbrance. HCLS has not granted to any
other person any license to use any Intellectual Property. HCLS has not
received any notice of infringement, misappropriation, or conflict
with, the intellectual property rights of others in connection with the
use by HCLS of the Intellectual Property or otherwise in connection
with HCLS's operation of its business.
2.1.13. TITLE TO AND CONDITION OF ASSETS. HCLS has good,
indefeasible and marketable title to all its properties, interests in
properties and assets, real and personal, reflected in the 6/30 Balance
Sheet or in SCHEDULE 2.1.8 hereto, free and clear of any Encumbrance of
any nature whatsoever, except (i) Encumbrances reflected in the 6/30
Balance Sheet or in SCHEDULE 2.1.8 hereto, (ii) liens for current taxes
not yet due and payable, and (iii) such imperfections of title,
easements and Encumbrances, if any, as are not substantial in
character, amount, or extent and do not and will not materially detract
from the value, or interfere with the present use, of the property
subject thereto or affected thereby, or otherwise materially impair
business operations. All leases pursuant to which HCLS leases (whether
as lessee or lessor) any substantial amount of real or personal
property are in good standing, valid, and effective; and there is not,
under any such leases, any existing default or event of default or
event which with notice or lapse of time, or both, would constitute a
default by HCLS and in respect to which HCLS has not taken adequate
steps to prevent a default from occurring. The buildings and premises
of HCLS that are used in its business are in good operating condition
and repair, subject only to ordinary wear and tear. All major items of
equipment of HCLS are in good operating condition and in a state of
reasonable maintenance and repair, ordinary wear and tear excepted, and
are free from any known defects except as may be repaired by routine
maintenance and such minor defects as to not substantially interfere
with the continued use thereof in the conduct of normal
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operations. To the best of each Shareholder's knowledge, all such
assets conform to all applicable laws governing their use. No notice of
any violation of any law, statute, ordinance, or regulation relating to
any such assets has been received by HCLS or any of the Shareholders,
except such as have been fully complied with.
2.1.14. CONTRACTS. All contracts, leases, plans or other
arrangements to which HCLS is a party, by which it is bound or to which
it or its assets are subject are in full force and effect, and
constitute valid and binding obligations of HCLS. HCLS is not, and to
the knowledge of any of the Shareholders, no other party to any such
contract, lease, plan or other arrangement is, in default thereunder,
and no event has occurred which (with or without notice, lapse of time,
or the happening of any other event) would constitute a default
thereunder. No contract has been entered into on terms which could
reasonably be expected to have an adverse effect on HCLS. None of the
Shareholders have received any information which would cause any of the
Shareholders to conclude that any customer of HCLS will (or is likely
to) cease doing business with HCLS as a result of the consummation of
the transactions contemplated hereby.
2.1.15. LICENSES AND PERMITS. HCLS possesses all permits,
authorizations, certificates, approvals, registrations, variances,
waivers, exemptions, rights-of-way, franchises, ordinances, licenses
and other rights of every kind and character (collectively, "Permits")
necessary under law or otherwise for HCLS to conduct its business as
now being conducted and to construct, own, operate, maintain and use
its assets in the manner in which they are now being constructed,
operated, maintained and used. Each of such Permits and HCLS's rights
with respect thereto (1) is valid and subsisting, in full force and
effect, and enforceable by HCLS subject to administrative powers of
regulatory agencies having jurisdiction, and (2) following consummation
of the transactions contemplated hereby, will continue to be valid and
subsisting in full force and effect, and subject to any requisite
governmental consents, enforceable by HCLS or Lasermedics without any
consent or approval of any governmental body or third party; or, in
lieu of such existing Permits, replacement or substitute Permits, will
be available to or obtainable by HCLS or Lasermedics at little or no
cost in the ordinary course without any interruption of the conduct of
the business following the Effective Date, assuming timely application
therefor and reasonable diligence in pursuit thereof by HCLS or
Lasermedics. HCLS is in compliance in all material respects with the
terms of such Permits. None of such Permits have been, or to the
knowledge of any of the Shareholders, are threatened to be, revoked,
canceled, suspended or modified.
2.1.16. LITIGATION. There is no suit, action, or legal,
administrative, arbitration, or other proceeding or governmental
investigation pending to which HCLS is a party or, to the knowledge of
any of the Shareholders, might become a party or which particularly
affects HCLS, nor is any change in the zoning or building ordinances
directly affecting the real property or leasehold interests of HCLS,
pending or, to the knowledge of any of the Shareholders, threatened.
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2.1.17. ENVIRONMENTAL COMPLIANCE.
2.1.17.1. ENVIRONMENTAL CONDITIONS. There are no
environmental conditions or circumstances, including, without
limitation, the presence or release of any hazardous
substance, on any property presently or previously owned by
HCLS, or on any property to which hazardous substances or
waste generated by HCLS's operations or use of its assets were
disposed of, which would result in a material adverse change
in the business or business prospects of HCLS;
2.1.17.2. PERMITS, ETC. HCLS has in full force and
effect all environmental permits, licenses, approvals and
other authorizations required to conduct its operations, other
than those that are not material to the business or operations
of HCLS, and is operating in compliance thereunder;
2.1.17.3. COMPLIANCE. HCLS's operations and use of
its assets do not violate in any material respect any
applicable federal, state or local law, statute, ordinance,
rule, regulation, order or notice requirement pertaining to
(a) the condition or protection of air, groundwater, surface
water, soil, or other environmental media, (b) the
environment, including natural resources or any activity
which affects the environment, or (c) the regulation of any
pollutants, contaminants, waste, substances (whether or not
hazardous or toxic), including, without limitation, the
Comprehensive Environmental Response Compensation and
Liability Act (42 U.S.C. ss. 9601 ET SEQ.), the Hazardous
Materials Transportation Act (49 U.S.C. ss. 1801 ET SEQ.),
the Resource Conservation and Recovery Act (42 U.S.C. ss.
1609 ET SEQ.), thE Clean Water Act (33 U.S.C. 1251 ET SEQ.),
the Clean Air Act (42 U.S.C. ss. 7401 ET SEQ.), the Toxic
Substances Control Act (17 U.S.C. ss. 2601 ET SEQ.), the
FederaL Insecticide Fungicide and Rodenticide Act (7 U.S.C.
ss. 136 ET SEQ.), the Safe Drinking Water Act (42 U.S.C. ss.
201 and ss. 300f ET SEQ.), the Rivers and Harbors Act (33
U.S.C. ss. 401 ET SEQ.), the Oil Pollution Act (33 U.S.C. ss.
2701 ET SEQ.) and analogous federal, interstate, state and
local requirements, as any of the foregoing may have been
amended or supplemented from time to time (collectively, the
"Applicable Environmental Laws");
2.1.17.4. PAST COMPLIANCE. None of the operations or
assets of HCLS has ever been conducted or used in such a
manner as to constitute violation of any of the Applicable
Environmental Laws, other than violations that in the
aggregate are not material to the business or operations of
HCLS;
2.1.17.5. ENVIRONMENTAL CLAIMS. No notice has been
served on HCLS or any of the Shareholders from any entity,
governmental agency or individual regarding any existing,
pending or threatened investigation, inquiry, enforcement
action or litigation related to alleged violations under any
Applicable Environmental Laws, or regarding any claims for
remedial obligations, response costs or contribution under any
Applicable Environmental Laws;
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2.1.17.6. RENEWALS. None of the Shareholders know of
any reason the Surviving Corporation would not be able to
renew any of the permits, licenses, or other authorizations
required pursuant to any of the Applicable Environmental Laws
to operate and use any of HCLS's assets for their current
purposes and uses; and
2.1.17.7. ASBESTOS AND PCBS. No material amounts of
friable asbestos currently exist on any property owned or
operated by HCLS, nor do polychlorinated biphenyls exist in
concentrations of 50 parts per million or more in electrical
equipment owned or being used by HCLS in its operations or on
its properties.
2.1.18. COMPLIANCE WITH OTHER LAWS. HCLS is not in violation
of or in default with respect to, or in alleged violation of or alleged
default with respect to, the Occupational Safety and Health Act (29
U.S.C. ss.ss.651 ET SEQ.) as amended, or any other applicable law or
any applicable rule, regulation, or any writ or decree of any court or
any governmental commission, board, bureau, agency, or instrumentality,
or delinquent with respect to any report required to be filed with any
governmental commission, board, bureau, agency or instrumentality.
2.1.19. LABOR ISSUES. HCLS has not engaged in any unfair labor
practices which could reasonably be expected to result in a material
adverse effect on its operations or assets. HCLS does not have any
dispute with any of its existing or former employees. There are no
labor disputes or, to the knowledge of any of the Shareholders, any
disputes threatened by current or former employees of HCLS.
2.1.20. TERMINATED EMPLOYEES. HCLS has terminated those
employees listed on SCHEDULE 2.1.20 hereto effective prior to the date
hereof (the "Terminated Employees") and has paid the Terminated
Employees all wages and other compensation owed them through the date
of termination.
2.1.21. COMPLIANCE WITH ERISA. Each benefit plan set forth in
SCHEDULE 2.1.21 hereto (collectively the "Benefit Plans") complies
currently, and has complied in the past, in form and operation, with
the applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), the Code and other applicable laws.
All contributions required to be made to each Benefit Plan under the
terms of such Benefit Plans, ERISA or other applicable laws have been
timely made.
2.1.21.1. PROHIBITED TRANSACTIONS. HCLS has not
engaged in any transaction in connection with which it could
be subject (either directly or indirectly) to a material
liability for either a civil penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed by Section 4975 of
the Code.
2.1.21.2. PLAN TERMINATION; MATERIAL LIABILITIES.
There has been no termination of an "employee pension benefit
plan" as defined in ERISA which is subject to Title IV of
ERISA (a "Statutory Plan") or trust created under any
Statutory Plan that would give rise to a material liability
to the Pension Benefit Guaranty
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Corporation ("PBGC") on the part of HCLS. All Statutory Plans
intended to be tax-qualified under Section 401(a) or 403(a) of
the Code have complied in the past, both in form and
operation, with every provision of the Code, regulation
promulgated pursuant thereto, and every ruling, notice or
announcement issued by the Internal Revenue Service necessary
to maintain the qualified status of such Statutory Plans. No
material liability to the PBGC has been or is expected to be
incurred with respect to any Statutory Plan. The PBGC has not
instituted proceedings to terminate any Statutory Plan. There
exists no condition or set of circumstances which presents a
material risk or termination or partial termination of any
Statutory Plan by the PBGC.
2.1.21.3. ACCUMULATED FUNDING DEFICIENCY. Full
payment has been made of all amounts which are required under
the terms of each Statutory Plan, ERISA or other applicable
laws to have been paid as contributions to such Statutory
Plan, and no accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or
not waived, exists with respect to any Statutory Plan.
2.1.21.4. RELATIONSHIP OF BENEFITS TO PENSION PLAN
ASSETS. The current value of all accrued benefits, both vested
and unvested, under all Statutory Plans does not exceed the
current value of the assets of such Statutory Plans allocable
to such accrued benefits. For purposes of the representation
in this Section 2.1.21.4, the term "current value" has the
meaning specified in Section 4062(b)(1)(A) of ERISA, the term
"accrued benefit" has the meaning specified in Section 3 of
ERISA and "current value" is based upon the same actuarial
assumptions used by HCLS.
2.1.21.5. EXECUTION OF AGREEMENTS. The execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby will not involve any
transaction which is subject to the prohibitions of Section
406 or ERISA or in connection with which a tax could be
imposed pursuant to Section 4975 of the Code.
2.1.21.6. FIDUCIARY LIABILITY. There have been no
acts, failures to act, omissions or transactions involving a
Statutory Plan or the assets thereof which could result in
imposition on HCLS (whether direct or indirect) of damages or
liability in actions brought under Section 502 or Sections 404
through 409 of ERISA.
2.1.21.7. PENDING CLAIMS. There are no claims,
pending or overtly threatened, involving any of the Benefit
Plans by any current or former employee (or beneficiary
thereof) of HCLS which allege any violation of ERISA or the
terms of the Benefit Plans, nor is there any reasonable basis
to anticipate any claims involving such Benefit Plans which
would likely be successfully maintained against HCLS.
2.1.21.8. MULTIEMPLOYER PLANS. HCLS neither
contributes nor has any obligation to contribute to any plan
which is a "multiemployer plan" as such term is defined in
Section 3(37) or 4001(a)(3) of ERISA.
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2.1.21.9. NO REPORTABLE EVENT. There has been no
"reportable event" (within the meaning of Section 4043(b) of
ERISA with respect to a Statutory Plan) or any "prohibited
transaction" (as such term is defined in Section 406 of ERISA
and Section 4975(c) of the Code) with respect to any of the
Employee Plans. All reporting and disclosure requirements
under Title I of ERISA have been met.
2.1.22. INVESTIGATIONS; LITIGATION. No investigation or review
by any governmental entity with respect to HCLS or any of the
transactions contemplated by this Agreement is pending or, to the best
of each Shareholder's knowledge, threatened, nor has any governmental
entity indicated to HCLS an intention to conduct the same, and there is
no action, suit or proceeding pending or, to the best of each
Shareholder's knowledge, threatened against or affecting HCLS at law or
in equity, or before any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, that either individually or in the aggregate, does or
is likely to result in any material adverse change in the financial
condition, properties or business of HCLS.
2.1.23. ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither HCLS
nor any officer, employee or agent of HCLS, nor any other person acting
on its behalf, has, directly or indirectly, within the past five years,
given or agreed to give any gift or similar benefit to any customer,
supplier, government employee or other person who is or may be in a
position to help or hinder the business of HCLS (or to assist HCLS in
connection with any actual or proposed transaction) which (i) might
subject HCLS to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (ii) if not given in the past,
might have had a material adverse effect on the assets, business or
operations of HCLS as reflected in the 6/30 Financial Statements, or
(iii) if not continued in the future, might materially adversely effect
the assets, business operations or prospects of HCLS or which might
subject HCLS to suit or penalty in a private or governmental litigation
or proceeding.
2.1.24. UNTRUE STATEMENTS. HCLS and each of the Shareholders
have made available to Lasermedics true, complete and correct copies of
all contracts, documents concerning all litigation and administrative
proceedings, licenses, permits, insurance policies, lists of suppliers
and customers, and records relating principally to HCLS's assets and
business, and such information covers all commitments and liabilities
of HCLS relating principally to its business or the assets. This
Agreement and the agreements and instruments to be entered into in
connection herewith do not include any untrue statement of a material
fact or omit to state any material fact necessary to make the
statements made herein and therein not misleading in any material
respect.
2.1.25. INVESTMENT REPRESENTATIONS. Each of the Shareholders
acknowledges, represents and agrees that:
(a) the Lasermedics Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or
registered or qualified under any applicable state securities laws;
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(b) the Lasermedics Shares are being issued to such
Shareholder in reliance upon exemptions from such registration or
qualification requirements, and the availability of such exemptions
depends in part upon such Shareholder's bona fide investment intent
with respect to the Lasermedics Shares;
(c) such Shareholder's acquisition of the Lasermedics Shares
is solely for his own account for investment, and such Shareholder is
not acquiring the Lasermedics Shares for the account of any other
person or with a view toward resale, assignment, fractionalization, or
distribution thereof;
(d) such Shareholder shall not offer for sale, sell, transfer,
pledge, hypothecate or otherwise dispose of any of the Lasermedics
Shares except in accordance with the registration requirements of the
Securities Act and applicable state securities laws or upon delivery to
Lasermedics of an opinion of legal counsel reasonably satisfactory to
Lasermedics that an exemption from registration is available;
(e) such Shareholder has such knowledge and experience in
financial and business matters that they are capable of evaluating the
merits and risks of an investment in the Lasermedics Shares, and to
make an informed investment decision;
(f) such Shareholder has received a copy of (i) Lasermedics's
annual report on Form 10-K for the year ended December 31, 1995 as
filed with the Securities and Exchange Commission (the "SEC") and (ii)
Lasermedics's quarterly reports on Form 10-Q for the three months ended
March 31, 1996, June 30, 1996 and September 30, 1996 as filed with the
SEC. Such Shareholder has had the opportunity to ask questions of, and
receive answers from Lasermedics's officers and directors concerning
the Shareholder's acquisition of the Lasermedics Shares and to obtain
such other information concerning Lasermedics and the Lasermedics
Shares, to the extent Lasermedics's officers and directors possessed
the same or could acquire it without unreasonable effort or expense, as
the Shareholder deemed necessary in connection with making an informed
investment decision;
(g) since the Lasermedics Shares have not been registered
under the Securities Act or applicable state securities laws, the
Shareholder must bear the economic risk of holding the Lasermedics
Shares for an indefinite period of time, and are capable of bearing
such risk; and
(h) in addition to any other legends required by law or the
other agreements entered into in connection herewith, each certificate
evidencing the Lasermedics Shares will bear a conspicuous restrictive
legend substantially as follows:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR UNDER ANY
APPLICABLE STATE SECURITIES LAWS, AND THEY CANNOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE HYPOTHECATED
-16-
EXCEPT IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF THE
ACT AND SUCH OTHER STATE LAWS OR UPON DELIVERY TO THIS
CORPORATION OF AN OPINION OF LEGAL COUNSEL SATISFACTORY TO THE
CORPORATION THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
2.1.26. CONSENTS AND APPROVALS. No consent, approval or
authorization of, or filing or registration with, any governmental or
regulatory authority, or any other person or entity other than HCLS and
the Shareholders, is required to be made or obtained by HCLS or any of
the Shareholders in connection with the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated hereby.
2.1.27. FINDER'S FEE. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on
by HCLS and the Shareholders and their counsel directly with
Lasermedics and Acquistion Sub and their counsel, without the
intervention of any other person in such manner as to give rise to any
valid claim against any of the parties hereto for a brokerage
commission, finder's fee or any similar payments.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
LASERMEDICS AND ACQUISTION SUB
3.1. REPRESENTATIONS AND WARRANTIES OF LASERMEDICS. Lasermedics
represents and warrants to each of the Shareholders as follows:
3.1.1. ORGANIZATION AND STANDING. Lasermedics is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Texas, has full requisite corporate power and authority to
carry on its business as it is currently conducted, and to own and
operate the properties currently owned and operated by it, and is duly
qualified or licensed to do business and is in good standing as a
foreign corporation authorized to do business in all jurisdictions in
which the character of the properties owned or the nature of the
business conducted by it would make such qualification or licensing
necessary.
3.1.2. AGREEMENT AUTHORIZED AND ITS EFFECT ON OTHER
OBLIGATIONS. The consummation of the transactions contemplated hereby
has been duly and validly authorized by all necessary corporate action
on the part of Lasermedics, and this Agreement is a valid and binding
obligation of Lasermedics enforceable (subject to normal equitable
principles) in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, debtor relief or
similar laws affecting the rights of creditors generally. The
execution, delivery and performance of this Agreement and the
consummation of the Merger contemplated by this Agreement will not
result in the breach of any term or provision of or constitute a
default under any obligation, indenture, mortgage,
-17-
deed of trust, lease, contract or other agreement to which Lasermedics
or any of its subsidiaries is a party.
3.1.3. FINDER'S FEE. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on
by Lasermedics and its counsel directly with HCLS and the Shareholders
and their counsel, without the intervention by any other person as the
result of any act of Lasermedics in such a manner as to give rise to
any valid claim against any of the parties hereto for any brokerage
commission, finder's fee or any similar payments.
3.2. REPRESENTATIONS AND WARRANTIES OF ACQUISTION SUB. Acquistion Sub
represents and warrants to each of the Shareholders as follows:
3.2.1. ORGANIZATION AND STANDING. Acquistion Sub is a
corporation duly organized, validly existing, and in good standing
under the laws of Michigan, has full requisite corporate power and
authority to carry on its business as it is currently conducted, and to
own and operate the properties currently owned and operated by it, and
is duly qualified or licensed to do business and is in good standing as
a foreign corporation authorized to do business in all jurisdictions in
which the character of the properties owned or the nature of the
business conducted by it would make such qualification or licensing
necessary.
3.2.2. AGREEMENT AUTHORIZED AND ITS EFFECT ON OTHER
OBLIGATIONS. The execution and delivery of this Agreement has been
authorized by the board of directors and all of the holders of capital
stock of Acquistion Sub, the consummation of the transactions
contemplated hereby has been duly and validly authorized by all
necessary corporate action on the part of Acquistion Sub, and this
Agreement is a valid and binding obligation of Acquistion Sub
enforceable against Acquistion Sub (subject to normal equitable
principles) in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, debtor relief or
similar laws affecting the rights of creditors generally.
3.2.3. FINDER'S FEE. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on
by Acquistion Sub and its counsel and HCLS and the Shareholders and
their counsel, without the intervention of any other person as the
result of any act of Acquistion Sub in such a manner as to give rise to
any valid claim against any of the parties hereto for any brokerage
commission, finder's fee or any similar payments.
ARTICLE 4
ADDITIONAL AGREEMENTS
4.1. NONCOMPETITION. Except as otherwise consented to or approved in
writing by Acquistion Sub and Lasermedics, each of the Shareholders agrees that
for a period of 60 months following the Effective Date, such Shareholder will
not, directly or indirectly, acting alone or as a
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member of a partnership or as an officer, director, employee, consultant,
representative, holder of, or investor in as much as 5% of any security of any
class of any corporation or other business entity (i) engage in competition with
the business or businesses conducted by HCLS or Lasermedics at the Effective
Date, or in any manufacturing, publishing or distribution business the products
of which are provided and marketed by HCLS or Lasermedics at the Effective Date
in any state of the United States, or any foreign country in which HCLS or
Lasermedics transacts business on the Effective Date; (ii) request any present
customers or suppliers of HCLS to curtail or cancel their business with HCLS or
Lasermedics; (iii) disclose to any person, firm or corporation any trade,
technical or technological secrets of HCLS or Lasermedics or any details of
their organization or business affairs or (iv) induce or actively attempt to
influence any employee of HCLS or Lasermedics to terminate his employment. Each
of the Shareholders agrees that if either the length of time or geographical
area set forth in this Section is deemed too restrictive in any court
proceeding, the court may reduce such restrictions to those which it deems
reasonable under the circumstances. The obligations expressed in this Section
4.1 are in addition to any other obligations that the Shareholders may have
under the laws of the State of Michigan requiring an employee of a business or a
shareholder who sells his stock in a corporation (including a disposition in a
merger) to limit his activities so that the goodwill and business relations of
his employer and of the corporation whose stock he has sold (and any successor
corporation) will not be materially impaired. Each of the Shareholders further
agrees and acknowledges that Acquistion Sub and Lasermedics do not have any
adequate remedy at law for the breach or threatened breach by such Shareholder
of this covenant, and agree that Lasermedics or the Surviving Corporation may,
in addition to the other remedies which may be available to it hereunder, file a
suit in equity to enjoin such Shareholder from such breach or threatened breach.
If any provisions of this Section 4.1 are held to be invalid or against public
policy, the remaining provisions shall not be affected thereby. Each of the
Shareholders acknowledges that the covenants set forth in this Section 4.1 are
being executed and delivered by such Shareholder in consideration of the
covenants of Acquistion Sub and Lasermedics contained in this Agreement, and for
other good and valuable consideration, receipt of which is hereby acknowledged.
4.2. FURTHER ASSURANCES. From time to time, as and when requested by
any party hereto, any other party hereto shall execute and deliver, or cause to
be executed and delivered, such documents and instruments and shall take, or
cause to be taken, such further or other actions as may be reasonably necessary
to effectuate the transactions contemplated hereby.
ARTICLE 5
INDEMNIFICATION
5.1. INDEMNIFICATION BY SHAREHOLDERS. In addition to any other remedies
available to Lasermedics under this Agreement, or at law or in equity, each of
the Shareholders shall jointly and severally indemnify, defend and hold harmless
Lasermedics and the Surviving Corporation, and their respective officers,
directors, employees, agents and stockholders, against and with respect to any
and all claims, costs, damages, losses, expenses, obligations, liabilities,
recoveries, suits, causes of action and deficiencies, including interest,
penalties and reasonable attorneys' fees and expenses (collectively, the
"Damages") that such indemnitees shall incur or suffer, which arise, result from
-19-
or relate to (i) any breach of, or failure by any of the Shareholders to
perform, his respective representations, warranties, covenants or agreements in
this Agreement or in any schedule, certifi cate, exhibit or other instrument
furnished or delivered to Lasermedics by HCLS or any of the Shareholders under
this Agreement or (ii) HCLS's prior employment relationship with any Terminated
Employee.
5.2. INDEMNIFICATION BY LASERMEDICS. In addition to any other remedies
available to the Shareholders under this Agreement, or at law or in equity,
Lasermedics shall indemnify, defend and hold harmless each of the Shareholders
and his employees and agents against and with respect to any and all Damages
that such indemnitees shall incur or suffer, which arise, result from or relate
to (i) any breach of, or failure by Acquistion Sub or Lasermedics to perform,
any of its representations, warranties, covenants or agreements in this
Agreement or in any schedule, certificate, exhibit or other instrument furnished
or delivered to HCLS or any of the Shareholders by or on behalf of Lasermedics
or Acquistion Sub under this Agreement or (ii) any of the personal guarantees of
the Shareholders with respect to loans from Comerica Bank to HCLS.
5.3. INDEMNIFICATION PROCEDURE. In the event that any party hereto
discovers or otherwise becomes aware of an indemnification claim arising under
Section 5.1 or Section 5.2 of this Agreement, such indemnified party shall give
written notice to the indemnifying party, specifying such claim, and may
thereafter exercise any remedies available to such party under this Agreement;
PROVIDED, HOWEVER, that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of any obligations
hereunder, to the extent the indemnifying party is not materially prejudiced
thereby. Further, promptly after receipt by an indemnified party hereunder of
written notice of the commencement of any action or proceeding with respect to
which a claim for indemnification may be made pursuant to this Article 5, such
indemnified party shall, if a claim in respect thereof is to be made against any
indemnifying party, give written notice to the latter of the commencement of
such action; PROVIDED, HOWEVER, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of any
obligations hereunder, to the extent the indemnifying party is not materially
prejudiced thereby. In case any such action is brought against an indemnified
party, the indemnifying party shall be entitled to participate in and to assume
the defense thereof, jointly with any other indemnifying party similarly
notified, to the extent that it may wish, with counsel reasonably satisfactory
to such indemnified party, and after such notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof unless the indemnifying party has failed to assume the defense
of such claim and to employ counsel reasonably satisfactory to such indemnified
person. An indemnifying party who elects not to assume the defense of a claim
shall not be liable for the fees and expenses of more than one counsel in any
single jurisdiction for all parties indemnified by such indemnifying party with
respect to such claim or with respect to claims separate but similar or related
in the same jurisdiction arising out of the same general allegations.
Notwithstanding any of the foregoing to the contrary, the indemnified party will
be entitled to select its own counsel and assume the defense of any action
brought against it if the indemnifying party fails to select counsel reasonably
satisfactory to the indemnified party, the expenses of such defense to be paid
by the indemnifying party. No indemnifying party shall consent to entry of any
judgment or enter into any settlement with respect
-20-
to a claim without the consent of the indemnified party, which consent shall not
be unreasonably withheld, or unless such judgment or settlement includes as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability with respect to such claim. No
indemnified party shall consent to entry of any judgment or enter into any
settlement of any such action, the defense of which has been assumed by an
indemnifying party, without the consent of such indemnifying party, which
consent shall not be unreasonably withheld.
5.4. OFFSET. The parties hereto agree that if the Surviving Corporation
or Lasermedics shall incur any Damages for which it is entitled to
indemnification by the Shareholders pursuant to the terms of this Agreement,
Lasermedics shall have the right to offset any payments due or to be due under
the terms of this Agreement or any other agreement executed in connection
herewith, by the amount of the Damages, including the right to reduce the number
of Additional Shares to be issued to the Shareholders pursuant to Section 1.10.4
hereof. Such right of offset shall not be considered an exclusive remedy, it
being agreed that Lasermedics shall also be entitled to exercise any other
remedies available to it at law or in equity, including, without limitation, the
indemnification rights set forth in this Article 5. In the event of an offset by
Lasermedics as a result of any account receivable of HCLS not being collected in
breach of the representation of the Shareholders in Section 2.1.6 hereof, upon
any such offset, Lasermedics shall assign to the Shareholders the account
receivable subject to offset, and the Shareholders shall thereafter have the
right to take any reasonable action to collect such account receivable. In the
event of an offset by Lasermedics as a result of any inventory of HCLS being
unsalable in the normal course of business in breach of the representations of
the Shareholders in Section 2.1.6 hereof, upon any such offset, Lasermedics
shall convey and transfer to the Shareholders title to such inventory subject to
offset.
ARTICLE 6
MISCELLANEOUS
6.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
All representations, warranties, covenants and agreements made by the parties
hereto shall survive indefinitely without limitation, notwithstanding any
investigation made by or on behalf of any of the parties hereto. All statements
contained in any certificate, schedule, exhibit or other instrument delivered
pursuant to this Agreement shall be deemed to have been representations and
warranties by the respective party or parties, as the case may be, and shall
also survive without limitation despite any investigation made by any party
hereto or on its behalf.
6.2. ENTIRETY. This Agreement embodies the entire agreement among the
parties with respect to the subject matter hereof, and all prior agreements
between the parties with respect thereto are hereby superseded in their
entirety.
6.3. COUNTERPARTS. Any number of counterparts of this Agreement may be
executed and each such counterpart shall be deemed to be an original instrument,
but all such counterparts together shall constitute but one instrument.
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6.4. NOTICES AND WAIVERS. Any notice or waiver to be given to any party
hereto shall be in writing and shall be delivered by courier, sent by facsimile
transmission or first class registered or certified mail, postage prepaid,
return receipt requested.
IF TO LASERMEDICS OR THE SURVIVING CORPORATION
Addressed to: With a copy to:
Lasermedics, Inc. Xxxxxx & Xxxxxx, L.L.P.
000 Xxxxxxxxxx Xxxxxxxxx 000 Xxxxxxxxx, 00xx Xxxxx
Xxxxx Xxxx, Xxxxx 00000 Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxxx Attention: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
IF TO ANY OF THE SHAREHOLDERS
Addressed to: With a copy to:
Xxxxxx X. Xxxxxxxxx Adams, Howe, Xxxxxxxx & Xxxxxxxx, P.C.
0000 Xxxxx Xxxx 000 Xxxxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000 Xx. Xxxxx Xxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000 Attention: Xxxxx X. Xxxx
Facsimile: (000) 000-0000
Xxxxxxx Xxxxxxx
0000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Xxxxx X. Xxxxxxx
0000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Any communication so addressed and mailed by first-class registered or
certified mail, postage prepaid, with return receipt requested, shall be deemed
to be received on the third business day after so mailed, and if delivered by
courier or facsimile to such address, upon delivery during normal business hours
on any business day.
6.5. CAPTIONS. The captions contained in this Agreement are solely for
convenient reference and shall not be deemed to affect the meaning or
interpretation of any article, section, or paragraph hereof.
6.6. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of and be enforceable by the successors and assigns
of the parties hereto.
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6.7. SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void,
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
6.8. APPLICABLE LAW. This Agreement shall be governed by and construed
and enforced in accordance with the applicable laws of the State of Michigan.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Shareholders have executed this Agreement and
the other parties hereto have caused this Agreement to be signed in their
respective corporate names by their respective duly authorized representatives,
all as of the day and year first above written.
LASERMEDICS, INC.
By: /S/ XXXXXXX X. XXXXXXX
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
LASERMEDICS ACQUISTION NO. 1, INC.
By: /S/ XXXXXXX X. XXXXXXX
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
HEALTH CAREER LEARNING SYSTEMS, INC.
By: /S/ XXXXXX X. XXXXXXXXX
Xxxxxx X. Xxxxxxxxx
Chairman
SHAREHOLDERS:
/S/ XXXXXX XXXXXXXXX
Xxxxxx Xxxxxxxxx
/S/ XXXXX X. XXXXXXX
Xxxxx X. Xxxxxxx
/S/ XXXXXXX XXXXXXX
Xxxxxxx Xxxxxxx
