AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of December 18, 1997 by and among
MEDIWARE INFORMATION SYSTEMS, INC., a corporation organized under the laws of
the State of New York ("Parent"), MEDIWARE ACQUISITION CORPORATION, a
corporation organized under the laws of the State of Oregon and a wholly-owned
subsidiary of Parent ("Acquisition") and INFORMEDICS, INC., a corporation
organized under the laws of the State of Oregon (the "Company").
WHEREAS, the respective Boards of Directors of the Parent, Acquisition
and the Company have approved the merger of the Company with and into
Acquisition (the "Merger"), with Acquisition being the surviving corporation
upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements set forth herein, and intending to be
legally bound hereby, the parties hereby agree as follows:
ARTICLE I
THE MERGER
1.1 Surviving Corporation. In accordance with the provisions of this
Agreement and the Oregon Business Corporation Act (the "Oregon Act"), at the
Effective Date (as defined in Section 1.6, below) the Company shall be merged
with and into Acquisition, with Acquisition being the surviving corporation in
the Merger, with the initial corporate name of Mediware Acquisition Corp.
(hereinafter sometimes called the "Surviving Corporation"). At the Effective
Date, the separate existence of the Company shall cease and the Surviving
Corporation shall continue its corporate existence under the laws of the State
of Oregon as a wholly-owned subsidiary of Parent. Without limiting the
generality of the foregoing, from and after the Effective Date the Surviving
Corporation shall possess all of the rights, privileges, immunities, powers and
purposes, and shall assume and be liable for all of the liabilities, obligations
and penalties, of each of Acquisition and the Company, and the Merger shall have
all of the effects provided for in Section 60.497 of the Oregon Act.
1.2 Articles of Incorporation. The Articles of Incorporation of
Acquisition as in effect at the Effective Date shall be the Articles of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law.
1.3 By-Laws. The By-Laws of Acquisition as in effect at the Effective
Date shall be the By-Laws of the Surviving Corporation until thereafter amended
as provided by law.
1.4 Directors. The directors of Acquisition at the Effective Date
shall, from and after the Effective Date, be the directors of the Surviving
Corporation, all such directors to hold office until their respective successors
are duly elected and qualified in the manner provided in the Articles of
Incorporation and By-Laws of the Surviving Corporation, or as otherwise provided
by law.
1.5 Officers. The officers of Acquisition at the Effective Date shall,
from and after the Effective Date, be the officers of the Surviving Corporation,
all such officers to hold office until their respective successors are duly
elected and qualified in the manner provided in the Articles of Incorporation
and By-Laws of the Surviving Corporation, or as otherwise provided by law.
1.6 Effective Date. As soon as practicable following the Closing (as
defined in Section 2.4, below), Articles of Merger shall be filed with the
Secretary of State of the State of Oregon. The Merger shall become effective at
such time as the Articles of Merger are filed with the Secretary of State
pursuant to Section 60.494 of the Oregon Act. The time when the Merger shall
become effective is herein referred to as the "Effective Date."
1.7 Additional Actions. If, at any time after the Effective Date, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other acts or things are necessary or
desirable to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation, its right, title or interest in or to any of the rights, properties
or assets of Acquisition or the Company acquired or to be acquired by reason of,
or as a result of, the Merger, or otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors shall
be authorized to execute and deliver, in the name and on behalf of Acquisition
or the Company, all such deeds, bills of sale, assignments and assurances and to
do, in the name and on behalf of Acquisition or the Company, all such other acts
and things necessary or desirable to vest, perfect or confirm any and all right,
title or interest in, to or under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out the purposes of this Agreement.
ARTICLE II
CONSIDERATION; CONVERSION OF SHARES
2.1 Merger Consideration. The consideration payable in the Merger to
holders of shares of the Company's Common Stock, par value $.01 per share
("Company Common Stock"), shall consist solely of a total of Four Hundred Twenty
One Thousand Three Hundred Eighty Three (421,383) shares of the Common Stock,
par value $.10 per share, of Parent ("Parent Common Stock"), such shares of
Parent Common Stock to be issuable at the Closing in accordance with the terms
of this Agreement, subject to increase to reflect exercises of outstanding
employee stock options prior to the Closing.
2.2 Conversion of Shares; Cancellation of Options.
(a) Each share of Company Common Stock issued and outstanding
as of the Effective Date (other than Dissenting Shares, as defined in Section
2.2(e), below) shall, by virtue of the Merger and without any action on the part
of the holder thereof, automatically be converted into 0.1587301 of a share of
Parent Common Stock, with the ratio of Company Common Stock exchangeable into
Parent Common Stock being 6.3:1, which ratio is referred to herein as the
"Exchange Ratio."
(b) All options and warrants to acquire shares of Company
Common Stock (collectively, "Company Options") that are outstanding and
unexercised at the Effective Date and that are held by persons who are employees
of the Company prior to the Merger who will continue as employees of the
Surviving Corporation following the Merger, shall by virtue of the Merger and
without any action on the part of such Company Option holders, automatically be
canceled and terminated in consideration for the issuance to such Company Option
holders of replacement options with comparable vesting provisions to purchase
Parent Common Stock at the Exchange Ratio (i.e., for each option to purchase one
share of Company Common Stock, the holder thereof would receive an option to
purchase 0.1587301 of a share of Parent Common Stock) at the exercise prices
applicable to Company Options prior to the Merger.
(c) All Company Options which have vested that are outstanding
and unexercised at the Effective Date and that are held by persons who will not
be employees of the Surviving Corporation following the Merger shall, by virtue
of the Merger and without any action on the part of such Option holders,
automatically be canceled and terminated in a cashless exchange in consideration
for the issuance of registered shares of Parent Common Stock, with each option
to acquire one share of Company Common Stock being converted into an option to
acquire 0.1587301 of a share of Parent Common Stock, valuing the Parent Common
Stock for purposes of the cashless exercise at its closing price on the business
day prior to the Effective Date and subtracting the exercise price to determine
the net value, and dividing the net value by the closing price of Parent Common
Stock on the business day prior to the Effective Date to determine the number of
Parent Common Stock share equivalents to be received in the Merger (rounded,
however, to the nearest whole number per option holder to avoid the issuance of
fractional shares).
(d) Each share of Company Common Stock held in the Company's
treasury as of the Effective Date shall, by virtue of the Merger, be canceled
without payment of any consideration therefor.
(e) Notwithstanding the foregoing, any shares of Company
Common Stock issued and outstanding immediately prior to the Effective Date
which are held by shareholders who have not voted such shares in favor of the
Merger and who have complied with all other relevant provisions of Section
60.571 of the Oregon Act (the "Dissenting Shares") shall not be converted into
shares of Parent Common Stock in the manner contemplated by Section 2.2(a)
above, and the rights of holders of Dissenting Shares shall be governed by the
provisions of the Oregon Act.
2.3 Cancellation of Certificates. At the Closing, certificates representing
all of the issued and outstanding shares of Company Common Stock (other than
Dissenting Shares), together with all instruments representing Company Options,
shall be surrendered. At the Effective Date, each such certificate shall be
canceled and, simultaneously with such cancellation, a new certificate for
shares of Parent Common Stock, representing the number of shares of Parent
Common Stock into which the shares of Company Common Stock formerly represented
by such certificate shall have been converted in the Merger, shall be issued to
the holder thereof. At the Effective Date, each instrument representing Company
Options shall be canceled and terminated and, simultaneously with such
cancellation and termination, either (i) a certificate representing replacement
options to purchase Parent Common Stock shall be issued in accordance with
Section 2.2(b) or (ii) the number of shares of Parent Common Stock issuable to
each holder of Company Options who is subject to Section 2.2(c) hereof shall be
issued to each such Company Option holder. From and after the Effective Date,
each certificate or instrument which prior to the Effective Date represented
shares of Company Common Stock or Company Options as applicable, shall be deemed
to represent only the right to receive the certificates of Parent Common Stock
or options to acquire Parent Common Stock, as the case may be, contemplated by
the preceding two sentences, and the holder of each such certificate or
instrument shall cease to have any rights with respect to the shares of Company
Common Stock or Company Options (and the underlying Common Stock) formerly
represented thereby, except as otherwise provided herein or by law.
2.4 Closing. Subject to Section 9.1 hereof, the closing of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Nordlicht & Hand, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at 10:00
A.M. local time, (i) as soon as practicable after the later to occur of (x) the
date of the later of the shareholders' meeting referred to in Section 7.3 hereof
or (y) the day on which the last condition set forth in Articles VIII and IX
hereof shall have been fulfilled or waived, or (ii) at such other time as Parent
and the Company may mutually agree (the "Closing Date").
2.5 Adjustment Event. If, between the date hereof and the Effective
Date, the issued and outstanding shares of Parent Common Stock or Company
Common Stock shall have been combined, split, reclassified or otherwise
changed into a different number of share or a different class of shares, an
appropriate adjustment to the Exchange Ratio shall be agreed upon by Parent
and the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Acquisition that:
3.1 Corporate Organization. The Company is a corporation duly organized
and validly existing under the laws of the State of Oregon. The Company has no
subsidiaries. The Company has all requisite corporate power and authority to
own, operate and lease the properties and assets it now owns, operates and
leases and to carry on its business as presently conducted. Except as set forth
on Schedule 3.11 the Company is duly qualified to transact business as a foreign
corporation and is in existence in the State of Oregon and in good standing in
the other jurisdictions set forth in Schedule 3.1, which are the only
jurisdictions where such qualification is required by reason of the nature of
the properties and assets currently owned, operated or leased by the Company or
the business currently conducted by it, except for such jurisdictions where the
failure to be so qualified would not have a material adverse effect on the
Company. The Company has previously delivered to Parent complete and correct
copies of its Articles of Incorporation (certified by the secretary of state of
the jurisdiction in which it was formed as of a recent date) and its By-Laws
(certified by the Secretary of the Company as of a recent date). Neither the
Articles of Incorporation nor the By-Laws of the Company has been amended since
the respective dates of certification thereof, nor has any action been taken for
the purpose of effecting any amendment of such instruments.
3.2 Authorization. The Company has full corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly approved by the Board of
Directors of the Company, and no other corporate action on the part of the
Company is necessary to approve and authorize the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby (subject
to the approval of this Agreement and the transactions contemplated hereby by
the Company's shareholders). The Board of Directors of the Company has
determined that the Merger is in the best interests of the shareholders of the
Company and will recommend to the shareholders of the Company that they vote any
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(1) All Schedules are made part of and incorporated in this Agreement and Plan
Merger.
and all shares of Company Common Stock owned by them on the date of the Meeting
of the Company's shareholders described in Section 7.3 hereof to approve the
Merger, this Agreement and the transactions contemplated hereby. This Agreement
has been duly executed and delivered by the Company and constitutes the valid
and binding agreement of the Company, enforceable in accordance with its terms,
except to the extent that enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting the
enforcement of creditors' rights generally and by general principles of equity,
regardless of whether such enforceability is considered in a proceeding in law
or in equity.
3.3 Consents and Approvals; No Violations. Subject to (a) the filing of a
Registration Statement on Form S-4 (the "Registration Statement") and the
prospectus and proxy statement contained therein with the Securities and
Exchange Commission (the "SEC") and appropriate regulatory authorities, and any
required actions under various state securities and blue sky laws in connection
with the issuance of shares of Parent Common Stock in the Merger and (b) the
filing of Articles of Merger with the Secretary of State of the State of Oregon,
the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby will not: (i) violate or conflict with any
provision of the Articles of Incorporation or By-Laws of the Company, (ii)
breach, violate or constitute an event of default (or an event which with the
lapse of time or the giving of notice or both would constitute an event of
default) under, give rise to any right of termination, cancellation,
modification or acceleration under, or except as otherwise disclosed herein,
require any consent or the giving of any notice under, any note, bond,
indenture, mortgage, security agreement, lease, license, franchise, permit,
agreement or other instrument or obligation to which the Company or any of the
Subsidiaries is a party, or by which the Company or any of the Subsidiaries or
any of their respective properties or assets may be bound, or result in the
creation of any lien, claim or encumbrance or other right of any third party of
any kind whatsoever upon the properties or assets of the Company or the
Subsidiaries pursuant to the terms of any such instrument or obligation, (iii)
violate or conflict with any law, statute, ordinance, code, rule, regulation,
judgment, order, writ, injunction, decree or other instrument of any Federal,
state, local or foreign court or governmental or regulatory body, agency or
authority applicable to the Company or the Subsidiaries or by which any of their
respective properties or assets may be bound or (iv) require, on the part of the
Company or any Subsidiary, any filing or registration with, or permit, license,
exemption, consent, authorization or approval of, or the giving of any notice
to, any governmental or regulatory body, agency or authority. Without limiting
the generality of clause (ii) above, neither the Company nor any of the Company
Identified Persons (as defined below) is a party to any agreement, arrangement
or understanding which contemplates the sale of the business of the Company and
its Subsidiaries, in whole or in part, whether by means of a sale of shares,
sale of assets, merger, consolidation or otherwise.
3.4 Capitalization.
(a) The authorized capital stock of the Company consists of
15,000,000 shares of Company Common Stock, of which 2,654,716 shares are issued
and outstanding and 5,000,000 shares of Series Preferred Stock, $.01 par value
none of which is issued and outstanding. Schedule 3.4(a) sets forth a complete
and correct list of the record and beneficial ownership of the issued and
outstanding shares of Company Common Stock. All of the issued and outstanding
shares of Company Common Stock were duly authorized and validly issued and are
fully paid and nonassessable, and were not issued in violation of any preemptive
rights, rights of first refusal, or Federal or state securities laws. Except as
disclosed in Schedule 3.4(a) hereto, the Company has never repurchased or
redeemed any shares of its capital stock, and there are no amounts owed or which
may be owed to any person by the Company as a result of any repurchase or
redemption of shares of its capital stock. Except as disclosed in Schedule
3.4(a) hereto, there are no agreements, arrangements or understandings to which
the Company is a party or by which it is bound to redeem or repurchase any
shares of its capital stock. Except as set forth in Schedule 3.4(a), there are
no outstanding options, warrants (including, without limitation, the Company
Options) or other rights to purchase, or any securities convertible into or
exchangeable for, shares of the capital stock of the Company, and there are no
agreements, arrangements or understandings to which the Company is a party or by
which it is bound pursuant to which the Company is or may be required to issue
additional shares of its capital stock.
(b) The Company does not own, directly or indirectly, any
equity interest in any other corporation, partnership, limited liability
company, or any other entity.
3.5 SEC Reports and Financial Statements. The Company has heretofore
delivered or made available to Parent complete and correct copies of all reports
and other filings filed by the Company with the SEC pursuant to the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder (the
"Exchange Act") during its past two fiscal years (such reports and other filings
collectively referred to herein as the "Company Exchange Act Filings"). As of
their respective dates, the Company Exchange Act Filings did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements of Company included in the Company Exchange
Act Filings (i) were prepared from the books and records of the Company and its
consolidated subsidiaries, (ii) were prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated therein or in the notes or schedules thereto) and (iii) present fairly
the financial position of the Company as at the dates thereof and the results of
their operations and cash flows for the fiscal year ended October 31, 1996 and
earlier years. The unaudited financial statements included in the Company
Exchange Act Filings comply in all material respects with the published rules
and regulations of the SEC with respect thereto; and such unaudited financial
statements (i) were prepared from the books and records of the Company, (ii)
were prepared in accordance with generally accepted accounting principles,
except as otherwise permitted under the Exchange Act and the rules and
regulations thereunder, on a consistent basis (except as may be indicated
therein or in the notes or schedules thereto) and (iii) present fairly the
financial position of the Company as at the dates thereof and the results of
their operations and cash flows (or changes in financial condition) for the
periods then ended, subject to normal year-end adjustments and any other
adjustments described therein or in the notes or schedules thereto.
3.6 Absence of Undisclosed Liabilities. Except (i) as set forth on
Schedule 3.6, (ii) as set forth or reserved against in the consolidated balance
sheet of the Company and its Subsidiaries dated as of July 31, 1997 included in
the Financial Statements and (iii) for contractual obligations arising under
contracts entered into in the ordinary course and disclosed in the Schedules to
this Agreement to the extent such contracts are required to be disclosed
hereunder, and (iv) for liabilities or obligations incurred since July 31, 1997
in the ordinary course of business for which the Company's undischarged
obligation is less than $25,000, the Company and its Subsidiaries do not have
any liabilities or obligations of any nature, whether accrued, absolute,
contingent or otherwise, which would be required to be reflected in a balance
sheet of the Company or the notes thereto prepared in accordance with generally
accepted accounting principles as of the date hereof.
3.7 Absence of Certain Changes or Events. Except for the transactions
contemplated by this Agreement and as set forth in Schedule 3.7, since July 31,
1997, the Company has carried on its business in the ordinary course and
consistent with past practice. The Company has not since July 31, 1997: (i)
incurred any material obligation or liability (whether absolute, accrued,
contingent or otherwise) except in the ordinary course of business and
consistent with past practice; (ii) experienced any material adverse change in
its financial condition, results of operations, assets, liabilities, business or
operations; (iii) made any change in any accounting principle or practice or in
its methods of applying any such principle or practice or written up (or failed
to write down in accordance with generally accepted accounting principles
consistent with past practice) the value of any inventories or revalued any
assets of the Company; (iv) suffered any material damage, destruction or loss,
whether or not covered by insurance, affecting its properties, assets or
business; (v) mortgaged, pledged or subjected to any lien, charge or other
encumbrance, or granted to third parties any rights in, any of its assets,
tangible or intangible; (vi) sold or transferred any of its assets, except in
the ordinary course of business and consistent with past practice, or canceled
or compromised any debts or waived any claims or rights of a material nature;
(vii) issued any additional shares of capital stock or any rights, options or
warrants to purchase, or securities convertible into or exchangeable for, shares
of its capital stock (other than the issuance of shares upon the exercise of
employee stock options); (viii) declared or paid any dividends on or made any
distributions (however characterized) in respect of shares of its capital stock;
(ix) repurchased or redeemed any shares of its capital stock; (x) granted any
general or specific increase in the compensation payable or to become payable to
any of its employees or any bonus or service award or other like benefit, which
increase is in excess of 15% of the total of compensation and bonus previously
payable to any such Employee, or instituted, increased, augmented or improved
any Benefit Plan (as defined in Section 3.13(c), below); or (xi) entered into
any agreement to do any of the foregoing.
3.8 Legal Proceedings, etc. Except as set forth in Schedule 3.8, there
are no suits, actions, claims, proceedings (including, without limitation,
arbitral or administrative proceedings) or investigations pending or, to the
best knowledge of the Company, threatened against the Company or its properties,
assets or business (or, to the best knowledge of the Company, pending or
threatened against, relating to or involving any of the officers, directors,
employees, agents or consultants of the Company in connection with the business
of the Company). There are no such suits, actions, claims, proceedings or
investigations pending, or, to the best knowledge of the Company, threatened,
challenging the validity or propriety of the transactions contemplated by this
Agreement. There is no judgment, order, injunction, decree or award (whether
issued by a court, an arbitrator or an administrative agency) to which the
Company is a party, or involving the Company's properties, assets or business,
which is unsatisfied or which requires continuing compliance therewith by the
Company.
3.9 Taxes.
(a) The Company has duly and timely filed, or will duly and in
a timely manner file, all tax returns and other filings in respect of Taxes (as
defined in Section 3.9(c), below) required to be filed by them or which are
required to be filed by them on or prior to the Effective Date, and have in a
timely manner paid (or will in a timely manner pay) all Taxes which are (or will
be) shown to be due on such returns. All tax returns and other filings in
respect of Taxes are true, correct and complete in all material respects. The
provisions for Taxes payable reflected in the Financial Statements are adequate
under generally accepted accounting principles.
(b) There are no actions or proceedings currently pending or,
to the best knowledge of the Company, threatened, against the Company or any
Subsidiary by any governmental authority for the assessment or collection of
Taxes, no claim for the assessment or collection of Taxes has been asserted
against the Company, and there are no matters under discussion with any
governmental authority regarding claims for the assessment or collection of
Taxes. Any Taxes that have been claimed or imposed as a result of any
examinations of any tax return of the Company by any governmental authority are
being contested in good faith and have been disclosed in writing to the Parent.
There are no agreements or applications by the Company for an extension of time
for the assessment or payment of any Taxes.
(c) For purposes of this Agreement, the terms "Tax" and
"Taxes" shall mean and include any and all United States, state, local, foreign
or other income, sales, use, withholding, employment, payroll, social security,
property taxes and all other taxes of any kind, deficiencies, fees or other
governmental charges, including, without limitation, any installment payment for
taxes and contributions or other amounts determined with respect to compensation
paid to directors, officers, employees or independent contractors, from time to
time imposed by or required to be paid to any governmental authority (including
penalties and additions to tax thereon, penalties for failure to file a return
or report, and interest on any of the foregoing).
(d) The Company has not, with regard to any assets or property
held, acquired or to be acquired by the Company, filed a consent to the
application of Section 341(f) of the Internal Revenue Code of 1986, as amended
(the "Code").
(e) The Company has not participated in or cooperated with an
international boycott within the meaning of Section 999(b) of the Code.
(f) The disclosure set forth in the Company's Annual Report on
Form 10-KSB for the fiscal year ended October 31, 1996 regarding deferred taxes
and tax loss carry forwards is true and complete as of the date hereof and no
events have occurred since October 31, 1996 which would make such information
misleading or incomplete.
3.10 Title to Properties and Related Matters.
(a) Except as set forth on Schedule 3.10(a), the Company has
good and marketable title to all personal property, tangible or intangible,
which the Company purports to own, including the properties reflected on its
July 31, 1997 Balance Sheet or acquired after the date thereof (other than
properties and assets sold or otherwise disposed of in the ordinary course of
business and consistent with past practice since July 31, 1997), free and clear
of any claims, liens, pledges, security interests or encumbrances of any kind
whatsoever (other than purchase money security interests and common law vendor's
liens, in each case for goods purchased on open account in the ordinary course
of business and having a fair market value of less than $10,000 in each
individual case).
(b) The Company does not own any real property.
(c) Schedule 3.10(c) sets forth a complete and correct list of
all equipment, machinery, instruments, vehicles, furniture, fixtures and other
items of personal property currently owned, leased or used by the Company with a
book value in each case of $5,000 or more. All such personal property is in
satisfactory operating condition (ordinary and reasonable wear and tear
excepted), is physically located in or about one of the Company's places of
business and is owned by the Company or is leased by the Company under one of
the leases set forth in Schedule 3.10(d). None of such personal property is
subject to any agreement or commitment for its use by any person other than the
Company. The maintenance and operation of such personal property is appropriate
for personal property of such nature and is and has been in material conformance
with all applicable laws and regulations. There are no assets leased by the
Company or used in the business of the Company that are owned, directly or
indirectly, by any Company Related Person (as defined in Section 3.22, below).
(d) Schedule 3.10(d) sets forth a complete and correct list
and summary description of all real property and personal property leases to
which the Company is a party, as lessee or lessor. The Company has previously
delivered to Parent complete and correct copies of each lease (and any
amendments or supplements thereto) listed in Schedule 3.10(d). Each such lease
is valid and binding and in full force and effect. Neither the Company nor (to
the best knowledge of the Company) any other party is in default under any such
lease, and no event has occurred which constitutes, or with the lapse of time or
the giving of notice or both would constitute, a default by the Company or (to
the best knowledge of the Company) a default by any other party under such
lease. To the best knowledge of the Company, there are no disputes or
disagreements between the Company and any other party with respect to any such
lease. The lessor under each such lease has consented or been given notice (or
prior to the Closing shall have consented or been given notice), where such
consent or the giving of such notice is necessary, sufficient that such lease
shall remain in full force and effect following the consummation of the
transactions contemplated by this Agreement without requiring modification in
the rights or obligations of the lessee under any such lease.
(e) Schedule 3.10(e) sets forth a complete and correct list of
all inventory, merchandise, work in process, finished goods, and raw materials,
and, all material amounts of packaging, supplies and other personal property
related to the business of the Company maintained, held or stored by or for the
Company and any prepaid deposits for purchases of any of the same (the
"Inventory"). Except as disclosed on Schedule 3.10(e), the Company and its
Subsidiaries have good and valid title to the Inventory free and clear of all
liens, claims, security interests and encumbrances of any kind whatsoever. The
Inventory does not include items that are obsolete, damaged or slow-moving; is
in good and merchantable condition in all material respects; and is suitable and
usable for the purposes for which it is intended. The Inventory does not consist
of any items held on consignment.
3.11 Intellectual Property.
(a) Schedule 3.11 hereto sets forth a complete and correct
list of all patents, patent applications, material unpatented inventions set
forth or described in writing, registered trademarks and service marks,
trademark and service xxxx applications, trade names, copyrights, software
documentation and manuals including all versions thereof (collectively the
"Intellectual Property") which, to the Company's best knowledge, are owned by,
registered in the name of or used in the business of the Company (including,
without limitation, the copyright and all other rights in reports issued by the
Company to its clients in the conduct of its business), all of which are valid
and subsisting. In each registration or patent or application for registration
or patent listed in Schedule 3.11 held by assignment, the assignment has been
recorded with the state or national Patent and Trademark Office from which the
original registration issued or before which the application for registration is
pending. To the Company's best knowledge, the rights of the Company in or to
such Intellectual Property owned by the Company does not conflict with or
infringe on the rights of any third party. The Company has not received any
written claim or notice to such effect. The Company is not subject to any
judgment, injunction, decree, order or agreement restricting its use of the
Intellectual Property, except for such restrictions contained in Intellectual
Property licensed from third parties, which licensed Intellectual Property
(other than "off the shelf" software such as word processing and spreadsheet
programs) and material restrictions on the use thereof are listed in Schedule
3.11.
(b) Except set forth in Schedule 3.11, the Intellectual
Property owned by the Company is free and clear of all liens, claims, security
interests or encumbrances of any kind whatsoever. No actions have been made or
asserted or are pending or, to the best knowledge of the Company, threatened
against the Company either (i) based upon or challenging or seeking to deny or
restrict the use by the Company of any Intellectual Property or (ii) alleging
that any services provided, or products manufactured or sold by the Company are
being provided, manufactured or sold in violation of any patents or trademarks,
or other rights of any third party. To the best knowledge of the Company, no
third party is using any patents, copyrights, trademarks, service marks, trade
names, trade names, trade secrets or similar property that infringe upon the
Intellectual Property owned by the Company or upon the rights of the Company
used in its or their business. The Company has not granted any license or other
right to any third party with respect to the Intellectual Property except for
licenses of software to customers. The consummation of the transactions
contemplated by this Agreement will not result in the termination or impairment
of any of the Intellectual Property owned by the Company.
(c) The Company has made available to Parent correct and
complete copies of all licenses and sublicenses for Intellectual Property
licensed from or to third parties set forth in Schedule 3.11 and any and all
ancillary documents pertaining thereto (including, but limited to, all
amendments, consents and evidence of commencement dates and expiration dates).
With respect to each of such licenses and sublicenses:
(i) such license or sublicense, together with all
ancillary documents made available pursuant to the first sentence of this
Section 3.11(c), is valid, binding, enforceable and in full force and effect and
represents the entire agreement between the respective licensor and licensee
with respect to the subject matter of such licensee or sublicense;
(ii) subject to obtaining any necessary consent to
assignment from the licensor or licensee, such license or sublicense will not
cease to be valid, binding, enforceable and in full force and effect on the
terms currently in effect as a result of the consummation of the transactions
contemplated by this Agreement, nor will the consummation of the transactions
contemplated by this Agreement constitute a breach or default under such license
or sublicense or otherwise give the licensor or sublicensor a right to terminate
such license or sublicense;
(iii) with respect to each such license or sublicense; (A)
the Company has not received any notice of cancellation or termination under
such license or sublicense and no licensor, sublicensor, licensee or sublicensee
has any right to terminate or cancel such license or sublicense, (B) the Company
has not received any notice or a breach or default under such license or
sublicenses, which breach or default has not been cured, and (C) the Company has
not granted to any third party any rights, adverse or otherwise, under such
licenses or sublicense (except for licenses of software to customers);
(iv) neither the Company, nor to the best knowledge of the
Company, any other party to such license or sublicense, is in breach or default
in any material respect, and no event has occurred with respect to the Company,
or to the best knowledge of the Company, such other party, that, with notice or
lapse of time would constitute such a breach or default or permit termination,
modification or acceleration under such license or sublicense;
(v) no actions have been made or asserted or are pending
or, to the best knowledge of the Company, have been threatened against the
Company, either (A) based upon or challenging or seeking to deny or restrict the
use by the Company of any licensed Intellectual Property or (B) alleging that
any Intellectual Property is being licensed, sublicensed or used in violation of
any patents or trademarks, or any other rights of any third party; and
(vi) to the best knowledge of the Company, no third party
is using any patents, copyrights, trademarks, service marks, trade names, trade
secrets or similar property that infringe upon the use of the licensed
Intellectual Property by the Company or upon the rights of the Company therein.
(d) The Company is not aware of any reason that would prevent
any pending applications to register trademarks, service marks or copyrights or
any pending patent applications from being granted.
(e) All rights of the Company in each item of Intellectual
Property owned by the Company are transferable to Acquisition as herein
contemplated and such transfer will not, with or without the giving of notice,
or lapse of time, or both, result in a default of any agreement to which the
Company is a party or the impairment of any rights of the Company in such
intellectual property which impairment would cause a material adverse effect on
the Company, its business operations or its financial statements . As a result
of the transactions contemplated hereby, upon the Closing, subject to obtaining
necessary consents to transfer licensed Intellectual Property, Parent shall own
or possess, or own or possess adequate and enforceable licenses, sublicenses or
sublicenses or other rights to use, all the Intellectual Property.
(f) Other than "off the shelf" software, the Intellectual
Property set forth in Schedule 3.11 constitutes all the Intellectual Property
used in or held by the Company and its Subsidiaries to be used in, and necessary
in the conduct of, the business of the Company and its Subsidiaries as currently
conducted and there are not other items of Intellectual Property that are
material to the Company and its Subsidiaries or its or their business.
(g) Schedule 3.11(g) sets forth all of the Company's software
products including all versions of each such product and the uses therefor.
3.12 Contracts.
(a) Except as set forth in Schedule 3.12(a) the Company is
not a party to, or subject to:
(i) any contract, arrangement or understanding, or series
of related contracts, arrangements or understandings, which involves annual
expenditures or receipts by the Company of more than $10,000 not cancelable by
the Company on thirty days (or less) notice;
(ii) any note, indenture, credit facility, mortgage,
security agreement or other contract, arrangement or understanding relating to
or evidencing indebtedness for money borrowed or a security interest or mortgage
in the assets of the Company;
(iii) any guaranty issued by the Company;
(iv) any contract, arrangement or understanding granting
to any person the right to use any property or property right of the Company
having a value in excess of $10,000;
(v) any material contract, arrangement or understanding
restricting the Company's right to engage in any business activity or compete
with any business;
(vi) any contract, arrangement or understanding with a
Company Related Person; or
(vii) any outstanding offer, commitment or obligation to
enter into any contract or arrangement of the nature described in subsections
(i) through (vi) of this subsection 3.12(a).
(b) The Company has provided to Parent complete and correct
copies (or, in the case of oral contracts, a complete and correct description)
of samples of each contract (and any amendments or supplements thereto) listed
on Schedule 3.12(a). Each contract listed in Schedule 3.12(a) is valid and
binding and in full force and effect. Neither the Company nor (to the best
knowledge of the Company) any other party is in default under any such contract,
and no event has occurred which constitutes, or with the lapse of time or the
giving of notice or both would constitute, a default by the Company or (to the
best knowledge of the Company) a default by any other party under such contract.
To the best knowledge of the Company, there are no disputes or disagreements
between the Company and any other party with respect to any such contract and
the Company has not received any notice of cancellation or termination of any
such contracts. Each other party to each such contract has consented or been
given notice (or prior to the Closing shall have consented or been given
notice), where such consent or the giving of such notice is necessary,
sufficient that such contract shall remain in full force and effect following
the consummation of the transactions contemplated by this Agreement without
modification in the rights or obligations of the Company thereunder.
(c) All indebtedness of the Company for monies borrowed by the
Company is prepayable at any time at the option of the Company, without premium
or penalty.
(d) Except as set forth and described in Schedule 3.12(d),
the Company has not issued any warranty or any agreement or commitment to
indemnify any person.
(e) The Company has not disclosed any secret or confidential
Intellectual Property (except by way of issuance of a patent or subject to a
confidentiality agreement) or permitted to lapse or go abandoned any
Intellectual Property (or any registration or grant thereof or any application
relating thereto) to which, or under which, the Company has any rights, title,
interest or license.
(f) Set forth on Schedule 3.12(f) hereto is a list of the
Company's current customers.
3.13 Employees; Employee Benefits.
(a) Schedule 3.13(a) sets forth the names of all current
employees of the Company (the "Employees") and, with respect to any Employee
whose annual compensation exceeds $50,000 such Employee's job title, the
location of employment of such Employee, such Employee's current salary, the
date and amount of such Employee's most recent salary increase, the amount of
any bonuses or other compensation paid since October 31, 1996 to such Employee,
the date of birth of such Employee, the date of employment of such Employee, the
accrued vacation time of such Employee and a description of the annual total
compensation arrangements currently applicable to such Employee. The Company has
accrued on its books and records all obligations for salaries, benefits and
other compensation with respect to its Employees and former employees ("Former
Employees"), to the extent required by generally accepted accounting principles,
including, but not limited to, vacation pay, severance, bonuses, incentive and
deferred compensation, and all commissions and other fees payable to
salespeople, sales representatives and other agents. Except as set forth on
Schedule 3.13, there are no outstanding loans from the Company to any officer,
director, employee, agent or consultant of the Company, or to any other Company
Related Person. Complete and correct copies of all written agreements with
Employees and all employment policies, including but not limited to policies on
severance pay and liability for accrued but unused sick and vacation pay, and
all amendments and supplements thereto, have previously been delivered or made
available to the Parent, and a list of all such agreements and policies is set
forth on Schedule 3.13(a). None of the Employees has, to the best knowledge of
the Company, indicated a desire to terminate his or her employment, or any
intention to terminate his or her employment upon a sale of, or business
combination relating to, the Company or in connection with the transactions
contemplated by this Agreement. Except as set forth on Schedule 3.13(a), since
October 31, 1996 the Company and its Subsidiaries have not (i) except in the
ordinary course of business and consistent with past practice, increased the
salary or other compensation payable or to become payable to or for the benefit
of any of the Employees, (ii) increased the term or tenure of employment for any
Employee, except in the ordinary course of business consistent with past
practice, or provided any Employee with any increased security of employment,
(iii) increased the amounts payable to any of the Employees upon the termination
of any such person's employment or (iv) adopted, increased, augmented or
improved benefits granted to or for the benefit of any of the Employees under
any Benefit Plan.
(b) The Company has complied in all material respects with
Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in
Employment Act, as amended, the Fair Labor Standards Act, as amended, the
Immigration Reform and Control Act of 1986, and all applicable laws, rules and
regulations governing payment of minimum wages and overtime rates, the
withholding and payment of taxes from compensation, discriminatory practices
with respect to employment and discharge, or otherwise relating to the conduct
of employers with respect to Employees or potential employees, and there have
been no claims made or, to the best knowledge of the Company, threatened
thereunder against the Company arising out of, relating to or alleging any
violation of any of the foregoing. There are no material controversies, strikes,
work stoppages, picketing or disputes pending or threatened between the Company
and any of the Employees or Former Employees. No labor union or other collective
bargaining unit represents or has ever represented any of the Employees,
including any "leased employees" (within the meaning of Section 414(n) of the
Code). No organizational effort by any labor union or other collective
bargaining unit currently is under way or, to the best knowledge of the Company,
threatened with respect to any Employees. The Company is not required to obtain
the consent of any labor union or other collective bargaining unit to consummate
the transactions contemplated by this Agreement. The requirements of the Workers
Adjustment and Retraining Notification Act do not apply to the transactions
contemplated by this Agreement.
(c) Schedule 3.13(c) sets forth a list of each defined benefit
and defined contribution plan, stock ownership plan, employment or consulting
agreement, executive compensation plan, bonus plan, incentive compensation plan
or arrangement, deferred compensation agreement or arrangement, agreement with
respect to temporary employees or "leased employees" (within the meaning of
Section 414(n) of the Code), vacation pay, sickness, disability or death benefit
plan (whether provided through insurance, on a funded or unfunded basis or
otherwise), employee stock option, stock appreciation rights or stock purchase
plan, severance pay plan, arrangement or practice, employee relations policy,
practice or arrangement, and each other employee benefit plan, program or
arrangement, including, without limitation, each "employee benefit plan" within
the meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), which has been maintained by the Company for the
benefit of or relating to any of the Employees or to any Former Employees or
their dependents, survivors or beneficiaries, whether or not legally binding,
whether written or oral or whether express or implied, all of which are
hereinafter referred to as the "Benefit Plans."
(d) With Respect to the Benefit Plans, each Benefit Plan which
is an "employee pension benefit plan" (as defined in Section 3(2) of ERISA)
meets the requirements of Section 401(a) of the Code; the trust, if any, forming
part of such plan is exempt from U.S. federal income tax under Section 501(a) of
the Code; a favorable determination letter has been issued by the Internal
Revenue Service (the "IRS") with respect to each plan and trust and each
amendment thereto; and nothing has occurred since the date of such determination
letter that would adversely affect the qualification of such plan. No Benefit
Plan is a "voluntary employees beneficiary association" (within the meaning of
Section 501(c)(9) of the Code) and there have been no other "welfare benefit
funds" (within the meaning of Section 419 of the Code) relating to Employees or
Former Employees; no event or condition exists with respect to any Benefit Plan
that could subject the Company to any material Tax under Section 4980B of the
Code; each Benefit Plan has complied with the requirements of Section 162(k) of
the Code. With respect to each Benefit Plan, the Company has heretofore
delivered to Parent complete and correct copies of the following documents,
where applicable and to the extent available: (i) the most recent annual report
(Form 5500 series), together with schedules, as required, filed with the IRS,
and any financial statements and opinion required by Section 103(a)(3) of ERISA,
(ii) the most recent determination letter issued by the IRS, (iii) the most
recent summary plan description and all modifications, as well as all other
descriptions distributed to Employees or set forth in any manuals or other
documents, (iv) the text of the Benefit Plan and of any trust, insurance or
annuity contracts maintained in connection therewith and (v) the most recent
actuarial report, if any, relating to the Benefit Plan.
(e) Neither the Company nor any corporation or other trade or
business under common control with the Company (as determined pursuant to
Section 414(b) or (c) of the Code) (a "Common Control Entity") has maintained or
contributed to or in any way directly or indirectly has any liability (whether
contingent or otherwise) with respect to any "multiemployer plan," within the
meaning of Section 3(37) of ERISA; no Benefit Plan or similar benefit plan of
any Common Control Entity has been subject to Title IV of ERISA; neither the
Company nor any Common Control Entity is a party to or has any liability under
any agreement imposing secondary liability on it as a seller of the assets of a
business in accordance with Section 4204 of ERISA or under any other provision
of Title IV of ERISA or other agreement; no contingent or other liability with
respect to which the Company has or could have any liability exists under Title
IV of ERISA to the Pension Benefit Guaranty Corporation ("PBGC") or to any
Benefit Plan; and no assets of the Company are subject to a lien under Sections
4064 or 4068 of ERISA. The Company does not have any obligation to provide
medical or other benefits to Employees or Former Employees or their survivors,
dependents and beneficiaries, except as may be required by the Consolidated
Omnibus Budget Reconciliation Act of 1986 or applicable state medical benefits
continuation law. The Company will not incur any liability under any severance
agreement, deferred compensation agreement, employment or similar agreement as a
result of the consummation of the transactions contemplated by this Agreement.
(f) None of the Benefit Plans has been subject to a
"reportable event," within the meaning of Section 4043 of ERISA (whether or not
waived); there have been no "prohibited transactions", within the meaning of
Section 4975 of the Code or Part 4 of Subtitle B of Title I of ERISA; none of
the Benefit Plans are subject to Section 412 of the Code; each Benefit Plan has,
in all material respects, been administered to date in accordance with the
applicable provisions of ERISA, the Code and applicable law and with the terms
and provisions of all documents, contracts or agreements pursuant to which such
Benefit Plan is maintained; all reports and information required to be filed
with the Department of Labor, the IRS, the PBGC or plan participants or
beneficiaries with respect to any Benefit Plan have been timely filed; there is
no dispute, arbitration, claim, suit, or grievance, pending or, to the best
knowledge of the Company, threatened, involving a Benefit Plan (other than
routine claims for benefits), and, to the best knowledge of the Company, there
is no basis for such a claim; none of the Benefit Plans nor any fiduciary
thereof has been the direct or indirect subject of a order or investigation or
examination by a governmental or quasi-governmental agency and there are no
matters pending before the IRS, the Department of Labor, the PBGC or any other
domestic or, to the best knowledge of the Company, foreign governmental agency
with respect to a Benefit Plan; there have been no claims, or notice of claims,
filed under any fiduciary liability insurance policy covering any Benefit Plan;
and there has been and will be no "parachute payment" (as that term is defined
in Section 28OG(b)(2) of the Code) to any of the Employees prior to the
Effective Date. No event or set of conditions exist which would subject the
Company to any Tax under Section 4999 of the Code. No event or set of conditions
exist which would subject the Company or any Subsidiary to any material Tax
under Sections 4972, 4974-76, 4979, 4980 or 5000 of the Code. No loan has been
made to a Benefit Plan, which was intended to qualify under Section 4975(d)(3)
of the Code.
(g) Except as set forth on Schedule 3.13(g), all directors,
officers, management employees, and technical and professional employees of the
Company have executed employee confidentiality agreements substantially in the
form attached as Exhibit 3.13(g).
3.14 Compliance with Applicable Law.
(a) The Company is not to its best knowledge in violation of
any applicable safety, health, environmental or other law, statute, ordinance,
code, rule, regulation, judgment, order, injunction, writ or decree of any
Federal, state, local or foreign court or governmental or regulatory body,
agency or authority having, asserting or claiming jurisdiction over it or over
any part of its business, operations, properties or assets, except where any
such violation would not have a material adverse effect on the business,
operations or assets of the Company. The Company has not received any notice
alleging any such violation, nor to the best knowledge of the Company, is there
any inquiry, investigation or proceedings relating thereto.
(b) The Company is in material compliance with the rules,
regulations, guidelines and interpretations of the Food and Drug Administration
("FDA"), including the registration of the Company as a medical device
manufacture for blood bank software. To the best knowledge of the Company, the
FDA has no reason to deny the registration of the Company as a medical device
manufacture for blood banks software. The Company has never recalled any of its
products, except as set forth in Schedule 3.14(c). The Company has delivered to
Parent true and complete copies of all of the Company's correspondence with the
FDA.
3.15 Ability to Conduct the Business. There is no agreement,
arrangement or understanding, nor any judgment, order, writ, injunction or
decree of any court or governmental or regulatory body, agency or authority,
applicable to the Company or to which the Company is a party or by which it or
any of its properties or assets is bound, that will prevent the use by the
Surviving Corporation, after the Effective Date, of the properties and assets
owned by, the business conducted by or the services rendered by the Company on
the date hereof, in each case on substantially the same basis as the same are
used, owned, conducted or rendered on the date hereof. The Company is in
compliance with all material governmental permits, licenses, exemptions,
consents, authorizations and approvals, including without limitation, all
material health, safety, environmental and food and drug permits used in or
required for the conduct of their business as presently conducted, all of which
shall continue in full force and effect, without requirement (except as set
forth in Schedule 3.15) of any filing or the giving of any notice and without
modification thereof, following the consummation of the transactions
contemplated hereby. The Company has not received any notice of, and to the best
knowledge of the Company, there are no inquiries, proceedings or investigations
relating to or which could result in the revocation or modification of any such
permit, license, exemption, consent, authorization or approval, nor are the
Company aware of any basis therefor. The Company is in all material respects in
compliance with all such permits licenses, exemptions, consents, authorizations
and approvals and all applicable laws. The Company is not party to any agreement
which would prohibit it from manufacturing, selling or distributing any products
or services.
3.16 Consultants, Sales Representatives and Other Agents. Schedule 3.16
hereto sets forth a complete and correct list of the names and addresses of each
consultant, sales representative or other agent (other than any such person
performing solely clerical functions) currently engaged by the Company who is
not an employee of the Company and who has or is expected to receive
compensation in excess of $50,000 in respect of the fiscal year beginning
November 1, 1996 and ending October 31, 1997, a summary description of the
services provided by each such person, the commission rates or other
compensation applicable with respect to each such person and the amount of
commissions or other compensation earned by each such person for the fiscal
period ended October 31, 1996. Complete and correct copies of all current
agreements between the Company and any such person have previously been
delivered or made available by the Company to the Parent.
3.17 Accounts Receivable. Attached hereto as Schedule 3.17 is a list of
all of the Company's accounts receivable. All accounts receivable of the Company
(i) arose from bona fide transactions in the ordinary course of business and
consistent with past practice, (ii) except as set forth on Schedule 3.17, are
owned by the Company or the respective Subsidiary free and clear of any claim,
security interest, lien or other encumbrance and (iii) are accurately and fairly
reflected on the Balance Sheet, or, with respect to accounts receivable of the
Company created on or after July 31, 1997, are accurately and fairly reflected
in the books and records of the Company.
3.18 Insurance. Schedule 3.18 hereto is a true and complete list of all
insurance policies carried by the Company, together with, in respect of each
such policy, the name of the insurer, the number of the policy, the annual
policy premium payable therefor, the limits of coverage, the deductible amount
(if any), the expiration date thereof and each pending claim thereunder.
Complete and correct copies of each certificate of insurance have previously
been delivered by the Company to the Parent. All such policies are legal, valid,
binding and enforceable in accordance with their terms and are in full force and
effect. All premiums due thereon have been paid in a timely manner. The Company
believes that the insurance carried by the Company is, as to amount and
coverage, consistent with the insurance practices of companies generally who are
engaged in businesses similar to that of the Company. Neither the Company nor
any person holding a policy or binder of insurance for the Company is in breach
or default with respect to any provision contained in any such policy or binder,
and no event has occurred which, with notice or the lapse of time, would
constitute such a breach or default or permit termination or modification under
the policy, nor has the Company or any such policyholder failed to give any
notice of any claim under such policy or binder in due or timely fashion.
Neither the Company nor any such policyholder has canceled or failed to renew
any such policy or binder, has knowledge of any material inaccuracy in any
application for such policies or binders, has failed to pay premiums when due,
has knowledge of any similar state or facts that might form the basis for
termination of any such insurance, or given notice of any such circumstance.
3.19 Information in Registration Statement and Proxy Statement. None of
the information relating to the Company, its business or any of its shareholders
supplied by the Company for inclusion or incorporation by reference in the
Registration Statement to be filed under the Securities Act of 1933, as amended
(the "Securities Act"), and the prospectus contained therein, for the purpose of
registering the shares of Parent Common Stock to be issued in the Merger (the
"Registration Statement") or the proxy statement to be distributed in connection
with the meetings of the shareholders of the Company and the shareholders of
Parent referred to in Section 7.3 (the "Proxy Statement") will, in the case of
the Registration Statement, at the time it becomes effective under the
Securities Act and at the Effective Date, or, in the case of the Proxy Statement
or any amendments thereof or supplements thereto, at the time of the mailing of
the Proxy Statement and any amendments thereof or supplements thereto and at the
time of the meetings of shareholders referred to in Section 7.3, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The
information in the Registration Statement and the Proxy Statement provided by
the Company will comply as to form with the provisions of the Securities Act and
the Exchange Act.
3.20 Bank Accounts; Powers of Attorney. Schedule 3.20 sets forth a
complete and correct list showing:
(a) all bank accounts of the Company, together with, with
respect to each such account, the account number, the names of all signatories
thereof and the authorized powers of each such signatory; and
(b) the names of all persons holding powers of attorney from
the Company and a summary statement of the terms thereof.
3.21 Minute Books, etc. The minute book, stock certificate book and
stock ledger of the Company are complete and correct in all material respects
and fairly reflect the conduct of the business of the Company. The minute book
of the Company contains accurate and complete records of all meetings or written
consents to action of the Board of Directors and shareholders of the Company and
accurately reflects all corporate actions of the Company which are required by
law to be passed upon by the Board of Directors or shareholders of the Company.
3.22 Company Related Person Indebtedness and Contracts. Schedule 3.22
sets forth a complete and correct summary of all contracts, commitments,
arrangements and understandings not described elsewhere in this Agreement
between the Company and any of the following (collectively, "Company Related
Persons"): (i) directors and officers who are identified in accordance with Item
402 of Regulation S-B of the Exchange Act (the "Company Identified Persons");
(ii) the spouses, children and other lineal descendants of any of the Company
Identified Persons, (collectively, "near relatives"): (iii) any trust for the
benefit of any of the Company Identified Persons, any of their respective near
relatives; or (iv) any corporation, partnership, joint venture or other entity
or enterprise owned or controlled by any of the Company Identified Persons or by
any of their respective near relatives.
3.23 Environmental Matters.
(a) For purposes of this Section 3.23, (i) the term
"Environmental Claim" shall mean any claim, action, proceeding, investigation or
notice by any person or entity alleging actual or potential liability
(including, without limitation, actual or potential liability for investigatory
costs, clean-up costs, governmental response costs, natural resources damages,
property damages, personal injuries or penalties) arising out of, based on or
resulting from (A) the presence, or release into the environment, of any
Material of Environmental Concern (as that term is hereinafter defined) at any
location owned or used by the Company (or any of its predecessors-in-interest)
prior to the Effective Date, or (B) circumstances forming the basis of any
violation of any Environmental Law (as that term is hereinafter defined); (ii)
the term "Environmental Laws" shall mean all federal, state, local and foreign
laws, rules and regulations relating to (A) pollution, environmental safety or
protection of human health from damage to the environment or (B) the environment
(including, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata), including, without limitation, laws, rules and
regulations relating to emissions, discharges, releases or threatened releases
of Materials of Environmental Concern, or use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern; and (iii) the term
"Materials of Environmental Concern" shall mean any chemicals, pollutants,
contaminants, wastes, hazardous or toxic substances, petroleum or petroleum
products.
(b) The Company is in material compliance with all applicable
Environmental Laws, and all material permits and other governmental
authorizations, if any, currently held by the Company pursuant to the
Environmental Laws are in full force and effect and shall remain in full force
and effect upon consummation of the Merger.
(c) There is no Environmental Claim pending or, to the
knowledge of the Company, threatened against the Company or against any person
or entity whose liability the Company has or may have retained or assumed either
contractually or by operation of law.
(d) There are no past or present actions or, to the knowledge
of the Company, activities, circumstances, conditions, events or incidents,
including, without limitation, the release or threatened release, emission,
discharge, presence or disposal of any Material of Environmental Concern, that
could form the basis of any Environmental Claim against the Company or any
person or entity whose liability for any Environmental Claim the Company has or
may have retained or assumed either contractually or by operation of law.
3.24 Disclosure. No representation or warranty by the Company contained
in this Agreement and no statement contained in any Schedule, certificate or
other document or instrument delivered or to be delivered pursuant to this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary to make the statements
contained therein not misleading. For the avoidance of doubt, it is hereby
stipulated that with respect to any oral agreement or commitment disclosed in
any Schedule, only those terms of such oral agreement expressly set forth in
such Schedule shall be deemed to have been disclosed. The representations and
warranties contained in this Article III and in Article IV hereof (and in the
Schedules referred to therein) constitute the sole and exclusive representations
and warranties made by the Company in connection with the transactions
contemplated hereby. Such representations and warranties are made by the Company
with the knowledge and expectation that Parent and Acquisition are placing
complete reliance thereon in entering into, and performing their obligations
under, this Agreement, and the same shall not be affected in any respect
whatsoever by any investigation heretofore or hereafter conducted by or on
behalf of Parent and Acquisition, whether in contemplation of this Agreement or
otherwise.
3.25 Company Identified Persons. There are no agreements, arrangements
or understandings to which each Company Identified Person is a party involving
the purchase, sale or other acquisition or disposition of the shares and/or
Options owned by such Identified Person.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION
Parent and Acquisition jointly and severally represent and warrant to
the Company and the Company's Shareholders that:
4.1 Corporate Organization.
(a) Parent is a corporation duly organized, validly existing
and in good standing under the laws of the State of New York. Each of Parent
Subsidiaries (as defined in Section 4.1(b), below) is a corporation duly
organized, validly existing and in good standing under the laws of the state or
country of its formation. Each of Parent and Parent Subsidiaries has all
requisite corporate power and authority to own, operate and lease the properties
and assets it now owns, operates and leases and to carry on its business as now
being conducted. Parent and Parent Subsidiaries are each duly qualified to
transact business as a foreign corporation and are each in good standing in the
jurisdictions set forth opposite their respective names in Schedule 4.1, which
are the only jurisdictions where such qualification is required by reason of the
nature of the properties and assets currently owned, operated or leased by
Parent or Parent Subsidiaries or the business currently conducted by them,
except for such jurisdictions where the failure to be so qualified would not
have a material adverse effect on Parent and Parent Subsidiaries taken as a
whole. Parent has previously delivered to the Company complete and correct
copies of (i) its Certificate of Incorporation (certified by the Secretary of
State of New York as of a recent date) and its By-Laws (certified by the
Secretary of Parent as of a recent date) and (ii) the Articles of Incorporation
(or the foreign equivalent thereof) of Acquisition and all amendments thereto to
the date hereof (certified by the secretary of state of Oregon and the By-Laws
of Acquisition (certified in each case by the secretary of Acquisition as of a
recent date). Neither the Certificate of Incorporation nor the By-Laws of Parent
or of Acquisition has been amended since the respective dates of certification
thereof, nor has any action been taken for the purpose of effecting any
amendment of such instruments.
(b) Set forth in Schedule 4.1(b) is a complete list of all
corporations, partnerships, limited liability companies and other entities in
which Parent owns, directly or indirectly, any equity interest (the "Parent
Subsidiaries"), including the authorized and issued and outstanding shares of
all classes of capital stock of such entities, and the record and beneficial
ownership thereof. There are no agreements or commitments to which any of such
entities is a party or by which it is bound for the repurchase, purchase or sale
of, and there are no options, warrants or other rights to subscribe for or to
purchase, any shares of capital stock of such entity, nor are there any other
agreements or commitments under which such entity is or may become obligated to
issue any capital stock. Parent is the beneficial owner, directly or indirectly,
of all equity securities of the Parent Subsidiaries in each case free and clear
of any pledges, liens, equities or other encumbrances, except as set forth in
Schedule 4.1(b).
4.2 Authorization. Each of Parent and Acquisition has full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
approved by the Boards of Directors of Parent and Acquisition and by Parent as
the sole shareholder of Acquisition, and no other corporate proceedings on the
part of Parent or Acquisition are necessary to approve and authorize the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby. The Board of Directors of Parent has determined that the
Merger is in the best interests of the shareholders of Parent. This Agreement
has been duly executed and delivered by Parent and Acquisition and, subject to
the approval of this Agreement and the transactions contemplated hereby by the
Company's shareholders, constitutes the valid and binding agreement of Parent
and Acquisition, enforceable in accordance with its terms, except to the extent
that enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other laws affecting the enforcement of creditors'
rights generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or in law).
4.3 Consents and Approvals; No Violations. Subject to (a) the filing of
the Registration Statement and the prospectus and proxy statement contained
therein and any required actions under various state securities and blue sky
laws in connection with the issuance of shares of Parent Common Stock in the
Merger and (b) the filing of the Articles of Merger with the Secretary of State
of the State of Oregon, the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not: (i) violate or
conflict with any provisions of the Certificate of Incorporation or By-Laws of
Parent or the Articles of Incorporation or By-Laws of Acquisition; (ii) except
as set forth in Schedule 4.3, breach, violate or constitute an event of default
(or an event which with the lapse of time or the giving of notice or both would
constitute an event of default) under, give rise to any right of termination,
cancellation, modification or acceleration under, or require any consent or the
giving of any notice under, any note, bond, indenture, mortgage, security
agreement, lease, license, franchise, permit, agreement or other instrument or
obligation to which Parent, Acquisition or any of the Parent Subsidiaries is a
party, or by which any of them or any of their respective properties or assets
may be bound, or result in the creation of any lien, claim or encumbrance of any
kind whatsoever upon the properties or assets of Parent, Acquisition or any of
the Parent Subsidiaries pursuant to the terms of any such instrument or
obligation, which breach, violation or event of default would result in a
material adverse effect on Parent, Acquisition and the Parent Subsidiaries taken
as a whole; (iii) violate or conflict with any law, statute, ordinance, code,
rule, regulation, judgment, order, writ, injunction or decree or other
instrument of any Federal, state, local or foreign court or governmental or
regulatory body, agency or authority applicable to Parent, Acquisition or any of
the Parent Subsidiaries or by which any of their respective properties or assets
may be bound; or (iv) require, on the part of Parent or Acquisition, any filing
or registration with, or permit, license, exemption, consent, authorization or
approval of, or the giving of any notice to, any governmental or regulatory
body, agency or authority. Without limiting the generality of clause (ii) above,
as of the date hereof, neither the Parent nor any of the Parent Identified
Persons (as defined below) is a party to any agreement, arrangement or
understanding which contemplates the sale of the business of the Parent and the
Parent Subsidiaries, in whole or in part, whether by means of a sale of shares,
sale of assets, merger, consolidation or otherwise.
4.4 Capitalization.
(a) The sole class of authorized capital stock of Parent
consists of 12,000,000 shares of Parent Common Stock, of which 5,532,042 shares
are issued and outstanding on the date of this Agreement and 10,000,000 shares
of Preferred Stock, par value $.01 per share, of which none are issued and
outstanding. All of the issued and outstanding shares of Parent Common Stock are
(and all shares of Parent Common Stock to be issued in connection with the
Merger, when issued in accordance with this Agreement, shall be) duly
authorized, validly issued, fully paid and nonassessable, and none of such
shares has been issued in violation of any applicable preemptive rights. There
are no agreements or commitments to which Parent is a party or by which it is
bound for the redemption or repurchase of any shares of its capital stock.
Except for options issued under the Parent's 1982 and 1991 Incentive Stock
Option Plans, its 1991 Non-Employee Director Stock Option Plan and the 1997
successor thereto and outstanding options and warrants to purchase shares of
Parent Common Stock, as set forth in Schedule 4.4(a) hereto, there are no
outstanding options, warrants or other rights to purchase, or securities
convertible into or exchangeable for, shares of the capital stock of the Parent,
and except as contemplated by this Agreement, there are no agreements or
commitments to which Parent is a party or by which it is bound pursuant to which
Parent is or may become obligated to issue additional shares of its capital
stock.
(b) The authorized capital stock of Acquisition consists of
1,000 shares of common stock, par value $.01 per share, of which 100 shares are
issued and outstanding, all of which shares are owned beneficially and of record
by the Parent. There are no outstanding options, warrants or other rights to
purchase, or securities convertible into or exchangeable for, shares of the
capital stock of Acquisition, and there are no agreements or commitments to
which Acquisition is a party or by which it is bound pursuant to which
Acquisition is or may become obligated to issue additional shares of its capital
stock.
4.5 SEC Reports and Financial Statements. Parent has heretofore
delivered or made available to Company complete and correct copies of all
reports and other filings filed by Parent with the SEC pursuant to the Exchange
Act during its past two fiscal years (such reports and other filings
collectively referred to herein as the "Parent Exchange Act Filings"). As of
their respective dates, the Parent Exchange Act Filings did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements of Parent included in the Parent Exchange Act
Filings (i) were prepared from the books and records of the Company and its
consolidated subsidiaries, (ii) were prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated therein or in the notes or schedules thereto) and (iii) present fairly
the financial position of Parent as at the dates thereof and the results of
their operations and cash flows the fiscal year ended June 30, 1996 and earlier
years. The unaudited financial statements included in Parent Exchange Act
Filings comply in all material respects with the published rules and regulations
of the SEC with respect thereto; and such unaudited financial statements (i)
were prepared from the books and records of Parent, (ii) were prepared in
accordance with generally accepted accounting principles, except as otherwise
permitted under the Exchange Act and the rules and regulations thereunder, on a
consistent basis (except as may be indicated therein or in the notes or
schedules thereto) and (iii) present fairly the financial position of Parent as
at the dates thereof and the results of their operations and cash flows (or
changes in financial condition) for the periods then ended, subject to normal
year-end adjustments and any other adjustments described therein or in the notes
or schedules thereto.
4.6 Absence of Undisclosed Liabilities. Parent has no liabilities or
obligations of any nature, whether accrued, absolute, contingent or otherwise,
which would be required to be reflected in a consolidated balance sheet of
Parent or the notes thereto prepared in accordance with generally accepted
accounting principles as of the date hereof, except (i) as set forth on Schedule
4.6, (ii) as set forth or reserved against in the Parent's consolidated balance
sheet dated as of September 30, 1997 included in the Parent's Report on Form
10-Q for the fiscal period ended September 30, 1997 (the "Parent Balance Sheet")
or disclosed in the notes to the financial statements included in such Report,
or (iii) liabilities or obligations incurred since September 30, 1997 in the
ordinary course of business and consistent with past practice which in any
single instance or in the aggregate are not material to Parent and the Parent
Subsidiaries taken as a whole.
4.7 Absence of Certain Changes. Except for the transactions
contemplated by this Agreement and as otherwise reported in the Parent Exchange
Act Filings, since September 30, 1997, the business of Parent and the Parent
Subsidiaries has been conducted in the ordinary course and consistent with past
practice. Except as described in the Parent Exchange Act Filings or on Schedule
4.7 hereto, since September 30, 1997 there has been no material adverse change
in the financial condition, results of operations, business, operations, assets
or liabilities of Parent and Parent Subsidiaries taken as a whole, nor has
Parent or any Parent Subsidiary: (i) incurred any material obligation or
liability (whether absolute, accrued, contingent or otherwise) except in the
ordinary course of business consistent with past practice; (ii) experienced any
material adverse change in its financial condition, results of operations,
assets, liabilities, business or operations; (iii) made any change in any
accounting principle or practice or in its methods of applying any such
principle or practice or written up (or failed to write down in accordance with
generally accepted accounting principles consistent with past practice) the
value of any inventories or revalued any assets of the Parent; (iv) suffered any
material damage, destruction or loss, whether or not covered by insurance,
affecting their assets, properties or business; (v) mortgaged, pledged or
subjected to any lien, charge or other encumbrance, or granted to third parties
any rights in, any of their assets, tangible or intangible; (vi) sold or
transferred any of their assets, except in the ordinary course of business and
consistent with past practice, or canceled or compromised any debts or waived
any claims or rights of a material nature; (vii) issued any additional shares of
capital stock or any rights, options or warrants to purchase, or securities
convertible into or exchangeable for, shares of its capital stock, (viii)
declared or paid any dividends on or made any distributions (however
characterized) in respect of shares of its capital stock, (ix) repurchased or
redeemed any shares of its capital stock, (x) granted any general or specific
increase in the compensation payable or to become payable to any of its
employees or any bonus or service award or other like benefit, which increase is
in excess of 15% of the total of compensation, bonus or service award payable to
such employee or (xi) entered into any agreement to do any of the foregoing.
4.8 Legal Proceedings, etc. Except as set forth in Schedule 4.8 hereto,
there are no suits, actions, claims, proceedings (including without limitation,
arbitral or administrative proceedings) or investigations pending or, to the
best knowledge of the Parent, threatened against Parent or any of Parent
Subsidiaries or their properties, assets or business (or, to the best knowledge
of the Parent, pending or threatened against, relating to or involving any of
the officers, directors, employees, agents or consultants of Parent or any
Parent Subsidiary in connection with the business of Parent or Parent
Subsidiaries). There are no such suits, actions, claims, proceedings or
investigations pending against Parent or any of the Parent Subsidiaries, or, to
the best knowledge of the Parent, threatened challenging the validity or
propriety of the transactions contemplated by this Agreement. There is no
judgment, order, injunction, decree or award (whether issued by a court, an
arbitrator or an administrative agency) to which Parent or the Parent
Subsidiaries is a party, or involving the Parent's or any of the Parent
Subsidiaries' properties, assets or business, which is unsatisfied or which
requires continuing compliance therewith by Parent or any Parent Subsidiary.
4.9 Taxes.
(a) Parent and each Parent Subsidiary has duly and timely
filed, or will duly and in a timely manner file, all tax returns and other
filings in respect of Taxes required to be filed by it or which are required to
be filed by it on or prior to the Effective Date, and has in a timely manner
paid (or will in a timely manner pay) all Taxes which are (or will be) shown to
be due on such returns. All tax returns and other filings in respect of taxes
are true, correct and complete in all material respects. The provisions for
Taxes payable reflected in the Parent Balance Sheet, are adequate under
generally accepted accounting principles.
(b) There are no actions or proceedings currently pending or,
to the best knowledge of the Parent, threatened against Parent or any Parent
Subsidiary by any governmental authority for the assessment or collection of
Taxes, no claim for the assessment or collection of Taxes has been asserted
against Parent or any Parent Subsidiary, and there are no matters under
discussion with any governmental authority regarding claims for the assessment
or collection of Taxes. Any Taxes that have been claimed or imposed as a result
of any examinations of any tax return of Parent or any Parent Subsidiary by any
governmental authority are being contested in good faith and have been disclosed
in writing to the Company. There are no agreements or applications by Parent or
any Parent Subsidiary for an extension of time for the assessment or payment of
any Taxes.
(c) Parent has not, with regard to any assets or property
held, acquired or to be acquired by the Company, filed a consent to the
application of Section 341(f) of the Internal Revenue Code of 1986, as amended
(the "Code").
(d) Parent has not participated in or cooperated with an
international boycott within the meaning of Section 999(b) of the Code.
(e) The disclosure set forth in the Parent's Annual Report on
Form 10-KSB for the fiscal year ended June 30, 1997 regarding deferred taxes and
tax loss carry forwards is true and complete as of the date hereof and no events
have occurred since June 30, 1997 which would make such information misleading
or incomplete.
4.10 Title to Properties and Related Matters. Parent and Parent
Subsidiaries do not own any real property. Except as set forth on Schedule 4.10,
Parent and the Parent Subsidiaries have good and marketable title to all
personal property, tangible or intangible, on the Parent Balance Sheet or
acquired after the date thereof (other than properties and assets sold or
otherwise disposed of in the ordinary course of business and consistent with
past practice since June 30, 1997; free and clear of any claims, liens, pledges,
security interests or encumbrances of any kind whatsoever (other than purchase
money security interests and common law vendor's liens, in each case for goods
purchased on open account in the ordinary course of business and having a fair
market value of less than $10,000 in each individual case).
4.11 Intellectual Property.
(a) Schedule 4.11 hereto sets forth a complete and correct
list of all patents, patent applications, material unpatented inventions set
forth or described in writing, registered trademarks and service marks,
trademark and service xxxx applications, trade names, copyrights, software
documentation and manuals, including all versions thereof (collectively the
"Intellectual Property") which, to Parent's best knowledge, are owned by or
registered in the name of or used in the business of Parent or any Parent
Subsidiary (including, without limitation, the copyright and all other rights in
reports issued by Parent and Parent Subsidiaries to their clients in the conduct
of their business), all of which are valid and subsisting.. In each registration
or patent or application for registration or patent listed in Schedule 4.11 held
by assignment, the assignment has been recorded with the state or national
Patent and Trademark Office from which the original registration issued or
before which the application for registration is pending. To Parent's best
knowledge, the rights of Parent and Parent Subsidiaries in or to such
Intellectual Property owned by Parent and Parent Subsidiaries does not conflict
with or infringe on the rights of any third party. Parent and Parent
Subsidiaries have not received any written claim or notice to such effect.
Parent and Parent Subsidiaries are not subject to any judgment, injunction,
decree, order or agreement restricting their use of the Intellectual Property,
except for such restrictions contained in Intellectual Property licensed from
third parties, which licensed Intellectual Property (other than "off the shelf"
software such as word processing and spreadsheet programs) and material
restrictions on the use thereof are listed in Schedule 4.11.
(b) Except set forth in Schedule 4.11, the Intellectual
Property owned by Parent and Parent Subsidiaries is free and clear of all liens,
claims, security interests or encumbrances of any kind whatsoever. No actions
have been made or asserted or are pending or, to the best knowledge of Parent
and Parent Subsidiaries, threatened against Parent and Parent Subsidiaries
either (i) based upon or challenging or seeking to deny or restrict the use by
Parent and Parent Subsidiaries of any Intellectual Property or (ii) alleging
that any services provided, or products manufactured or sold by Parent and
Parent Subsidiaries are being provided, manufactured or sold in violation of any
patents or trademarks, or other rights of any third party. To the best knowledge
of Parent and Parent Subsidiaries, no third party is using any patents,
copyrights, trademarks, service marks, trade names, trade names, trade secrets
or similar property that infringe upon the Intellectual Property owned by Parent
and Parent Subsidiaries or upon the rights of Parent and Parent Subsidiaries
used in its or their business. Parent and Parent Subsidiaries have not granted
any license or other right to any third party with respect to the Intellectual
Property except for licenses of software to customers. The consummation of the
transactions contemplated by this Agreement will not result in the termination
or impairment of any of the Intellectual Property owned by Parent and Parent
Subsidiaries.
(c) Parent has made available to the Company correct and
complete copies of all material licenses and sublicenses for Intellectual
Property licensed from or to third parties set forth in Schedule 4.11 and any
and all ancillary documents pertaining thereto (including, but limited to, all
amendments, consents and evidence of commencement dates and expiration dates).
With respect to each of such licenses and sublicenses:
(i) such license or sublicense, together with all
ancillary documents made available pursuant to the first sentence of this
Section 4.11(c), is valid, binding, enforceable and in full force and effect and
represents the entire agreement between the respective licensor and licensee
with respect to the subject matter of such licensee or sublicense;
(ii) subject to obtaining any necessary consent to
assignment from the licensor or licensee, such license or sublicense will not
cease to be valid, binding, enforceable and in full force and effect on the
terms currently in effect as a result of the consummation of the transactions
contemplated by this Agreement, nor will the consummation of the transactions
contemplated by this Agreement constitute a breach or default under such license
or sublicense or otherwise give the licensor or sublicensor a right to terminate
such license or sublicense;
(iii) with respect to each such license or sublicense; (A)
Parent has not received any notice of cancellation or termination under such
license or sublicense and no licensor, sublicensor, licensee or sublicensee has
any right to terminate or cancel such license or sublicense, (B) Parent has not
received any notice or a breach or default under such license or sublicenses,
which breach or default has not been cured, and (C) Parent has not granted to
any third party any rights, adverse or otherwise, under such licenses or
sublicense (except for licenses of software to customers);
(iv) neither Parent, nor to the best knowledge of Parent,
any other party to such license or sublicense, is in breach or default in any
material respect, and no event has occurred with respect to Parent, or to the
best knowledge of Parent, such other party, that, with notice or lapse of time
would constitute such a breach or default or permit termination, modification or
acceleration under such license or sublicense;
(v) no actions have been made or asserted or are pending
or, to the best knowledge of Parent, have been threatened against Parent, either
(A) based upon or challenging or seeking to deny or restrict the use by Parent
of any licensed Intellectual Property or (B) alleging that any Intellectual
Property is being licensed, sublicensed or used in violation of any patents or
trademarks, or any other rights of any third party; and
(vi) to the best knowledge of Parent, no third party is
using any patents, copyrights, trademarks, service marks, trade names, trade
secrets or similar property that infringe upon the use of the licensed
Intellectual Property by Parent or upon the rights of Parent therein.
(d) Parent is not aware of any reason that would prevent any
pending applications to register trademarks, service marks or copyrights or any
pending patent applications from being granted.
(e) Other than "off the shelf" software, the Intellectual
Property set forth in Schedule 4.11 constitutes all the material Intellectual
Property used in or held by Parent and its Subsidiaries to be used in, and
necessary in the conduct of, the business of Parent and its Subsidiaries as
currently conducted and there are not other items of Intellectual Property that
are material to Parent and its Subsidiaries or its or their business.
(f) Schedule 4.11(f) sets forth all of the Company's software
products including all versions of each such product and the uses therefor.
4.12 Contracts.
(a) Except as set forth in Schedule 4.12, neither Parent nor
any Parent Subsidiary is a party to:
(i) any contract, arrangement or understanding, or series
of related contracts, arrangements or understandings, which involves annual
expenditures or receipts by the Company of more than $10,000 not cancelable by
the Company on thirty days (or less) notice;
(ii) any note, indenture, credit facility, mortgage,
security agreement or other contract, arrangement or understanding relating to
or evidencing indebtedness for money borrowed, or granting a security interest
or mortgage in the assets of Parent or any Parent Subsidiary, for an amount in
excess of $10,000;
(iii) any guaranty issued by Parent or any Parent
Subsidiary;
(iv) any contract, arrangement or understanding granting
to any person the right to use any property or property right of Parent or any
Parent Subsidiary with a value exceeding $10,000;
(v) any contract, arrangement or understanding restricting
in any material respect the Parent's or any Parent Subsidiary's right to engage
in any business activity or compete with any business;
(vi) any contract, arrangement or understanding with a
Parent Related Person as defined in Section 4.21 hereof; or
(vii) any outstanding offer, commitment or obligation to
enter into any contract or arrangement of the nature described in subsections
(i) through (vi) of this subsection 4.12(a).
(b) Parent has not disclosed any secret or confidential
Intellectual Property (except by way of issuance of a patent or subject to a
confidentiality agreement) or permitted to lapse or go abandoned any
Intellectual Property (or any registration or grant thereof or any application
relating thereto) to which, or under which, Parent has any rights, title,
interest or license.
4.13 Employee Benefit Plans. The employee benefit plans of Parent and
the Parent Subsidiaries have been operated in material compliance with all
applicable laws. Parent and the Parent Subsidiaries have not incurred any
material liability under Title IV of ERISA, and none of the employee benefit
plans of Parent or any of the Parent Subsidiaries has incurred a material
funding deficiency under Section 412 of the Code (whether or not waived). There
have been no material changes to the funding status of any employee benefit plan
of Parent or any of the Parent Subsidiaries since the date of the most recent
Exchange Act Filings. Each employee benefit plan of Parent and the Parent
Subsidiaries which is an "employee pension benefit plan" (as defined in Section
3(2) of ERISA) intended to qualify under Section 401(a) of the Code and the
trust, if any, forming part of such plan has received a favorable determination
letter from the Internal Revenue Service with respect to its qualification under
Sections 401(a) and 501(a) of the Code and nothing has occurred since the date
of such determination letter that would adversely affect the qualification of
such plan. A list of all such material "employee pension benefit plans" ("Parent
Plans") is set forth in Schedule 4.13 hereto.
4.14 Compliance with Applicable Law; Ability to Conduct the Business.
(a) Parent and Parent Subsidiaries are not in violation of any
applicable safety, health, environmental or other law, statute, ordinance, code,
rule, regulation, judgment, order, injunction, writ or decree of any Federal,
state, local or foreign court or governmental or regulatory body, agency or
authority having, asserting or claiming jurisdiction over it or over any part of
its business, operations, properties or assets, except where any such violation
would not have a material adverse effect on the consolidated business,
operations or assets of Parent. Parent and Parent Subsidiaries have not received
any notice alleging any such violation, nor to the best knowledge of Parent and
Parent Subsidiaries, is there any inquiry, investigation or proceedings relating
thereto.
(b) Parent and Parent Subsidiaries are in material compliance
with the rules, regulations, guidelines and interpretations of the Food and Drug
Administration ("FDA"), including the registration of Parent as a medical device
manufacture for blood bank software. To the best knowledge of Parent, the FDA
has no reason to deny the registration of the Company as a medical device
manufacture for blood banks software. Parent has never recalled any of its
products, except as set forth in Schedule 4.14(b). Parent will deliver to
Company true and complete copies of all of Parent's correspondence with the FDA
no later than thirty days after the date hereof.
(c) Parent is in compliance with all material governmental
permits, licenses, exemptions, consents, authorizations and approvals, including
without limitation, all material health, safety, environmental and food and drug
permits used in or required for the conduct of its business as presently
conducted, all of which shall continue in full force and effect, without
requirement (except as set forth in Schedule 4.14(c)) of any filing or the
giving of any notice and without modification thereof, following the
consummation of the transactions contemplated hereby. The Parent has not
received any notice of, and to the best knowledge of the Parent, there are no
inquiries, proceedings or investigations relating to or which could result in
the revocation or modification of any such permit, license, exemption, consent,
authorization or approval, nor is the Parent aware of any basis therefor. The
Parent is in all material respects in compliance with all such permits licenses,
exemptions, consents, authorizations and approvals and all applicable laws. The
Parent is not party to any agreement which would prohibit it from manufacturing,
selling or distributing any products or services.
4.15 Accounts Receivable. All accounts receivable of Parent and the
Parent Subsidiaries (i) arose from bona fide transactions in the ordinary course
of business and consistent with past practice, (ii) except as set forth on
Schedule 4.15, are owned by Parent and the Parent Subsidiaries free and clear of
any claim, security interest, lien or other encumbrance and (iii) are accurately
and fairly reflected on Parent's June 30, 1997 consolidated balance sheet, or,
with respect to accounts receivable of Parent and the Parent Subsidiaries
created on or after June 30, 1997, are accurately and fairly reflected in the
books and records of the Company.
4.16 Insurance. Schedule 4.16 hereto is a true and complete list of all
insurance policies carried by Parent and the Parent Subsidiaries with respect to
their respective businesses, together with, in respect of each such policy, the
name of the insurer, the number of the policy, the annual policy premium payable
therefor, the limits of coverage, the deductible amount (if any), the expiration
date thereof and each pending claim thereunder. Complete and correct copies of
each such policy have previously been made available by Parent to the Company
for inspection and photocopying. All such policies are in full force and effect.
All premiums due thereon have been paid in a timely manner.
4.17 Information in Registration Statement and Proxy Statement. None
of the information relating to Parent or the Parent Subsidiaries or any of their
shareholders or their respective businesses supplied by Parent for inclusion or
incorporation by reference in the Registration Statement and the prospectus
contained therein or the Proxy Statement will, in the case of the Registration
Statement, at the time it becomes effective under the Securities Act and at the
Effective Date, or, in the case of the Proxy Statement or any amendments thereof
or supplements thereto, at the time of the mailing of the Proxy Statement and
any amendments thereof or supplements thereto and at the time of the meeting of
shareholders referred to in Section 6.3, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The information in the
Registration Statement and the Proxy Statement provided by Parent will comply as
to form with the provisions of the Securities Act and the Exchange Act.
4.18 Environmental Matters.
(a) Parent and each Parent Subsidiary is in material
compliance with all applicable Environmental Laws. All material permits and
other governmental authorizations, if any, currently held by Parent and the
Parent Subsidiaries pursuant to the Environmental Laws are in full force and
effect and shall remain in full force and effect upon consummation of the
Merger.
(b) There is no Environmental Claim pending or, to the
knowledge of Parent, threatened against Parent or any Parent Subsidiary or
against any person or entity whose liability Parent or any Parent Subsidiary has
or may have retained or assumed either contractually or by operation of law.
(c) There are no actions or, to the knowledge of Parent,
activities, circumstances, conditions, events or incidents, including, without
limitation, the release or threatened release, emission, discharge, presence or
disposal of any Material of Environmental Concern, existing on the date hereof
that could form the basis of any Environmental Claim against Parent or any
Parent Subsidiary or any person or entity whose liability for any Environmental
Claim Parent or any Parent Subsidiary has or may have retained or assumed either
contractually or by operation of law.
4.19 Disclosure. No representation or warranty by Parent or Acquisition
contained in this Agreement and no statement contained in any Schedule,
certificate or other document or instrument delivered or to be delivered
pursuant to this Agreement contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact necessary to make
the statements contained therein not misleading. For the avoidance of doubt, it
is hereby stipulated that with respect to any oral agreement or commitment
disclosed in any Schedule, only those terms of such oral agreement expressly set
forth in such Schedule shall be deemed to have been disclosed. The
representations and warranties contained in this Article IV (and in the
Schedules thereto) constitute the sole and exclusive representations and
warranties made by Parent in connection with the transactions contemplated
hereby. Such representations and warranties are made by Parent and Acquisition
with the knowledge and expectation that the Company are placing complete
reliance thereon in entering into, and performing their obligations under, this
Agreement, and the same shall not be affected in any respect whatsoever by any
investigation heretofore or hereafter conducted by or on behalf of the Company,
whether in contemplation of this Agreement or otherwise.
4.20 Minute Books, etc. The minute book, stock certificate book and
stock ledger of the Parent and Acquisition are complete and correct in all
material respects and fairly reflect the conduct of the business of the Parent
and Acquisition. The minute book of the Parent and Acquisition contains accurate
and complete records of all meetings or written consents to action of the Board
of Directors and shareholders of the Parent and Acquisition and accurately
reflects all corporate actions of the Parent and Acquisition which are required
by law to be passed upon by the Board of Directors or shareholders of the Parent
and Acquisition.
4.21 Parent Related Person Indebtedness and Contracts. Schedule 4.21
sets forth a complete and correct summary of all contracts, commitments,
arrangements and understandings not described elsewhere in this Agreement
between the Parent and any of the following (collectively, "Parent Related
Persons"): (i) directors and officers who are identified in accordance with Item
402 of Regulation S-B of the Exchange Act (the "Parent Identified Persons");
(ii) the spouses, children and other lineal descendants of any of the Parent
Identified Persons, (collectively, "near relatives"): (iii) any trust for the
benefit of any of the Parent Identified Persons, any of their respective near
relatives; or (iv) any corporation, partnership, joint venture or other entity
or enterprise owned or controlled by any of the Parent Identified Persons or by
any of their respective near relatives.
4.22 Parent Identified Persons.There are no agreements, arrangements or
understandings to which each Parent Identified Person is a party involving the
purchase, sale or other acquisition or disposition of the shares and/or Options
owned by such Parent Identified Person;
ARTICLE V
CONDUCT OF BUSINESS OF THE COMPANY AND THE PARENT
PRIOR TO THE EFFECTIVE DATE
5.1 Conduct of Business of the Company. During the period commencing on
the date hereof and continuing until the Effective Date, the Company agrees that
except as otherwise expressly contemplated by this Agreement or agreed to in
writing by the Parent, it:
(a) subject to the fiduciary duties of Company's Board of
Directors as advised in writing by counsel, will carry on its business only in
the ordinary course and consistent with past practice;
(b) will not declare or pay any dividend on or make any other
distribution (however characterized) in respect of shares of its capital stock;
(c) will not, directly or indirectly, redeem or repurchase,
or agree to redeem or repurchase, any shares of its capital stock;
(d) will not amend its Articles of Incorporation or By-Laws;
(e) will not issue, or agree to issue, any shares of its
capital stock, or any options, warrants or other rights to acquire shares of its
capital stock, or any securities convertible into or exchangeable for shares of
its capital stock;
(f) will not combine, split or otherwise reclassify any
shares of its capital stock;
(g) subject to the fiduciary duties of the Company's Board of
Directors, as advised in writing by counsel, will use all reasonable efforts to
preserve intact its present business organization, keep available the services
of its officers and key employees and preserve its relationships with clients
and others having business dealings with it to the end that its goodwill and
ongoing business shall not be materially impaired at the Effective Date;
(h) will not make any capital expenditures individually in
excess of $50,000 or in the aggregate in excess of $100,000, (ii) enter into or
terminate (except in the ordinary course of business and consistent with past
practice) any lease of, or purchase or sell, any real property, (iii) enter into
any leases of personal property involving individually in excess of $25,000
annually or in the aggregate in excess of $50,000 annually, (iv) incur or
guarantee any additional indebtedness for borrowed money except draw downs on
its line of credit and in the ordinary course of business, (v) create or permit
to become effective any security interest, mortgage, lien, charge or other
encumbrance on its properties or assets, or (vi) enter into any agreement to do
any of the foregoing;
(i) will not, other than as set forth in Schedule 5.1(i) and
other than in the ordinary course of business, adopt or amend any Benefit Plan
for the benefit of Employees, or (except for such increases in salary or other
compensation payable to any Employee as the Board of Directors of the Company
may reasonably determine are necessary to retain the services of such Employee)
increase the salary or other compensation (including, without limitation,
bonuses) payable or to become payable to its Employees (except pursuant to
existing contractual obligations which have been disclosed to Parent or
consistent with past practice), or enter into any agreement to do any of the
foregoing;
(j) will promptly advise Parent of the commencement of, or
threat of (to the extent that such threat comes to the knowledge of the
Company), any material claim, action, suit, proceeding or investigation against,
relating to or involving the Company or any of its directors, officers,
employees, agents or consultants in connection with its businesses or the
transactions contemplated hereby;
(k) will maintain in full force and effect all insurance
policies maintained by the Company on the date hereof;
(l) will not enter into any agreement to dissolve, merge
(other than as contemplated by this Agreement), consolidate or, except in the
ordinary course, sell any Company Common Stock or any material assets of the
Company to any third party, and if the Company should, in the performance by the
Company's Board of Directors of their fiduciary duties, nevertheless enter into
such an agreement, shall promptly provide Parent with notice thereof including a
copy of such agreement, or a written summary of its terms if the agreement is
not in writing, and Parent shall have a right of first refusal for a period of
sixty (60) days after receipt of the aforesaid notice to cause the Company to
close the transaction with Parent on the same terms as the agreement with the
third party;
(m) will make efforts to in a timely manner make all filings
it is required to make with the Securities and Exchange Commission and other
regulatory organizations and provide copies thereof to Parent;
(n) will not breach any material provision of or default or
commit any act or fail to take any action necessary which with the giving notice
or lapse of time, would constitute a default under any material contract or
instrument to which it is a party or by which it is bound; and
(o) will promptly notify Parent in writing of any material
problem with any Employee, customer or supplier, if any key employee leaves the
Company for any reason, or if any material customer terminates its relationship
with the Company.
5.2 Conduct of Business of the Parent. During the period commencing on
the date hereof and continuing until the Effective Date, Parent agrees that,
except as expressly contemplated by this Agreement or agreed to in writing by
the Company, the Parent:
(a) subject to the fiduciary duties of the Parent's Board of
Directors, as advised in writing by counsel, will carry on its business only in
the ordinary course consistent with past practice;
(b) will not declare or pay any dividend on or make any other
distribution (however characterized) in respect of shares of its capital stock;
(c) will not, directly or indirectly, redeem or repurchase,
or agree to redeem or repurchase, any shares of its capital stock;
(d) will not amend its Certificate of Incorporation or
By-Laws;
(e) except as described in Schedule 5.2(e), will not issue,
or agree to issue, any shares of its capital stock, or any options, warrants or
other rights to acquire shares of its capital stock, or any securities
convertible into or exchangeable for shares of its capital stock, other than the
issuance of common stock upon the exercise of options granted under its
Incentive Stock Option Plan;
(f) will not combine, split or otherwise reclassify any
shares of its capital stock;
(g) will not sell or pledge, or agree to sell or pledge, any
shares of the capital stock of any of Parent Subsidiaries, except as disclosed
in Schedule 5.2(g) hereof;
(h) will promptly advise the Company of the commencement of,
or threat of (to the extent that such threat comes to the knowledge of Parent or
any Parent Subsidiary), any material claim, action, suit, proceeding or
investigation against, relating to or involving Parent or any Parent Subsidiary
or any of their directors, officers, employees, agents or consultants in
connection with their businesses or the transactions contemplated hereby;
(i) subject to the fiduciary duties of Parent's Board of
Directors, will not enter into any agreement to dissolve, merge, consolidate or,
except in the ordinary course, sell any material assets of the Parent or any of
the Parent Subsidiaries to any third party, and if the Parent or any of the
Parent Subsidiaries should, in performance by the Parent's Board of Directors of
their fiduciary duties, nevertheless enter into such an agreement, the Parent
shall promptly provide the Company with notice thereof;
(j) will not, other than in the ordinary course of business,
adopt or amend any Benefit Plan for the benefit of employees of Parent or any
Parent Subsidiary, or (except for such increases in salary or other compensation
payable to any employee of Parent or any Parent Subsidiary as the Board of
Directors of Parent or Parent Subsidiary may reasonably determine are necessary
to retain the services of such employee) increase the salary or other
compensation (including, without limitation, bonuses) payable or to become
payable to such employees (except pursuant to existing contractual obligations
or consistent with past practice), or enter into any agreement to do any of the
foregoing;
(k) subject to the fiduciary duties of the Parent's Board of
Directors, as advised in writing by counsel, will use all reasonable efforts to
preserve intact its present business organization, keep available the services
of its officers and key employees and preserve its relationships with clients
and others having business dealings with it to the end that its goodwill and
ongoing business shall not be materially impaired at the Effective Date;
(l) will make efforts to in a timely manner make all filings
it is required to make with the Securities and Exchange Commission and other
regulatory organizations and provide copies thereof to the Company;
(m) will not breach any material provision of or default of
commit any act or fail to take any action necessary which the giving of notice
or lapse of time, would constitute a default under any material contract or
instrument to which it is a party or by which it is bound;
(n) will promptly notify the Company in writing of any
material problem with any employee, customer, or supplier, if any key employee
leaves the Parent or any Parent Subsidiary for any reason, or if any material
customer terminates its relationship with the Parent or any Parent Subsidiary;
and
(o) will maintain in full force and effect all insurance
policies maintained by the Company on the date hereof.
5.3 Conduct of Business of Acquisition. During the period commencing on
the date hereof and continuing until the Effective Date, Acquisition shall not
engage in any activities of any nature except as provided in or contemplated by
this Agreement.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Access to Properties and Records. Between the date of this
Agreement and the Effective Date, the Company will provide Parent and its
accountants, counsel and other authorized advisors, and Parent (with respect to
itself and Parent Subsidiaries) will provide the Company and its accountants,
counsel and other authorized advisors, with full access, during business hours,
to their respective premises and properties and their respective books and
records (including, without limitation, contracts, leases, insurance policies,
litigation files, minute books, accounts, working papers and tax returns filed
and in preparation) and each will cause its officers to furnish to the other and
its authorized advisors such additional financial, tax and operating data and
other information pertaining to its business as the other shall from time to
time reasonably request. All of such data and information shall be subject to
the terms and conditions of the confidentiality agreement, dated June 4, 1997
between the Company and the Parent, with respect to information provided by the
Company, and the confidentiality agreement dated as of December 4, 1997 between
Parent and the Company, with respect to information provided by the Parent.
6.2 Registration Statement. As soon as reasonably practicable after the
execution and delivery of this Agreement, and subject to the availability of
year end financial statements, Parent shall prepare and file with the SEC the
Registration Statement, which shall cover all of the shares of Parent Common
Stock to be issued in connection with the Merger, and shall use all reasonable
efforts to have the Registration Statement declared effective by the SEC as
promptly as practicable. Parent shall also take such actions as may be required
under state blue sky or securities laws in connection with such issuance of
shares of Parent Common Stock in connection with the Merger. The Company shall
cooperate fully with Parent and shall furnish Parent with all information
concerning the Company and the Informedics Shareholders and shall take all such
other action as Parent may reasonably request in connection with any such
actions.
6.3 Shareholders' Approvals. Promptly after the effectiveness of the
Registration Statement and compliance with all state securities and blue sky
laws, each of Acquisition and the Company shall take all action necessary to
convene meetings of their respective shareholders for the purpose of voting upon
the transactions contemplated hereby and such other matters as may be
appropriate at such meetings, and in connection therewith the Company shall in a
timely manner mail to its shareholders the Proxy Statement contained in the
Registration Statement and, if necessary after the Proxy Statement shall have
been mailed, shall promptly and in a timely manner circulate amended or
supplemental materials and (if necessary) resolicit proxies. The Company and
Parent will, through their respective Board of Directors, recommend to their
respective shareholders approval of the transactions contemplated by this
Agreement.
6.4 Reasonable Efforts; etc. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use his/its reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including obtaining any consents, authorizations, exemptions and approvals from,
and making all filings with, any governmental or regulatory authority, agency or
body which are necessary in connection with the transactions contemplated by
this Agreement.
6.5 Material Events. At all times prior to the Effective Date, each
party shall promptly notify the others in writing of the occurrence of any event
which will or may result in the failure to satisfy any of the conditions
specified in Article VII or Article VIII hereof.
6.6 Exclusivity.
(a) Following the execution of this Agreement, neither the
Company, any of the Company's officers, employees, representatives or agents,
nor any of the Company Identified Persons (the "Company Group") will directly or
indirectly solicit or accept any offers or solicit or initiate any discussion or
negotiations with, participate in any negotiations with or provide any
information to or otherwise cooperate in any other way with, or facilitate or
encourage any effort or attempt by any corporation, partnership, persons or
other entity or group, other than Parent and its directors, officers, employees,
representatives and agents (the "Parent Group") concerning any merger, sale of
assets, sale of shares of capital stock or similar transaction involving the
Company or its business.
(b) If any member of the Company Group violates the above
Section 6.6(a), or should any "person" (as such term is defined In Section 13d-3
of the Exchange Act) other than persons who are part of the Parent Group, become
after the date hereof the "beneficial owner" (as such term ins defined in the
Exchange Act) of ten percent (10%) or more of the outstanding Common Stock and
discloses (by press release, public filing or otherwise) its opposition to the
transaction contemplated herein or publicly announces a tender or exchange offer
with the intent to accomplish the type of transaction described in Section 6.6
(a), above, then, if such a transaction results, simultaneous with the closing
of that transaction, the Company shall deliver to Parent an amount equal to the
sum of (i) the fees and expenses paid or payable by or on behalf of the Company
to its attorneys, accountants, environmental consultants, management
consultants, and other consultants and advisors in connection with the
negotiation, execution and delivery of this Agreement, performing diligence,
preparing documentation, structuring and negotiating this Agreement and the
transactions contemplated hereby, and to all banks, investment banking firms and
other financial institutions for arranging or providing any financing or
financial commitments in connection with the transactions contemplated hereby
plus (ii) a non-accountable expense reimbursement of $500,000 for various
out-of-pocket and general costs incurred by Parent and its affiliates in
connection with this transaction.
(c) The provisions of this Section 6.6 shall terminate if a
Closing does not occur by April 30, 1998, or if this Agreement is terminated
prior thereto for any reason other than a violation of this Section 6.6.
6.7 No Issuance of Company Preferred Stock. The Company agrees
not to issue any shares of CompanyPreferred Stock after the execution and
delivery of this Agreement.
6.8 Tax Consequences. From and after the Effective Date, none of the
parties will take any position in or with regard to their respective Federal,
state and local income tax returns (or any amendments thereto) that is
inconsistent with the treatment of the Merger as a tax-free reorganization for
Federal income tax purposes under Section 368 of the Code or with respect to the
tax consequences contemplated thereby (including those related to the basis of
stock and assets).
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF
PARENT AND ACQUISITION
The obligation of Parent and Acquisition to consummate the transactions
contemplated hereby shall be subject to the satisfaction, on or prior to the
Closing Date, of each of the following conditions (any of which may be waived in
writing by Parent and Acquisition in their sole discretion):
7.1 Representations and Warranties True. The representations and
warranties of the Company which are contained in this Agreement, or contained in
any Schedule, certificate or other instrument or document delivered or to be
delivered pursuant to this Agreement, shall be true and correct in all material
respects at and as of the Closing Date as though such representations and
warranties were made on and as of the Closing Date, and at the Closing the
Company shall have delivered to Parent and Acquisition a certificate (signed on
behalf of the Company by the President and the Chief Financial Officer of the
Company) to that effect with respect to all such representations and warranties
made by the Company.
7.2 Performance. The Company shall have performed and complied in all
material respects with all of the obligations under this Agreement which are
required to be performed or complied with by it on or prior to the Closing Date,
and at the Closing the Company shall have delivered to Parent and Acquisition a
certificate (duly executed on behalf of the Company by the President and the
Chief Financial Officer of the Company) to that effect with respect to all such
obligations required to have been performed or complied with by the Company on
or before the Closing Date.
7.3 Authorization of Merger. This Agreement and the consummation of the
transactions contemplated hereby shall have been duly approved and adopted by
the requisite affirmative vote of the Company's shareholders and Parent's
shareholders in accordance with applicable laws and regulations.
7.4 Registration Statement; Blue Sky Laws. The Registration Statement
shall have been declared effective under the Securities Act and shall not be
subject to a stop order or any threatened stop order. All necessary state
securities and blue sky permits, approvals and exemption orders required in
connection with the transactions contemplated by this Agreement shall have been
obtained.
7.5 Absence of Litigation. No statute, rule or regulation shall have
been enacted or promulgated, and no order, decree, writ or injunction shall have
been issued and shall remain in effect, by any court or governmental or
regulatory body, agency or authority which restrains, enjoins or otherwise
prohibits the consummation of the transactions contemplated hereby, and no
action, suit or proceeding before any court or governmental or regulatory body,
agency or authority shall have been instituted by any person (or instituted or
threatened by any governmental or regulatory body, agency or authority), and no
investigation by any governmental or regulatory body, agency or authority shall
have been commenced with respect to the transactions contemplated hereby or with
respect to the Company which, in the reasonable judgment of the Parent's Board
of Directors, would have a material adverse effect on the transactions
contemplated hereby or on the business of the Company.
7.6 Additional Agreements. The Company shall have delivered
(or cause to be delivered) duly executed counterparts of the following
agreements:
(a) a Consulting Agreement, duly executed by the President of
the Company; and
(b) a consent from the lessor of the Company's facilities
waiving any default under said lease resulting from the transactions
contemplated herein and permitting assignment of said lease to Acquisition and
any other entry which acquires all of the outstanding stock or all or
substantially all of the assets of Acquisition.
7.7 Legal Opinion. The Parent shall have received an opinion of
Tonkon, Xxxx, Xxxxx, Marmaduke & Booth, counsel to the Company, in a form
reasonably satisfactory to the Parent.
7.8 Delivery of Certificates for Cancellation. The share certificates
representing all of the issued and outstanding shares of Company Common Stock as
of the Closing Date (other than Dissenting Shares), and the instruments
representing all Options which are outstanding and unexercised on the Closing
Date, in each case duly endorsed in blank, shall have been surrendered for
cancellation.
7.9 Appraisal Rights. The holders of five percent (5%) or more of the
issued and outstanding shares of Company Common Stock shall not have demanded
appraisal rights in respect of the Merger.
7.10 Comfort Letter. Prior to the Registration Statement becoming
effective, Deloitte & Touche, independent accountants to the Company, shall have
delivered to Parent a "comfort" letter, addressed to Parent and dated within
three days of the date on which the Registration Statement became effective, in
such form and substance as is customary in connection with such transactions and
is satisfactory to the Parent.
7.11 Articles of Merger. The Company shall have executed and delivered
to Parent counterparts of the Articles of Merger to be filed with the Secretary
of State of the State of Oregon in connection with the Merger.
7.12 Schedules and Deliveries. The Parent and Acquisition acknowledge
and agree that certain of the schedules and items to be delivered by the Company
pursuant to this Agreement have not yet been provided by the Company. All of
such schedules and other items which have not been delivered shall have been
delivered by the Company to Parent no later than 30 days from the date hereof,
and such schedules and other items shall have been reasonably satisfactory to
the Parent, such approval not to be unreasonably withheld. Company shall
cooperate with Parent and work diligently to modify any schedule or other
deliverable which Parent does not approve so that it meets with Parent's
reasonable satisfaction.
7.13 Completion of Financial Due Diligence. The Parent and Acquisition
shall have completed their financial due diligence review of the Company to
their reasonable satisfaction, including but not limited to discussions with the
Company's auditors and financial personnel.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF THE
COMPANY
The obligation of the Company to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction, on or
prior to the Closing Date, of each of the following conditions (any of which
may be waived in writing by the Company in its sole discretion):
8.1 Representations and Warranties True. The representations and
warranties of each of Parent and Acquisition contained in this Agreement, or
contained in any Schedule, certificate or other instrument or document delivered
or to be delivered pursuant to this Agreement, shall be true and correct in all
material respects at and as of the Closing Date as though such representations
and warranties were made on and as of the Closing Date, and at the Closing each
of Parent and Acquisition shall have delivered to the Company a certificate
(signed on its behalf by its President and its Chief Financial Officer) to that
effect with respect to all such representations and warranties made by such
entity.
8.2 Performance. Each of Parent and Acquisition shall have performed
and complied in all material respects with all of the obligations under this
Agreement which are required to be performed or complied with by them on or
prior to the Closing Date, and at the Closing each of Parent and Acquisition
shall have delivered to the Company a certificate, signed on its behalf by its
President and its Chief Financial Officer, to that effect with respect to all
such obligations required to have been performed or complied with by such entity
on or before the Closing Date.
8.3 Authorization of Merger. This Agreement and the
transactions contemplated hereby shall have been duly approved and adopted by
the requisite affirmative vote of the Company's shareholders and Acquisition's
shareholders in accordance with applicable laws and regulations.
8.4 Registration Statement; Blue Sky Laws. The Registration Statement
shall have been declared effective under the Securities Act and shall not be
subject to a stop order or any threatened stop order. All necessary state
securities and blue sky permits, approvals and exemption orders required in
connection with the transactions contemplated by this Agreement shall have been
obtained.
8.5 Absence of Litigation. No statute, rule or regulation shall have
been enacted or promulgated. and no order, decree, writ or injunction shall have
been issued and shall remain in effect, by any court or governmental or
regulatory body, agency or authority which restrains, enjoins or otherwise
prohibits the consummation of the transactions contemplated hereby, and no
action, suit or proceeding before any court or governmental or regulatory body,
agency or authority shall have been instituted by any person (or instituted or
threatened by any governmental or regulatory body, agency or authority) and no
investigation by any governmental or regulatory body, agency or authority shall
have been commenced with respect to the transactions contemplated hereby or with
respect to Parent or Parent Subsidiaries which, in the reasonable judgment of
the Company's Board of Directors, would have a material adverse effect on the
transactions contemplated hereby or on the business of Parent and Parent
Subsidiaries taken as a whole.
8.6 Additional Agreements. Parent shall have executed and delivered
(and shall have agreed to cause the Surviving Corporation to execute and deliver
immediately following the Effective Date, as applicable) counterparts of the
following agreements:
(a) the Consulting Agreement referred to in Section 8.7(a)
hereof.
8.7 Legal Opinion. The Company shall receive an opinion of Nordlicht &
Hand, and/or Winthrop, Stimson, Xxxxxx & Xxxxxxx, as appropriate, counsels to
Parent and Acquisition, in a form reasonably satisfactory to the Company.
8.8 Articles of Merger. Parent and Acquisition shall have executed and
delivered to the Company counterparts of the Articles of Merger to be filed with
the Secretary of the State of the State of Oregon in connection with the Merger.
8.9 Schedules and Deliveries. The Company acknowledges and agrees that
certain of the schedules and items to be delivered by the Parent and Acquisition
pursuant to this Agreement have not yet been provided by the Company. All of
such schedules and other items which have not been delivered shall have been
delivered by Parent and Acquisition to the Company no later than 30 days from
the date hereof, and such schedules and other items remain shall have been
reasonably satisfactory to the Company. Parent and Acquisition shall cooperate
with the Company and work diligently to modify any schedule or other deliverable
which the Company does not approve so that it meets with the Company's
reasonable satisfaction.
8.10 Completion of Financial Due Diligence. The Company shall have
completed its financial due diligence review of the Parent to its reasonable
satisfaction, including but not limited to discussions with the Parent's
auditors and financial personnel.
ARTICLE IX
TERMINATION
9.1 Termination. This Agreement may be terminated at any time prior to
the Effective Date, whether prior to or after approval of this Agreement and
the transactions contemplated hereby by the Company's shareholders:
(a) by the mutual written consent of the Boards of Directors
of the Company and the Parent;
(b) by either the Company or the Parent
(i) if any court or governmental or regulatory agency,
authority or body shall have enacted, promulgated or issued any statute, rule,
regulation, ruling, writ or injunction, or taken any other action, restraining,
enjoining or otherwise prohibiting the transactions contemplated hereby and all
appeals and means of appeal therefrom have been exhausted;
(ii) if the Effective Date shall not have occurred on or
before April 30, 1998; provided, however, that the right to terminate this
Agreement pursuant to this Section 9.1 (b)(ii) shall not be available to any
party whose (or whose affiliate(s)') breach of any representation or warranty or
failure to perform or comply with any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Effective Date to occur on or
before such date;
(iii) if the shareholders of the Company or the
shareholders of Acquisition shall have failed to approve the Merger at the
meetings referred to in Section 6.3;
(c) by the Company, if any of the conditions specified in
Article VIII have not been met or waived prior to such time as such condition
can no longer be satisfied; or
(d) by the Parent, if any of the conditions specified in
Article VII shall not have been met or waived prior to such time as such
condition can no longer be satisfied.
9.2 Effect of Termination. In the event of termination of this
Agreement, this Agreement shall forthwith become void and there shall be no
liability on the part of any of the parties hereto or their respective officers
or directors, except for Sections 11.6 and 11.8 and the last sentence of Section
6.1, which shall remain in full force and effect, and except that nothing herein
shall relieve the Company from its obligations under Section 6.6 hereof or any
party from liability for a breach of this Agreement prior to the termination
hereof.
ARTICLE X
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
10.1 Survival of Representations and WarrantiesSurvival of
Representations and Warranties. All representations and warranties set forth
herein shall survive only until the Effective Date and not beyond.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Amendment. This Agreement may be amended by written agreement
among the Company and Parent prior to the Effective Date, whether prior to or
after approval hereof by the Company's shareholders, but after any such approval
no amendment shall be made to the Exchange Ratio pursuant to which outstanding
shares of Company Common Stock are converted into shares of Parent Common Stock
pursuant to the Merger, without the further approval of such shareholders.
11.2 Waiver of Compliance. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant or agreement contained herein may be waived only by a written notice
from the party or parties entitled to the benefits thereof. No failure by any
party hereto to exercise, and no delay in exercising, any right hereunder, shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right hereunder preclude any other or future exercise of that right by that
party.
11.3 Notices. All notices and other communications hereunder shall be
deemed given if given in writing and delivered personally, by registered or
certified mail, return receipt requested, postage prepaid, or by overnight
courier for which a receipt confirming delivery is provided, to the party to
receive the same at its respective address set forth below (or at such other
address as may from time to time be designated by such party to the others in
accordance with this Section 11.3):
(a) if to the Company, to:
Informedics, Inc.
0000 Xxxxx Xxx Xxxxx
Xxxxxxxx 0, Xxxxx 000
Lake Oswego, Oregon 97035
Attention: Xx. Xxxx Xxxxxxxxx
with copies to:
Tonkon, Xxxx, Xxxxx, Marmaduke & Booth
1600 Pioneer Tower
000 X.X. Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
(c) if to Parent or Acquisition, to:
Mediware Information Systems, Inc.
0000 Xxx Xxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: President
with copies to:
Nordlicht & Hand
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxxxxx, Esq.
and
Winthrop, Stimson, Xxxxxx & Xxxxxxx
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxx, Esq.
All such notices and communications hereunder shall be deemed given
when received, as evidenced by the signed acknowledgment of receipt of the
person to whom such notice or communication shall have been personally
delivered, the acknowledgment of receipt returned to the sender by the
applicable postal authorities or the confirmation of delivery rendered by the
applicable overnight courier service.
11.4 Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any
rights, duties or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other parties hereto.
11.5 No Third Party Beneficiaries. Neither this Agreement or any
provision hereof nor any Schedule, certificate or other instrument delivered
pursuant hereto, nor any agreement to be entered into pursuant hereto or any
provision hereof, is intended to create any right, claim or remedy in favor of
any person or entity, other than the parties hereto and their respective and
permitted assigns.
11.6 Expenses. Each party shall pay its own expenses in connection with
this Agreement. the agreements, to be entered into pursuant hereto and the
transactions contemplated hereby.
11.7 Public Announcements. Promptly upon execution and delivery of this
Agreement, Parent and the Company shall issue a press release in such form as
they shall mutually agree. Thereafter, and prior to the consummation of the
Merger or the termination of this Agreement, none of the parties hereto shall,
except as mutually agreed by Parent and the Company, or except as may be
required by law or applicable regulatory authority, issue any reports, releases,
announcements or other statements to the public relating to the transactions
contemplated hereby.
11.8 Brokers and Finders. The Company, Parent and Acquisition represent
and warrant that, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission based on arrangements made by or
on behalf of any of them. The Company and Parent shall each pay the fees and
other compensation of any broker, finder or investment banker engaged by it or
on its behalf.
11.9 Dispute Resolution
(a) In the event of any controversy, claim or dispute, other
than for which equitable relief is available, the party initiating the
controversy, claim or dispute shall provide to the other party a written notice
containing a brief and concise statement of the matter, together with relevant
supporting facts. During a period of thirty (30) days or such longer period as
mutually agreed, the parties shall attempt to settle the matter by good faith
negotiation. Such efforts shall include, but not be limited to, full
presentation by each party of its claims, with or without counsel, to the
President of the other party.
(b) If efforts under Section 11.9(a) are not successful, such
dispute shall be settled by binding arbitration in New York, New York, under the
Commercial Rules of the American Arbitration Association then in effect (except
as otherwise set forth in the Agreement). The failure to comply with Section
11.9(a) with respect to such dispute shall be an absolute bar to the institution
of arbitration proceedings with respect thereto. The arbitration shall be
conducted in the English language before a panel of three arbitrators, one of
whom is selected by the Company, one of whom is selected by Parent, and one of
whom is selected by the two arbitrators so designated. The parties will
cooperate with each other in causing the arbitration to be held in as efficient
and expeditious a manner as practicable. If either party fails to appoint an
arbitrator in thirty days, the other party may request that the American
Arbitration Association make such appointment. The arbitrators will be required
to render a full and complete written report of their decision. The decision of
a majority of the arbitrators will constitute the arbitrators' decision. Any
award rendered by the arbitrators shall be binding upon the parties hereto and
shall be final, subject to review by a court of competent jurisdiction under the
statutory standard of review applicable to arbitrations. Judgment on the award
may be entered in any court of record having competent jurisdiction. Each party
shall pay its own expenses of arbitration and the expenses of the arbitrators
shall be equally shared except that if, in the opinion of the arbitrators, any
claim or position by a party hereto, or any defense or objection thereto by
another party was unreasonable or frivolous, the arbitrators may in their
discretion assess as part of their award all or any part of the arbitration
expenses of the other party or parties (including reasonable attorneys' fees)
and expenses of the arbitrators against such party. Nothing herein shall prevent
the parties from settling any dispute by mutual agreement at any time. The law
of the State of New York shall govern the validity, scope and effect of this
Section 11.9.
11.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.11 Headings. The article and section headings contained in this
Agreement are solely for convenience of reference, are not part of the agreement
of the parties and shall not be used in construing this Agreement or in any way
affect the meaning or interpretation of this Agreement.
11.12 Entire Agreement. This Agreement, and the Schedules, certificates
and other instruments and documents delivered pursuant hereto, together with the
other agreements referred to herein and to be entered into pursuant hereto,
embody the entire agreement of the parties hereto with respect to the subject
matter hereof, and supersede all prior agreements or understandings, written or
oral, among the parties relating to, the subject matter hereof.
11.13 Governing Law. The parties hereby agree that this Agreement, and
the respective rights, duties and obligations of the parties hereunder, shall be
governed by and construed in accordance with the laws of the State of New York,
without giving effect to principles of conflicts of law thereunder, except for
the provisions of Article I hereto setting forth the provisions for the
consummation and effects of the Merger, which shall be governed by and construed
in accordance with the laws of the State of Oregon.
11.14 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any law or public policy,
all other terms and provisions of this Agreement shall nevertheless remain in
full force and effect. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the greatest extent possible.
11.15 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity without the necessity of demonstration the inadequacy of
monetary damages.
11.16 Schedules and Exhibits. The Schedules and Exhibits to this
Agreement shall be construed with and as an integral part of this Agreement to
the same extent as if the same had been set forth verbatim herein.
IN WITNESS WHEREOF, the Parent, Acquisition and the Company have caused
this Agreement to be duly executed and delivered as of the date first above
written.
MEDIWARE INFORMATION SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------
Name: Xxxxxx X. Xxxxx
Title: CFO
MEDIWARE ACQUISITION CORPORATION
By: /s/ Xxxxxx X. Xxxxx
------------------------
Name: Xxxxxx X. Xxxxx
Title: CFO
INFORMEDICS, INC.
By: /s/ X. Xxxxxxxxx
------------------------
Name: X. Xxxxxxxxx
Title: Chairman & CFO
