EXHIBIT 2.2
AGREEMENT OF MERGER
by and among
▇▇▇▇▇▇▇▇.▇▇▇, Inc.,
Medical Acquisition Wireless, Inc.,
▇▇▇▇▇▇, Inc.,
And
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Dated: August 29, 2000
TABLE OF CONTENTS
Page
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ARTICLE I.
DEFINITIONS................................................................................................... 1
1.1 Defined Terms................................................................................ 1
1.2 Other Defined Terms.......................................................................... 3
ARTICLE II.
THE MERGER.................................................................................................... 4
2.1 The Merger................................................................................... 4
2.2 Effective Time............................................................................... 4
2.3 Effects of the Merger........................................................................ 5
2.4 Certificate of Incorporation and By-laws of the Surviving Corporation; Officers and Directors 5
2.5 Effect of the Merger on Company Shares....................................................... 5
2.6 Cancellation of Company Shares; Delivery of Merger Consideration............................. 5
ARTICLE III.
MERGER CONSIDERATION.......................................................................................... 5
3.1 Merger Consideration......................................................................... 5
3.2 Issuance of Additional Parent Shares to the Shareholder...................................... 6
3.3 Determination of Gross Revenue and Gross Business Expenses................................... 6
(a) Disputed Gross Revenue Amount.......................................................... 7
(b) Resolution of Disputed Gross Revenue Amount............................................ 7
ARTICLE IV.
CLOSING....................................................................................................... 7
4.1 Closing Date and Location.................................................................... 7
4.2 Obligations to the Company................................................................... 7
4.3 Obligation of the Shareholder................................................................ 8
4.4 Obligations of Parent and Wireless........................................................... 8
ARTICLE V.
REPRESENTATIONS AND WARRANTIES AS TO COMPANY.................................................................. 8
5.1 Organization and Good Standing............................................................... 8
5.2 Capitalization............................................................................... 8
5.3 Subsidiaries................................................................................. 8
5.4 Authorization................................................................................ 8
5.5 Employee Benefit Plans....................................................................... 9
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5.6 Tax Returns and Payments..................................................................... 9
5.7 Title to Property and Assets................................................................. 9
5.8 No Adverse Change............................................................................ 9
5.9 Contracts and Commitments.................................................................... 10
(a) Contracts ............................................................................. 10
(b) Absence of Breaches or Defaults........................................................ 11
5.10 Permits...................................................................................... 11
5.11 Corporate Documents.......................................................................... 12
5.12 No Conflict or Violation..................................................................... 12
5.13 Financial Statements......................................................................... 12
5.14 Disclosure................................................................................... 13
5.15 Litigation................................................................................... 13
5.16 Labor Matters................................................................................ 13
5.17 Liabilities.................................................................................. 13
5.18 Compliance with Law.......................................................................... 14
5.19 No Brokers................................................................................... 14
5.20 No Other Agreements.......................................................................... 14
5.21 Proprietary Rights........................................................................... 14
(a) Proprietary Rights..................................................................... 14
(b) Ownership and Protection of Proprietary Rights......................................... 15
5.22 Transactions with Certain Persons............................................................ 15
5.23 Insurance.................................................................................... 15
5.24 Accounts Receivable.......................................................................... 15
5.25 Customers, Distributors and Suppliers........................................................ 15
5.26 Material Misstatements Or Omissions.......................................................... 16
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER................................................................. 16
6.1 Title 16
6.2 Execution and Effect of Agreement............................................................ 16
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES OF PARENT AND WIRELESS......................................................... 17
7.1 Organization of Parent and Wireless.......................................................... 17
7.2 Authorization................................................................................ 17
7.3 No Conflict or Violation..................................................................... 17
ARTICLE VIII.
CONDITIONS TO THE SHAREHOLDER'S OBLIGATIONS................................................................... 18
8.1 Representations, Warranties and Covenants.................................................... 18
8.2 No Proceedings, Litigation or Laws........................................................... 18
8.3 Certificates................................................................................. 18
8.4 Corporate Documents.......................................................................... 18
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ARTICLE IX.
CONDITIONS TO PARENT'S AND WIRELESS' OBLIGATIONS............................................................. 18
9.1 Representations, Warranties and Covenants.................................................... 18
9.2 No Proceedings or Litigation................................................................. 19
9.3 Opinion of Counsel........................................................................... 19
9.4 Certificates................................................................................. 19
9.5 Material Changes............................................................................. 19
9.6 Releases..................................................................................... 19
9.7 Corporate Documents.......................................................................... 19
9.8 Due Diligence Review......................................................................... 19
ARTICLE X.
ACTIONS BY PARTIES AFTER THE CLOSING.......................................................................... 20
10.1 Registration of Parent Shares................................................................ 20
10.2 Parent Services.............................................................................. 20
10.3 Survival of Representations, Etc............................................................. 20
10.4 Indemnifications............................................................................. 20
(a) By the Shareholder..................................................................... 21
(b) Tax Indemnity.......................................................................... 21
(c) By Parent and Wireless................................................................. 21
(d) Damages................................................................................ 21
(e) Cooperation............................................................................ 22
(f) Defense of Claims...................................................................... 22
(g) Parent's Right of Offset............................................................... 22
(h) Product and Warranty Liability......................................................... 23
(i) Brokers and Finders.................................................................... 23
ARTICLE XI.
MISCELLANEOUS................................................................................................. 23
11.1 Termination.................................................................................. 23
(a) Termination............................................................................ 23
(b) In the Event of Termination............................................................ 24
11.2 Assignment................................................................................... 24
11.3 Notices...................................................................................... 24
11.4 Choice of Law................................................................................ 26
11.5 Entire Agreement; Amendments and Waivers..................................................... 26
11.6 Multiple Counterparts........................................................................ 26
11.7 Expenses..................................................................................... 27
11.8 Invalidity................................................................................... 27
11.9 Titles....................................................................................... 27
11.10 Cumulative Remedies.......................................................................... 27
11.11 Attorneys' Fees.............................................................................. 27
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AGREEMENT OF MERGER
This Agreement of Merger (this "Agreement"), dated as of August __,
2000, is by and among ▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Nevada corporation ("Parent"),
Medical Acquisition Wireless, Inc., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Wireless"), ▇▇▇▇▇▇, Inc. a Florida corporation (the
"Company") and J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (the "Shareholder").
RECITALS
WHEREAS, the Company is engaged in the business of research and
development and sales of pharmaceutical and medical software and provides the
following services for desktop, laptop, palmtop and wireless devices: market
analysis to determine customer needs and market size, prototype development,
product testing, onsite and internet customer education and training, customer
support, product enhancements and CD-ROM and internet tutorials (the
"Business"); and
WHEREAS, the Boards of Directors of each of Parent, Wireless and the
Company determined that it would be advisable and in the respective best
interests of each such corporation and its shareholder(s) that: (i) the Company
be merged with Wireless, with Wireless as the surviving entity; and (ii) the
shareholder of the Company, who currently owns all of the issued and outstanding
shares of capital stock of the Company (the "Company Shares"), will have the
right to receive that certain number of shares of common stock of Parent (the
"Parent Shares") as provided in Section 3.1 below.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
I.1 Defined Terms. As used herein, the terms below shall have the
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following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending upon the reference.
"affiliate" shall have the meaning set forth in the Securities
---------
Exchange Act of 1934, as amended, and the rules and regulations thereunder.
"Closing Date" shall mean the date of this Agreement or such other
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date as Parent, Wireless and the Company shall mutually agree upon.
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"Contract" shall mean any agreement, contract, note, loan, evidence of
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indebtedness, purchase order, letter of credit, franchise agreement,
undertaking, covenant not to compete, employment agreement, license, instrument,
obligation or commitment to which the Company is a party or is bound, whether
oral or written, but excluding all leases.
"Disclosure Schedule" shall mean a schedule executed and delivered by
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the Company to Parent and Wireless as of the date hereof which sets forth the
exceptions to the representations and warranties contained in Articles V and VI
hereof and certain other information called for by this Agreement. Unless
otherwise specified, each reference in this Agreement to any numbered schedule
is a reference to that numbered schedule which is included in the Disclosure
Schedule.
"Effective Time" shall mean the date and time of receipt of the
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Certificate of Merger for filing by the Secretary of State of the State of
Delaware and the Secretary of State of the State of Florida, unless a delayed
effective time is specified therein.
"Financial Statements" shall mean the compiled balance sheet dated
--------------------
April 30, 2000 and the related statement of income of the Company for the six
months ended April 30, 2000. The definition of Financial Statements shall also
include an updated balance sheet and income statement of the Company as of May
31, 2000.
"Gross Business Expenses" shall mean any and all costs (as determined
-----------------------
in accordance with generally accepted accounting principles) incurred by the
Surviving Corporation in connection with the operation of the Business.
"Gross Revenues" shall mean total revenues (as determined in
--------------
accordance with the generally accepted accounting principles) of the Surviving
Corporation that were earned by, or generated from the Business (including any
products or services of Parent or its affiliates that are sold through the
Business).
"material adverse effect" or "material adverse change" shall mean any
----------------------- -----------------------
adverse effect or change in the condition (financial or other), business,
results of operations, prospects, assets, liabilities or operations of the
Company, taken as a whole, or on the ability of the Company to consummate the
transactions contemplated hereby, or any event or condition which would, with
the passage of time, constitute a "material adverse effect" or "material adverse
change."
"Parent MFN Rates" shall mean rates at least as favorable as rates
----------------
charged by Parent at such time to any third party for substantially similar
services.
"Permits" shall mean all licenses, permits, franchises, approvals,
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authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state
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or local, or any other person, necessary or desirable for the past, present or
anticipated conduct of, or relating to the operation of the Business.
"Year Period" shall mean, collectively, the First Year Period, the
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Second Year Period and the Third Year Period.
I.2 Other Defined Terms. The following terms shall have the meanings
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defined for such terms in the Sections set forth below:
Term Section
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Action 5.15
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Business Recitals
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Business Plan 5.14
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Capitalization Representations 10.4
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Claim 10.5(f)
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Claim Notice 10.5(f)
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Closing 4.1
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Company Shares Recitals
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Damages 10.5
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DGCL 2.1
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Expiration Date 10.4
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First Year Base 3.1(c)
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First Year Period 3.1(c)
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First Year Shares 3.1(c)
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FCGL 2.1
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Merger Certificate 2.2
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Merger Consideration 3.1
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Parent Preamble
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Parent CFO 3.2
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Term Section
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Parent Services 10.3
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Parent Shares Recitals
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Proprietary Rights 5.21(a)
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Second Year Base 3.1(d)
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Second Year Period 3.1(d)
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Second Year Shares 3.1(d)
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Shareholder Preamble
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Third Year Base 3.1(e)
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Third Year Period 3.1(e)
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Third Year Shares 3.1(e)
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Wireless 3
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Year End Statement 3.2
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ARTICLE II.
THE MERGER
II.1 The Merger. Upon the terms and subject to the conditions hereof
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and in accordance with the Delaware General Corporation Law (the "DGCL") and the
Florida General Corporation Law (the "FGCL"), the Company shall be merged with
Wireless (the "Merger") at the Effective Time. Following the Merger, the
separate existence of the Company shall cease, and Wireless shall continue as
the surviving corporation (the "Surviving Corporation"), and shall succeed to
and assume all the rights and obligations of the Company.
II.2 Effective Time. The parties hereto shall cause the Merger to be
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consummated by filing a Certificate of Merger with respect thereto with the
Secretary of State of the State of Delaware and with the Secretary of State of
the State of Florida (the "Certificate of Merger") in the form attached hereto
as Exhibit 2.2.
II.3 Effects of the Merger. The Merger shall have the effects set forth
---------------------
in Section 259 of the DGCL and Section ___ of the FGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, except
as otherwise provided herein, all of the property, rights,
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privileges, powers and franchises of the Company and Wireless shall rest in the
Surviving Corporation, and all debts, liabilities and duties of the Company and
Wireless shall become the debts, liabilities and duties of the Surviving
Corporation.
II.4 Certificate of Incorporation and By-laws of the Surviving
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Corporation; Officers and Directors. The Certificate of Incorporation of
-----------------------------------
Wireless shall be the Certificate of Incorporation for the Surviving Corporation
until thereafter changed or amended, and the By-laws of Wireless shall be the
By-laws of the Surviving Corporation until thereafter changed or amended. From
and after the Effective Time, until their successors are duly elected or
appointed and qualified, the officers and the Board of Directors of Wireless
shall be the officers and directors, respectively, of the Surviving Corporation.
II.5 Effect of the Merger on Company Shares. At the Effective Time, by
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virtue of the Merger and without any action on the part of the Shareholder, or
the Board of Directors of the Parent, Wireless or the Company, all of the
Company Shares held by the Shareholder shall be converted into the right to
receive the Merger Consideration (as defined below).
II.6 Cancellation of Company Shares; Delivery of Merger Consideration.
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On the Closing Date, the Shareholder shall surrender to Wireless the certificate
representing 100% of the issued and outstanding Company Shares, and such
certificate shall thereafter be cancelled and will cease to represent any
interest in the Company. On the Closing Date, Parent shall deliver (or cause
its transfer agent to deliver) to the Shareholder, in exchange for the
certificate representing the Company Shares, the Merger Consideration (as
defined below).
ARTICLE III.
MERGER CONSIDERATION
III.1 Merger Consideration. The Shareholder shall transfer to Wireless
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all of the Company Shares owned by the Shareholder (which shall equal 100% of
the issued and outstanding common stock of the Company) in exchange for the
right to receive cash in the amount of one hundred and sixty thousand dollars
($160,000) and a maximum of 312,500 Parent Shares (as may be adjusted in
accordance with Section 3.2 below) (the "Merger Consideration"). The Merger
Consideration shall be payable to the Shareholder as follows:
(1) $160,000 in cash on the Closing Date;
(2) 100,000 Parent Shares on the Closing Date; such Parent Shares
shall be available for sale after Registration of the Parent Shares, pursuant to
Section X.1 "Registration of Parent Shares", but such sales must be limited to
10,000 shares per month. Shareholder shall give Parent written notice of his
intent to sell any Shares at least five business days before any sale of Parent
Shares may take place. The Parent shall have the right to place the shares for
sale before any broker sale, and the Parent shall have five business days upon
receipt of Shareholder's written notification to exercise that right;
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(3) if the Surviving Corporation generates Gross Revenues of at
least $850,000 (the "First Year Base") during the twelve (12) months following
the Closing Date (the "First Year Period"), then the Shareholder shall receive
.0885 additional Parent Shares for each $1of Gross Revenues generated above the
First Year Base during the First Year Period (the "First Year Shares"). The
maximum number of First Year Shares issuable shall be 35,417;
(4) if the Surviving Corporation generates Gross Revenues of at least
$1,250,000 (the "Second Year Base") during the twelve (12) months following the
First Year Period (the "Second Year Period"), then the Shareholder shall receive
.0567 additional Parent Shares for each $1 Gross Revenues generated above the
Second Year Base during the Second Year Period (the "Second Year Shares"). The
maximum number of Second Year Shares issuable shall be 106,250 minus the First
Year Shares; and
(5) if the Surviving Corporation generates Gross Revenues of at least
$2,500,000 (the "Third Year Base") during the twelve (12) months following the
Second Year Period (the "Third Year Period"), then the Shareholder shall receive
.0612 additional Parent Shares for each $1 of Gross Revenues generated above the
Third Year Base during the Third Year Period (the "Third Year Shares"). The
maximum number of Third Year Shares issuable shall be 212,500 minus the sum of
the First Year Shares plus the Second Year Shares.
Parent shall (or cause its transfer agent to) issue any Parent Shares due to the
Shareholder in accordance with (3),(4) or (5) above, within sixty (60) days
after the Shareholder's receipt of a Year End Statement (as defined below).
Notwithstanding the foregoing, the shareholder acknowledges and agrees that he
will not be entitled to receive any Parent Shares in accordance with (3), (4) or
(5) above, if during a respective Year Period the Gross Business Expenses are
greater than the Budget.
III.2 Determination of Gross Revenue and Gross Business Expenses. The
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Shareholder acknowledges and agrees that the Chief Financial Officer of the
Parent (the "Parent CFO") shall determine the Gross Revenue and the Gross
Business Expenses for each respective Year Period. Promptly after each Year
Period the Parent CFO shall provide to the Shareholder a statement which shall
disclose the Gross Revenues and the Gross Business Expenses for the preceding
Year Period (a "Year End Statement"). The Surviving Corporation agrees to
provide any and all information, as reasonably requested by the Parent CFO,
necessary to calculate the Gross Revenues and Gross Business Expenses for any
given Year Period.
(1) Disputed Gross Revenue Amount. If the Shareholder disagrees
-----------------------------
with the Year End Statement, he must notify Parent of such disagreement in
writing, specifying the particulars of such disagreement, within fifteen (15)
business days after the Shareholder's receipt of the Year End Statement. To the
extent that any portion of the Year End Statement is not in dispute, within
sixty (60) days after the Shareholder's receipt of the Year End Statement,
Parent shall (or cause its transfer agent to) issue to the Shareholder those
Parent Shares which have become issuable with respect to that portion of the
Year End Statement which is not in dispute.
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(2) Resolution of Disputed Gross Revenue Amount. Parent and
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Shareholder will use their best efforts for a period of thirty (30) calendar
days after the Shareholder's delivery of such notice to resolve any
disagreements with respect to the Year End Statement. If, at the end of such
period, Parent and the Shareholder are unable to resolve such disagreements, the
independent auditor of Parent shall resolve any remaining disagreements. The
determination by Parent's independent auditor shall be final, binding and
conclusive on the parties. Parent shall use its best efforts to cause the
independent auditor to make its determination within thirty (30) calendar days
of accepting the matter. Within sixty (60) days after the date of determination
of Parent's independent auditor, Parent shall (or cause its transfer agent to)
issue Parent Shares as are due in accordance with Section 3.1 above. If the
independent auditor determines that there was a mistake in a disputed Year End
Statement, the fees and expenses of the independent auditor retained to settle
that particular Year End Statement dispute shall be borne by Parent. If, on the
other hand, the independent auditor determines that there were no mistakes, the
fees and expenses of the independent auditor retained to settle that particular
Year End Statement dispute shall be borne by Shareholder.
III.3 Changes in Parent Shares. If prior to the Third Year Period, the
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Parent Shares shall be recapitalized or reclassified or Parent shall effect any
stock dividend, stock split, or reverse stock split of Parent Shares, then the
shares of Parent Shares to be issued as Merger Consideration under this
Agreement, shall be proportionately and equitably adjusted to reflect any
increase or decrease in the number of shares of Parent Shares resulting from
such corporate event.
ARTICLE IV.
CLOSING
IV.1 Closing Date and Location. The closing of the transactions
-------------------------
contemplated herein (the "Closing") shall be held at 10:00 a.m. local time on
the Closing Date at the offices of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Fields Claman & Machtinger
LLP, at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (1) on the
first business day following the date on which the last of the conditions set
forth in Articles VIII and IX (other than the filing of the Merger Certificate)
are satisfied or to the extent permissible, waived, or (2) on such other date
and at such other time or place as is mutually agreed by the parties hereto.
IV.2 Obligations to the Company. At the Closing, the Company shall
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deliver to Parent and Wireless the following documents:
(1) A certificate of good standing from the State of Florida dated as
of a date not more than two (2) business days prior to the Closing Date and
certifying that the Company is duly qualified and in good standing as of the
date of such certificate;
(2) The officers' certificate provided for in Section 9.4; and
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(3) The executed Certificate of Merger substantially in the form of
Exhibit 2.2.
IV.3 Obligation of the Shareholder. At the Closing, the Shareholder
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shall deliver to Parent and Wireless the certificate evidencing all of the
issued and outstanding shares of the Company, duly endorsed in blank for
transfer or accompanied by a stock power duly executed in blank in a form
reasonably requested by Wireless to evidence the acknowledgment of and consent
to the sale of the Company Shares.
IV.4 Obligations of Parent and Wireless. At the Closing, the
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Shareholder shall deliver to Parent and Wireless an officers' certificate
provided for in Section 8.3.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES AS TO COMPANY
Each of the Company and the Shareholder, jointly and severally, hereby
represents and warrants to Parent and Wireless as follows, except as otherwise
set forth on the Disclosure Schedule, which representations and warranties are,
as of the date hereof, and will be, as of the Closing Date, true and correct:
V.1 Organization and Good Standing. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Florida. The Company is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where the character of its
properties owned or leased or the nature of its activities make such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a material adverse effect on the Company or the
Business. Copies of the Articles of Incorporation and Bylaws of the Company,
and all amendments thereto, heretofore delivered to Parent and Wireless are
accurate and complete as of the date hereof. Schedule 5.1 contains a true,
correct and complete list of all jurisdictions in which the Company is qualified
to do business as a foreign corporation.
V.2 Capitalization. The authorized capital stock of the Company
--------------
consists of _____ shares of common stock, of which 501 shares are
outstanding. All of the Company Shares have been validly issued and are fully
paid and non-assessable. No shares of common stock are held by the Company as
treasury stock. There is no existing option, warrant, call, commitment or other
security or agreement of any kind to which the Company is a party requiring, and
there are no convertible securities of the Company outstanding which upon
conversion would require, the issuance of any additional shares of capital stock
of the Company or other securities convertible into shares of capital stock or
any debt or equity security of the Company of any kind.
V.3 Subsidiaries. The Company does not have any subsidiaries or any
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equity interest in another entity.
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V.4 Authorization. The Company has all requisite corporate power and
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authority, and has taken all corporate action necessary, to execute and deliver
this Agreement, to consummate the transactions contemplated hereby and to
perform its obligations hereunder. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly approved by the board of directors and the
shareholder of the Company. No other corporate proceedings on the part of the
Company are necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Company and is a legal, valid and binding obligation, enforceable against it in
accordance with its terms.
V.5 Employee Benefit Plans. Except as set forth on Schedule 5.5, the
----------------------
Company does not have any Employee Benefit Plan as defined in the Employee
Retirement Income Security Act of 1974.
V.6 Tax Returns and Payments. The Company has filed all tax returns and
------------------------
reports as required by law. These returns and reports are true and correct in
all material respects. The Company has paid all taxes and other assessments
due.
V.7 Title to Property and Assets. The Company owns its property and
----------------------------
assets free and clear of all mortgages, liens, loans and encumbrances, except
such encumbrances and liens which arise in the ordinary course of business and
do not materially impair the Company's ownership or use of such property or
assets. With respect to the property and assets it leases, the Company is in
compliance with such leases and, to its knowledge, holds a valid leasehold
interest free of any liens, claims or encumbrances.
V.8 No Adverse Change. Since April 30, 2000, there has not been
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(1) any change in the assets, liabilities, financial condition or
operating results of the Company from that reflected in the Financial
Statements, except changes in the ordinary course of business that have not
been, in the aggregate, materially adverse;
(2) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the business, properties,
prospects, or financial condition of the Company;
(3) any waiver or compromise by the Company of a valuable right or of
a material debt owed to it;
(4) any satisfaction or discharge of any lien, claim, or encumbrance
or payment of any obligation by the Company, except in the ordinary course of
business and that is not material to the business, properties, prospects or
financial condition of the Company;
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(5) any material change to a material contract or agreement by which
the Company or any of its assets is bound or subject;
(6) any material change in any compensation arrangement or agreement
with any employee, officer, director or shareholder;
(7) any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(8) any resignation or termination of employment of any officer or key
employee of the Company; and the Company is not aware of any impending
resignation or termination of employment of any such officer or key employee;
(9) any mortgage, pledge, transfer of a security interest in, or lien,
created by the Company, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable;
(10) any loans or guarantees made by the Company to or for the benefit
of its employees, officers or directors, or any members of their immediate
families, other than travel advances and other advances made in the ordinary
course of its business;
(11) any declaration, setting aside or payment or other distribution
in respect to any of the Company's capital stock, or any direct or indirect
redemption, purchase, or other acquisition of any of such stock by the Company;
(12) to the Company's knowledge, any other event or condition of any
character that might materially and adversely affect the business, properties,
prospects or financial condition of the Company; or
(13) any arrangement or commitment by the Company to do any of the
things described in this Section 5.8.
V.9 Contracts and Commitments.
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(1) Contracts. Schedule 5.9 sets forth a complete and accurate
---------
list of all Contracts of the following categories:
(1) Contracts not made in the ordinary course of business;
(2) Employment contracts and severance agreements;
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(3) Labor or union contracts;
(4) Distribution, franchise, license, sales, commission,
consulting agency or advertising contracts which are not cancelable on thirty
(30) calendar days notice;
(5) Contracts involving expenditures or liabilities, actual or
potential, in excess of $5,000 or otherwise material to the Company, taken as a
whole, and not cancelable (without liability) within thirty (30) calendar days;
(6) Contracts or commitments relating to commission arrangements
with others;
(7) Promissory notes, loans, agreements, indentures, evidences of
indebtedness, letters of credit, guarantees, or other instruments relating to an
obligation to pay money, whether the Company shall be the borrower, lender or
guarantor thereunder or whereby any assets are pledged (excluding credit
provided by the Company to purchasers in the ordinary course of business;
(8) Contracts containing covenants limiting the freedom of the
Company or any officer, director, shareholder or affiliate, to engage in any
line of business or compete with any person;
(9) Any Contract with the United States, state or local
government or any agency or department thereof;
(10) Leases of real property;
(11) Leases of personal property not cancelable (without
liability) within thirty (30) calendar days; and
(12) Governmental or regulatory Permits or approvals required to
conduct the Business as presently conducted.
The Company has delivered to Wireless and Parent true, correct and complete
copies of all of the written Contracts listed on Schedule 5.9, including all
amendments and supplements thereto, and a written summary setting forth the
material terms and conditions of each and every oral Contract listed on Schedule
5.9, including all amendments and supplements thereto.
(2) Absence of Breaches or Defaults. All of the Contracts are
-------------------------------
valid and in full force and effect. The Company has duly performed all of its
obligations under the Contracts, and no violation of, or default or breach under
any Contracts has accrued.
11
V.10 Permits. The Company has all Permits required to conduct its
-------
business except such Permits the failure of which to obtain would not have a
material adverse effect. All such permits are valid and in full force and
effect and are listed on Schedule 5.10. No notice to, declaration, filing or
registration with, or Permit from, any domestic or foreign governmental or
regulatory body or authority, or any other person or entity, is required to be
made or obtained by the Company or any shareholder in connection with the
execution, delivery or performance of this Agreement and the consummation of the
transactions contemplated hereby.
V.11 Corporate Documents. The Articles of Incorporation and Bylaws of
-------------------
the Company are in the form provided to counsel for Parent and Wireless. The
copy of the minute books of the Company provided to Parent and Wireless' counsel
contains minutes of all meetings of directors and shareholders and all actions
by written consent without a meeting by the directors and shareholders since the
date of incorporation and reflects all actions by the directors (and any
committee of directors) and shareholders with respect to all transactions
referred to in such minutes accurately in all material respects.
V.12 No Conflict or Violation. Neither the execution, delivery or
------------------------
performance of this Agreement nor the consummation of the transactions
contemplated hereby, nor compliance by the shareholder or the Company with any
of the provisions hereof, will (1) violate or conflict with any provision of the
Company's Articles of Incorporation or Bylaws, (2) violate, conflict with, or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under any of the terms,
conditions or provisions of any Contract, agreement, or other instrument or
obligation (1) to which the Company is a party or (2) by which the Company is
bound, (3) violate any statute, rule, regulation, ordinance, code, order,
judgment, ruling, writ, injunction, decree or award, or (4) impose any
encumbrance restriction or charge on the Company or the Business except in the
case of each of clauses (a), (b), and (c) above, for such violations, conflicts,
breaches, defaults, terminations or accelerations which, in the aggregate would
not have a material adverse effect on the Company or the Business.
V.13 Financial Statements. The Financial Statements (1) are in
--------------------
accordance with the books and records of the Company, (2) except as set forth in
Section 5.13 of the Disclosure Schedule or in the notes to the Financial
Statements, have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods covered thereby and (3)
fairly and accurately present the assets, liabilities (including all reserves)
and financial position of the Company as of the respective dates thereof and the
results of operations and changes in cash flows for the periods then ended.
Financial Statements have been compiled by F. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Jr., an
independent certified public accountant. At the respective dates of the
Financial Statements, there were no liabilities of the Company, which, in
accordance with generally accepted accounting principles, should have been shown
or reflected in the Financial Statements or the notes thereto, which are not
shown or reflected in the Financial Statements or the notes thereto.
12
V.14 Disclosure. The Company has fully provided Parent and Wireless
----------
with all the information that has been requested for deciding whether to enter
into this transaction and all information that the Company believes is
reasonably necessary to enable Parent and Wireless to make such a decision,
including the Company's projections described in the business plan (the
"Business Plan"). No representation or warranty of the Company contained in
this Agreement and the exhibits attached hereto, any certificate furnished or to
be furnished to Parent and Wireless at the Closing, or the Business Plan (when
read together) contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
or therein not misleading in light of the circumstances under which they were
made. To the extent the Business Plan was prepared by management of the
Company, the Business Plan and the financial and other projections were prepared
in good faith.
V.15 Litigation. There is no action, order, writ, injunction, judgment
----------
or decree outstanding or any claim, suit, litigation, proceeding, labor dispute,
arbitral action, governmental audit or investigation (collectively, "Actions")
pending, threatened or anticipated (1) against, related to or affecting: (1) the
Company, (2) any officers or directors of the Company, or (3) the Shareholder,
(2) seeking to delay, limit or enjoin the transactions contemplated by this
Agreement, (3) that involve the risk of criminal liability, or (4) in which the
Company is a plaintiff, including any derivative suits. The Company is not in
default with respect to or subject to any judgment, order, writ, injunction or
decree of any court or governmental agency, and there are no unsatisfied
judgments.
V.16 Labor Matters. The Company is not a party to any labor agreement
-------------
with any labor organization, union, group or association; there are no employee
unions (nor any other similar labor or employee organizations) under local
statutes, custom or practice; there has not been any attempt by organized labor
or its representatives to make the Company conform to demands of organized labor
relating to its employees or to enter into a binding agreement with organized
labor. There is no labor strike or labor disturbance pending or threatened, nor
is any grievance currently being asserted. The Company is in compliance in all
material respects with all applicable laws respecting employment practices,
employee documentation, terms and conditions of employment and wages and hours
and has not engaged in any unfair labor practice.
V.17 Liabilities. The Company does not have any liabilities,
-----------
obligations or commitments of any nature (whether absolute, accrued, contingent
or otherwise and whether matured or unmatured), including without limitation tax
liabilities due or to become due, except (1) liabilities which are reflected and
reserved against on the Financial Statement, which have not been paid or
discharged since the date thereof, (2) liabilities arising under Contracts,
leases, letters of credit, purchase orders, licenses, Permits, purchase
agreements and other agreements, business arrangements and commitments described
in the Disclosure Schedule (and under those Contracts which are not required to
be disclosed on the Disclosure Schedule) and (3) liabilities incurred since the
date of the Financial Statement in the ordinary course of business and
consistent with past
13
practice and in accordance with this Agreement (none of which relates to any
breach of Contract, breach of warranty, tort, infringement or violation of law
or arose out of any Action) which, individually or in the aggregate, has or
would have a material adverse effect.
V.18 Compliance with Law. The Company has not violated and is in
-------------------
compliance with all laws, statutes, ordinances, regulations, rules and orders of
any foreign, federal, state or local government and any other governmental
department or agency (including, without limitation, the Federal Drug Agency),
and any judgment, decision, decree or order of any court or governmental agency,
department or authority, except where the violation or failure to comply,
individually or in the aggregate, would not have a material adverse effect. The
Company has not received any notice to the effect that it is not in compliance
with any such statutes, regulations, rules, judgments, decrees, orders,
ordinances or other laws. The Company has committed no act, and there has been
no omission, which may result in, and there has been no occurrence which may
give rise to, product liability or liability for breach of warranty (whether
covered by insurance or not) on the part of the Company, with respect to
products designed, manufactured, assembled, repaired, maintained, delivered,
shipped or installed or services rendered prior to or on the Closing Date which,
in the aggregate, would have a material adverse effect.
V.19 No Brokers. Neither the Company nor any of its officers,
----------
directors, employees, shareholders or affiliates has employed or made any
agreement with any broker, finder or similar agent or any person or firm which
will result in the obligation of Parent or Wireless or any of its affiliates to
pay any finder's fee, brokerage fees or commission or similar payment in
connection with the transactions contemplated hereby.
V.20 No Other Agreements . Neither the Shareholder nor the Company, its
-------------------
officers, directors or affiliates have any commitment or legal obligation,
absolute or contingent, to any other person or firm other than Parent and
Wireless to sell, assign, transfer or effect a sale of any assets of the Company
(other than inventory in the ordinary course of business), to sell or effect a
sale of a majority of the capital stock of the Company, to effect any merger,
consolidation, liquidation, dissolution or other reorganization of the Company,
or to enter into any agreement or cause the entering into of an agreement with
respect to any of the foregoing.
V.21 Proprietary Rights. With respect to the Company:
------------------
(1) Proprietary Rights. Schedule 5.21 lists all of its domestic or
------------------
foreign, federal, state and foreign registrations of trademarks and of other
marks, trade names or other trade rights, and all pending applications for any
such registrations and all of its patents and copyrights and all pending
applications therefor, all other trademarks and other marks, trade names and
other trade rights or in which it has any interest whatsoever, and all other
trade secrets, designs, plans, specifications, technical information and other
proprietary rights, whether or not registered, created or used by or on behalf
of it (collectively, "Proprietary Rights"). The Proprietary Rights listed in
the Disclosure Schedule are all those used by the Company in connection with the
Business.
14
(2) Ownership and Protection of Proprietary Rights. It owns and
----------------------------------------------
has the sole right to use each of the Proprietary Rights. None of the
Proprietary Rights is involved in any pending or threatened litigation. It has
not received any notice of invalidity or infringement of any rights of others
with respect to such trademarks. No other firm, corporation, association or
person (1) has the right to use any such trademarks, (2) has notified the
Company that it is claiming any ownership of or right to use such Proprietary
Rights, or (3) is infringing upon any such Proprietary Rights in any way. Its
use of the Proprietary Rights is not infringing upon or otherwise violating the
rights of any third party in or to such Proprietary Rights. All of the
Proprietary Rights are valid and enforceable, except where the failure to be so
valid and enforceable would not have a material adverse effect.
V.22 Transactions with Certain Persons. Except as set forth on Schedule
---------------------------------
5.22, no officer, director or employee of the Company, nor any member of any
such person's immediate family, is presently a party to any transaction with the
Company, including without limitation, any contract, agreement or other
arrangement(1) providing for the furnishing of services by, (2) providing for
the rental of real or personal property from, or (3) otherwise requiring
payments to (other than for services as officers, directors or employees of the
Company ) any such person or corporation, partnership, trust or other entity in
which any such person has an interest as a shareholder, officer, director,
trustee or partner.
V.23 Insurance. Schedule 5.23 contains a complete and accurate list of
---------
all policies or binders of fire, liability, title, worker's compensation,
product liability (which list shall be for five (5) years) and other forms of
insurance (showing as to each policy or binder the carrier, policy number,
coverage limits, expiration dates, annual premiums and a general description of
the type of coverage provided) maintained by the Company. Such insurance
provides, and during such period provided, coverage to the extent required by
law and by any and all Contracts. The Company is not in default under any of
such policies or binders, and has not failed to give any material notice or to
present any material claim under any such policy or binder in a due and timely
fashion. Except as set forth on Schedule 5.23, there are no outstanding unpaid
claims under any such policies or binders. All policies and binders are in full
force and effect on the date hereof and shall be kept in full force and effect
through the Closing Date.
V.24 Accounts Receivable. The accounts receivable set forth in the
-------------------
Financial Statement, and all accounts receivable arising since the date of the
Financial Statement, represent bona fide claims of the Company against debtors
for sales, services performed or other charges arising on or before the date
hereof, and all the goods delivered and services performed which gave rise to
said accounts were delivered or performed in accordance with the applicable
orders, Contracts or customer requirements.
V.25 Customers, Distributors and Suppliers. Schedule 5.25 sets forth a
-------------------------------------
complete and accurate list with respect to the Company, of the names and
addresses of the (1) five (5) largest
15
customers, distributors and other agents and representatives, showing the
approximate total sales in dollars by the Company to each such customer during
such fiscal year; and (2) five (5) largest suppliers, showing the approximate
total purchases in dollars from each such supplier during such fiscal year. To
the knowledge of the Company and the Shareholder after thorough inquiry of all
sales people and other relevant personnel since March 31, 2000, except as
disclosed on Schedule 5.25, there has been no material adverse change in the
business relationship of the Company with any customer, distributor or supplier
named on Schedule 5.25. The Company has not received any communication from any
customer, distributor or supplier named on Schedule 5.25 of any intention to
terminate or materially reduce purchases from or supplies to the Company.
V.26 Material Misstatements Or Omissions. No representations or
-----------------------------------
warranties by the Company or the Shareholder in this Agreement, nor any
document, exhibit, statement, certificate or schedule heretofore or hereafter
furnished to the Parent and Wireless pursuant hereto, or in connection with the
transactions contemplated hereby, including without limitation the Disclosure
Schedule, contains any untrue statement of a material fact, or omits to state
any material fact necessary to make the statements or facts contained therein
not misleading. The Company and the Shareholder have disclosed all events,
conditions and facts materially affecting the business, prospects and financial
condition of the Company.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
The Shareholder hereby represents and warrants to Parent and Wireless that
the following representations and warranties are, as of the date hereof, and
will be, as of the Closing Date, true and correct:
VI.1 Title. The Shareholder holds of record and holds beneficially 100%
-----
of the issued and outstanding shares of common stock of the Company, free and
clear of any and all encumbrances or other restrictions on transfer. Other than
this Agreement, the Shareholder is not a party to any voting trust, proxy or
other agreement or understanding with respect to any capital stock of the
Company.
VI.2 Execution and Effect of Agreement. The Shareholder has the full
---------------------------------
right, power and authority to execute and deliver this Agreement and to perform
her obligations hereunder, and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Shareholder, and
the consummation by the shareholder of the transactions contemplated hereby have
been duly authorized by all necessary action (corporate or otherwise) and no
other proceeding on the part of the Shareholder is necessary to authorize the
execution, delivery and performance of this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Shareholder and constitutes the legal, valid and binding obligation of
Shareholder, enforceable against the shareholder in accordance with its terms.
16
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES OF PARENT AND WIRELESS
Parent and Wireless hereby represent and warrant to the Company and the
Shareholder as follows, which representations and warranties are, as of the date
hereof, and will be, as of the Closing Date, true and correct:
VII.1 Organization of Parent and Wireless. Parent is a corporation duly
-----------------------------------
organized, validly existing and in good standing under the laws of the State of
Nevada, and Wireless is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
VII.2 Authorization. Both Parent and Wireless have all requisite
-------------
corporate power and authority, and have taken all corporate action necessary, to
execute and deliver this Agreement, to consummate the transactions contemplated
hereby and to perform their obligations thereunder. The execution and delivery
of this Agreement by Parent and Wireless and the consummation by Parent and
Wireless of the transactions contemplated hereby have been duly approved by the
boards of directors of Parent and Wireless. No other corporate proceedings on
the part of Parent or Wireless are necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Parent and Wireless and is a legal, valid and binding obligation of
Parent and Wireless, enforceable against Parent and Wireless in accordance with
its terms.
VII.3 No Conflict or Violation. Neither the execution, delivery or
------------------------
performance of this Agreement nor the consummation of the transactions
contemplated hereby, nor compliance by Parent or Wireless with any of the
provisions hereof, will (1) violate or conflict with any provision of (i) the
Articles of Incorporation or Bylaws of Parent or (ii) the Articles of
Incorporation or Bylaw of Wireless, (2) violate, conflict with, or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, any of the terms, conditions or
provisions of any contract, indebtedness, note, bond, indenture, security or
pledge agreement, commitment, license, lease, franchise, permit, agreement,
authorization, concession, or other instrument or obligation to which Parent or
Wireless is a party, or (3) violate any statute, rule, regulation, ordinance,
code, order, judgment, ruling, writ, injunction, decree or award except, in the
case of each of clauses (a), (b) and (c) above, for such violations, conflicts,
breaches, defaults, terminations, accelerations or creations of encumbrances
which, in the aggregate, would not have a material adverse effect on the
Business or its ability to consummate the transactions contemplated hereby.
ARTICLE VIII.
CONDITIONS TO THE SHAREHOLDER'S OBLIGATIONS
17
The obligations of the Shareholder to consummate the transactions provided
for hereby are subject, in the discretion of the Shareholder, to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions, any of which may be waived by the Shareholder and the Company:
VIII.1 Representations, Warranties and Covenants. All representations
-----------------------------------------
and warranties of Parent and Wireless contained in this Agreement shall be true
and correct in all material respects at and as of the date of this Agreement and
at and as of the Closing Date, except to the extent expressly required or
permitted to be changed by the terms hereof, and Parent and Wireless shall have
performed and satisfied all agreements and covenants required hereby to be
performed by them prior to or on the Closing Date.
VIII.2 No Proceedings, Litigation or Laws. No Action by any
----------------------------------
governmental authority or other person shall have been instituted or threatened
against the Parent, Wireless, the Company or the Shareholder which questions the
validity or legality of the transactions contemplated hereby and which, in the
reasonable opinion of the Shareholder, makes it inadvisable to consummate such
transaction.
VIII.3 Certificates. Parent and Wireless shall furnish the Shareholder
------------
with such certificates of their officers and others to evidence compliance with
the conditions set forth in this Article VIII as may be reasonably requested by
the Company and the Shareholder.
VIII.4 Corporate Documents. The Shareholder shall have received from
-------------------
Parent and Wireless resolutions adopted by the boards of directors of Parent and
Wireless approving this Agreement, and the transactions contemplated hereby.
VIII.5 Exchange Listing. The Parent Shares to be issued as Merger
----------------
Consideration shall have been authorized for listing on either (i) the National
Market of the National Association of Securities Dealers, Inc. Automated
Quotation System or (ii) the American Stock Exchange, subject to office notice
of issuance.
ARTICLE IX.
CONDITIONS TO PARENT'S AND WIRELESS' OBLIGATIONS
The obligations of Parent and Wireless to consummate the transactions
provided for hereby are subject, in the discretion of Parent and Wireless, to
the satisfaction, on or prior to the Closing Date, of each of the following
conditions, any of which may be waived by Parent and Wireless.
IX.1 Representations, Warranties and Covenants. All representations and
-----------------------------------------
warranties of the Company and the Shareholder contained in this Agreement shall
be true and correct in all material respects at and as of the date of this
Agreement and at and as of the Closing Date, except to the extent expressly
required or permitted to be changed by the terms hereof, and the Company and the
Shareholder shall have performed and satisfied all agreements and covenants
required hereby to be performed by them prior to or on the Closing Date.
18
IX.2 No Proceedings or Litigation. No Action by any governmental
----------------------------
authority or other person shall have been instituted or threatened against
Parent, Wireless, the Company or the Shareholder which questions the validity or
legality of the transactions contemplated hereby and which, in the reasonable
opinion of the Parent and Wireless, makes it inadvisable to consummate such
transaction.
IX.3 Opinion of Counsel. The Company and the Shareholder shall have
------------------
delivered to Parent and Wireless an opinion of counsel to the Company and the
shareholder, dated as of the Closing Date, in form and substance reasonably
satisfactory to Parent and Wireless.
IX.4 Certificates. The Company shall furnish Parent and Wireless with
------------
such certificates of its officers and others to evidence compliance with the
conditions set forth in this Article IX as may be reasonably requested by Parent
and Wireless.
IX.5 Material Changes. There shall not have been any material adverse
----------------
change with respect to the Business or the Company since the date of this
Agreement.
IX.6 Corporate Documents. Parent and Wireless shall have received a
-------------------
certificate of a duly authorized officer of the Company, dated the Closing Date,
setting forth resolutions of the Board of Directors of the Company authorizing
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and certifying that such resolutions were duly
adopted and have not been rescinded or amended as of the Closing Date.
IX.7 Due Diligence Review. Parent and Wireless and their
--------------------
representatives shall have conducted a due diligence review of the Company's
books and records, financial statements, and other records and accounts of the
Company, and in the sole discretion of Parent and Wireless, Parent and Wireless
shall be satisfied on the basis of such review that there has been no breach of
the representations and warranties or the pre-closing covenants of the Company
or the Shareholder made pursuant to this Agreement. Such review shall have no
effect whatsoever on the liability of the Company or the Shareholder to Parent
or Wireless under this Agreement or otherwise for breach of any representations,
warranties, or covenants of the Company or the shareholder hereunder.
ARTICLE X.
ACTIONS BY PARTIES AFTER THE CLOSING
X.1 Registration of Parent Shares. Within thirty (30) days of the
-----------------------------
Effective Time, Parent shall prepare and file with the Securities and Exchange
Commission a registration statement on Form S-3 containing a form of prospectus
(as amended or supplemented, if applicable) registering under
19
the Securities Act of 1933, as amended, the 100,000 Parent Shares issued to the
Shareholder on the Closing Date.
X.2 Budget. Parent and the Company shall mutually approve (and such
------
approval shall not be unreasonably withheld, the Surviving Corporation's
operating and capital expenditure budget with respect to the projected
expenditures for the following 12 month period (the "Budget") and the Surviving
Corporation (including its officer, directors or agents) shall not without the
prior written approval of Parent, which approval may be given or withheld in
Parent's sole discretion, make or approve an expenditure which would change,
alter or modify the Budget or make or approve an expenditure which would result
in: (i) an increase of greater than 5% of the total amount of the Budget; or
(ii) an increase of greater than 5% of the amount of a respective line item
described in the Budget. The Surviving Corporation shall provide Parent with a
proposed operating and capital expenditure budget no later than 30 days prior to
the first day of the 12 month period related thereto.
X.3 Parent Services. Parent will use commercially reasonable efforts to
---------------
extend to the Surviving Corporation, for the benefit of the Surviving
Corporation, non-monetary contributions in the form of sales, marketing,
engineering and technical support services (including personnel) to assist the
Surviving Corporation during any Year Period (the "Parent Services"). Each
request for Parent Services must be included in the Budget for the respective
Year Period. All Parent Services rendered in accordance with this Section X.3
shall be provided at Parent MFN Rates.
X.4 Survival of Representations, Etc. All statements contained in the
--------------------------------
Disclosure Schedule or in any certificate, schedule, exhibit or instrument or
conveyance delivered by or on behalf of the parties pursuant to this Agreement
or in connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the parties hereunder. The representations,
warranties, covenants and agreements of the Company, the shareholder, Parent and
Wireless contained herein shall survive the consummation of the transactions
contemplated hereby and the Closing Date, without regard to any investigation
made by any of the parties hereto. Except as provided in this sentence, all
such representations and warranties and all claims and causes of action with
respect thereto (other than the provisions of Sections 5.6, 5.22, 5.26 and this
Section X.4, and all claims and causes of action with respect thereto) shall
terminate upon expiration of five (5) years after the Closing Date ("Expiration
Date"). The representations and warranties in Sections 5.6, 5.22, and 5.26
shall survive until the expiration of the applicable statute of limitations
(with extensions) with respect to the matters addressed in such sections. The
representations and warranties in Sections 5.2, 6.1 and 6.2 (the "Capitalization
Representations") shall survive indefinitely. The termination of the
representations and warranties provided herein shall not affect the rights of a
party in respect of any Claim made by such party in a writing received by the
other party prior to the expiration of the applicable survival period provided
herein.
X.5 Indemnifications.
----------------
20
(1) By the Shareholder. The Shareholder shall indemnify, save and
------------------
hold harmless Parent and Wireless, their affiliates and subsidiaries, and their
respective representatives, from and against any and all costs, losses
(including without limitation diminution in value), taxes, liabilities,
obligations, damages, lawsuits, deficiencies, claims, demands, and expenses
(whether or not arising out of third-party claims), reasonable attorneys' fees
and all amounts paid in investigation, defense or settlement of any of the
foregoing (herein, "Damages"), incurred in connection with, arising out of,
resulting from or incident to (1) any breach of any representation or warranty
or the inaccuracy of any representation made by the Company or the Shareholder
in or pursuant to this Agreement, or (2) any breach of any covenant or agreement
made by the Company or the shareholder in or pursuant to this Agreement;
provided, however, that Parent and Wireless makes a written claim for
-------- -------
indemnification against the shareholder within the applicable survival period.
(2) Tax Indemnity. The shareholder, shall indemnify, save and hold
-------------
harmless Parent and Wireless, their affiliates and subsidiaries, and their
respective representatives, from and against any and all Damages incurred in
connection with, arising out of, resulting from or incident to (1) any taxes of
the Company with respect to any tax year or portion thereof ending on or before
the Closing Date and (2) for the unpaid taxes of any person (other than the
Company) under Treasury Regulations Section 1.1502-6 (or any similar provision
of state, local or foreign law), as a transferee or successor, by contract, or
otherwise.
(3) By Parent and Wireless. Parent and Wireless, jointly and
----------------------
severally, shall indemnify and save and hold harmless the Company, the
shareholder and each of their affiliates and subsidiaries, and their respective
representatives from and against any and all Damages incurred in connection
with, arising out of, resulting from or incident to (1) any breach of any
representation or warranty or the inaccuracy of any representation, made by
Parent or Wireless in or pursuant to this Agreement, (2) any breach of any
covenant or agreement made by Parent or Wireless in or pursuant to this
Agreement; or (3) operation of the Business of the Company from and after the
Closing Date; provided, however, that the shareholder make a written claim for
-------- -------
indemnification against Parent or Wireless within the applicable survival
period.
(4) Damages. The term "Damages" as used in this Section 10.5 is
-------
not limited to matters asserted by third parties against the Company, the
Shareholder, Parent or Wireless, but includes Damages incurred or sustained by
the Company, the Shareholder, Parent or Wireless in the absence of third party
claims. Payments by Parent or Wireless of amounts for which Parent or Wireless
is indemnified hereunder, and payments by the Company or the shareholder of
amounts for which the Company or the shareholder are indemnified, shall not be a
condition precedent to recovery. The Company's or the Shareholder's obligation
to indemnify Parent or Wireless, and Parent's or Wireless' obligation to
indemnify the Company or the Shareholder, shall not limit any other rights,
including without limitation rights of contribution which either party may have
under statute or common law.
21
(5) Cooperation. The indemnified party shall cooperate in all
-----------
reasonable respects with the indemnifying party and such attorneys in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom; provided, however, that the indemnified party may, at its own
-------- -------
cost, participate in the investigation, trial and defense of such lawsuit or
action and any appeal arising therefrom. The parties shall cooperate with each
other in any notifications to insurers.
(6) Defense of Claims. If a claim for Damages (a "Claim") is to be
-----------------
made by a party entitled to indemnification hereunder against the indemnifying
party, the party claiming such indemnification shall give written notice (a
"Claim Notice") to the indemnifying party as soon as practicable after the party
entitled to indemnification becomes aware of any fact, condition or event which
may give rise to Damages for which indemnification may be sought under this
Section 10.5. If any lawsuit or enforcement action is filed against any party
entitled to the benefit of indemnity hereunder, written notice thereof shall be
given to the indemnifying party as promptly as practicable (and in any event
within thirty (30) calendar days after the service of the citation or summons).
The failure of any indemnified party to give timely notice hereunder shall not
affect rights to indemnification hereunder, except to the extent that the
indemnifying party demonstrates actual damage caused by such failure. After
such notice, if the indemnifying party shall acknowledge in writing to the
indemnified party that the indemnifying party shall be obligated under the terms
of its indemnity hereunder in connection with such lawsuit or action, then the
indemnifying party shall be entitled, if it so elects, (1) to take control of
the defense and investigation of such lawsuit or action, (2) to employ and
engage attorneys of its own choice to handle and defend the same, at the
indemnifying party's cost, risk and expense unless the named parties to such
action or proceeding include both the indemnifying party and the indemnified
party and the indemnified party has been advised in writing by counsel that
there may be one or more legal defenses available to such indemnified party that
are different from or additional to those available to the indemnifying party,
and (3) to compromise or settle such claim, which compromise or settlement shall
be made only with the written consent of the indemnified party, such consent not
to be unreasonably withheld. If the indemnifying party fails to assume the
defense of such claim within fifteen (15) calendar days after receipt of the
Claim Notice, the indemnified party against which such claim has been asserted
will (upon delivering notice to such effect to the indemnifying party) have the
right to undertake, at the indemnifying party's cost and expense, the defense,
compromise or settlement of such claim on behalf of and for the account and risk
of the indemnifying party. In the event the indemnified party assumes the
defense of the claim, the indemnified party will keep the indemnifying party
reasonably informed of the progress of any such defense, compromise or
settlement. The indemnifying party shall be liable for any settlement of any
action effected pursuant to and in accordance with this Section 10.5 and for any
final judgment (subject to any right of appeal), and the indemnifying party
agrees to indemnify and hold harmless an indemnified party from and against any
Damages by reason of such settlement or judgment.
(7) Parent's Right of Offset. Anything in this Agreement to the
------------------------
contrary notwithstanding, Parent may withhold and set off against any Merger
Consideration otherwise due
22
to the Shareholder, any amount as to which the Shareholder is obligated to
indemnify Parent or Wireless pursuant to any provision of this Section 10.5.
(8) Product and Warranty Liability. The provisions of this Section
------------------------------
10.5 shall cover, without limitation, all obligations and liabilities of
whatsoever kind, nature or description relating, directly or indirectly, to
product liability, litigation or claims against Parent, Wireless or the
Surviving Corporation in connection with, arising out of, or relating to
products developed or sold by Parent, Wireless or the Surviving Corporation in
connection with the Business.
(9) Brokers and Finders. Pursuant to the provisions of this
-------------------
Section 10.5, each of Parent, Wireless, the Company and the Shareholder shall
indemnify, hold harmless and defend the other party from the payment of any and
all broker's and finder's expenses, commissions, fees or other forms of
compensation which may be due or payable from or by the indemnifying party, or
may have been earned by any third party acting on behalf of the indemnifying
party in connection with the negotiation and execution hereof and the
consummation of the transactions contemplated hereby.
ARTICLE XI.
MISCELLANEOUS
XI.1 Termination.
-----------
(1) Termination. This Agreement may be terminated at any time
-----------
prior to Closing:
(a) By mutual written consent of Parent, Wireless, the Company
and the Shareholder;
(b) By Parent, Wireless, the Company or the Shareholder: (i) if
the Merger shall not have been consummated on or before [October 31, 2000],
provided that the right to terminate this Agreement pursuant to this clause (a)
(ii) shall not be available to any party whose failure to perform any of its
obligations under this Agreement resulted in, or has been the cause of a or a
substantial cause of, the failure of the Merger to be consummated on or before
such date, and provider further that if the Merger has not been consummate4d on
or before [October 31, 2000] solely or primarily as a result of the failure of
the conditions set forth in Sections 8.2 or 9.2 to be satisfied or waived, and
party, by written notice to each other party, may extend such date up to
[December 31, 2000];
(c) By Parent or Wireless if there is a material breach of any
representation or warranty set forth in Articles V and VII hereof or any
covenant or agreement to be complied with or performed by the Company or the
shareholder pursuant to the terms of this Agreement or the material failure of a
condition set forth in Article IX to be satisfied (and such condition is not
waived in writing by Parent or Wireless) on or prior to the Closing Date, or the
23
occurrence of any event which results or would result in the failure of a
condition set forth in Article IX to be satisfied on or prior to the Closing
Date, provided that Parent or Wireless may not terminate this Agreement prior to
the Closing Date if the Company or the shareholder has not had an adequate
opportunity to cure such failure; or
(d) By the Company or the Shareholder if there is a material
breach of any representation or warranty set forth in Article VII hereof or of
any covenant or agreement to be complied with or performed by Parent or Wireless
pursuant to the terms of this Agreement or the failure of a condition set forth
in Article VIII to be satisfied (and such condition is not waived in writing by
the Company or the shareholder) on or prior to the Closing Date, or the
occurrence of any event which results or would result in the failure of a
condition set forth in Article VIII to be satisfied on or prior to the Closing
Date; provided that, the Company and the shareholder may not terminate this
Agreement prior to the Closing Date if Parent or Wireless has not had an
adequate opportunity to cure such failure.
(2) In the Event of Termination. In the event of termination of this
---------------------------
Agreement:
(a) Each party will redeliver all documents, work papers and
other material of any other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same;
(b) The provisions of the Mutual Non-Disclosure Agreement (the
"Mutual Non-Disclosure Agreement") , dated as of May 1, 2000, by and between
Parent and the Company shall continue in full force and effect; and
(c) No party hereto shall have any liability or further
obligation to any other party to this Agreement, except as stated in subsections
(i), (ii) and (iii) of this Section 11.1(b), except for any willful breach of
this Agreement occurring prior to the proper termination of this Agreement. The
foregoing provisions shall not limit or restrict the availability of specific
performance or other injunctive relief to the extent that specific performance
or such other relief would otherwise be available to a party hereunder.
XI.2 Assignment. Neither this Agreement nor any of the rights or
----------
obligations hereunder may be assigned by any party without the prior written
consent of the other parties. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, and no other person shall have any right,
benefit or obligation under this Agreement as a third party beneficiary or
otherwise.
XI.3 Notices. All notices, requests, demands and other communications
-------
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given when received if personally delivered;
when transmitted if transmitted by telecopy, electronic or digital transmission
method; the day after it is sent, if sent for next day delivery to a
24
domestic address by recognized overnight delivery service (e.g., Federal
Express); and upon receipt, if sent by certified or registered mail, return
receipt requested. In each case notice shall be sent to:
If to the Company before the Effective Time,
addressed to:
▇▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: ___________________________
With a copy to:
[Attorney
Attention:
Facsimile: ___________________________
25
If to Parent or Wireless at any time or the Surviving
Corporation, addressed to:
▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇ Glusker Fields Claman & Machtinger LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
XI.4 Choice of Law. This Agreement shall be construed, interpreted and
-------------
the rights of the parties determined in accordance with the laws of the State of
California (without reference to the choice of law provisions of California
law), except with respect to matters of law concerning the internal corporate
affairs of any corporate entity which is a party to or the subject of this
Agreement, and as to those matters the law of the jurisdiction under which the
respective entity derives its powers shall govern.
XI.5 Entire Agreement; Amendments and Waivers. This Agreement, the
----------------------------------------
Mutual Non-Disclosure Agreement, together with all exhibits and schedules hereto
and thereto (including the Disclosure Schedule) constitutes the entire agreement
among the parties pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto. No
amendment, supplement, modification or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of any
of the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
XI.6 Multiple Counterparts. This Agreement may be executed in one or
---------------------
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
26
XI.7 Expenses. Except as otherwise specified in this Agreement, each
----------
party hereto shall pay its own legal, accounting, out-of-pocket and other
expenses incident to this Agreement and to any action taken by such party in
preparation for carrying this Agreement into effect.
XI.7 Invalidity. In the event that any one or more of the provisions
----------
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
XI.8 Titles. The titles, captions or headings of the Articles and
------
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
XI.9 Cumulative Remedies. All rights and remedies of either party
-------------------
hereto are cumulative of each other and of every other right or remedy such
party may otherwise have at law or in equity, and the exercise of one or more
rights or remedies shall not prejudice or impair the concurrent or subsequent
exercise of other rights or remedies.
XI.10 Attorneys' Fees. If any party to this Agreement brings an action
---------------
to enforce its rights under this Agreement, the prevailing party shall be
entitled to recover its costs and expenses, including without limitation
reasonable attorneys' fees, incurred in connection with such action, including
any appeal of such action.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their respective behalf, by their respective officers thereunto
duly authorized, all as of the day and year first above written.
PARENT:
▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: ___________________________________________
Name:
Its:
WIRELESS:
27
MEDICAL ACQUISITION WIRELESS, INC.
By: __________________________________
Name:
Its:
COMPANY:
▇▇▇▇▇▇, INC.
By: __________________________________
Name:
Its:
SHAREHOLDER:
By: _____________________________________
Name: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
28
Exhibit 2.2
-----------
Merger Certificate
29
Disclosure Schedules
--------------------
30