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Med Diversified Inc – ‘8-K’ for 5/5/00 – EX-10.10

On:  Tuesday, 5/23/00, at 5:19pm ET   ·   For:  5/5/00   ·   Accession #:  948830-0-268   ·   File #:  1-15587

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 5/23/00  Med Diversified Inc               8-K:2,7     5/05/00    2:79K                                    Sawyer Jon D P C/FA

Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                         3     11K 
 2: EX-10.10    Material Contract                                     24    118K 


EX-10.10   —   Material Contract

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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of April 18, 2000 (the "Agreement"), among e-MedSoft.com, a corporation organized and existing under the laws of the State of Nevada ("Parent"), Illumea Acquisition Corporation, a corporation organized and existing under the laws of the State of Delaware ("Merger Sub") and a direct wholly owned subsidiary of Parent, and Illumea Corporation, a corporation organized and existing under the laws of the State of Delaware (the "Company"); W I T N E S S E T H: WHEREAS, the boards of directors of Parent, Merger Sub and the Company have each determined that it is consistent with and in furtherance of their respective long-term business strategies and fair to and in the best interests of their respective stockholders to combine the respective businesses of Parent and the Company by means of a merger (the "Merger") of Merger Sub with and into the Company upon the terms and subject to the conditions set forth herein and in accordance with the Delaware Corporation Law (the "Delaware Corporation Law"); and WHEREAS, for United States Federal income tax purposes, it is intended that the Merger qualify as a reorganization under the provisions of Section 368 of the Internal Revenue Code of 1986, as amended (together with the rules and regulations promulgated thereunder, the "Code"); NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements set forth herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows: ARTICLE I THE MERGER 1.1 The Merger. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the Delaware Corporation Law, at the Effective Time, Merger Sub shall be merged with and into the Company. As a result of the Merger, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation of the Merger (the "Surviving Corporation"). 1.2 Closing. Unless this Agreement shall have been terminated and the Merger shall have been abandoned pursuant to Section 7.1 and subject to the satisfaction or waiver of the conditions set forth in Article VII, the consummation of the Merger shall take place as promptly as practicable (and in any event within three business days) after satisfaction or waiver of the conditions set forth in Article VII, at a closing (the "Closing") to be held at the offices of e-MedSoft.com, 20750 Ventura Boulevard, Suite 320, Woodland Hills, California 91364, unless another date, time or place is agreed to by the Company and Parent.
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1.3 Effective Time. At the time of the Closing, the parties shall cause the Merger to be consummated by filing articles of merger (the "Articles of Merger") with the Secretary of State of the State of Delaware in such form as required by, and executed in accordance with the relevant provisions of, the Delaware Corporation Law (the date and time of such filing, or such later time as may be agreed by the parties hereto and specified in the Articles of Merger, being the "Effective Time"). 1.4 Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of the Delaware Corporation Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, except as otherwise provided herein, all the property, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation, and the Parent shall own all of the issued and outstanding stock of the Surviving Corporation and shall have full legal control over the Surviving Corporation. 1.5 Certificate of Incorporation; Bylaws; Directors and Officers of Surviving Corporation. Unless otherwise agreed by the Company and Parent prior to the Effective Time, at the Effective Time: (a) the certificate of incorporation and bylaws of the Company, as in effect immediately prior to the Effective Time, shall be the certificate of incorporation and bylaws of the Surviving Corporation until thereafter amended as provided by Law and such certificate of incorporation or bylaws; (b) the officers of Merger Sub immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation until their successors are elected or appointed and qualified or until their resignation or removal; and (c) the directors of Merger Sub immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation. ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES 2.1 Conversion of Securities. At the Effective Time, by virtue of the Merger and without any action on the part of Merger Sub, the Company or the holders of any of the following securities, and in addition to any consideration that may become payable pursuant to Section 2.2: (a) Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than any Dissenting Shares) and all rights in respect thereof shall forthwith cease to exist and shall be converted into and become exchangeable for the number of shares of Parent Common Stock equal to the product of (x) one divided by the number of shares of the Company's Common Stock issued and outstanding immediately prior to the Effective Time and (y) the quotient of Eleven Million One Hundred Thirty-Three Thousand Three Hundred Fifty Six Dollars ($11,133,356) divided by the average closing price of the Parent's Common Stock on the American Stock Exchange during the thirty (30) trading days ending two days before the Effective Time (the "Common Exchange Ratio"). (b) Each share of Series A Preferred Stock of Company issued and outstanding immediately prior to the Effective Time (other than any Dissenting Shares) and all rights in respect thereof shall forthwith cease to exist and shall be converted into and become exchangeable for the number of shares of Parent Common Stock equal to the product of (x) one divided by the number of 2
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shares of the Company's Common Stock issued and outstanding immediately prior to the Effective Time and (y) the quotient of Eight Hundred Twenty-Three Thousand Six Hundred Forty-Four Dollars ($823,644) divided by the average closing price of the Parent's Common Stock on the American Stock Exchange during the thirty (30) trading days ending two days before the Effective Time (the "Series A Exchange Ratio"). (c) Each share of Series B Preferred Stock of Company issued and outstanding immediately prior to the Effective Time (other than any Dissenting Shares) and all rights in respect thereof shall forthwith cease to exist and shall be converted into and become exchangeable for the number of shares of Parent Common Stock equal to the product of (x) one divided by the number of shares of the Company's Common Stock issued and outstanding immediately prior to the Effective Time and (y) the quotient of Three Million Forty-Three Thousand Dollars ($3,043,000) divided by the average closing price of the Parent's Common Stock on the American Stock Exchange during the thirty (30) trading days ending two days before the Effective Time (the "Series B Exchange Ratio"). (d) Subject to the other terms of this Section 2, each Option to purchase shares of Common Stock of the Company held by an employee, director or consultant of the Company (the "Company Options") outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of any holder thereof, be converted into the right to acquire that number of shares of Parent Common Stock determined by multiplying the number of shares of the Company's Common Stock for which such Company Options are exercisable immediately prior to the Effective Time by the Common Exchange Ratio, at an exercise price per share of Parent Common Stock equal to the exercise price per share of such Company Options divided by the Common Exchange Ratio, subject to the provisions of Section 2.4 regarding the elimination of fractional shares. The number of shares of Parent Common Stock subject to such option shall be subject to increase pursuant to Section 2.2, with the number of additional shares being equal to the number of Earn-Out-Shares that correspond to the full number of shares subject to such option. Such Company Options shall be assumed by Parent under the terms of Parent's 1999 Stock Option Plan. (e) Each share of common stock, no par value, of Merger Sub issued and outstanding immediately prior to the Effective Time and all rights in respect thereof shall forthwith cease to exist and shall be converted into and become exchangeable for one newly and validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation. 2.2 Earn-Out Shares. (a) In addition to the number of shares of Parent Common Stock set forth in Section 2.1 above, but subject to certain conditions set forth below, Parent shall issue to the holders of the Company's Common Stock, Series A Preferred Stock and/or Series B Preferred Stock converted pursuant to Section 2.1 (the "Company Stockholders"), as additional merger consideration, an additional number of shares of Parent Common Stock (the "Earn-Out Shares") based upon Company's gross sales (the "Milestones") for each of the fiscal years ending on March 31, 2001 and March 31, 2002 (the "Earn-Out Period") (calculated in accordance with generally accepted accounting principals on an accrual basis). The Earn-Out Shares shall be cumulative with respect to each separate Milestone listed below and the corresponding additional consideration. For example, if the Company's gross sales for fiscal 2002 were $30,000,000, the minimum number of Earn-Out Shares issuable would be 3,000,000. The Earn-Out Shares shall be calculated as follows: 3
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Cumulative Gross Sales Fiscal Year for Such Ending Year Earn-Out 3/31/01 $ 3,000,000 The greater of (a) 150,000 shares of Parent Common Stock or (b) that number of shares of Parent Common Stock with a value equal to $3,000,000 3/31/02 $10,000,000 The greater of (a) 500,000 shares of Parent Common Stock or (b) that number of shares of Parent Common Stock with a value equal to $10,000,000 3/31/02 $20,000,000 The greater of (a) 1,000,000 shares of Parent Common Stock or (b) that number of shares of Parent Common Stock with a value equal to $20,000,000 3/31/02 $30,000,000 The greater of (a) 1,500,000 shares of Parent Common Stock or (b) that number of shares of Parent Common Stock with a value equal to $30,000,000 3/31/02 $40,000,000 The greater of (a) 500,000 shares of Parent Common Stock or (b) that number of shares of Parent Common Stock with a value equal to $10,000,000 (b) Notwithstanding anything to the contrary contained in Section 2.2(a) above, in no event shall the total number of shares of Parent Common Stock to be issued pursuant to Section 2.2(a) above, together with the total number of shares of Parent Common Stock to be issued pursuant to Sections 2.1(a), (b) and (c) of this Agreement, exceed five percent of the total number of shares of Parent Common Stock outstanding as of the date of any such issuance. The share numbers set forth in Section 2.2(a) above shall be subject to adjustment for stock splits, combinations and dividends with respect to the Parent Common Stock. In case of any reorganization of Parent during the Earn-out Period, or in case that, during such period, the Company shall consolidate with or merge into another corporation or convey all or substantially all of its assets to another corporation, then and in each such case the Company Stockholders, upon payment of the Earn-Out Shares as provided in this Section 2 at any time after the consummation of such reorganization, consolidation, merger or conveyance, shall be entitled to receive, in lieu of the Earn-Out Shares receivable prior to such consummation, the stock or other securities or property to which the Company Stockholder would have been entitled upon such consummation if the Company Stockholder had received the Earn-Out Shares immediately prior thereto; in each such case, the terms of this Agreement, shall be applicable to the shares of stock or other securities or property receivable upon receipt of the Earn-Out Shares after such consummation. The value of the shares of Parent Common Stock to be issued pursuant to the Earn-Out Shares shall be determined by dividing the relevant dollar value by the average closing price of the Parent Common Stock on the American Stock Exchange for the thirty (30) trading days ended two (2) trading days prior to the date that Company satisfies the relevant Milestone and such shares shall be deemed issued as of such date. 4
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(c) The Earn-Out Shares shall be delivered to the Company Stockholders within thirty days following achievement of the relevant milestone. Following the achievement of a milestone, the Company shall notify Parent (the "Report"). Parent shall have fifteen days to review and approve the Report. If Parent does not notify the Company Stockholders in writing within such fifteen day period that they dispute any matter set forth in the Report, the Report shall be deemed to have been accepted by the Company Stockholders and Parent. If any disputes arise regarding the Report which the Company Stockholders and Parent cannot resolve between themselves within fifteen days, such questions shall be referred to the independent accountants representing each of the parties, who shall have seven days thereafter to attempt to resolve such questions, and any decisions mutually agreeable to such accountants shall be binding upon the Company Stockholders and Parent. If, after such seven days, the independent accountants of the Company Stockholders and Parent are unable to arrive at a resolution of any issue relating to the Report, such independent accountants will appoint a third independent accounting firm satisfactory to each of them, which shall be directed to resolve such questions within seven days thereafter, and whose decisions shall be final and binding on all parties. The cost of the accounting firm shall be borne equally by the Company Stockholders and Parent. (d) After the Closing Date and at all times during the Earn-Out Period, the Company shall operate pursuant to an annual budget that has been mutually agreed upon by both Andrew Borsanyi and the board of directors of Parent prior to the commencement of such fiscal year. (e) The Earn-Out Shares shall be divided among the holders of Company Common Stock, Company Series A Preferred Stock and Company Series B Preferred Stock converted pursuant to Section 2.1 above (the "Company Stock") (other than any Dissenting Shares), such that, each share of Company Stock shall be entitled to receive that number of shares of Parent Common Stock equal to the product of (i) the Earn-Out-Shares, multiplied by (ii) one divided by the sum of (x) the number of shares of Company Stock and (y) the number of shares subject to Company Options. 2.3 Exchange of Shares and Company Options; Delivery of Earn-Out Shares. (a) Subject to the terms and conditions hereof, at or prior to the Effective Time, Parent shall appoint an exchange agent to effect the exchange of shares of Company Common Stock (other than Dissenting Shares) for Parent Common Stock in accordance with the provisions of this Article II (the "Exchange Agent"). From time to time after the Effective Time, Parent shall deposit, or cause to be deposited, certificates representing Parent Common Stock for conversion of shares of Company Common Stock (other than Dissenting Shares) in accordance with the provisions of Sections 2.1 and 2.2 (such certificates being herein referred to as the "Exchange Fund"); provided, however, that all certificates representing Parent Common Stock to be issued pursuant to Section 2.1(a) and (b) shall be deposited within ten (10) business days following the Effective Time. Commencing immediately after the Effective Time and until the appointment of the Exchange Agent shall be terminated, each holder of a certificate or certificates theretofore representing shares of Company Common Stock (other than Dissenting Shares) may surrender the same to the Exchange Agent and, after the appointment of the Exchange Agent shall be terminated, any such holder may surrender any such certificate to Parent. Such holder shall be entitled upon such surrender to receive in exchange therefor a certificate or certificates representing the number of full shares of Parent Common Stock into which the shares of Company Common Stock theretofore represented by the certificate or certificates so surrendered shall have been 5
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converted in accordance with the provisions of Section 2.1, in accordance with Section 2.4, and all such shares of Parent Common Stock shall be deemed to have been issued at the Effective Time. Until so surrendered and exchanged, each outstanding certificate which, prior to the Effective Time, represented issued and outstanding shares of Company Common Stock shall be deemed for all corporate purposes of Parent to evidence ownership of the number of fullshares of Parent Common Stock into which the shares of Company Common Stock theretofore represented thereby shall have been converted at the Effective Time. Notwithstanding the foregoing provisions of this Section 2.3, risk of loss and title to such certificates representing shares of Company Common Stock shall pass only upon proper delivery of such certificates to the Exchange Agent, and neither the Exchange Agent nor any party hereto shall be liable to a holder of shares of Company Common Stock for any Parent Common Stock or dividends or distributions thereon delivered to a public official pursuant to any applicable abandoned property, escheat or similar law or to a transferee pursuant to Section 2.3. In the event that this Agreement shall have been terminated pursuant to Section 7.1 hereof, the Company and Parent shall cause the Exchange Agent to use its commercially reasonable efforts to effect the prompt return of stock certificates representing shares of Company Common Stock to the holders thereof. In the event Earn-Out Shares become deliverable to the Company Stockholders pursuant to Section 2.3, such shares shall be deposited with the Exchange Agent within five (5) business days following final determination of the number of shares issuable for such year, and the Exchange Agent shall distribute to each Company Stockholder the Earn-Out Shares issuable to such Company Stockholder pursuant to Section 2.3(e). (b) Following the Effective Time, Parent shall exchange, or cause to be exchanged, agreements in respect of all Company Options exchanged pursuant to Section 2.1(d) above for the existing agreements covering such Company Options, which new agreements shall be covered by the terms of Parent's 1999 Stock Option Plan. 2.4 Stock Transfer Books. At the Effective Time, the stock transfer books of the Company with respect to shares of Company Common Stock shall be closed, and there shall be no further registration of transfers of shares of Company Common Stock thereafter on the records of any such stock transfer books. In the event of a transfer of ownership of shares of Company Common Stock that is not registered in the stock transfer records of the Company, at the Effective Time, a certificate or certificates representing the number of full shares of Parent Common Stock into which such shares of Company Common Stock shall have been converted shall be issued to the transferee in accordance with Section 2.3, if the certificate or certificates representing such shares of Company Common Stock is or are surrendered as provided in Section 2.3, accompanied by all documents required to evidence and effect such transfer and by evidence of payment of any applicable stock transfer tax. 2.5 No Fractional Share Certificates. Unless Parent otherwise determines, no scrip or fractional share certificates for Parent Common Stock shall be issued upon the surrender for exchange of certificates evidencing shares of Company Common Stock. In lieu of fractional shares, each holder of shares of Company Common Stock who would be entitled to receive a fractional share of Parent Common Stock shall, upon surrender of the certificate or certificates representing shares of Company Common Stock, be entitled to receive one full share of Parent Common Stock for any fractional share interest. 6
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2.6 Dissenting Shares. Notwithstanding any provision of Section 2.1 hereof to the contrary, shares of Company Common Stock which are held by holders of such shares who have not voted in favor of the Merger, who are entitled to dissent and who have delivered a written notice of intent to demand payment for such shares in the manner provided in Section 262 of the Delaware Corporation Law ("Dissenting Shares"), shall not be converted into or exchanged for or represent the right to receive any shares of Parent Common Stock, unless such holder fails to perfect or effectively withdraws or loses such rights to payment. If, after the Effective Time, such holder fails to perfect or effectively withdraws or loses such right to payment, then such Dissenting Shares shall thereupon be deemed to have been converted into and exchanged pursuant to Section 2.1 hereof, as of the Effective Time, for the right to receive shares of Parent Common Stock issued in the Merger to which the holder of such shares of Company Common Stock is entitled, without any interest thereon. The Company shall give Parent prompt notice of any notices and demands received by the Company for payment for shares of Company Common Stock, and Parent shall have the right to participate in all negotiations and proceedings with respect to such notices and demands. The Company shall not, except with the prior written consent of Parent, make any payment with respect to, or settle or offer to settle, any such demands. Prior to the Effective Time, the Company shall establish an escrow account with a financial institution and the Company shall fund such escrow account with cash or cash equivalents in an amount sufficient to make all payments to holders of Dissenting Shares. Such escrow account shall survive the Merger. All payments to holders of Dissenting Shares shall be made out of such escrow account, and no such payments shall be made or otherwise funded by Parent. 2.7 Protection Against Dilution as to Conversion Rate. In the event that Parent subdivides or consolidates the Parent Common Stock or declares a Common Stock dividend with respect to the Parent Common Stock or recapitalizes or reclassifies its shares of Common Stock subsequent to the execution of this Agreement and effective prior to the Closing Date, the conversion rate and type of security (and the exercise price, with respect to Company Options) shall be proportionately adjusted. 2.8 Further Assurances. Parent agrees that if, at any time after the Effective Time, Company considers or is advised that any further deeds, assignments or assurances are reasonably necessary or desirable to be obtained from Parent or its officers or directors, to consummate the Merger or to carry out the purposes of this Agreement at or after the Effective Time, then Company, Parent and their respect officers and directors may execute and deliver all such proper deeds, assignments and assurances and do all other things necessary or desirable to consummate the Merger and to carry out the purposes of this Agreement, in the name of Parent or otherwise. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY Except as disclosed in Schedule 2 which is attached hereto and incorporated herein by reference, the Company hereby represents and warrants to Parent and Merger Sub that: 3.1 Organization. The Company is a corporation duly organized, validly existing, and in good standing under the laws of Delaware, has all necessary corporate powers to own its properties and to carry on its business as now owned and operated by it, and is duly qualified to do business and is in good standing in each of the jurisdictions where its business requires qualification. 7
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3.2 Capital. The authorized Common Stock of the Company consists of 25,000,000 shares of Common Stock, $.001 par value, of which 1,932,800 are currently issued and outstanding, and 5,000,000 shares of Preferred Stock, $.001 par value, of which 50,575 shares of Preferred A stock and 179,000 shares of Preferred B stock are currently issued and outstanding. All of the issued and outstanding shares of the Company are duly authorized, validly issued, fully paid, and nonassessable, and are owned by the persons listed on Schedule 1 hereto. Other than the Preferred A and B stock, there are no outstanding subscriptions, options, rights, warrants, debentures, instruments, convertible securities, or other agreements or commitments obligating the Company to issue or to transfer from treasury any additional shares of its Common Stock of any class. 3.3 Subsidiaries. The Company does not have any subsidiaries or own any interest in any other enterprise (whether or not such enterprise is a corporation) except as disclosed in Schedule 2. 3.4 Directors and Officers. Schedule 2 contains the names and titles of all directors and officers of the Company as of the date of this Agreement. 3.5 Financial Statements. The Company has delivered to Parent unaudited balance sheets and statements of operations for the year ended December 31, 1999 (the "Financial Statements"). The Financial Statements fairly present the financial condition of the Company, subject to normal year-end adjustments. The Financial Statements fairly accurately set out and describe the financial condition of the Company as of December 31, 1999. 3.6 Absence of Changes. Since December 31, 1999, except for changes in the ordinary course of business which have not in the aggregate been materially adverse, to the best of the Company's knowledge, the Company has conducted its business only in the ordinary course and has not experienced or suffered any material adverse change in the condition (financial or otherwise), results of operations, properties, business or prospects of the Company or waived or surrendered any claim or right of material value. 3.7 Absence of Undisclosed Liabilities. Neither the Company nor any of its properties or assets are subject to any material liabilities or obligations of any nature, whether absolute, accrued, contingent or otherwise and whether due or to become due, that are required to be recorded in accordance with generally accepted accounting principles and are not reflected in the financial statements presented to Parent or have otherwise been disclosed to Parent. 3.8 Tax Returns. Within the times and in the manner prescribed by law, the Company has filed all federal, state and local tax returns required by law, or has filed extensions which have not yet expired, and has paid all taxes, assessments and penalties due and payable. 3.9 Patents, Trade Names and Rights. Schedule 2 sets forth a complete and accurate schedule of (i) all patents pending or issued; (ii) all registered trademarks and service marks and all trademark and service mark applications, including country of filing, filing number, date of issue and expiration date used in the business of the Company; and (iii) all registered copyrights owned by the Company. Except as set forth in such schedule, to the Company's knowledge, no third party has asserted, or threatened to assert against the Company or any of its officers or directors, any conflicting rights to any such intellectual property and the Company has no knowledge of facts that the Company believes could reasonably be expected to give rise to such a claim. 8
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3.10 Compliance with Laws. To the best of the Company's knowledge, the Company has complied with, and is not in violation of, applicable federal, state or local statutes, laws and regulations (including, without limitation, any applicable building, zoning or other law, ordinance or regulation) affecting its properties or the operation of its business, except for matters which would not have a material affect on the Company or its properties. 3.11 Litigation. The Company is not a party to any suit, action, arbitration or legal, administrative or other proceeding, or governmental investigation pending or, to the best knowledge of the Company, threatened against or affecting the Company or its business, assets or financial condition, except for matters which would not have a material affect on the Company or its properties. The Company is not in default with respect to any order, writ, injunction or decree of any federal, state, local or foreign court, department, agency or instrumentality applicable to it. The Company is not engaged in any lawsuit to recover any material amount of monies due to it. 3.12 Authority. The Company has full corporate power and authority to enter into this Agreement. The board of directors of the Company has taken all action required to authorize the execution and delivery of this Agreement by or on behalf of the Company and the performance of the obligations of the Company under this Agreement, other than the approval of the Company's stockholders in accordance with Delaware law. No other corporate proceedings on the part of the Company are necessary to authorize the execution and delivery of this Agreement by the Company in the performance of its obligations under this Agreement. This Agreement is, when executed and delivered by the Company, and will be a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by general principles of equity, bankruptcy, insolvency, moratorium and similar laws relating to creditors' rights generally. 3.13 Ability to Carry Out Obligations. Neither the execution and delivery of this Agreement, the performance by the Company of its obligations under this Agreement, nor the consummation of the transactions contemplated under this Agreement will to the best of the Company's knowledge: (a) materially violate any provision of the Company's certificate of incorporation or bylaws; (b) with or without the giving of notice or the passage of time, or both, violate, or be in conflict with, or constitute a material default under, or cause or permit the termination or the acceleration of the maturity of, any debt, contract, agreement or obligation of the Company, or require the payment of any prepayment or other penalties; (c) require notice to, or the consent of, any party to any material agreement or commitment, lease or license, to which the Company is bound; (d) result in the creation or imposition of any security interest, lien, or other encumbrance upon any material property or assets of the Company; or (e) violate any material statute or law or any judgment, decree, order, regulation or rule of any court or governmental authority to which the Company is bound or subject. 3.14 Full Disclosure. None the representations and warranties made by the Company in this Agreement and the Schedules and Exhibits to this Agreement prepared by the Company contained, contains, or will contain at the time it was or is so furnished any untrue statement of a material fact or omitted, omits or will omit at such time to state any material fact necessary in order to make the statements made herein and therein, in light of the circumstances under which they were made, not misleading. The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings. 9
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3.15 Assets and Technology. The Company has good and marketable title to all of its tangible properties and such tangible properties are not subject to any material liens or encumbrances. There are no existing rights granted to anyone to use or license the technology and there are no known claims by anyone else to any rights to the technology. 3.16 Material Contracts and Obligations. Attached hereto on Schedule 2 is a list of all agreements, contracts, indebtedness, liabilities and other obligations to which the Company is a party or by which it is bound that are material to the conduct and operations of its business and properties, which provide for payments to or by the Company in excess of $25,000; or which involve transactions or proposed transactions between the Company and its officers, directors, affiliates or any affiliate thereof. Copies of such agreements and contracts and documentation evidencing such liabilities and other obligations have been made available for inspection by Parent and its counsel. All of such agreements and contracts are valid, accurate, binding and in full force and effect in all material respects, and there have been, to the knowledge of the Company, no breaches or anticipatory repudiation of such agreements and contracts. 3.17 Approval of Clients. The Company has contacted each of its clients listed in Schedule 3.17 regarding the transaction and each client has consented to the change in ownership of the Company and agreed that the contracts would remain in full force and effect after the Closing. In addition all of the clients and persons mentioned in the draft press release attached hereto as Exhibit D have approved of the use of their names in the drafts press release. The Company shall not be deemed to be in breach of this provision in the event the Company obtains the requisite approvals from its clients on or before the Effective Time. 3.18 Consents and Approvals. No consent, approval or authorization of, or declaration, filing or registration with, any governmental or regulatory authority is required to be made or obtained by the Company in connection with: (a) the execution and delivery by the Company of this Agreement; (b) the performance by the Company of its obligations under this Agreement; or (c) the consummation by the Company of the transactions contemplated under this Agreement. 3.19 No Debts. Except as set forth on Schedule 3.19, at the Closing of this transaction, the Company shall have no outstanding debts or liabilities, absolute or contingent. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB Except as disclosed in Schedule 3 which is attached hereto and incorporated herein by reference, Parent and Merger Sub hereby jointly and severally represent and warrant to the Company that: 4.1 Organization and Qualification; Subsidiaries. (a) Each of Parent, Merger Sub and all other subsidiaries of Parent (the "Parent Subsidiaries") has been duly organized and is validly existing and in good standing (to the extent applicable) under the laws of the jurisdiction of its incorporation or organization, as the case may be, and has the requisite corporate power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted, except where the failure to be so 10
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organized, existing or in good standing or to have such power, authority and governmental approvals could not reasonably be expected to have, individually or in the aggregate, a material adverse effect. Parent, Merger Sub and each other Parent Subsidiary is duly qualified or licensed to do business, and is in good standing (to the extent applicable), in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for such failures to be so qualified or licensed and in good standing that could not reasonably be expected to have, individually or in the aggregate, a material adverse effect. (b) Section 4.1 of Schedule 3 sets forth, as of the date of this Agreement, a true and complete list of each Parent Subsidiary. Except as set forth in Section 4.1 of Schedule 4, neither Parent nor any Parent Subsidiary owns an equity interest in any partnership or joint venture arrangement or other business entity that is material to the financial condition, results of operations, business or prospects of Parent and the Parent Subsidiaries, taken as a whole. 4.2 Capitalization. The authorized Common Stock of Parent consists of 100,000,000 shares of Common Stock of which 75,689,532 are currently issued and outstanding, all of which are validly issued, fully paid and nonassessable. Except as set forth in Schedule 3, there are no options, warrants or other rights, agreements, arrangements or commitments of any character to which Parent is a party or by which Parent is bound relating to the issued or unissued Common Stock of Parent, Merger Sub or any other Parent Subsidiary or obligating Parent, Merger Sub or any other Parent Subsidiary to issue or sell any shares of Common Stock of, or other equity interests in, Parent, Merger Sub or any other Parent Subsidiary. Each outstanding share of Common Stock of each Parent Subsidiary is duly authorized, validly issued, fully paid and nonassessable and each such share owned by Parent or another Parent Subsidiary is free and clear of all security interests, liens, claims, pledges, options, rights of first refusal, agreements, limitations on Parent's or such other Parent Subsidiary's voting rights, charges and other encumbrances of any nature whatsoever, except where the failure to own such shares free and clear could not reasonably be expected to have, individually or in the aggregate, a material adverse effect. 4.3 Directors and Officers. Schedule 3 contains the names and titles of all directors and officers of Parent and Merger Sub as of the date of this Agreement. 4.4 Financial Statements. Parent has delivered to the Company its audited balance sheet and statements of operations and cash flows as of and for the period ended March 31, 1999, and its unaudited balance sheet and statements of operations and cash flows as of and for the period ended December 31, 1999 (collectively the "Financial Statements"). The Financial Statements are complete and correct in all material respects and have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods indicated. The Financial Statements accurately set out and describe the financial condition and operating results of the Company as of the dates, and for the periods, indicated therein. 4.5 Absence of Changes. Since December 31, 1999, except for changes in the ordinary course of business which have not in the aggregate been materially adverse, to the best of Parent's knowledge, Parent has not experienced or suffered any material adverse change in its condition (financial or otherwise), results of operations, properties, business or prospects or waived or surrendered any claim or right of material value. 11
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4.6 Absence of Undisclosed Liabilities. Neither Parent nor any of its properties or assets are subject to any liabilities or obligations of any nature, whether absolute, accrued, contingent or otherwise and whether due or to become due, that are not reflected in the financial statements presented to the Company. 4.7 Tax Returns. Within the times and in the manner prescribed by law, Parent has filed all federal, state and local tax returns required by law and has paid all taxes, assessments and penalties due and payable. 4.8 Trade Names and Rights. Parent does not use any trademark, service mark, trade name, or copyright in its business, or own any trademarks, trademark registrations or applications, trade names, service marks, copyrights, copyright registrations or applications. 4.9 Compliance with Laws. To the best of Parent's knowledge, Parent has complied with, and is not in violation of, applicable federal, state or local statutes, laws and regulations (including, without limitation, any applicable building, zoning, or other law, ordinance, or regulation) affecting its properties or the operation of its business or with which it is otherwise required to comply. 4.10 Litigation. There is no legal action, suit, arbitration or other legal, administrative or other governmental investigation, inquiry or proceeding (whether federal, state, local or foreign) pending or threatened against or affecting (i) Parent or any of its subsidiaries or any of their respective properties, assets or business (existing or contemplated) or (ii) any employee of Parent or any such subsidiary, before any court or governmental department, commission, board, bureau, agency or instrumentality or any arbitrator, except for suits, arbitrations, investigations, inquiries and proceedings which, if decided adversely to Parent would not a have material adverse effect on Parent, its operations, assets or prospects. After reasonable investigation, neither Parent nor any employee or agent of nor attorney for Parent is aware of any fact that might result in or form the basis for any such action, suit, arbitration, investigation, inquiry or other proceeding. Neither Parent nor any employee is in default with respect to any order, writ, judgment, injunction, decree, determination or award of any court or of any governmental agency or instrumentality (whether federal, state, local or foreign). 4.11 No Pending Investigation. Parent is not aware of any pending investigations or legal proceedings by the SEC, any state securities regulatory agency, or any other governmental agency regarding Parent or any officers or directors of Parent or any shareholders or controlling persons of such shareholders. 4.12 Authority Relative to this Agreement. Parent and Merger Sub have all necessary corporate power and authority to execute and deliver this Agreement, to perform their respective obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of Parent or Merger Sub are necessary to authorize this Agreement or to consummate such transactions (other than the filing and recordation of the Articles of Merger as required by the Delaware Corporation Law). This Agreement has been duly executed and delivered by Parent and Merger Sub and, assuming the due authorization, execution and delivery by the Company, constitutes the legal, valid and binding obligation of Parent and Merger Sub, enforceable against Parent and Merger Sub in accordance with its terms. 12
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4.13 No Conflict; Required Filings and Consents. (a) The execution and delivery of this Agreement by Parent and Merger Sub do not, and the performance by Parent and Merger Sub of their obligations hereunder and the consummation of the Merger will not, (i) conflict with or violate any provision of the certificate or articles of incorporation, as the case may be, or bylaws of Parent or Merger Sub or any equivalent organizational documents of any other Parent Subsidiary, (ii) assuming that all consents, approvals, authorizations and permits described in Section 4.14(b) have been obtained and all filings and notifications described in Section 4.14(b) have been made, conflict with or violate any Law applicable to Parent or any other Parent Subsidiary or by which any property or asset of Parent, Merger Sub or any other Parent Subsidiary is bound or affected or (iii) except as set forth in Section 4.14(a) of the Schedule 3, result in any breach of or constitute a default (or an event which with the giving of notice or lapse of time or both could reasonably be expected to become a default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or other encumbrance on any property or asset of Parent, Merger Sub or any other Parent Subsidiary pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation, except, with respect to clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults or other occurrences which could not reasonably be expected, individually or in the aggregate, (A) to have a material adverse effect or (B) to prevent or materially delay the performance by Parent or Merger Sub of its obligations pursuant to this Agreement or the consummation of the Merger. (b) The execution and delivery of this Agreement by Parent and Merger Sub do not, and the performance by Parent and Merger Sub of their respective obligations hereunder and the consummation of the Merger will not, require any consent, approval, authorization or permit of, or filing by Parent or Merger Sub with or notification by Parent or Merger Sub to, any Governmental Entity, except (i) pursuant to applicable requirements of the Exchange Act, the Securities Act, Blue Sky Laws, the rules and regulations of the American Stock Exchange, and the filing and recordation of the Articles of Merger as required by the Delaware Corporation Law and (ii) where failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, could not reasonably be expected, individually or in the aggregate, (A) to have a material adverse effect or (B) to prevent or materially delay the performance by Parent or Merger Sub of its obligations pursuant to this Agreement or the consummation of the Merger. 4.14 Validity of Parent Shares. The shares of Parent Common Stock to be delivered pursuant to this Agreement, when issued in accordance with the provisions of this Agreement, will be duly authorized, validly issued, fully paid and nonassessable. 4.15 Full Disclosure. None the representations and warranties made by Parent in this Agreement, the Schedules and Exhibits to this Agreement prepared by Parent, any filings made by Parent with the Securities and Exchange Commission (the "Commission") (including all the exhibits and appendixes thereto) (the "SEC Documents") contained, contains, or will contain at the time it was or is so furnished any untrue statement of a material fact or omitted, omits or will omit at such time to state any material fact necessary in order to make the statements made herein and therein, in light of the circumstances under which they were made, not misleading. Except as disclosed in any SEC Document filed on EDGAR at least five (5) business days 13
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prior to the date hereof, since January 1, 1999, there has been no material adverse change and no material adverse development in the business, properties, operations, condition (financial or otherwise), assets, liabilities or results of operations or, insofar as can reasonably be foreseen, prospects of Parent or any of its subsidiaries. Parent has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any bankruptcy law nor does Parent or any of its subsidiaries have any knowledge or reason to believe that their respective creditors intend to initiate involuntary bankruptcy proceedings. No event, liability, development or circumstance has occurred or exists, or is contemplated to occur, with respect to the Parent or its subsidiaries or their respective businesses, properties, operations, condition (financial or otherwise), assets, liabilities or results of operations or, insofar as can reasonably be foreseen, prospects, that would be required to be disclosed by Parent under applicable securities laws on a registration statement (including by way of incorporation by reference) filed with the Commission, on the date this representation is made or deemed to be made, relating to an issuance and sale by Parent of the Common Stock and which has not been publicly disclosed. 4.16 Assets. Parent has good and marketable title to all of its tangible properties and such tangible properties are not subject to any liens or encumbrances except as disclosed in Parent's Financial Statements. ARTICLE V COVENANTS 5.1 Investigative Rights. From the date of this Agreement until the Closing Date, each party shall provide to the other party, and such other party's counsels, accountants, auditors, and other authorized representatives, full access during normal business hours and upon reasonable advance written notice to all of each party's properties, books, contracts, commitments, and records for the purpose of examining the same. Each party shall furnish the other party with all information concerning each party's affairs as the other party may reasonably request. If the transaction contemplated hereby is not completed, all documents received by each party and/or its attorneys and accountants, auditors or other authorized representatives shall be returned to the other party who provided same upon request. The parties hereto, their directors, employees, agents and representatives shall not disclose any of the information described above unless such information is already disclosed to the public, without the prior written consent of the party to which the confidential information pertains. Each party shall take such steps as are necessary to prevent disclosure of such information to unauthorized third parties. 5.2 Conduct of Business. Prior to the Closing, Parent and the Company shall each conduct its business in the normal course, and shall not sell, pledge, or assign any assets, without the prior written approval of the other party, except in the regular course of business or as contemplated in previously disclosed contractual obligations. Neither Parent nor the Company shall amend its Certificate of Incorporation (other than to amend the liquidation preferences of the Preferred Stock) or Bylaws, declare dividends, redeem or sell stock or other securities, incur additional or newly-funded liabilities, acquire or dispose of fixed assets, change employment terms, enter into any material or long-term contract, guarantee obligations of any third party, settle or discharge any balance sheet receivable for less than its stated amount, pay more on any liability than its stated amount, or enter into any other transaction other than in the regular course of business except as otherwise contemplated herein. 14
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5.3 Plan of Reorganization. This Agreement is intended to constitute a "plan of reorganization" within the meaning of Section 1.368-2(g) of the income tax regulations promulgated under the Code. From and after the date of this Agreement, each party hereto shall use all reasonable efforts to cause the Merger to qualify, and shall not, without the prior written consent of the other parties hereto, knowingly take any actions or cause any actions to be taken which could reasonably be expected to prevent the Merger from qualifying as a reorganization under the provisions of Section 368 of the Code. In the event that the Merger shall fail to qualify as a reorganization under the provisions of Section 368 of the Code, then the parties hereto agree to negotiate in good faith to restructure the Merger in order that it shall qualify as tax-free transaction under the Code. Following the Effective Time, and consistent with any such consent, neither the Surviving Corporation nor Parent nor any of their respective affiliates knowingly and voluntarily shall take any action or cause any action to be taken which could reasonably be expected to cause the Merger to fail to qualify as a reorganization under Section 368 of the Code. 5.4 Registration of Common Stock by Parent. As soon as reasonably practicable, and in any event within 60 days following the Closing, Parent shall prepare and file a registration statement on Form S-3 or, if Form S-3 is not available, then on Form S-1, or such other available form, with respect to 150,000 of the shares of Parent Common Stock to be received pursuant to this Agreement (the "Registrable Shares"), and shall use its best efforts to cause such registration statement to be declared effective as soon as possible and keep such registration continuously effective for a period extending until the earlier of one (1) year following the effective date thereof, or the date on which all of the Registrable Shares have been sold. Each Company Stockholder registering shares pursuant to such registration statement shall agree not to sell more than 500 shares under such registration statement on any trading day, and all such sales shall be made through accounts at Sutro and Company, Inc. 5.5 Fairness Opinion. The parties agree that they will attempt to obtain a fairness opinion as quickly as possible in which the investment banker rendering the opinion concludes that the terms of this transaction are fair to the shareholders of the Parent. This opinion will not, however, be a condition to closing. ARTICLE VI CONDITIONS TO THE MERGER 6.1 Conditions to the Obligations of Each Party to Consummate the Merger. The obligations of the parties hereto to consummate the Merger, or to permit the consummation of the Merger, are subject to the satisfaction or, if permitted by applicable Law, waiver of the following conditions: (a) this Agreement and the Merger shall have been duly approved by the requisite vote of stockholders of the Company in accordance with the Delaware Corporation Law; (b) no court of competent jurisdiction shall have issued or entered any order, writ, injunction or decree, and no other governmental entity shall have issued any order, which is then in effect and has the effect of making the Merger illegal or otherwise prohibiting its consummation; (c) all consents, approvals and authorizations legally required to be obtained to consummate the Merger shall have been obtained from all governmental entities, except where the failure to obtain any such consent, approval or authorization could not reasonably be expected to result in a 15
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change in or have an effect on the business of the Company or Parent that is materially adverse to the business, assets, liabilities (contingent or otherwise), condition (financial or otherwise) or results of operations of Parent and its subsidiaries, taken as a whole; and (d) the shares of Parent Common Stock into which the shares of Company Common Stock will be converted pursuant to Article I shall have been authorized for listing on the American Stock Exchange. 6.2 Conditions to the Obligations of the Company. The obligations of the Company to consummate the Merger, or to permit the consummation of the Merger, are subject to the satisfaction or, if permitted by applicable Law, waiver of the following further conditions: (a) each of the representations and warranties of Parent contained in this Agreement shall be true, complete and correct in all material respects on and as of the Effective Time as if made at and as of the Effective Time and the Company shall have received a certificate of the President and Chief Financial Officer of Parent to such effect; (b) Parent shall have performed or complied in all material respects with all material agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Effective Time and the Company shall have received a certificate of the President and Chief Financial Officer of Parent to that effect; (c) Employment Agreements. Parent and each of Andrew Borsanyi, Jack Zeineh, M.D., and Nathalie J.v.d. Doornmalen shall have entered into an employment agreement substantially in the forms of Exhibit A, B and C hereto, respectively. 6.3 Conditions to the Obligations of Parent. The obligations of Parent to consummate the Merger, or to permit the consummation of the Merger, are subject to the satisfaction or, if permitted by applicable Law, waiver of the following further conditions: (a) each of the representations and warranties of the Company contained in this Agreement shall be true, complete and correct in all material respects on and as of the Effective Time as if made at and as of the Effective Time and Parent shall have received a certificate of the Chairman or President and Chief Financial Officer of the Company to such effect; (b) the Company shall have performed or complied in all material respects with all material agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Effective Time and Parent shall have received a certificate of the Chairman or President and Chief Financial Officer of the Company to that effect; (c) there shall not be pending or threatened any action, proceeding, claim or counterclaim which seeks to or would, or any order, decree or injunction (whether preliminary, final or appealable) which would, require Parent to hold separate or dispose of any of the stock or assets of the Company or the Company Subsidiaries or imposes material limitations on the ability of Parent to control in any material respect the business, assets or operations of either Parent or the Company; (d) The Company shall provide a letter from its auditors stating that its financial statements for the period from inception through December 31, 1999, can be audited in accordance with SEC rules and that the audit can be completed within 75 days after the Closing. 16
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(e) Parent shall have received evidence that all of the Company's outstanding vested options and warrants have been cancelled or exercised. ARTICLE VII TERMINATION, AMENDMENT AND WAIVER 7.1 Termination. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, notwithstanding any requisite adoption and approval of this Agreement, as follows: (a) by mutual written consent duly authorized by the boards of directors of each of Parent and the Company; (b) by either Parent or the Company, if the Effective Time shall not have occurred on or before May 15, 2000; provided, however, that the right to terminate this Agreement under this Section 7.1(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement shall have caused, or resulted in, the failure of the Effective Time to occur on or before such date; (c) by Parent, upon a breach of any representation, warranty, covenant or agreement on the part of the Company set forth in this Agreement, or if any representation or warranty of the Company shall have become untrue, incomplete or incorrect, in either case such that the conditions set forth in Section 6.3 would not be satisfied (a "Terminating Company Breach"); provided, however, that if such Terminating Company Breach is curable by the Company through the exercise of its reasonable efforts within 30 days and for so long as the Company continues to exercise such reasonable efforts, Parent may not terminate this Agreement under this Section 7.1(c); and provided further that the preceding proviso shall not in any event be deemed to extend any date set forth in paragraph (b) of this Section 7.1. 7.2 Effect of Termination. In the event of termination of this Agreement pursuant to Section 7.1, this Agreement shall forthwith become void, there shall be no liability under this Agreement on the part of any party hereto or any of its affiliates or any of its or their officers or directors, and all rights and obligations of each party hereto shall cease; provided, however, that nothing herein shall relieve any party hereto from liability for the willful or intentional breach of any of its representations and warranties or the willful or intentional breach of any of its covenants or agreements set forth in this Agreement. 7.3 Amendment. This Agreement may be amended by the parties hereto by action taken by or on behalf of their respective boards of directors at any time prior to the Effective Time. This Agreement may not be amended except by an instrument in writing signed by the parties hereto. 7.4 Waiver. At any time prior to the Effective Time, any party hereto may (a) extend the time for or waive compliance with the performance of any obligation or other act of any other party hereto or (b) waive any inaccuracy in the representations and warranties contained herein or in any document delivered pursuant hereto. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party or parties to be bound thereby. 7.5 Expenses. All Expenses incurred in connection with this Agreement and the Merger shall be paid by the party incurring such Expenses, whether or not the Merger is consummated. 17
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ARTICLE VIII GENERAL PROVISIONS 8.1 Non-survival of Representations and Warranties. The representations and warranties in this Agreement shall terminate at the Effective Time or upon the termination of this Agreement pursuant to Section 7.1, as the case may be. Each party agrees that, except for the representations and warranties contained in this Agreement and the Disclosure Schedules, no party hereto has made any other representations and warranties, and each party hereby disclaims any other representations and warranties made by itself or any of its officers, directors, employees, agents, financial and legal advisors or other representatives, with respect to the execution and delivery of this Agreement or the Merger contemplated herein, notwithstanding the delivery or disclosure to any other party or any party's representatives of any documentation or other information with respect to any one or more of the foregoing. 8.2 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by telecopy or facsimile, by registered or certified mail (postage prepaid, return receipt requested) or by a nationally recognized courier service to the respective parties at their addresses set forth on the signature pages to this Agreement (or at such other address for a party as shall be specified in a notice given in accordance with this Section 8.2). 8.3 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Merger is not affected in any manner materially adverse to any party. 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 a mutually acceptable manner to the fullest extent permitted by applicable Law in order that the Merger may be consummated as originally contemplated to the fullest extent possible. 8.4 Assignment; Binding Effect; Benefit. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of Law or otherwise) without the prior written consent of the other parties hereto. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Notwithstanding anything contained in this Agreement to the contrary, nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto or their respective successors and permitted assigns any rights or remedies under or by reason of this Agreement. 8.5 Incorporation of Exhibits. The Disclosure Schedules and all Exhibits attached hereto and referred to herein are hereby incorporated herein and made a part of this Agreement for all purposes as if fully set forth herein. 18
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8.6 Choice of Law. This Agreement shall be construed and governed by the laws of the State of California without regard to conflicts of interest principles. The parties hereto consent to the jurisdiction of the federal and state courts located in Los Angeles, California, for any action or suit arising out of this Agreement, and waive any defense to such jurisdiction, including, without limitation, any defense based on venue or inconvenient forum. 8.7 Headings. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. 8.8 Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. 8.9 Entire Agreement. This Agreement (including the Exhibits, the Disclosure Schedules) constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings among the parties with respect thereto. No addition to or modification of any provision of this Agreement shall be binding upon any party hereto unless made in writing and signed by all parties hereto. 8.10 Further Assurances. Each party shall do and perform or cause to be done or performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other parties may reasonably request in order to carry out the intent and accomplish the purpose of this Agreement and the consummation of the transactions contemplated hereby; provided, however, that no party shall be obligated in any way to do anything that would conflict with, contradict or otherwise contravene any term or condition set forth prior to this Section 8.10. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized. AGREED TO AND ACCEPTED as of the date first above written. e-MedSoft.com Illumea Corporation By:/s/ John F. Andrews By:/s/ Andrew Borsanyi John F. Andrews, President Andrew Borsanyi, President 1300 Marsh Landing Parkway, Suite 106 151 Shipyard Way Jacksonville, Florida 32250 Newport Beach, California 92663 Illumea Acquisition Corporation By:/s/ John F. Andrews John F. Andrews, President 1300 Marsh Landing Parkway, Suite 106 Jacksonville, Florida 32250 19
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SCHEDULE 1 Current Common Stockholders # Held Clive R. Taylor, MD, D.Phil. 200,000 University Pathology Associates, Inc 100,000 Charles P. Garrison, MD 80,000 Jack Zeineh 592,800 Andrew Borsanyi 390,000 Nathalie j.v.d. Doornmalen 180,000 Alexander Timken Trust 150,000 Global Strategic Holdings Limited 45,000 GEM Global Yield Fund 45,000 TJ Eadington 50,000 Edith Timken 33,334 Peter Toot 33,333 Elizabeth Timken 33,333 Current Common 1,932,800 Common from Conversion of Bridge Leeward Management 143,905 Pillar Management 67,720 Empire Ventures 67,720 Trinity Advisors 33,860 Lee Family Interests 25,395 Joel Harrison 16,930 Common from Bridge 355,530 Common from Exercise of Options Garage.com 50,000 John Kondo 30,000 Eric Fischer 50,000 Michael McGarry 50,000 John Cornfield 7,217 John D. Villasenor 5,155 Andrew Sherrod, M.D. 5,000 Peter Nichols, M.D. 5,000 Sue Ellen Martin, M.D. 5,000 John Cornfield 5,000 Robert Kilpatrick 5,000 Robert Kilpatrick 5,000 Mehdi Rashidi 5,000 John D. Villasenor 3,627 Martin Borsanyi 3,422 Anthony Curci 3,333 Richard Koffler 2,797 Bill Miller 2,774 Goran Forshager 2,655 Jeffrey Ng 1,839 Eric Fischer 17,000 John Suk 1,250 David Valentine 1,200 Michael McGarry 17,000 Diane Jacobs 924 Birdie Eakins 870 Karolyn Bayaca 712 Carol Andretta 657 R.J.Watkins 488 Gabriel Schonwald 274 The Concord Group 262 Mehdi Rashidi 64 Udo Koellmann 33 Udo Koellmann 20 Common from Exercise of Options 287,764(1) Total Common before Preferred 2,576,094 Common from Conversion of Preferred A Alexander Timken Trust 10,438 Yee Mau Chen 10,438 Eltrinic Enterprise Ltd. 10,438 David Chung Shing Wu 5,219 George K.K. Tong 5,219 Norman Yuen Tsing Tao 5,219 Charles P. Garrison, MD 2,559 Edna Liu 1,045 Common Stock from Preferred A 50,575 Common from Conversion of Preferred B Alexander Timken Trust 55,000 Edith Timken 15,000 Elizabeth Timken 15,000 Peter Toot 15,000 Harry Applebaum 10,000 Gerald Gendell 10,000 Vane Clayton 5,000 Boris Luchterhand 5,000 Carolina Andretta 5,000 Kin Hon Yu 5,000 Norman Tao 4,000 David Chung-Shing Wu 3,000 John Budinich 2,500 Richard Budinich 2,500 Bradley Gendell 2,500 Jeffrey Gudman 2,500 Michael Gudman 2,500 Roger Muller 2,500 Rick Nagle 2,500 Matthew Stasior 2,500 James Auld 2,000 Hunter Vest, Ltd. 2,000 True Will Investment Limited 2,000 Gregory Kunin 1,000 Edna Liu 1,000 Microscopy Marketing & Education 1,000 Kathryn Ma 834 Alan K. Munro 833 Yonanda j.v.d. Doornmalen 833 Gary Hogan 500 Common Stock from Preferred B 179,000 Total Fully-Diluted Common Shares (2) 2,805,669 _______________________ (1) Total unvested options are 182,236 (2) In addition, Blackwell Donaldson holds warrants for 7,245 shares at $10.00 a share.
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SCHEDULE 2 3.4 - Directors and Officers Name Title Andrew Borsanyi President, Chief Executive Officer and Director Jack Zeineh, M.D. Chief Science Officer and Director Diane Jacobs Secretary/Treasurer Clive Taylor M.D., Ph.D. Chairman Thomas J. Eadington Director John Kondo Director Alex Timken Director 3.9 Intellectual Property Patent Information Patent Name : COMPRESSION PACKAGED IMAGE TRANSMISSION FOR TELEMICROSCOPY Patent Docket #: 34660/JWE/I214 Patent Application #: 09/323,371 Trademark Trademark # Current Status I Logo 75/713169 Filing receipt received 8/30/99, still pending THE TELEPATHOLOGY SOLUTION 75/762736 Filing receipt received 10/20/99. Still pending THE TELEMICROSCOPY SOLUTION 75/762736 Filing receipt received 10/20/99. Still pending FASTPIX 75/631414 Scheduled in Official Gazette on 11/9/99 FIBERPIX, CLASS 9,10 75/631400 Pending FIBERPIX, CLASS 9 75/711435 Pending ILLUMEA 75/711434 Pending ILLUMEA CORPORATION 75/521307 Pending 3.16 - Material Contracts Receivables 04/15/00 Norris Cancer Institute $ 84,861 USC 50,000 Total Receivables 134,861 Liabilities Accounts Payable Scientific Instruments $ 64,910 Garage.com 23,750 Other 149,205 $237,865 Salaries & Wages Payable (1) $ 41,154 Promissory Notes to Employees (2) 0
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Capital Leases 59,904 Series C Bridge Loan (3) 1,017,500 Total Liabilities(4) $1,356,423 (1) In addition, certain employees have accrued vacations which would become payable on departure from the company. (2) The Company will issue a maximum of $25,000 of notes to employees to assist with exercise of options prior to merger. Notes will be paid back out of salary over 12 months and accelerate if employee leaves firm. (3) To be converted to common stock on close of transaction. (4) In addition, the Company has leases totalling $45,000 with monthly lease payments of $1,100. 3.17 Clients University Pathology Associates (University of Southern California) Genetics and Lab Medicine Ohio State University Memorial Sloan Kettering Cancer Center Beijing University Empire Pathology Quest Diagnostics Chulangkon Hospital University of Maryland Los Angeles County Hospital Stanford University Aventis Pharmaceuticals Dianon Systems Harvard University U.S. Labs Dartmouth Hitchcock Medical Center Veterans Hospital - Los Angeles Hartford Hospital 3.19 - No Debts As of April 15, 2000, the Company has no liabilities or obligations except as outlined in Schedule 2, 3.16. The Company may incur additional liabilties between April 15, 2000 and closing during the ordinary course of business (not to exceed $25,000).
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Purchase Price Including Earn Out Provisions Illumea purchase price shall be paid with restricted shares of common stock valued at $15,000,000 with the number of shares being calculated in accordance with subparagraph 2.1(a) of the Agreement. 150,000 shares shares shall have piggyback registration rights, subject to approval by the Board of Directors of e-MedSoft.com and a schedule of "dribble-out" provisions. Targets for Earn Out Portion of Purchase Price: Bonus to Illumea shareholders are cumulative meaning that each milestone met as referenced below yields the additional consideration referenced: 1. Illumea generates $3,000,000 in gross sales by end of MED Fiscal Year (3/31/01) - Illumea receives 375,000 shares or shares valued at $7,500,000, whichever is greater.* 2. Illumea generates $10,000,000 in gross sales by end of MED Fiscal Year (3/31/02) - Illumea receives bonus of 500,000 shares or shares valued at $10,000,000, whichever is greater.* 3. Illumea generates $20,000,000 in gross sales by end of MED Fiscal Year (3/31/02) - Illumea receives an additional bonus of 1,000,000 shares or shares valued at $20,000,000, whichever is greater.* 4. Illumea generates $30,000,000 in gross sales by end of MED Fiscal Year (3/31/02), Illumea receives an additional bonus of 1,500,000 shares or shares valued at $30,000,000, whichever is greater.* 5. Illumea generates $40,000,000 in gross sales by end of MED Fiscal Year (3/31/02), Illumea receives an additional bonus of 500,000 shares or shares valued at $10,000,000, whichever is greater.* 6. In no event shall the number of shares issued under the provisions of paragraphs 1 through 5 above, together with the $15,000,000 worth of shares to be issued at the closing, exceed 5% of the shares outstanding as the date of this Agreement. * All shares of restricted stock and all shares are issued and valued as of the date the performance hurdle has first been satisfied by Illumea.
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SCHEDULE 3 e-MedSoft.com ("e-Med") 4.1 Subsidiaries. E-Net Technologies LTD and its wholly-owned UK subsidiaries B2B, an Australian subsidiary 4.2 Capitalization: Schedule of Warrants and Options Outstanding as of February 10, 2000 Price Number of Number Date of Per Warrant Holder Warrants of Shares Issue Share Term Magnum Financial 50,000 50,000 1/11/99 $0.25 5 Years Trammel Investors 250,000 250,000 3/19/99 $3.85 5 Years Don Ayers 250,000 250,000 3/19/99 $3.85 5 Years Sutro & Co. 350,000 350,000 5/23/99 $5.00 5 Years Sutro & Co. 1,300,000 1,300,000 5/23/99 $0.01 5 Years Warrants in December private offering 3,568,000 3,568,000 12/31/99 $4.00 5 Years Outstanding 5,768,000 5,768,000 Price Number of Number of Date of Per Option Holder Options Shares Issue Share Ian McPherson 100,000 100,000 8/31/99 $1.00 UK employees 202,500 202,500 various $1.00 Stock Option Plan 632,000 632,000 various various Outstanding 934,500 934,500 Total Options and Warrants 6,702,500 6,702,500 4.4 Directors and Officers of e-Med: Name Position John F. Andrews Chairman, President and Chief Executive Officer Margaret A. Harris Chief Financial Officer Ian McPherson Managing Director, e-Net Technology Limited Marshall Gibbs Chief Technology Officer and Executive Vice President Masood Jabaar Director Sam J.W. Romeo Director Mitchell J. Stein Director

Dates Referenced Herein   and   Documents Incorporated by Reference

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3/31/02310-K,  NT 10-K
3/31/01310-K,  NT 10-K
Filed on:5/23/00
5/15/0017S-1
For Period End:5/5/00
4/18/001
4/15/0022
2/10/0024
12/31/9981610QSB
3/31/991110KSB,  NTN 10K
1/1/9914
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