RESTRUCTURE AND SETTLEMENT AGREEMENT
------------------------------------
This Restructure and Settlement Agreement (the "Agreement"), dated as of
November 5, 2001 (the "Signing Date"), is entered into by and among MB SOFTWARE
CORPORATION, a Colorado corporation ("MBS"), HEALTHCARE INNOVATIONS, LLC, a
Arkansas limited liability company ("MBS Sub"), IMAGINE INVESTMENTS, INC., a
Delaware corporation ("Imagine"), and XHI2, INC., a Delaware corporation
("Imagine Sub").
RECITALS
--------
WHEREAS, Imagine is the legal and beneficial owner and holder (as assignee
of Stone Capital, Inc., a Delaware corporation ("Stone"), pursuant to that
certain assignment effective as of November 5, 2001 from Stone to Imagine) of
that certain Renewal Unsecured Promissory Note, dated July 15, 1998, issued by
MBS Sub originally payable to the order of Stone in the original principal
amount of $300,000.00, and bearing interest and requiring payment in accordance
with the terms set forth therein, for which all principal and accrued but unpaid
interest is past due and payable as of the Signing Date (the "$300,000 Note");
and
WHEREAS, Imagine is the legal and beneficial owner and holder of that
certain Promissory Note, dated August 1, 1997, issued by MBS payable to the
order of Imagine in the original principal amount of $500,000.00, and bearing
interest and requiring payment in accordance with the terms set forth therein,
for which all principal and accrued but unpaid interest is past due and payable
as of the Signing Date (the "$500,000 Note"); and
WHEREAS, Imagine is the legal record and beneficial owner and holder of an
aggregate of 340,000 shares of the issued and outstanding shares of the Series A
Senior Cumulative Convertible Participating Preferred Stock, par value $10.00
per share, of MBS, for which all accrued dividends are past due and payable as
of the Signing Date (the "MBS Preferred Shares"); and
WHEREAS, Imagine is the legal and beneficial owner and holder of that
certain Promissory Note, dated April 1, 1998, issued by MBS payable to the order
of Imagine in the original principal amount of $1,400,000.00, and bearing
interest and requiring payment in accordance with the terms set forth therein,
of which the principal amount was previously exchanged for the MBS Preferred
Shares by mutual agreement of MBS and Imagine, but for which all accrued but
unpaid interest is past due and payable as of the Signing Date (the "$1,400,000
Note") (the $300,000 Note, $500,000 Note, MBS Preferred Shares and $1,400,000
Note are sometimes referred to herein collectively as the "Imagine Exchanged
Assets"); and
WHEREAS, the authorized capital stock of MBS includes 150,000,000 shares of
common stock, par value $0.001 per share (the "MBS Common Shares"); and
WHEREAS, MBS Sub is the legal record and beneficial owner and holder of
100% of the issued and outstanding membership interests (the "NFPM Membership
Interests") of N.F.P.M., LLC, a Arkansas limited liability company that does
business in the State of Florida as North Florida Physical Medicine Associates
("NFPM"); and
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WHEREAS, MBS Sub is currently in default under the terms of the $300,000
Note, and MBS is currently in default under the terms of the $500,000 Note, MBS
Preferred Shares and $1,400,000 Note; and
WHEREAS, Imagine has made demand against MBS and MBS Sub with respect to
such defaults under the Imagine Exchanged Assets, but MBS and MBS Sub have
refused to pay and perform in response to such demand; and
WHEREAS, MBS and MBS Sub, on the one hand, and Imagine, on the other hand,
now mutually desire to resolve all claims between them with respect to the
Imagine Exchanged Assets, in order to avoid the expense and uncertainty of
litigation and to buy peace, upon the terms and subject to the conditions set
forth herein; and
WHEREAS, Imagine Sub is a wholly owned Subsidiary of Imagine and is
entering into this Agreement for the purposes of and in anticipation of taking
title to some or all of the MBS Common Shares and NFPM Membership Interests upon
the Closing (as defined in Section 2.1(a) hereof).
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties and covenants set forth in this Agreement, and the other good and
valuable consideration exchanged between the parties, the receipt and
sufficiency of which is hereby acknowledged, the parties intending to be legally
bound agree as follows:
ARTICLE I.
DEFINITIONS
-----------
1.1 Definitions. As used in this Agreement, the terms defined in Schedule 1.1
attached hereto have the meanings given to them therein (unless specifically
defined or the context clearly requires otherwise). Other terms may be defined
elsewhere herein and have the meanings so given to them.
ARTICLE II.
CLOSING; OBLIGATION TO CLOSE; TERMINATION
-----------------------------------------
2.1 Closing.
(a) Closing Date. Unless this Agreement shall have been terminated
pursuant to the provisions of Section 2.3(a) or Section 2.3(b) hereof, the
closing for the consummation of the Transaction (the "Closing") shall take place
at the offices of Munsch Hardt Kopf & Harr, P.C., located at 4000 Fountain
Place, 1445 Ross Avenue, Dallas, Texas 75202-2790, at 10:00 a.m., local time, as
soon as practicable (but, in any event, no later than the tenth day) after
Imagine and Imagine Sub receive notice (the "Closing Notice") from MBS and MBS
Sub, acting together, that (i) the Termination Trigger Condition under Section
2.2(a)(i) has been satisfied, and (ii) including a statement as to whether MBS
and MBS Sub reasonably believe that all the other Termination Trigger Conditions
under Section 2.2(a) can and will be satisfied at and as of the Closing, but
subject to Imagine and Imagine Sub receiving the Special Closing Deliveries (as
defined in Section 2.2(b) hereof) at the Closing, or on such other date and time
mutually agreed upon in writing by the parties. The date on which the Closing
actually occurs is referred to herein as the "Closing Date".
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(b) Effective Time. The Transaction shall be effective for Tax, accounting
and all other purposes as of 12:01 a.m., local time, on the Closing Date (the
"Effective Time"), unless otherwise mutually agreed upon in writing by the
parties. --------------
(c) Closing by Fax/Fed Ex. The parties may mutually agree to close the
Transaction via facsimile, with executed original Transaction Documents to be
sent to the appropriate party (or its legal counsel) via Federal Express (or
other nationally recognized guaranteed and receipted next day delivery service)
or local courier service.
(d) Effect of Failure to Close. Subject to the provisions of Section 2.3
hereof, failure to consummate the Transaction on the date contemplated by
Section 2.1(a) hereof will not result in the termination of this Agreement and
will not relieve any party of any obligation hereunder.
2.2 Obligation of Imagine and Imagine Sub to Close.
(a) Termination Trigger Conditions. The obligation of each of Imagine and
Imagine Sub to close on the Closing Date hereunder is subject to the existence
or satisfaction of the following conditions (any of which may, in such party's
sole discretion, be waived in writing) on and as of the Closing Date or such
other applicable date (the "Termination Trigger Conditions"):
(i) Requisite Approval. Within 180 days following the Signing Date,
the Requisite MBS Approval and Requisite MBS Sub Approval shall have been
obtained. Each of MBS and MBS Sub shall give Imagine and Imagine Sub notice
of each such approval on the next Business Day after such approval is
obtained;
(ii) Solvency. Each of MBS and MBS Sub shall be Solvent;
(iii)Special Representations and Warranties. The representations and
warranties made by MBS and MBS Sub in Article VI hereof (but not including
any of the Supplemental Representations and Warranties (as defined in
Section 9.9 hereof) unless specifically agreed otherwise in writing by the
parties hereto) shall be true and accurate on and as of the Closing Date
with the same effect as though such representations and warranties had been
made or given on and as of such date;
(iv) Ordinary Course of Business. The business of NFPM shall have only
been operated in the Ordinary Course of Business during the period between
the Signing Date and the Closing Date and NFPM shall not have entered into
or remained a party to any Contract with Dr. Ronald Dennie that is binding
on or enforeceable against NFPM following the Closing Date without
obtaining the prior written Consent of Imagine and Imagine Sub; and
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(v) Legal Matters. There must not have been entered against any of
MBS, MBS Sub, Imagine, Imagine Sub, or NFPM, or any of their respective
Subsidiaries or Affiliates, any judgment, order, writ, injunction, or
decree issued by any Governmental Entity that has the effect of preventing,
delaying, making illegal, or otherwise interfering with the consummation of
the Transaction.
(b) Special Closing Deliveries. If the Termination Trigger Conditions are
satisfied, at the Closing, MBS and MBS Sub shall deliver, or cause to be
delivered, the following items to Imagine and Imagine Sub (the "Special Closing
Deliveries"):
(i) Secretary's Certificates. The Secretary's Certificate of each of
MBS and MBS Sub, in the form attached hereto as Exhibit A, in the event of
a Closing under either Alternative Transaction A or Alternative Transaction
B;
(ii) Solvency Certificates. The Solvency Certificate of each of MBS
and MBS Sub, in the form attached hereto as Exhibit B, in the event of a
Closing under either Alternative Transaction A or Alternative Transaction
B;
(iii)Special Closing Certificates. The Special Closing Certificate of
each of MBS and MBS Sub, in the form attached hereto as Exhibit C, in the
event of a Closing under either Alternative Transaction A or Alternative
Transaction B;
(iv) Alternative Transaction A. In the event of a Closing under
Alternative Transaction A, in addition to all of the foregoing items: (A)
the written resignations of the officers and managers of NFPM effective as
of the Closing Date; (B) an assignment of membership interests, pursuant to
which Imagine or Imagine Sub, as the case may be, is admitted as the sole
member of NFPM; and (C) the stock certificate or certificates of MBS
representing the MBS Common Shares to be issued to Imagine or Imagine Sub,
as the case may be, hereunder; and
(v) Alternative Transaction B. In the event of a Closing under
Alternative Transaction B, in addition to any of the foregoing applicable
items, the stock certificate or certificates of MBS representing the MBS
Common Shares to be issued to Imagine or Imagine Sub, as the case may be,
hereunder.
2.3 Termination by Parties.
(a) Termination Events of Imagine and Imagine Sub. This Agreement may be
terminated by Imagine and Imagine Sub, acting together, by notice to MBS and MBS
Sub given prior to or at the Closing, if:
(i) The Closing has not occurred on or before the 195th day following
the Signing Date, unless mutually agreed otherwise by the parties;
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(ii) (A) The Termination Trigger Condition under Section 2.2(a)(i)
hereof has not been satisfied by the 195th day following the Signing Date
or, (B) the Closing Notice has not been received by the 180th day following
the Signing Date, or (C) satisfaction of any of the Termination Trigger
Conditions is or becomes impossible (other than as a result of some act or
failure to act by either Imagine or Imagine Sub); or
(iii)Imagine and Imagine Sub fail to receive any of the Special
Closing Deliveries at the Closing (other than as a result of some act or
failure to act by either Imagine or Imagine Sub).
(b) Termination Events of MBS and MBS Sub. This Agreement may be terminated
by MBS and MBS Sub, acting together, by notice to Imagine and Imagine Sub given
prior to or at the Closing, if the Closing has not occurred on or before the
195th day following the Signing Date, unless mutually agreed otherwise by the
parties.
(c) Effect of Termination. The rights of the parties to terminate under
Section 2.3(a) or Section 2.3(b) hereof, as the case may be, are in addition to
any other rights they may have under this Agreement or otherwise, and the
exercise of a right of termination will not be an election of remedies. If this
Agreement is terminated pursuant to either Section 2.3(a) or Section 2.3(b), all
further obligations of the parties under this Agreement will terminate, except
that the obligations in Section 9.2(c), Section 9.2(d), Section 13.2 and Section
13.9 of this Agreement will survive; provided, however, that if this Agreement
is terminated by Imagine and Imagine Sub, on the one hand, or MBS and MBS Sub,
on the other hand, because of the breach of this Agreement by the other party or
because one or more of the conditions to the terminating party's obligations
under this Agreement are not satisfied as a result of the other party's failure
to comply with its obligations under this Agreement, the terminating party's
right to pursue all remedies will survive such termination unimpaired.
ARTICLE III.
ALTERNATIVE TRANSACTION STRUCTURES
----------------------------------
3.1 Determination of Alternative Transaction Structure.
(a) Imagine and Imagine Sub Entitled to Terminate. In the event Imagine
and Imagine Sub are entitled to terminate this Agreement pursuant to Section
2.3(a) hereof, but elect not to for whatever reason, as determined in their sole
discretion, Imagine and Imagine Sub, acting together, shall make an election to
close under the terms and conditions of Alternative Transaction A or Alternative
Transaction B, by giving MBS and MBS Sub notice thereof (the "Election Notice")
(i) within five days after receiving the Closing Notice from MBS and MBS Sub, or
(ii) at any other time on or prior to the Closing Date.
(b) Imagine and Imagine Sub Not Entitled to Terminate. In the event
Imagine and Imagine Sub are not entitled to terminate this Agreement pursuant to
Section 2.3(a) hereof, but for whatever reason, as determined in their sole
discretion, do not want to close under the terms and conditions of Alternative
Transaction A, Imagine and Imagine Sub, acting together, shall give MBS and MBS
Sub notice thereof (the "Alternative Transaction B Notice") no less than five
days after receiving the Closing Notice. Imagine and Imagine Sub shall be
obligated to close under the terms and conditions of Alternative Transaction A
if they fail to timely give the Alternative Transaction B Notice.
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3.2 Terms and Conditions of Alternative Transaction Structures. The terms and
conditions of Alternative Transaction A are set forth in Article IV of this
Agreement ("Alternative Transaction A"), and the terms and conditions of
Alternative Transaction B are set forth in Article V of this Agreement
("Alternative Transaction B"). In addition to the terms and conditions set forth
in those Articles for each transaction structure, the parties shall be obligated
to comply with their other obligations under this Agreement, but the failure to
comply will not result in any party having a right to terminate this Agreement,
except for the limited termination rights of Imagine and Imagine Sub under
Section 2.3(a) hereof, and MBS and MBS under Section 2.3(b) hereof.
Notwithstanding the provisions of Article XII, the failure of any of the parties
to make the deliveries at Closing required thereby (other than those required
under Section 2.2(b) hereof) shall not affect the Closing or give any other
party the right to terminate this Agreement.
ARTICLE IV.
ALTERNATIVE TRANSACTION A
-------------------------
A Closing that occurs under Alternative Transaction A shall be upon and
subject to the following terms and conditions:
4.1 Exchanges, Transfers and Issuances. At the Effective Time, in exchange for
the Imagine Exchanged Assets, (a) MBS will issue 4,500,000 shares of the MBS
Common Shares to Imagine or Imagine Sub, as the case may be (subject to
appropriate adjustment for any reclassification, stock split, reverse stock
split, stock dividend, or other similar change in the capital structure of MBS
becoming effective between the Signing Date and Closing Date), and (b) MBS Sub
will transfer, convey and assign the NFPM Membership Interests to Imagine or
Imagine Sub, as the case may be.
4.2 Transfers Prior to Closing. At the request of and in accordance with the
instructions given by Imagine or Imagine Sub, MBS and MBS Sub shall, for the
purposes of and at any time prior to the Closing, transfer, assign and delegate
between themselves all or any portion of their respective rights and obligations
under or with respect to the MBS Common Shares and the NFPM Membership
Interests. Each of MBS and MBS Sub acknowledge that Imagine and Imagine Sub also
may, for the purposes of and at any time prior to the Closing, transfer, assign
and delegate between themselves all or any portion of their respective rights
and obligations under or with respect to any of the Imagine Exchanged Assets.
4.3 Exchange, Transfer and Issuance Procedures. To effect the exchanges,
transfers and issuances of debt and equity described in Section 4.1 hereof, (a)
MBS and MBS Sub will deliver to Imagine and Imagine Sub at the Closing the
various certificates, instruments and documents identified or referred to in
Section 2.2(b) and Section 12.1(a) hereof, and (b) Imagine and Imagine Sub will
deliver to MBS and MBS Sub at the Closing the various certificates, instruments
and documents identified or referred to in Section 12.3(a) hereof.
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4.4 Establishment of Holdback Fund. Notwithstanding any other provision hereof
to the contrary, at the Closing, an aggregate of 2,000,000 shares out of the
4,500,000 shares of MBS Common Shares to be issued to Imagine or Imagine Sub, as
the case may be, pursuant to Section 4.1 hereof (the "Holdback Shares") shall
not be issued to Imagine or Imagine Sub, as the case may be, but instead shall
be delivered to, and directly deposited with, any person willing to serve as
escrow agent that is acceptable to Imagine and Imagine Sub, in their sole
discretion, including without limitation, any of Imagine, Imagine Sub, or any
other their respective Affiliates or Subsidiaries (the "Escrow Agent"), in
escrow for the account and future potential benefit of Imagine or Imagine Sub,
as the case may be. The stock certificate representing the Holdback Shares shall
be registered as follows: "[Escrow Agent], f/b/o Imagine Investments, Inc. or
XHI2, Inc." All the Holdback Shares delivered to the Escrow Agent, together with
all subsequent dividends or distributions (whether cash, stock, or other
property) with respect to such shares (the "Additional Shares"), shall be held
in escrow and while deposited with the Escrow Agent are referred to herein
collectively as the "Holdback Fund". The Holdback Fund shall held by the Escrow
Agent subject to the provisions of an Escrow Agreement, which addresses the
release of the Holdback Fund in a manner consistent with the obligations of the
parties under the other provisions of this Agreement, requires Imagine and
Imagine Sub to execute and deposit with the Escrow Agent at least three stock
powers, duly executed in blank for transfer of the Holdback Shares on the
records of MBS, and that otherwise is in a mutually agreeable form and substance
(the "Escrow Agreement").
4.5 Post-Closing Transaction Consideration Adjustment; Release of Holdback Fund.
(a) Trigger Event; Sale of NFPM. To the extent that a sale of all the NFPM
Membership Interests is consummated by Imagine or Imagine Sub, as the case may
be, within 180 days following the Closing Date, Imagine or Imagine Sub, as the
case may be, shall either be entitled to retain or obligated to return to MBS
all or that certain number of the Holdback Shares, together with any Additional
Shares related thereto, in the Holdback Fund, as determined pursuant to the
following provisions:
(i) In the event the Net Sales Proceeds (as defined in Section 4.5(c)
hereof) equal or exceed $5,400,000, Imagine or Imagine Sub, as the case may
be, shall be obligated to return to MBS all of the Holdback Shares,
together with any Additional Shares related thereto, in the Holdback Fund.
(ii) In the event the Net Sales Proceeds are equal to or less than
$4,320,000.99, Imagine or Imagine Sub, as the case may be, shall be
entitled to retain all of the Holdback Shares, together with any Additional
Shares related thereto, in the Holdback Fund.
(iii)In the event the Net Sales Proceeds are greater than
$4,320,000.99, but less than $5,400,000, Imagine or Imagine Sub, as the
case may be, shall be entitled to retain the number of Holdback Shares, and
Imagine or Imagine Sub, as the case may be, shall be obligated to return to
MBS all of the other Holdback Shares, in each case together with any
Additional Shares related thereto in the Holdback Fund, as determined based
on the following schedule:
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Number of Holdback
Shares Imagine or Imagine Sub
Net Sales Proceeds Entitled to Retain Obligated to Return
- ------------------ ------------------ -------------------
From $4,320,001 to $4,440,000.99 1,800,000 200,000
From $4,440,001 to $4,560,000.99 1,600,000 400,000
From $4,560,001 to $4,680,000.99 1,400,000 600,000
From $4,680,001 to $4,800,000.99 1,200,000 800,000
From $4,800,001 to $4,920,000.99 1,000,000 1,000,000
From $4,920,001 to $5,040,000.99 800,000 1,200,000
From $5,040,001 to $5,160,000.99 600,000 1,400,000
From $5,160,001 to $5,280,000.99 400,000 1,600,000
From $5,280,001 to $5,399,999.99 200,000 1,800,000
(b) 50/50 Split of Excess Net Sales Proceeds. To the extent that a sale of
all the NFPM Membership Interests is consummated by Imagine or Imagine Sub, as
the case may be, within 180 days following the Closing Date, in addition to the
return of all of the Holdback Shares, together with any Additional Shares
related thereto, in the Holdback Fund as required by Section 4.5(a) hereof, in
the event the Net Sales Proceeds exceed $5,400,000, MBS will be entitled to
receive, and Imagine or Imagine Sub, as the case may be, shall be obligated to
pay to MBS, an amount equal to 50% of the Net Sales Proceeds in excess of
$5,400,000. Imagine or Imagine Sub, as the case may be, shall pay and deliver to
MBS any amount due under this Section 4.5(b) as and within 10 Business Days
after, Imagine or Imagine Sub, as the case may be, receives any of the Net Sales
Proceeds (whether in a lump sum or installments).
(c) Total Consideration Adjustment. Any return of Holdback Shares under
Section 4.5(a) hereof and any amount paid pursuant to Section 4.5(b) hereof,
shall be treated as a reduction in the aggregate transaction consideration paid
by MBS or MBS Sub, as the case may be, and received by Imagine or Imagine Sub,
as the case may be, hereunder.
(d) Net Sales Proceeds. As used in this Agreement, the term "Net Sales
Proceeds" means (i) the total consideration that is received, directly or
indirectly, by Imagine or Imagine Sub, as the case may be, as payment for the
acquisition of all the NFPM Membership Interests by a third party, less (ii) the
sum of (A) all indebtedness or other liabilities of NFPM not assumed by the
purchaser, (B) all costs and expenses, including fees of accountants, attorneys
and other advisors incurred by Imagine, Imagine Sub, or NFPM, as the case may
be, in connection with such transaction and (C) all fees or commissions paid to
brokers, finders, or investment bankers in connection with such transaction.
4.6 Valuation of Transaction Consideration. Within 60 days following the
Signing Date, Imagine shall prepare and deliver to MBS and MBS Sub a schedule
(the "Valuation/Allocation Schedule [Alternative Transaction A]") setting forth
Imagine's proposed relative fair market values and allocations of the aggregate
transaction consideration among the Imagine Exchanged Assets, MBS Common Shares
and NFPM Membership Interests involved in the Transaction for accounting, Tax
and all other purposes (which shall not be in violation of MBS' obligations
under applicable provisions of the Colorado Act), assuming that the Closing
would occur under Alternative Transaction A. In the event MBS and MBS Sub
disagree with the Valuation/Allocation Schedule [Alternative Transaction A], or
any part thereof, based solely on the good faith belief that Imagine's proposed
valuation and allocation (i) will not be as favorable to MBS or MBS Sub from a
Tax standpoint as an alternative valuation and allocation, or (ii) will violate
Pge 8
applicable provisions of the Colorado Act, MBS and MBS Sub, acting together,
shall give Imagine notice, within 15 days after the date on which the first of
MBS and MBS Sub received the Valuation/Allocation Schedule [Alternative
Transaction A], proposing the alternative valuation and allocation preferred by
MBS and MBS Sub from a Tax standpoint or under the Colorado Act. If MBS and MBS
Sub do not give notice within such 15-day period, the Valuation/Allocation
Schedule [Alternative Transaction A] as proposed by Imagine shall become final
and binding on MBS and MBS Sub. In the event the parties are unable to reach
agreement by negotiating in good faith within 30 days after Imagine and Imagine
Sub receive MBS and MBS Sub's proposed alternative valuation and allocation, the
disagreement shall be resolved as soon as practicable by the mediation and
binding arbitration provisions in Section 13.9 hereof. The final
Valuation/Allocation Schedule [Alternative Transaction A] shall be initialed by
the parties and attached hereto as Schedule 4.6 at the Closing. Unless mutually
agreed otherwise, no party will take any position on any Tax Return, upon
examination or audit of any Tax Return, in any claim for a Tax refund, or
otherwise that is consistent with the valuations and allocations set forth on
Schedule 4.6. Prior to the Closing, the Valuation/Allocation Schedule
[Alternative Transaction A] will be updated to the Closing Date as necessary to
reflect any payments on any of the Imagine Exchanged Assets and any additional
interest or dividends accruing between the date such schedule is prepared and
the Closing Date using the same methodology followed in preparing the initial
Schedule 4.6.
ARTICLE V.
ALTERNATIVE TRANSACTION B
-------------------------
A Closing that occurs under Alternative Transaction B shall be upon and
subject to the following terms and conditions:
5.1 Exchanges, Transfers and Issuances. At the Effective Time, in exchange for
the Imagine Exchanged Assets, MBS will issue 9,000,000 shares of the MBS Common
Shares to Imagine or Imagine Sub, as the case may be (subject to appropriate
adjustment for any reclassification, stock split, reverse stock split, stock
dividend, or other similar change in the capital structure of MBS becoming
effective between the Signing Date and Closing Date).
5.2 Transfers Prior to Closing. At the request of and in accordance with the
instructions given by Imagine or Imagine Sub, MBS and MBS Sub shall, for the
purposes of and at any time prior to the Closing, transfer, assign and delegate
between themselves all or any portion of their respective rights and obligations
under or with respect to the MBS Common Shares and the NFPM Membership
Interests. Each of MBS and MBS Sub acknowledge that Imagine and Imagine Sub also
may, for the purposes of and at any time prior to the Closing, transfer, assign
and delegate between themselves all or any portion of their respective rights
and obligations under or with respect to any of the Imagine Exchanged Assets.
5.3 Exchange, Transfer and Issuance Procedures. To effect the exchanges,
transfers and issuances of debt and equity described in Section 5.1 hereof, (a)
MBS and MBS Sub will deliver to Imagine and Imagine Sub at the Closing the
various certificates, instruments and documents identified or referred to in
Section 2.2(b) and Section 12.1(b) hereof, and (b) Imagine and Imagine Sub will
deliver to MBS and MBS Sub at the Closing the various certificates, instruments
and documents identified or referred to in Section 12.3(b) hereof.
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5.4 Valuation of Transaction Consideration. Within 60 days following the
Signing Date, Imagine shall prepare and deliver to MBS and MBS Sub a schedule
(the "Valuation/Allocation Schedule [Alternative Transaction B]") setting forth
Imagine's proposed relative fair market values and allocations of the aggregate
transaction consideration among the Imagine Exchanged Assets and MBS Common
Shares involved in the Transaction for accounting, Tax and all other purposes
(which shall not be in violation of MBS' obligations under applicable provisions
of the Colorado Act),, assuming that the Closing would occur under Alternative
Transaction B. In the event MBS and MBS Sub disagree with the
Valuation/Allocation Schedule [Alternative Transaction B], or any part thereof,
based solely on the good faith belief that Imagine's proposed valuation and
allocation (i) will not be as favorable to MBS or MBS Sub from a Tax standpoint
as an alternative valuation and allocation, or (ii) will violate applicable
provisions of the Colorado Act, MBS and MBS Sub, acting together, shall give
Imagine notice, within 15 days after the date on which the first of MBS and MBS
Sub received the Valuation/Allocation Schedule [Alternative Transaction B],
proposing the alternative valuation and allocation preferred by MBS and MBS Sub
from a Tax standpoint or under the Colorado Act. If MBS and MBS Sub do not give
notice within such 15-day period, the Valuation/Allocation Schedule [Alternative
Transaction B] as proposed by Imagine shall become final and binding on MBS and
MBS Sub. In the event the parties are unable to reach agreement by negotiating
in good faith within 30 days after Imagine and Imagine Sub receive MBS and MBS
Sub's proposed alternative valuation and allocation, the disagreement shall be
resolved as soon as practicable by the mediation and binding arbitration
provisions in Section 13.9 hereof. The final Valuation/Allocation Schedule
[Alternative Transaction B] shall be initialed by the parties and attached
hereto as Schedule 5.4 at the Closing. Unless mutually agreed otherwise, no
party will take any position on any Tax Return, upon examination or audit of any
Tax Return, in any claim for a Tax refund, or otherwise that is consistent with
the valuations and allocations set forth on Schedule 5.4. Prior to the Closing,
the Valuation/Allocation Schedule [Alternative Transaction B] will be updated to
the Closing Date as necessary to reflect any payments on any of the Imagine
Exchanged Assets and any additional interest or dividends accruing between the
date such schedule is prepared and the Closing Date using the same methodology
followed in preparing the initial Schedule 5.4.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF MBS AND MBS SUB
-------------------------------------------------
MBS and MBS Sub hereby, jointly and severally, represent and warrant to
Imagine and Imagine Sub that, except as disclosed in the disclosure schedule
attached hereto, which shall be arranged in paragraphs corresponding to the
numbered and lettered sections of this Article VI (the "MBS/MBS Sub Signing Date
Disclosure Schedule"), each of the following statements is true and accurate in
all respects on the Signing Date and will be true and accurate on and as of the
Closing Date:
REPRESENTATIONS AND WARRANTIES
------------------------------
REGARDING MBS AND MBS SUB
-------------------------
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6.1 Organization and Qualification of MBS and MBS Sub. MBS is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Colorado. MBS Sub is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Arkansas.
Each of MBS and MBS Sub has all requisite power and authority to own, lease and
operate its assets and properties and to carry on its business as it is now
being conducted and is duly qualified and in good standing to do business in
each jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its assets or properties makes such qualification
necessary, other than where the failure to be so duly qualified and in good
standing could not reasonably be expected to materially adversely affect the
ability of MBS or MBS Sub to close the Transaction or of Imagine and Imagine Sub
to receive the title to any of the MBS Common Shares or NFPM Membership
Interests required hereunder.
6.2 Authority of MBS and MBS Sub. Each of MBS and MBS Sub has full power, legal
right, capacity and authority to execute and deliver this Agreement and the
other Transaction Documents to which it is a party and to perform its
obligations under this Agreement and the other Transaction Documents to which it
is a party. The execution and delivery of this Agreement by each of MBS and MBS
Sub and the performance by each of MBS and MBS Sub of its obligations hereunder,
including the consummation of the Transaction, have been duly authorized by all
necessary corporate or limited liability company, as the case may be, action and
no other corporate or limited liability company, as the case may be, proceedings
on the part of either of MBS or MBS Sub are necessary to authorize this
Agreement or to consummate the Transaction, except for obtaining the Requisite
MBS Approval (other than of the directors, which has been obtained) and the
Requisite MBS Sub Approval (other than of the managers, which has been
obtained). Each of this Agreement and the other Transaction Documents to which
either of MBS or MBS Sub is a party has been, or upon Closing will then have
been, duly executed and delivered by such party and, assuming the due
authorization, execution and delivery hereof and thereof by the other parties
hereto and thereto, constitutes, or will upon Closing constitute, the legal,
valid and binding obligation of such party, enforceable against it in accordance
with its terms. Each of MBS and MBS Sub will take, or cause to be taken, all
action necessary to consummate the Transaction.
6.3 Capitalization of MBS and MBS Sub.
(a) The MBSS Common Shares to be issued to Imagine or Imagine Sub, as the
case may be, pursuant to this Agreement will be duly authorized, validly issued,
fully paid and nonassessable, and free of and clear of all Liens and preemptive
or similar rights in favor of any other person.
(b) There are no voting trusts or other Contracts to which any of MBS or
MBS Sub is a party with respect to the voting of the capital stock, membership
interests, or other equity interests of any of MBS or MBS Sub.
6.4 No Conflict; Required Filings and Consents for MBS or MBS Sub.
Page 11
(a) The execution and delivery of this Agreement by each of MBS and MBS
Sub does not, and the performance by each of MBS and MBS Sub of their respective
obligations hereunder, including consummation of the Transaction, will not,
require either of MBS or MBS Sub to obtain any Consent or order of, or to make
any filing with or notification to, any Governmental Entity, other than filings
under the Securities Act, Exchange Act, or as required by the National
Association of Securities Dealers, Inc. ("NASD"), and except where the failure
to obtain such Consents or orders, or to make such filings or notifications
could not reasonably be expected to cause a MBS/MBS Sub Material Adverse Effect
or to prevent the any of MBS or MBS Sub from performing its respective
obligations under this Agreement.
(b) Assuming that all Consents contemplated by the exceptions to Section
6.4(a) hereof are obtained or made, as the case may be, the execution and
delivery of this Agreement by each of MBS and MBS Sub does not, and the
performance by each of MBS and MBS Sub of their respective obligations
hereunder, including consummation of the Transaction, will not (i) conflict with
or violate the MBS Organizational Documents or MBS Sub Organizational Documents,
(ii) conflict with or violate any applicable Legal Requirement, or any judgment,
order, or decree applicable to either of MBS or MBS Sub or by or to which any of
their respective assets or properties is bound or subject, or (iii) result in
any breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration, or cancellation of, or require payment
under, or result in the creation of a Lien on any of the assets or properties of
any of MBS or MBS Sub pursuant to, any Contract or Governmental Authorization to
which any of MBS or MBS Sub is a party or by or to which any of MBS or MBS Sub
or any of their respective assets or properties is bound or subject.
REPRESENTATIONS AND WARRANTIES REGARDING NFPM
---------------------------------------------
6.5 Organization and Qualification of NFPM. NFPM is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Arkansas. NFPM has all requisite power and authority to own, lease and
operate its assets and properties and to carry on its business as it is now
being conducted and is duly qualified and in good standing to do business in the
State of Florida and each other jurisdiction in which the nature of the business
conducted by it or the ownership or leasing of its assets or properties makes
such qualification necessary, other than where the failure to be so duly
qualified and in good standing could not reasonably be expected to have a NFPM
Material Adverse Effect. NFPM does not have any Subsidiaries or own capital
stock or any other equity interests of any corporation, partnership, joint
venture, limited liability company or other person.
6.6 Organizational Documents of NFPM. MBS and MBS Sub have delivered to Imagine
and Imagine Sub true, accurate and complete copies of the NFPM Organizational
Documents, each as amended through and in effect on the Signing Date. NFPM is
not in breach, default, or other violation of any of the provisions of its NFPM
Organizational Documents. To the knowledge of MBS or MBS Sub, no officer,
manager, or other person is in breach, default, or violation of any of the
provisions of the NFPM Organizational Documents. The officers and managers of
NFPM in office on the Signing Date, and the title and term of office thereof,
are listed in Section 6.6 of the MBS/MBS Sub Signing Date Disclosure Schedule,
and each such officer and manager was duly elected or appointed in full
compliance with the NFPM Organizational Documents and any applicable Legal
Requirements.
6.7 Capitalization of NFPM.
Page 12
(a) The authorized equity interests of MBS Sub consist of one class of
membership interests. All 100% of the issued and outstanding membership
interests of NFPM are owned and held legally of record and beneficially by MBS
Sub.
(b) All of the issued membership interests of NFPM have been duly
authorized, validly issued and fully paid and nonassessable, and have not been
issued in violation of the Securities Act or any similar Legal Requirements, or
in violation of (nor are any of the authorized equity interests of NFPM subject
to) any preemptive or similar rights created by applicable Legal Requirements or
the NFPM Organizational Documents, or any agreement to which NFPM is a party or
is bound, and all such issued membership interests of NFPM are owned free and
clear of all Liens, other than any such restrictions on transfer set forth in
the Operating Agreement.
(c) The NFPM Membership Interests to be transferred to Imagine or Imagine
Sub, as the case may be, pursuant to this Agreement will be duly authorized,
validly issued, fully paid and nonassessable, and free of and clear of all Liens
and preemptive or similar rights in favor of any third party.
(d) There are no voting trusts or other Contracts to which any of MBS, MBS
Sub, or NFPM is a party with respect to the voting of the membership interests
of NFPM.
(e) No bonds, debentures, notes, or other indebtedness of NFPM having the
right to vote (or convertible into or exchangeable or exercisable for equity
interests having the right to vote) on any matters on which members of NFPM may
vote (the "NFPM Voting Debt") are issued or outstanding.
(f) Other than pursuant to the provisions of the Operating Agreement,
there are no options, warrants or other rights (including, but not limited to,
registration rights), agreements, arrangements or commitments of any character
to which NFPM is a party relating to the issued or unissued membership interests
or other equity interests of NFPM or obligating NFPM to grant, issue, or sell
any membership interests, NFPM Voting Debt, or other equity interests of NFPM.
(g) There are no obligations, contingent or otherwise, of NFPM (i) to
repurchase, redeem, or otherwise acquire any membership interests or other
equity interests of NFPM, or (ii) (other than advances to wholly owned
Subsidiaries, if any, in the ordinary course of business) to provide funds to,
or to make any investment in (in the form of a loan, capital contribution, or
otherwise), or to provide any guarantee with respect to the obligations of, any
Subsidiary of NFPM or any other person.
(h) NFPM (i) does not directly or indirectly own, (ii) has not agreed to
purchase or otherwise acquire, and (iii) does not hold any interest convertible
into or exchangeable or exercisable for, any membership interests or other
equity interest of any corporation, partnership, joint venture, limited
liability company, or other person.
Page 13
(i) Except for any Contracts between NFPM and its wholly owned
Subsidiaries, if any, or between such wholly owned Subsidiaries, there are no
Contracts of any character (contingent or otherwise) pursuant to which any
person is or may be entitled to receive any payment based on, or calculated in
accordance with, the revenues or earnings of NFPM or any of its Subsidiaries.
(j) There are no voting trusts, proxies, or other Contracts to which NFPM
is a party or by which NFPM is bound with respect to the voting of any shares of
capital stock or other equity interests of NFPM.
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES OF IMAGINE AND IMAGINE SUB
---------------------------------------------------------
Imagine and Imagine Sub hereby, jointly and severally, represent and
warrant to MBS and MBS Sub that, except as disclosed in the disclosure schedule
attached hereto, which shall be arranged in paragraphs corresponding to the
numbered and lettered sections of this Article VII (the "Imagine/Imagine Sub
Signing Date Disclosure Schedule"), each of the following statements is true and
accurate in all respects on the Signing Date and will be true and accurate on
and as of the Closing Date:
7.1 Organization and Qualification of Imagine and Imagine Sub. Imagine is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Imagine Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each of
Imagine and Imagine Sub has all requisite power and authority to own, lease and
operate its assets and properties and to carry on its business as it is now
being conducted and is duly qualified and in good standing to do business in
each jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its assets or properties makes such qualification
necessary, other than where the failure to be so duly qualified and in good
standing could not reasonably be expected to have a Imagine/Imagine Sub Material
Adverse Effect. Imagine and Imagine Sub have delivered to MBS and MBS Sub true,
accurate and complete copies of the Articles of Incorporation and Bylaws (or
equivalent organizational documents) of each of Imagine and Imagine Sub, each as
amended through and in effect on the Signing Date.
7.2 Authority of Imagine and Imagine Sub. Each of Imagine and Imagine Sub has
full power, legal right, capacity and authority to execute and deliver this
Agreement and the other Transaction Documents to which it is a party and to
perform its obligations under this Agreement and the other Transaction Documents
to which it is a party. The execution and delivery of this Agreement by each of
Imagine and Imagine Sub and the performance by each of Imagine and Imagine Sub
of its obligations hereunder, including the consummation of the Transaction,
have been duly authorized by all necessary corporate action and no other
corporate proceedings on the part of either of Imagine or Imagine Sub are
necessary to authorize this Agreement or to consummate the Transaction. Each of
this Agreement and the other Transaction Documents to which either of Imagine or
Imagine Sub is a party has been, or upon Closing will then have been, duly
executed and delivered by such party and, assuming the due authorization,
execution and delivery hereof and thereof by the other parties hereto and
thereto, constitutes, or will upon Closing constitute, the legal, valid and
binding obligation of such party, enforceable against it in accordance with its
terms. Each of Imagine and Imagine Sub will take, or cause to be taken, all
action necessary to consummate the Transaction.
Page 14
7.3 Certain Securities Law Matters for Imagine and Imagine Sub.
(a) Each of Imagine and Imagine Sub, either alone or with his purchaser
representative as defined in Rule 501(h) under the Securities Act, if any, has
substantial experience in evaluating and investing in private placement
transactions so that such party is capable of evaluating the merits and risks of
its investment in the MBS Common Shares. Each of Imagine and Imagine Sub, by
reason of such party's business or financial experience, either alone or with
its purchaser representative, if any, has the capacity to protect such party's
own interests in connection with his acquisition of the MBS Common Shares
hereunder. Each of Imagine or Imagine Sub who has designated itself (i) as an
"accredited investor" on the signature page hereto is an "accredited investor"
as defined in Rule 501 of Regulation D promulgated pursuant to the Securities
Act or (ii) as a "nonaccredited investor" is not an "accredited investor" and,
either alone or with its purchaser representative, has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of the Transaction. MBS has provided each of Imagine and
Imagine Sub or its purchaser representative, if any, with copies of the MBS SEC
Reports. Each of Imagine and Imagine Sub, or its purchaser representative, if
any, is familiar with the business and financial condition, properties,
operations and prospects of MBS and has had an opportunity to discuss MBS'
business and financial condition, properties, operations and prospects with MBS'
management. Each of Imagine and Imagine Sub, or its purchaser representative, if
any, has also had an opportunity to ask questions of officers of MBS, which
questions were answered to such party's satisfaction. Each of Imagine and
Imagine Sub understands that such discussion was intended to describe certain
aspects of MBS' business and financial condition, properties, operations, and
prospects, but were not a thorough or exhaustive description.
(b) Each of Imagine and Imagine Sub understands that the MBS Common Shares
have not been registered under the Securities Act or the securities laws of
Texas or any other state and may be "restricted securities" under the applicable
federal securities laws, and that the Securities Act and the rules of the United
States Securities and Exchange Commission (the "SEC") provide in substance that
such party may dispose of the MBS Common Shares only pursuant to an effective
registration statement under the Securities Act or an exemption therefrom, and
each of Imagine and Imagine Sub further understand that, except to the limited
extent provided in this Section below, MBS has no obligation or intention to
register the MBS Common Shares, or to take action so as to permit sales pursuant
to the Securities Act (including Rule 144) thereunder which permits limited
resales of shares purchased in a private placement subject to the satisfaction
of certain conditions, including, among other things, the existence of a public
market for the shares, the availability of certain current public information
about the issue, the resale occurring not less than one year after a party has
purchased and paid for the security to be sold, the sale being effected through
a "broker's transaction" or in transactions with a "market maker" and the number
of shares being sold not exceeding specified limitations. Accordingly, Imagine
and Imagine Sub understand that under the SEC's rules, Imagine and Imagine Sub
may dispose of the MBS Common Shares in transactions, which are exempt from
registration under the Securities Act. As a consequence of all of the foregoing,
each of Imagine and Imagine Sub understands that it must bear the economic risk
of the investment in the MBS Common Shares for an indefinite period of time.
Each of MBS and MBS Sub understands that a restrictive legend will be placed on
the certificates representing the MBS Common Shares containing substantially the
following language:
Page 15
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED ("ACT") OR THE SECURITIES LAWS OF ANY
STATE. WITHOUT SUCH REGISTRATION, THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED, ASSIGNED, DONATED, PLEDGED, HYPOTHECATED, OR OTHERWISE
DISPOSED OF, UNLESS A LEGAL OPINION ACCEPTABLE TO THE ISSUER AND ITS COUNSEL
THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT OR ANY APPLICABLE STATE
SECURITIES LAWS IS PROVIDED TO AND APPROVED BY THE ISSUER PRIOR TO ANY ATTEMPTED
DISPOSITION.
(c) Notwithstanding the foregoing, MBS agrees that:
(i) For so long as and to the extent necessary to permit Imagine and
Imagine Sub to sell the MBS Common Shares pursuant to Rules 144 or 145
promulgated under the Securities Act, MBS shall (a) use its best efforts to (x)
file on a timely basis all reports, data and other information required to be
filed with the SEC by it pursuant to the Exchange Act, and (y) to furnish
Imagine and Imagine Sub upon request a written statement confirming that MBS has
complied with such reporting requirements during the 12 months preceding any
proposed sale of the MBS Common Shares by either of Imagine or Imagine Sub under
Rules 144 or 145. MBS has filed all reports, data and other information required
to be filed with the SEC by it under the Exchange Act during the 12 months
preceding the Signing Date.
(ii) The legends set forth on the certificates representing the MBS
Common Shares shall be removed by delivery of substitute certificates without
such legend, if such legend is not required for purposes of the Securities Act
or this Agreement. It is agreed that such restrictive legends and related stop
orders will be removed if (x) MBS has received either a written opinion of
counsel, which such counsel and opinion shall be reasonably satisfactory to MBS,
or a "no action" letter obtained from the SEC, to the effect that the MBS Common
Shares subject thereto may be transferred free of the restrictions imposed by
Rules 144 or 145, or (y) in the event of a sale of the MBS Common Shares which
has been registered under the Securities Act or made in conformity with the
provisions of Rules 144 or 145.
ARTICLE VIII.
COVENANTS OF MBS AND MBS SUB
----------------------------
8.1 Negative Covenants. Each of MBS and MBS Sub covenant and agree that, prior
to the Closing Date, it will not:
(a) take any action that reasonably could be expected to result in (i) any
of the representations and warranties of such party set forth in Article VI
hereof becoming untrue or (ii) any of the conditions set forth in Section 2.2(a)
hereof not being satisfied; or
(b) without obtaining the prior written Consent of Imagine and Imagine
Sub, as determined in their sole discretion, enter into any Contract with
respect to a Competing Transaction, consummate any Competing Transaction, or
agree in writing or otherwise to do any of the foregoing. Upon request from time
to time, MBS and MBS Sub will furnish Imagine and Imagine Sub with a summary of
any negotiations taking place with respect to a Competing Transaction.
Page 16
8.2 Negative Covenants About MBS. Except as expressly contemplated hereby or
otherwise consented to in writing by Imagine and Imagine Sub, from the Signing
Date until the Closing Date, MBS will not do any of the following:
(a) amend any of the material terms or provisions of the MBS Common
Shares;
(b) knowingly take any action that would result in the failure of the MBS
Common Shares to be eligible for trading on the NASDAQ (OTCBB) or any other
nationally recognized stock market;
(c) propose to adopt any amendments to any of the MBS Organizational
Documents that would have an adverse effect on the consummation of the
Transaction; or
(d) agree in writing or otherwise to do any of the foregoing.
ARTICLE IX.
ADDITIONAL COVENANTS AND AGREEMENTS
-----------------------------------
9.1 Notification of Certain Matters. Each of MBS and MBS Sub shall give prompt
notice to Imagine and Imagine Sub, orally and in writing, of (i) the occurrence,
or failure to occur, of any event which occurrence or failure would be likely to
cause any representation or warranty of the party giving such notice contained
in this Agreement to be untrue or inaccurate at any time from the Signing Date
to the Closing Date, (ii) any material failure of the party giving such notice
to comply with or satisfy any covenant, condition, or agreement to be complied
with or satisfied by such person hereunder within the time specified therefor,
and (iii) any change or event having, or which, insofar as can be reasonably
foreseen, could have, a material adverse effect on the financial condition,
results of operations, business, or prospects of any of MBS, MBS Sub, or NFPM.
9.2 Access and Information. Between the Signing Date and the Closing Date:
(a) MBS and MBS Sub shall cause NFPM to, (i) afford to Imagine and Imagine
Sub and its officers, directors, employees, accountants, consultants, legal
counsel, agents and other representatives (collectively, the "Imagine/Imagine
Sub Representatives") access during ordinary business hours and at other
reasonable times, upon reasonable prior notice, to the officers, employees,
accountants, agents, properties, offices and other facilities of NFPM and to the
books and records thereof, and (ii) furnish promptly to Imagine and Imagine Sub
and the Imagine/Imagine Sub Representatives such information concerning the
business, properties, contracts, records, and personnel of NFPM (including,
without limitation, financial, operating and other data and information) as may
be reasonably requested, from time to time, by Imagine, Imagine Sub, or any of
the Imagine/Imagine Sub Representatives.
Page 17
(b) Notwithstanding the provisions of Section 9.2(a) hereof, none of MBS,
MBS Sub, or NFPM shall be required to grant access or furnish information to any
of Imagine, Imagine Sub, or the Imagine/Imagine Sub Representatives to the
extent that such access or the furnishing of such information is prohibited by
applicable Legal Requirements or Contract. No investigation by the parties
hereto made heretofore or hereafter shall affect the representations and
warranties of the parties that are contained herein and each such representation
and warranty shall survive such investigation.
(c) Each party to this Agreement shall hold in confidence and not
disclose, except on a "need to know" basis to its respective representatives all
nonpublic information received from the other party to this Agreement (the
"Confidential Information") until such time as such Confidential Information is
otherwise publicly available and, if this Agreement is terminated, each party
will deliver to the other party all documents, work papers and other materials
(including copies) obtained by such party or on its behalf from another party as
a result of this Agreement or in connection herewith, whether so obtained before
or after the execution hereof. The foregoing obligations of confidentiality and
nondisclosure shall be effective for a period of 2 years after such termination;
provided that such obligations of Imagine and Imagine Sub shall terminate at the
Closing.
(d) In the event that a party, or anyone to whom it supplies Confidential
Information, receives a request to disclose all or any part of the Confidential
Information under the terms of a subpoena or order issued by a Governmental
Entity, the party agrees (i) to notify the other party immediately of the
existence, terms and circumstances surrounding such request, (ii) to consult
with the other party on the advisability of taking legally available steps to
resist or narrow such request, and (iii) if disclosure of such Confidential
Information is required to prevent a party from being held in contempt or
subject to other penalty, to furnish only such portion of the Confidential
Information as the disclosing party is legally compelled to disclose and to
exercise its best efforts to obtain an order or other reliable assurance that
confidential treatment will be accorded to the disclosed Confidential
Information.
9.3 Appropriate Action; Consents; Filings.
(a) Each of MBS and MBS Sub, on the one hand, and Imagine and Imagine Sub,
on the other hand, shall use, and shall cause each of their respective
Subsidiaries to use, all reasonable efforts promptly (i) to take, or cause to be
taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable under applicable Legal Requirements or otherwise
to consummate and make effective the Transaction, (ii) to obtain from any
Governmental Entity any Consents or Governmental Authorizations required to be
obtained by any of MBS, MBS Sub, NFPM, Imagine, or Imagine Sub, in connection
with the authorization, execution, delivery and performance of this Agreement
and the consummation of the Transaction, (iii) to make all necessary filings,
and thereafter make any other required submissions, with respect to this
Agreement required under (A) the Securities Act and the Exchange Act and the
rules and regulations thereunder, and any other applicable federal or state
securities laws, and (B) any other applicable Legal Requirement; provided that
MBS and MBS Sub, on the one hand, and Imagine and Imagine Sub, on the other
hand, shall cooperate with each other in connection with the making of all such
filings, including providing copies of all such documents to the nonfiling party
and its advisors prior to filing and, if requested, shall accept all reasonable
additions, deletions or changes suggested in connection therewith. Each of the
parties shall promptly furnish all information required for any application or
other filing to be made pursuant to the rules and regulations of any applicable
Legal Requirements in connection with the Transaction.
Page 18
(b) Each of Imagine and Imagine Sub, on the one hand, and MBS and MBS Sub,
on the other hand, agree, and MBS shall cause NFPM, to cooperate and to use all
reasonable efforts to contest and resist any action, including legislative,
administrative or judicial action, and to have vacated, lifted, reversed, or
overturned any decree, judgment, injunction or other order (whether temporary,
preliminary or permanent) (an "Order") that is in effect and that restricts,
prevents or prohibits the consummation of the Transaction, including, without
limitation, by vigorously pursuing all available avenues of administrative and
judicial appeal and all available legislative action. Each of Imagine and
Imagine Sub, on the one hand, and MBS and MBS Sub, on the other hand, also agree
to take any and all reasonable actions, including, without limitation, the
disposition of assets or the withdrawal from doing business in particular
jurisdictions, required by regulatory authorities as a condition to the granting
of any approvals required in order to permit the consummation of the
transactions contemplated hereby or as may be required to avoid, lift, vacate,
or reverse any legislative or judicial action that would otherwise cause any
condition to the transactions contemplated hereby not to be satisfied; provided,
however, that in no event shall any party take, or be required to take, any
action that could reasonably be expected to have a MBS/MBS Sub Material Adverse
Effect, NFPM Material Adverse Effect, or Imagine/Imagine Sub Material Adverse
Effect, as the case may be.
(c) Each of Imagine and Imagine Sub, on the one hand, and MBS and MBS Sub,
on the other hand, agree, and MBS shall cause NFPM, to give, any notices
regarding the Transaction to third parties required by applicable Legal
Requirements or by any Contract to which such person is a party or by which such
person is bound, and use (and cause such other specified persons to use) all
reasonable efforts to obtain any third party Consents (i) necessary, proper, or
advisable to consummate the Transaction, (ii) otherwise required under any
Contracts in connection with the consummation of the transactions contemplated
hereby, or (iii) required to prevent a MBS/MBS Sub Material Adverse Effect, NFPM
Material Adverse Effect, or Imagine/Imagine Sub Material Adverse Effect, as the
case may be, from occurring after the Closing Date.
(d) If any party shall fail to obtain any third party Consent described in
clause (i) of Section 9.3 (c) hereof, such party shall use all reasonable
efforts, and shall take any such actions reasonably requested by the other
parties, to limit the adverse effect upon any of MBS, MBS Sub, NFPM, Imagine and
Imagine Sub, and their respective businesses resulting, or which could
reasonably be expected to result after the Closing Date, from the failure to
obtain such Consent.
9.4 Public Announcements. Each of MBS and Imagine shall consult with each other
before issuing any press release or otherwise making any public statements with
respect to this Agreement or the Transaction and shall not issue any such press
release or make any such public statement prior to such consultation; provided,
however, that a party may, without consulting with the other party, issue such a
press release or make such a public statement if required by applicable Legal
Requirements or the rules of the NASDAQ or other national securities exchange if
such party has used commercially reasonable efforts to consult with the other
party but has been unable to do so in a timely manner.
9.5 Information for Tax Returns. From and after the Closing, each of MBS and
MBS Sub shall cooperate with Imagine, Imagine Sub and NFPM by providing and
granting access, promptly upon request, to such records, documents and other
information regarding NFPM as any of Imagine, Imagine Sub, or NFPM may
reasonably request from time to time, in connection with the preparation or
audit of any Tax Returns of NFPM, Imagine, or Imagine Sub, and for audits,
disputes, refund claims, or litigation or other proceedings relating thereto.
9.6 Disclaimer of Fiduciary Obligations. Without waiving any of the
representations or warranties made hereunder, MBS and MBS Sub, on the one hand,
and Imagine and Imagine Sub, on the other hand, agree that, (a) with respect to
the Transaction, each is an independent party, and (b) each is an experienced
and sophisticated business person, and is relying on its own representatives in
determining to enter into and consummate the contemplated Transaction. The
relationship between the parties in the contemplated transactions as buyer and
seller shall not create fiduciary obligations with respect to each other for the
purposes of the Transaction.
9.7 MBS Shareholder Approval. No later than 150 days following the Signing
Date, MBS shall submit this Agreement and the Transaction for approval of no
less than the number of shareholders of MBS, either by written consent or at a
meeting of the shareholders, who are required to approve the Transaction under
the applicable provisions of the Colorado Act and the MBS Organizational
Documents. MBS shall, through its Board of Directors, recommend to the
shareholders of MBS approval of this Agreement and the Transaction.
9.8 Supplemental Representations and Warranties. During the 60 days immediately
following the Signing Date, each of MBS and MBS Sub, on the one hand, and
Imagine and Imagine Sub, on the other hand, shall negotiate in good faith and
prepare a mutually agreed upon amendment to this Agreement (the "Representation
and Warranty Amendment") supplementing, but not being a part of, the
representations and warranties made by the parties under Article VI or Article
VII hereof, as the case may be, to include the additional representations and
warranties that are customarily made by buyers and sellers in transactions of
this type (the "Supplemental Representations and Warranties"). In connection
with the Representation and Warranty Amendment, MBS and MBS Sub, on the one
hand, and Imagine and Imagine Sub, on the other hand, may prepare and deliver to
the other party a disclosure schedule, arranged in paragraphs corresponding to
the numbered and lettered sections of the Representation and Warranty Amendment,
disclosing any necessary exceptions to the Supplemental Representations and
Warranties, any of which such exceptions shall be subject to the approval of the
other party, in its sole discretion.
9.9 Other Transaction Documents. During the 60 days immediately following the
Signing Date, each of MBS and MBS Sub, on the one hand, and Imagine and Imagine
Sub, on the other hand, shall negotiate in good faith and prepare the Escrow
Agreement, Management Agreement Physician Agreement and any other Transaction
Documents required hereby.
ARTICLE X.
NONDISCLOSURE, NONCOMPETION AND NONSOLICITATION COVENANTS
---------------------------------------------------------
MBS and MBS Sub, on the one hand, and Imagine and Imagine Sub, on the other
hand, covenant and agree as follows:
Page 20
10.1 Statement of Enforceability. Each of MBS and MBS Sub acknowledges that this
Article X is entered into in conjunction with the sale of a business and,
therefore, is fully enforceable as written under Tex. Bus. Comm. Code ss.15.50
and other applicable Legal Requirements. Each of MBS and MBS Sub further
acknowledge that the provisions in this Article X are conditions precedent and
material inducements to Imagine and Imagine Sub entering into this Agreement and
consummating the Transaction.
10.2 Nondisclosure Covenant.
(a) Each of MBS and MBS Sub acknowledges that it has occupied a position
of trust and confidence with NFPM prior to the date of this Agreement and has
become familiar with the following, any and all of which constitute confidential
information of NFPM (collectively, the "NFPM Confidential Information"): (i) any
and all trade secrets concerning the business and affairs of NFPM, product
specifications, data, know-how, formulae, compositions, processes, designs,
sketches, photographs, graphs, drawings, samples, inventions and ideas, past,
current and planned research and development, current and planned manufacturing
and distribution methods and processes, customer lists, current and anticipated
customer requirements, price lists, market studies, business plans, computer
software and programs (including object code and source code), computer software
and database technologies, systems, structures and architectures (and related
processes, formulae, compositions, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information, of NFPM and any
other information, however documented, of NFPM that is a trade secret or
proprietary; (ii) any and all information concerning the business and affairs of
NFPM (which includes historical financial statements, financial projections and
budgets, historical and projected sales, capital spending budgets and plans, the
names and backgrounds of key personnel, and personnel training and techniques
and materials, however documented; and (iii) any and all notes, analysis,
compilations, studies, summaries, and other material prepared by or for NFPM
containing or based, in whole or in part, on any information included in the
foregoing.
(b) Each of MBS and MBS Sub acknowledges and agrees that all NFPM
Confidential Information known or obtained by MBS or MBS Sub, whether before or
after the date of this Agreement, is the property of NFPM. Therefore, each of
MBS and MBS Sub agrees that such party will not, at any time, disclose to any
unauthorized persons or use for his own account or for the benefit of any third
party any NFPM Confidential Information, whether such party has such information
in its memory or embodied in writing or other physical form, without the prior
written consent of Imagine and Imagine Sub, unless and to the extent that the
NFPM Confidential Information is or becomes generally known to and available for
use by the public other than as a result of the fault of MBS or MBS Sub or the
fault of any other person bound by a duty of confidentiality to Imagine, Imagine
Sub, or NFPM. Each of MBS and MBS Sub agrees to deliver to Imagine and Imagine
Sub at the Closing, and at any other time Imagine or Imagine Sub may request,
all documents, memoranda, notes, plans, records, reports, and other
documentation, models, components, devices, or computer software, whether
embodied in a disk or in other form (and all copies of all of the foregoing),
relating to the businesses, operations, or affairs of NFPM and any other NFPM
Confidential Information that either of MBS or MBS Sub may then possess or have
under its control.
Page 21
10.3 Noncompetition Covenant.
(a) Each of MBS and MBS Sub agrees that, during the period beginning on
the Closing Date and continuing for a period of 5 years thereafter (the
"Restricted Period"), it will not, and will not permit any Subsidiary or
Affiliate to, for itself or any other person, directly or indirectly, either as
an employee, employer, independent contractor, consultant, agent, principal,
owner, partner, shareholder, member, manager, officer, director, or in any other
individual or representative capacity (collectively, the "Restricted Capacity"),
own, manage, operate, work for, consult with, advise, control, finance, guaranty
the performance of, or otherwise engage or participate in any manner whatsoever,
in any business or other activities that in any manner whatsoever are in
competition with the business of owning and operating a medical practice and
related facilities (the "Restricted Business"), including, but not limited to,
by conducting or attempting to engage in business with or soliciting or
diverting or attempting to solicit or divert away from Imagine or Imagine Sub
the business of any of the clients or customers either of MBS, MBS Sub, or NFPM
had engaged in any of the Restricted Business with prior to the Closing Date or
which Imagine, Imagine Sub, or NFPM engages in any of the Restricted Business
with during the Restricted Period (the "Restricted Activity"), anywhere in the
geographic area of Duvall County, Florida (the "Restricted Territory"), except
on behalf of Imagine, Imagine Sub, or NFPM in providing management services
pursuant to the Management Agreement.
(b) For purposes of this Section 10.3, a person shall be deemed to be
engaged or participating in business or other activities "in" the Restricted
Territory, in addition to other activities that would constitute being engaged
or participating in business or other activities, if such person uses any
telecommunication equipment or device (including without limitation any
telephone, modem, the Internet, any intranet or extranet, a cellular telephone
device, or any pager or satellite communication device) located in the
Restricted Territory to communicate with any other person, whether such other
person is located inside the Restricted Territory or outside the Restricted
Territory or any such equipment located outside the Restricted Territory to
communicate with any person located inside the Restricted Territory.
(c) Notwithstanding the preceding restrictions, Imagine and Imagine Sub
agree that either of MBS or MBS Sub may, without violating the provisions of
Section 10.3(a) hereof, invest in the securities of any enterprise (without
otherwise participating in the activities of such enterprise) if (y) such
securities are listed on any national or regional securities exchange or have
been registered under Section 12(g) of the Exchange Act, and (z) such Seller
does not beneficially own (as defined by Rule 13d-3 promulgated under the
Exchange Act) in excess of 1% of the outstanding equity securities of such
enterprise.
Page 22
10.4 Nonsolicitation Covenant. Each of MBS and MBS Sub agree that, during the
Restricted Period (except for employment advertisements which are placed for
general circulation), it will not, and will not permit, any of its Subsidiaries
or Affiliates, for itself or any other person, to directly or indirectly, (w)
induce or attempt to induce any former employee of MBS, MBS Sub, or NFPM in the
Business who is hired by Imagine, Imagine Sub, or NFPM in connection with the
Transaction to leave the employ of any of Imagine, Imagine Sub, or NFPM to
engage or participate in any Restricted Activity, (x) in any way interfere with
the relationship between any of Imagine, Imagine Sub, or NFPM and any such
employee of any of them, (y) employ, or otherwise engage as an employee,
independent contractor or otherwise, any employee of any of Imagine, Imagine
Sub, or NFPM, or (z) induce or attempt to induce any client, customer, supplier,
vendor, licensee or business relation of any of Imagine, Imagine Sub, or NFPM to
cease doing business with any of them, or in any way interfere with the
relationship between any client, customer, supplier, vendor, licensee, or
business relation of any of Imagine, Imagine Sub, or NFPM.
10.5 Mutual Nondisparagement Covenant. Neither MBS nor MBS Sub, on the one hand,
or Imagine or Imagine Sub, on the other hand, will, or encourage any of their
respective members, managers, officers, directors, employees, or agents to, at
any time during or after the Restricted Period, disparage the other party or any
of its partners, officers, employees, agent, Subsidiaries, or Affiliates.
10.6 Remedies.
(a) Injunctive Remedy. Each of MBS and MBS Sub acknowledge that the
foregoing restrictions in this Article X (the "Restrictions"), including those
relating to geographic area, duration and scope of activity, in view of the
nature of the business in which Imagine and Imagine Sub have been, are and will
be engaged, are reasonable and necessary in order to protect the goodwill and
other legitimate business interests of Imagine and Imagine Sub, and that any
violation thereof would result in immediate and irreparable injury to Imagine
and Imagine Sub, and each of MBS and MBS Sub, therefore, further acknowledge
that, in the event it violates, or threatens to violate, any of such
Restrictions, Imagine and Imagine Sub shall be entitled to obtain from any court
of competent jurisdiction, without the posting of any bond or other security,
preliminary and permanent injunctive relief as well as damages and an equitable
accounting of all earnings, profits and other benefits arising from such
violation, which rights shall be cumulative and in addition to any other rights
or remedies in law or equity to which it may be entitled. If either of MBS or
MBS Sub violates any of the Restrictions, the applicable restricted period shall
be tolled from the time of commencement of the violation until such time as the
violation has been cured to the satisfaction of Imagine and Imagine Sub. If any
Restrictions, or any part thereof, are determined in any Proceeding to be
invalid or unenforceable, the remainder of the Restrictions shall not thereby be
affected and shall be given full effect without regard to the invalid
provisions. If the Restrictions should be adjudged unreasonable in any
Proceeding, then the reviewing Governmental Entity or other person shall have
the power to reform the Restrictions to the extent reasonably necessary to make
the Restrictions valid and enforceable and, in the modified form, such
provisions shall then be enforceable and shall be enforced.
(b) Survival. Notwithstanding any other provision hereof, the provisions
of this Article X shall survive for the Restricted Period.
Page 23
ARTICLE XI.
INDEMNIFICATION
---------------
11.1 Survival. Notwithstanding any investigation made by or on behalf of any
party, all representations, warranties, covenants and agreements made by the
parties in this Agreement or pursuant hereto (including, without limitation, the
indemnification obligations under this Article XI) shall survive the Closing,
without any contractual limitation, and remain effective for a period of 12
months following the Closing Date (the "Indemnification Period"). Each party is
entitled to and is hereby deemed to have reasonably relied upon the
representations and warranties of the other party.
11.2 Indemnification of Imagine and Imagine Sub. Subject to the provisions of
this Article XI, MBS and MBS Sub agree, jointly and severally, to indemnify,
defend and hold harmless each of Imagine and Imagine Sub (and NFPM after the
Closing) and their respective predecessors, successors, assigns, officers,
directors, members, managers, stockholders, employees, Subsidiaries, parents,
Affiliates, partners, agents, attorneys, accountants, financial advisers,
representatives and insurers (collectively, the "Imagine/Imagine Sub Indemnified
Parties"), against and in respect of any losses, damages (including incidental
and consequential damages), deficiencies, diminutions in value, liabilities,
actions, suits, claims, proceedings, demands, assessments, judgments, fines, and
reasonable costs and expenses (including, but not limited to, attorney and
expert witness fees) (collectively, the "Losses"), arising or resulting,
directly or indirectly, from or in connection with:
(a) Any misrepresentation or other breach of any representation or
warranty made by any of MBS or MBS Sub in this Agreement or in any of the other
Transaction Documents (regardless of whether such has been waived);
(b) Any failure to perform or other breach of any covenant, agreement, or
obligation of any of MBS or MBS Sub in this Agreement or in any of the other
Transaction Documents (regardless of whether such has been waived); or
(c) Without limiting the generality of any of the foregoing:
(i) Any claims by shareholders of MBS or any other persons (other
than Imagine, Imagine Sub, or any of their respective Affiliates) relating
to this Agreement or the Transaction.
The foregoing matters giving rise to the rights of the Imagine/Imagine Sub
Indemnified Parties to indemnification hereunder are referred to as the
"Imagine/Imagine Sub Claims".
11.3 Indemnification of MBS and MBS Sub. Subject to the provisions of this
Article VIII, each of Imagine and Imagine Sub agree, jointly and severally, to
indemnify, defend and hold harmless each of MBS and MBS Sub and their respective
successors, assigns, Affiliates, partners, agents, attorneys, accountants,
financial advisers, representatives and insurers (collectively, the "MBS/MBS Sub
Indemnified Parties"), against and in respect of any Losses, arising or
resulting, directly or indirectly, from or in connection with:
(a) Any misrepresentation or other breach of any representation or
warranty made by any of Imagine or Imagine Sub in this Agreement or in any of
the other Transaction Documents (regardless of whether such has been waived);
and
Page 24
(b) Any failure to perform or other breach of any covenant, agreement, or
obligation of any of Imagine or Imagine Sub in this Agreement or in any of the
other Transaction Documents (regardless of whether such has been waived).
The foregoing matters giving rise to the rights of the MBS/MBS Sub
Indemnified Parties to indemnification hereunder are referred to as the "MBS/MBS
Sub Claims".
11.4 Procedure for Indemnification; Third Party Claims.
(a) After receipt by an Indemnitee under this Article XI of notice of the
commencement of any Proceeding against it, such Indemnitee shall, if a claim is
to be made against an Indemnitor hereunder, promptly give notice to the
Indemnitor of the commencement of such claim (including all documents and other
information which the Indemnitee has with respect thereto), but the failure to
notify the Indemnitor shall not relieve the Indemnitor of any liability that it
may have to any Indemnitee, except to the extent that the Indemnitor
demonstrates that the defense of such action is prejudiced by the Indemnitee's
failure to give such notice.
(b) If any Proceeding referred to in the preceding subsection is brought
against an Indemnitee and it gives notice to the Indemnitor of the commencement
of such Proceeding, the Indemnitor will be entitled to participate in such
Proceeding and, to the extent that it wants (unless (i) the Indemnitor is also a
party to such Proceeding and the Indemnitee determines in good faith that joint
representation would be inappropriate, or (ii) the Indemnitor fails to provide
reasonable assurance to the Indemnitee of its financial capacity to defend such
Proceeding and provide indemnification with respect to such Proceeding) to
assume the defense of such Proceeding with counsel satisfactory to the
Indemnitee and, after notice from the Indemnitor to the Indemnitee of its
election to assume the defense of such Proceeding, the Indemnitor will not, as
long as it diligently conducts such defense, be liable to the Indemnitee under
this Article XI for any fees of other counsel or any other expenses with respect
to the defense of such Proceeding, in each case subsequently incurred by the
Indemnitee in connection with the defense of such Proceeding, other than
reasonable and necessary costs of investigation. If the Indemnitor assumes the
defense of a Proceeding, (i) it will be conclusively established for purposes of
this Agreement that the claims made in that Proceeding are within the scope of
and subject to indemnification under this Article XI; (ii) no compromise or
settlement of such claims may be effected by the Indemnitor without the
Indemnitee's consent unless (y) there is no finding or admission of any
violation of Legal Requirements or any violation of the rights of any person and
no effect on any other claims that may be made against the Indemnitee, and (z)
the sole relief provided is monetary damages that are paid in full by the
Indemnitor; (iii) the Indemnitee will have no liability with respect to any
compromise or settlement of such claims effected without its consent, and (iv)
the Indemnitee shall fully cooperate with the Indemnitor in the defense of such
Proceeding. If notice is given to an Indemnitor of the commencement of any
Proceeding and the Indemnitor does not, within ten (10) calendar days after the
Indemnitee's notice is given, give notice to the Indemnitee of its election to
assume the defense of such Proceeding, the Indemnitor will be bound by any
determination made in such Proceeding or any compromise or settlement effected
by the Indemnitee.
Page 25
(c) Notwithstanding the foregoing, if an Indemnitee determines in good
faith that there is a reasonable probability that a Proceeding may adversely
affect it or its Affiliates, other than as a result of monetary damages for
which it would be entitled to indemnification under this Agreement, the
Indemnitee may, by notice to the Indemnitor, assume the exclusive right to
defend, compromise, or settle such Proceeding, but the Indemnitor will not be
bound by any determination of a Proceeding so defended or any compromise or
settlement effected without its consent (which may not be unreasonably
withheld).
11.5 Procedure for Indemnification; Other Claims. A claim for indemnification
for any matter not involving a third-party claim covered by Section 11.4 may be
asserted by the Indemnitee promptly giving notice to the Indemnitor requesting
indemnification and stating in reasonable detail the nature of such matter and
the amount of Losses claimed therefor. The Indemnitor shall have 30 calendar
days after receiving such notice to respond. If the Indemnitor accepts
responsibility or does not respond within such 30-day period, the Indemnitor
shall pay the Indemnitee the full amount of the claim within 10 Business Days
after responsibility therefor is so determined. If the Indemnitor rejects the
claim for indemnification, and the dispute is not resolved by the Indemnitor and
Indemnitee within 15 calendar days, the resolution of the dispute shall be
determined by the mandatory mediation and binding arbitration provided for in
Section 13.9 hereof. If it is determined after those Proceedings that the
Indemnitor is liable for the claim, it shall pay the Indemnitee the full amount
of the claim within 10 Business Days after responsibility therefor is so
determined or as otherwise ruled in the Proceeding.
ARTICLE XII.
DELIVERIES AT CLOSING; POST-CLOSING FURTHER ASSURANCES
------------------------------------------------------
12.1 Deliveries by MBS and MBS Sub.
(a) Additional Deliveries under Alternative Transaction A. MBS and MBS Sub
shall deliver, or cause to be delivered, to Imagine, Imagine Sub, or such other
person as required hereby, at any Closing under Alternative Transaction A, in
addition to any other deliveries required under Section 2.2(b) hereof:
(i) NFPM's Certificate. A certificate of the Secretary (or other
authorized limited liability company manager or officer) of NFPM dated as
of the Closing Date, upon which Imagine and Imagine Sub may rely,
certifying as true, accurate and complete: (i) a certified copy of the
Articles of Organization (or equivalent organizational document) of such
party issued by the Arkansas Secretary of State; (ii) a copy of the
Operating Agreement (or equivalent organizational document) of such party;
and (iii) a certified copy of the Certificate of Foreign Qualification of
such party issued by the Florida Secretary of State (or other appropriate
Governmental Entity).
(ii) General Closing Certificates. A certificate of the President and
Secretary (or other authorized corporate officers) of each of MBS and MBS
Sub, dated as of the Closing Date, upon which Imagine and Imagine Sub may
rely, certifying that (i) the Supplemental Representations and Warranties
made by each of MBS or MBS Sub in or pursuant to this Agreement or in any
of the other Transaction Documents are true and accurate in all material
respects on and as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as of such
date, and (ii) each of MBS and MBS Sub have performed and complied in all
material respects with all of its obligations under this Agreement and the
other Transaction Documents which are to be performed or complied with by
it prior to or on the Closing Date.
Page 26
(iii)Consents. Copies or other satisfactory evidence of the Consent
of all persons necessary for the consummation of the Transaction.
(iv) Corporate Documents and Governmental Certificates.
(A) A Certificate of Existence/Good Standing for MBS issued by
the Secretary of the State of the State of Colorado dated within 30
days prior to the Closing Date;
(B) A Certificate of Existence/Good Standing for MBS Sub issued
by the Secretary of the State of the State of Arkansas dated within 30
days prior to the Closing Date; and
(C) A Certificate of Existence/Good Standing for NFPM issued by
the Secretary of State of the States of Arkansas and Florida dated
within 30 days prior to the Closing Date.
(v) Delivery of Transaction Documents. The following Transaction
Documents executed by MBS, MBS Sub, or NFPM, as the case may be:
(A) the Escrow Agreement;
(B) a Management Services Agreement between MBS and NFPM, in a
mutually agreed upon form and substance (the "Management Agreement");
(C) a Physician Employment Agreement between NFPM and Dr. Ronald
Dennie, in a mutually agreed upon form and substance (the "Employment
Agreement"); and
(D) the Representation and Warranty Amendment.
(vi) Other Documents. All other documents, instruments, exhibits,
schedules, certificates and lists required by this Agreement and the other
Transaction Documents to be delivered or as reasonably requested by legal
counsel for Imagine or Imagine Sub.
(vii)Completion of Schedules. The Schedules to this Agreement
identified as to be completed by mutual agreement of the parties, initialed
and attached prior to Closing.
Page 27
(b) Additional Deliveries under Alternative Transaction B. MBS and MBS Sub
shall deliver, or cause to be delivered, to Imagine, Imagine Sub, or such other
person as required hereby, at any Closing under Alternative Transaction B, in
addition to any other deliveries required under Section 2.2(b) hereof:
(i) General Closing Certificates. A certificate of the President and
Secretary (or other authorized corporate officers) of each of MBS and MBS
Sub, dated as of the Closing Date, upon which Imagine and Imagine Sub may
rely, certifying that (i) the Supplemental Representations and Warranties
made by each of MBS or MBS Sub in or pursuant to this Agreement or in any
of the other Transaction Documents are true and accurate in all material
respects on and as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as of such
date, and (ii) each of MBS and MBS Sub have performed and complied in all
material respects with all of its obligations under this Agreement and the
other Transaction Documents which are to be performed or complied with by
it prior to or on the Closing Date.
(ii) Consents. Copies or other satisfactory evidence of the Consent of
all persons necessary for the consummation of the Transaction.
(iii) Corporate Documents and Governmental Certificates.
(A) A Certificate of Existence/Good Standing for MBS issued by
the Secretary of the State of the State of Colorado dated within 30
days prior to the Closing Date; and
(B) A Certificate of Existence/Good Standing for MBS Sub issued
by the Secretary of the State of the State of Arkansas dated within 30
days prior to the Closing Date.
(iv) Delivery of Transaction Documents. The following Transaction
Documents executed by MBS or MBS Sub, as the case may be:
(A) the Representation and Warranty Amendment.
(v) Other Documents. All other documents, instruments, exhibits,
schedules, certificates and lists required by this Agreement and the other
Transaction Documents to be delivered or as reasonably requested by legal
counsel for Imagine or Imagine Sub.
(vi) Completion of Schedules. The Schedules to this Agreement
identified as to be completed by mutual agreement of the parties, initialed
and attached prior to Closing.
Page 28
12.2 Further Assurances by MBS and MBS Sub. From time to time after the Closing,
upon the request of Imagine or Imagine Sub, each of MBS and MBS Sub agrees to
execute and deliver such additional instruments of conveyance and transfer and
take such further actions as may be required in conformity with this Agreement
and the other Transaction Documents for the complete exchange, transfer and
issuance, as the case may be, of the Imagine Exchanged Assets, the MBS Common
Shares and the NFPM Membership Interests.
12.3 Deliveries by Imagine and Imagine Sub.
(a) Additional Deliveries by Imagine and Imagine Sub under Alternative
Transaction A. Imagine and Imagine Sub shall deliver, or cause to be delivered,
to MBS, MBS Sub, or such other person as required hereby, at any Closing under
Alternative Transaction A:
(i) General Closing Certificates. A certificate of the President and
Secretary (or other authorized corporate officers) of each of Imagine and
Imagine Sub, dated as of the Closing Date, upon which MBS and MBS Sub may
rely, certifying that (i) the Supplemental Representations and Warranties
made by each of Imagine or Imagine Sub in or pursuant to this Agreement or
any of the other Transaction Documents are true and accurate in all
material respects on and as of the Closing Date with the same effect as
though such representations and warranties had been made or given on and as
of such date, and (ii) each of Imagine and Imagine Sub have performed and
complied in all material respects with all of its obligations under this
Agreement and the other Transaction Documents which are to be performed or
complied with by it prior to or on the Closing Date.
(ii) Secretary's Certificates. The Secretary's Certificates of Imagine
and Imagine Sub, in substantially the form attached hereto as Exhibit A,
with appropriate modifications therein to be used for Imagine and Imagine
Sub instead of MBS and MBS Sub.
(iii)Consents. Copies or other satisfactory evidence of the Consent
of all persons necessary for the consummation of the Transaction.
(iv) Corporate Documents and Governmental Certificates.
(A) A Certificate of Existence/Good Standing for Imagine issued
by the Secretary of State of the State of Delaware dated within 30
days prior to the Closing Date; and
(B) A Certificate of Existence/Good Standing for Imagine Sub
issued by the Secretary of State of the State of Delaware dated within
30 days prior to the Closing Date.
(v) Delivery of Transaction Documents. The following Transaction
Documents executed by Imagine or Imagine Sub, as the case may be:
Page 29
(A) the Escrow Agreement; and
(B) the Representation and Warranty Amendment.
(vi) $300,000 Note. The original of the $300,000 Note.
(vii) $500,000 Note. The original of the $500,000 Note.
(viii) $1,400,000 Note. The original of the $1,400,000 Note.
(ix) MBS Preferred Shares. The certificate or certificates
representing the MBS Preferred Shares, together with a stock power or
endorsement, duly executed for transfer to MBS on the records of MBS.
(x) Other Documents. All other documents, instruments, exhibits,
schedules, certificates and lists required by this Agreement and the other
Transaction Documents to be delivered or as reasonably requested by legal
counsel for MBS or MBS Sub.
(xi) Completion of Schedules. The Schedules to this Agreement
identified as to be completed by mutual agreement of the parties,
initialed, and attached prior to Closing.
(b) Deliveries by Imagine and Imagine Sub under Alternative Transaction B.
Imagine and Imagine Sub shall deliver, or cause to be delivered, to MBS, MBS
Sub, or such other person as required hereby, at any Closing under Alternative
Transaction B:
(i) General Closing Certificates. A certificate of the President and
Secretary (or other authorized corporate officers) of each of Imagine and
Imagine Sub, dated as of the Closing Date, upon which MBS and MBS Sub may
rely, certifying that (i) the Supplemental Representations and Warranties
made by each of Imagine or Imagine Sub in or pursuant to this Agreement or
any of the other Transaction Documents are true and accurate in all
material respects on and as of the Closing Date with the same effect as
though such representations and warranties had been made or given on and as
of such date, and (ii) each of Imagine and Imagine Sub have performed and
complied in all material respects with all of its obligations under this
Agreement and the other Transaction Documents which are to be performed or
complied with by it prior to or on the Closing Date.
(ii) Secretary's Certificates. The Secretary's Certificates of Imagine
and Imagine Sub, in substantially the form attached hereto as Exhibit A,
with appropriate modifications therein to be used for Imagine and Imagine
Sub instead of MBS and MBS Sub.
(iii)Consents. Copies or other satisfactory evidence of the Consent
of all persons necessary for the consummation of the Transaction.
Page 30
(iv) Corporate Documents and Governmental Certificates.
(A) A Certificate of Existence/Good Standing for Imagine issued
by the Secretary of State of the State of Delaware dated within 30
days prior to the Closing Date; and
(B) A Certificate of Existence/Good Standing for Imagine Sub
issued by the Secretary of State of the State of Delaware dated within
30 days prior to the Closing Date.
(v) Delivery of Transaction Documents. The following Transaction
Documents executed by Imagine or Imagine Sub, as the case may be:
(A) the Representation and Warranty Amendment.
(vi) $300,000 Note. The original of the $300,000 Note.
(vii) $500,000 Note. The original of the $500,000 Note.
(viii) $1,400,000 Note. The original of the $1,400,000 Note.
(ix) MBS Preferred Shares. The certificate or certificates
representing the MBS Preferred Shares, together with a stock power or
endorsement, duly executed for transfer to MBS on the records of MBS.
(x) Other Documents. All other documents, instruments, exhibits,
schedules, certificates and lists required by this Agreement and the other
Transaction Documents to be delivered or as reasonably requested by legal
counsel for MBS or MBS Sub.
(xi) Completion of Schedules. The Schedules to this Agreement
identified as to be completed by mutual agreement of the parties,
initialed, and attached prior to Closing.
12.4 Further Assurances by Imagine and Imagine Sub. From time to time
after the Closing, upon the request of MBS or MBS Sub, Imagine and Imagine Sub
agree to execute and deliver such additional instruments of assumption and take
such further actions as may be required in conformity with this Agreement and
the other Transaction Documents for the complete exchange, transfer and
issuance, as the case may be, of the Imagine Exchanged Assets, MBS Common Shares
and NFPM Membership Interests.
Page 31
ARTICLE XIII.
MISCELLANEOUS
-------------
13.1 Notices. All notices, requests, demands, claims and other communications
that are required to be or may be given under this Agreement shall be in writing
and (i) delivered in person or by courier, (ii) sent by telecopy or facsimile
transmission, or (iii) mailed, certified first class mail, postage prepaid,
return receipt requested, to the parties hereto at the following addresses:
If to MBS or MBS Sub: MB Software Corporation
2225 East Randol Mill Road, Suite 305
Arlington, Texas 76011
Attn: Scott Haire
Telephone: 817.633.9400
Facsimile: 817.633.9409
With a copy (which shall
not constitute notice) to: Jackson & Walker L.L.P.
901 Main Street, Suite 6000
Dallas, Texas 75202
Attn: Richard Dahlson
Telephone: 214.953.5896
Facsimile: 214.953.6187
If to Imagine or Imagine Sub: Imagine Investments, Inc.
8150 North Central Expressway, Suite 1901
Dallas, Texas 75206
Attn: Gary Goltz and Rick Smotherman
Telephone: 214.365.1905
Facsimile: 214.365.6905
With a copy (which shall
not constitute notice) to: Munsch Hardt Kopf & Harr, P.C.
1445 Ross Avenue
4000 Fountain Place
Dallas, Texas 75202-2790
Attn: Sally Schreiber and Jonathan K.
Henderson
Telephone: 214.855.7527
Facsimile: 214.978.4370
or to such other address as the parties hereto shall have furnished to the other
parties hereto by notice given in accordance with this Section 13.1. Such
notices shall be effective (i) if delivered in person or by courier, upon actual
receipt by the intended recipient, (ii) if sent by telecopy or facsimile
transmission, when the sender receives telecopier confirmation that such notice
was received at the telecopier number of the addressee, or (iii) if mailed, upon
the earlier of five Business Days after deposit in the mail and the date of
delivery as shown by the return receipt therefor.
Page 32
13.2 Transaction Costs and Expenses. Except as otherwise provided herein, each
party hereunder shall be responsible for and pay its, his, or her, as the case
may be, own costs and expenses, including fees of accountants, attorneys, and
other advisors, incurred by it, him, or her, as the case may be, in connection
with the Transaction. Neither MBS nor MBS Sub shall charge NFPM, or cause NFPM
to pay or be liable, for any costs or expenses incurred by any of MBS, MBS Sub,
or NFPM in connection with this Agreement or the Transaction.
13.3 Waiver and Amendment. Any provision of this Agreement may be waived at any
time by the party that is entitled to the benefits thereof. This Agreement may
not be amended or supplemented at any time, except by an instrument in writing
signed on behalf of each party hereto. The waiver by any party hereto of any
condition or of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any other condition or subsequent breach.
13.4 Entire Agreement; Third Party Beneficiaries. This Agreement and the other
Transaction Documents (including the Schedules and Exhibits hereto and thereto)
constitutes the entire agreement and supersedes all other prior agreements and
understandings, both oral and written, among the parties or any of them, with
respect to the subject matter hereof, and neither this Agreement nor any
document delivered in connection with this Agreement confers upon any person not
a party hereto any rights or remedies hereunder, except as provided in Article
XI hereof.
13.5 Assignment. This Agreement shall inure to the benefit of and will be
binding upon the parties hereto and their respective legal representatives,
successors and permitted assigns. This Agreement shall not be assignable by any
party hereto, without the consent of the other parties hereto, except that the
parties hereto agree that the rights and obligations of Imagine and Imagine Sub
may be assigned to any of their respective Affiliates by written notice to all
other parties hereto, provided that Imagine and Imagine Sub also remain jointly
liable for its obligations hereunder.
13.6 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provision, covenants and restrictions
of this Agreement shall continue in full force and effect and shall in no way be
affected, impaired or invalidated so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term, provision, covenant
or restriction is invalid, void or unenforceable, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible.
13.7 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same agreement.
13.8 Headings. The Article and Section headings herein are for convenience only
and shall not affect the construction hereof.
13.9 Mandatory Mediation; Binding Arbitration; Governing Law; Venue; Attorney's
Fees.
Page 33
(a) THE PARTIES AGREE THAT, EXCEPT FOR INJUNCTIVE OR OTHER IMMEDIATE
EQUITABLE RELIEF, ANY DISPUTE BETWEEN THEM RELATING TO THIS AGREEMENT, OR THE
BREACH HEREOF, SHALL, IF NEGOTIATIONS AND OTHER DISCUSSIONS FAIL, BE FIRST
SUBMITTED TO MEDIATION IN ACCORDANCE WITH THE PROVISIONS OF THE COMMERCIAL
MEDIATION RULES OF THE AAA BEFORE RESORTING TO ARBITRATION. THE PARTIES AGREE TO
CONDUCT THE MEDIATION IN GOOD FAITH AND MAKE REASONABLE EFFORTS TO RESOLVE THEIR
DISPUTE BY MEDIATION. THE COMMERCIAL MEDIATION RULES OF THE AAA THEN IN EFFECT
SHALL BE APPLIED. THE PARTIES AGREE TO CONDUCT THE MEDIATION IN DALLAS, TEXAS,
OR ANOTHER MUTUALLY AGREED UPON LOCATION.
(b) THE PARTIES AGREE THAT, EXCEPT FOR INJUNCTIVE OR OTHER IMMEDIATE
EQUITABLE RELIEF, ANY DISPUTE BETWEEN THEM RELATING TO THIS AGREEMENT, OR THE
BREACH HEREOF, SHALL BE SUBJECT TO BINDING ARBITRATION, IF THE DISPUTE IS NOT
RESOLVED BY THE MEDIATION REQUIRED UNDER THE PRECEDING SUBSECTION, IN ACCORDANCE
WITH THE PROVISIONS OF THE COMMERCIAL ARBITRATION RULES OF THE AAA, AND THAT
JUDGMENT ON THE AWARD RENDERED BY THE ARBITRATOR MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION THEREOF. THE ARBITRATION SHALL BE HEARD BEFORE ONE (1)
ARBITRATOR SELECTED IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES. THE
COMMERCIAL ARBITRATION RULES OF THE AAA THEN IN EFFECT SHALL BE APPLIED. THE
PARTIES AGREE TO CONDUCT THE ARBITRATION IN DALLAS, TEXAS, OR ANOTHER MUTUALLY
AGREED UPON LOCATION.
(c) Any dispute between the parties relating to this Agreement shall be
construed under and in accordance with the laws of the State of Texas applicable
to contracts between residents of Texas that are to be wholly performed within
such state, without regard to conflicts of law principles.
(d) If either party appeals the decision of the arbitrator, the parties
agree that the state courts within Dallas County, Texas shall have exclusive
venue and jurisdiction of the same.
(e) The prevailing party in any mediation, arbitration, or litigation
shall be entitled to recover from the other party reasonable attorney and expert
witness fees, court costs, and the administrative costs, fees, and expenses of
the AAA, as the case may be, incurred in the same, in addition to any other
relief that may be awarded.
[SIGNATURES ON FOLLOWING PAGE]
Page 34
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed and delivered as of the Signing Date.
MBS:
----
MB SOFTWARE CORPORATION
By: /s/ Scott A. Haire
------------------------
Scott A. Haire
President
MBS SUB:
--------
HEALTHCARE INNOVATIONS, LLC
By: /s/ Scott A. Haire
------------------------
Scott A. Haire
President
Imagine:
--------
IMAGINE INVESTMENTS, INC.
By: /s/ Harry T. Carneal
------------------------
Harry T. Carneal
Executive Vice President
Imagine Sub:
------------
XHI2, INC.
By: /s/ Harry T. Carneal
------------------------
Harry T. Carneal
Executive Vice President
LIST OF SCHEDULES AND EXHIBITS
------------------------------
Schedules
Schedule 1.1 - Definitions
MBS/MBS Sub Signing Date Disclosure Schedule
Imagine/Imagine Sub Signing Date Disclosure Schedule
Exhibits
Exhibit A - Form of Secretary's Certificates
Exhibit B - Form of Solvency Certificates
Exhibit C - Form of Special Closing Certificates
Restructure and Settlement Agreement Schedule 1.1
SCHEDULE 1.1
DEFINITIONS
-----------
"AAA" means the American Arbitration Association and its successors.
"Affiliate" means a person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with, the
first mentioned person.
"Arkansas Act" means the Small Business Entity Tax Pass Through Act (Arkansas
Code Annotatedss.ss.4-32-101 et. seq.), as amended and any corresponding
provisions of succeeding law, and the rules and regulations promulgated
thereunder.
"Business Day" means any day other than a day on which banks in the State of
Texas are authorized or obligated to be closed.
"Code" means the InternaFl Revenue Code of 1986, as amended and any
corresponding provisions of succeeding law, and the regulations promulgated
thereunder.
"Colorado Act" means the Colorado Corporations and Associations Act (Title 7,
Article 90,ss.ss.101 et. seq.), as amended and any corresponding provisions of
succeeding law, and the rules and regulations promulgated thereunder.
"Competing Transaction" means any proposal or offer from any person (other than
Imagine, Imagine Sub, or an Affiliate of either of them) relating to any
purchase or other acquisition of all or (other than in the ordinary course of
business) any material portion of the assets of, or any possible disposition or
issuance of any membership interests or other equity interests in NFPM (or any
rights or securities exercisable for or convertible into such membership
interests or other equity interests), or any merger or other business
combination with, NFPM.
"Consent" means any approval, consent, ratification, waiver, notification,
license, permit, or other authorization (including any Governmental
Authorization).
"Contract" means any contract, agreement, obligation, promise, purchase order,
sales order, license, lease, commitment, arrangement, or undertaking (whether
written or oral, and whether express or implied) that is legally binding.
"control" (including the terms "controlled", "controlled by", and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of voting stock or as
trustee or executor, by Contract or credit arrangement or otherwise.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
and any corresponding provisions of succeeding law, and the regulations
promulgated thereunder.
"Exchange Act" means the Securities Exchange Act of 1934, as amended and any
corresponding provisions of succeeding law, and the regulations promulgated
thereunder.
"GAAP" means the generally accepted accounting principles in the United States,
in effect from time to time.
"Governmental Authorization" means any approval, consent, ratification, waiver,
notification, license, permit, franchise, grant, identification or registration
number, easement, variance, exemption, certificate, order, or other
authorization issued, granted, given, or otherwise made available by or under
the authority of any Governmental Entity or pursuant to any Legal Requirement.
"Governmental Entity" means any (i) nation, state, county, city, town, village,
district, or other jurisdiction of any nature, (ii) federal, state, local,
municipal, foreign, For other government, (iii) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal), (iv)
multi-national organization or body, or (v) body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature.
"Imagine/Imagine Sub Material Adverse Effect" means any change or effect that
would be materially adverse to the financial condition, results of operations,
business, or prospects of Imagine and Imagine Sub, taken as a whole, at the time
of such change or effect.
"Indemnitee" means a party seeking indemnification.
"Indemnitor" means a party against whom a claim for indemnification is made.
"knowledge" with respect to: (i) an individual, is deemed to exist of a
particular fact or other matter if, such individual is, or has at any time been,
(A) actually aware of such fact or other matter, or (B) a prudent individual
could be expected to discover or otherwise become aware of such fact or other
matter in the course of conducting a reasonably comprehensive investigation
concerning the existence of such fact or other matter; and (ii) any person
(other than an individual), is deemed to exist of a particular fact or other
matter if, any individual who is serving, or who at any time has served, as a
shareholder, director, officer, partner, member, executor, or trustee of such
person (or in any similar capacity) has, or at any time had, knowledge (as
defined in the preceding clause (i) hereof) of such fact or other matter.
"Legal Requirement" means any federal, state, local, municipal, foreign,
international, multi-national, or other administrative order, constitution, law,
ordinance, principle of common law, rule, regulation, statute, or treaty.
"Lien" means all mortgages, deeds of trust, claims, liens, judgments, security
interests, pledges, leases, conditional sale contracts, rights of first refusal,
options, charges, liabilities, obligations, agreements, powers of attorney,
limitations, reservations, restrictions, and other encumbrances or adverse
claims of every kind and nature, including any restriction on use, voting,
transfer, receipt of income, or exercise of any attribute of ownership.
"MBS Organizational Documents" means the Articles of Incorporation, Bylaws and
any other documents, such as shareholders' agreements, voting agreements, or
other Contracts affecting the rights of shareholders of MBS.
"MBS/MBS Sub Material Adverse Effect" means any change or effect that would be
materially adverse to the financial condition, results of operations, business,
or prospects of MBS and MBS Sub, taken as a whole, at the time of such change or
effect.
"MBS Sub Organizational Documents" means the Articles of Organization, Operating
Agreement and any other documents, such as members' agreements, voting
agreements, or other Contracts affecting the rights of members of MBS Sub.
"NFPM Material Adverse Effect" means any change or effect that would be
materially adverse to the financial condition, results of operations, business,
or prospects of NFPM, taken as a whole, at the time of such change or effect.
"NFPM Organizational Documents" means the Articles of Organization, Operating
Agreement and any other documents, such as members' agreements, voting
agreements, or other Contracts affecting the rights of members of NFPM.
"Ordinary Course of Business" means an action taken by a person that is:
(i) consistent with the past practices of such person and is taken in the
ordinary course of the normal day-to-day operations of such person;
(ii) not required to be authorized by the board of directors (or equivalent
governing body) of such person, and is not required to be specifically
authorized by the parent company, if any, of such person; and
(iii)similar in nature and magnitude to actions customarily taken, without
any authorization by the board of directors (or equivalent governing body), in
the ordinary course of the normal day-to-day operations of other persons that
are in the same line of business as such person.
"person" means an individual, corporation, partnership, limited liability
company, association, trust, unincorporated organization, other entity or group
(as defined in Section 13(d) of the Exchange Act).
"Proceeding" means any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Entity or arbitrator.
"Requisite MBS Approval" means (i) the approval by the required vote of the
directors of MBS, and (ii) the approval by such vote of the shareholders of MBS
specified in the proxy statement to be filed with the SEC pursuant to applicable
federal securities laws, rules, regulations and other Legal Requirements and
sent to the shareholders of MBS, in each case in order for the Closing to occur
and the terms and conditions of this Agreement to be properly performed by MBS
under the applicable provisions of the Colorado Act and MBS Organizational
Documents.
"Requisite MBS Sub Approval" means (i) the approval by the required vote of the
managers of MBS, and (ii) the approval by the required vote of the members of
MBS Sub, in each case in order for the Closing to occur and the terms and
conditions of this Agreement to be performed by MBS Sub under the applicable
provisions of the Arkansas Act and the MBS Sub Organizational Documents.
"SEC" means the United States Securities and Exchange Commission and its
successors.
"Securities Act" means the Securities Act of 1933, as amended and any
corresponding provisions of succeeding law, and the regulations promulgated
thereunder.
"Solvent" means, for any person that, at and immediately after, the Effective
Time:
(i) such person does not and/or will not have insufficient cash (or
marketable securities readily convertible to cash) on hand (or in banks or other
financial institutions) to pay its debts as they become due in the usual course
of business for the foreseeable future; and
(ii) such person's total assets will not be less than the sum of its total
liabilities plus the amount that would be needed, if such person were to be
dissolved at the time of distribution to satisfy the preferential rights upon
dissolution of shareholders whose preferential rights are superior to those
receiving the distribution.
"Subsidiary" of MBS, MBS Sub, NFPM, Imagine, or Imagine Sub, or any other
person, means any corporation, partnership, joint venture or other legal entity
of which MBS, MBS Sub, NFPM, Imagine, or Imagine Sub, or any such other person,
as the case may be (either alone or through or together with any other
subsidiary), owns, directly or indirectly, 50% or more of the capital stock or
other equity interests the holders of which are generally entitled to vote for
the election of the board of directors or other governing body of such
corporation or other legal entity.
"Tax" means any and all taxes, charges, fees, levies, assessments, duties or
other amounts payable to any federal, state, local or foreign taxing authority
or agency, including, without limitation, (i) income, franchise, profits, gross
receipts, minimum, alternative minimum, estimated, ad valorem, value added,
sales, use, service, real or personal property, capital stock, license, payroll,
withholding, disability, employment, social security, workers compensation,
unemployment compensation, utility, severance, excise, stamp, windfall profits,
transfer and gains taxes, (ii) customs, duties, imposts, charges, levies or
other similar assessments of any kind, and (iii) interest, penalties and
additions to tax imposed with respect thereto.
"Tax Return" means any return (including an information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Entity in connection with the determination, assessment, collection, or payment
of any Tax or in connection with the administration, implementation, or
enforcement of or compliance with any Legal Requirement relating to any Tax.
"Transaction" means the exchanges of debt and equity and performance of the
other agreements and covenants as described in or required by this Agreement,
whether under the terms and conditions of Alternative Transaction A or
Alternative Transaction B.
"Transaction Documents" means this Agreement, the Escrow Agreement, the
Management Agreement, the Employment Agreement, the Representation and Warranty
Amendment and the other documents and instruments referred to in this Agreement,
and exhibits, schedules, certificates and lists related to each of the
foregoing, as applicable to each of MBS, MBS Sub, NFPM, Imagine and Imagine Sub,
depending on whether the Closing occurs under the terms and conditions of
Alternative Transaction A or Alternative Transaction B.
MBS/MBS SUB SIGNING DATE DISCLOSURE SCHEDULE
--------------------------------------------
Section Matter Disclosed
------- ----------------
6.1 None.
6.2 None.
6.3 None.
6.4 None.
6.5 None.
6.6 Scott Haire - President
Gil Valdez - Manager
6.7 None.
6.8 None.
6.9 None.
6.10 None.
IMAGINE/IMAGINE SUB SIGNING DATE DISCLOSURE SCHEDULE
----------------------------------------------------
Section Matter Disclosed
------- ----------------
7.1 None.
7.2 None.
7.3 None.
EXHIBIT A
FORM OF SECRETARY'S CERTIFICATE
-------------------------------
[SEE ATTACHED]
SECRETARY'S CERTIFICATE
-----------------------
OF MB SOFTWARE CORPORATION
--------------------------
This Secretary's Certificate (this "Certificate") is delivered pursuant to
Section 2.2(b) of that certain Restructure and Settlement Agreement, dated as of
November 5, 2001 (the "Agreement"), by and among MB Software Corporation (the
"Company"), Healthcare Innovations, LLC, Imagine Investments, Inc. and XHI2,
Inc. All capitalized terms used in this Certificate, but not defined herein,
shall have the meaning given them in the Agreement.
The undersigned, ______________, the duly elected and qualified Secretary
of the Company, does hereby certify that, as such, he is familiar with the facts
herein certified and is duly authorized to certify the same and does hereby
further certify as follows:
1. Attached as Exhibit A are true, accurate and complete copies of
resolutions duly adopted by the directors of the Company on November ___, 2001,
and the shareholders of the Company on ___________ ___, 2002, authorizing the
execution, delivery and performance of the Agreement and the other Transaction
Documents to which the Company is a party and the consummation by the Company of
the Transaction; and that such resolutions have not been rescinded or modified
and have been in full force and effect since their adoption, to and including
the date hereof; and that such resolutions are the only corporate proceeding now
in force relating to or affecting the matters referred to therein.
2. Attached as Exhibit B is a true, accurate and complete certified copy of
the Articles of Incorporation of the Company, including any amendments thereto
and modifications thereof, as in full force and effect as of the date hereof.
3. Attached as Exhibit C is a true, accurate and complete copy of the
Bylaws of the Company, including any amendments thereto and modifications
thereof, as in full force and effect as of the date hereof.
4. The following officers of the Company hereunder set forth have been duly
elected, and as of the date hereof hold the offices specified with the Company,
and that the signature set forth beside each person's name is the genuine
signature of such person:
Name Title Signature
----- ---------
President ___________________
Secretary ___________________
Page 1
IN WITNESS WHEREOF, the undersigned has executed this Certificate this ___
day of _____________, 2002.
_____________, Secretary
The undersigned President of the Company, ____________, hereby certifies
that ____________ is the duly elected Secretary of the Company and, as of the
date hereof continues to hold such office, and the signature set forth above is
her genuine signature.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this ___
day of ____________, 2002.
_____________, President
Page 2
SECRETARY'S CERTIFICATE
-----------------------
OF HEALTHCARE INNOVATIONS, LLC
-------'-----------------------
This Secretary's Certificate (this "Certificate") is delivered pursuant to
Section 2.2(b) of that certain Restructure and Settlement Agreement, dated as of
November 5, 2001 (the "Agreement"), by and among MB Software Corporation,
Healthcare Innovations, LLC (the "Company"), Imagine Investments, Inc. and XHI2,
Inc. All capitalized terms used in this Certificate, but not defined herein,
shall have the meaning given them in the Agreement.
The undersigned, ______________, the duly elected and qualified Secretary
of the Company, does hereby certify that, as such, he is familiar with the facts
herein certified and is duly authorized to certify the same and does hereby
further certify as follows:
1. Attached as Exhibit A are true, accurate and complete copies of
resolutions duly adopted by the managers of the Company on November ___, 2001,
and the members of the Company on ___________ ___, 2002, authorizing the
execution, delivery and performance of the Agreement and the other Transaction
Documents to which the Company is a party and the consummation by the Company of
the Transaction; and that such resolutions have not been rescinded or modified
and have been in full force and effect since their adoption, to and including
the date hereof; and that such resolutions are the only limited liability
company proceeding now in force relating to or affecting the matters referred to
therein.
2. Attached as Exhibit B is a true, accurate and complete certified copy of
the Articles of Organization of the Company, including any amendments thereto
and modifications thereof, as in full force and effect as of the date hereof.
3. Attached as Exhibit C is a true, accurate and complete copy of the
Operating of the Company, including any amendments thereto and modifications
thereof, as in full force and effect as of the date hereof.
4. The following officers of the Company hereunder set forth have been duly
elected, and as of the date hereof hold the offices specified with the Company,
and that the signature set forth beside each person's name is the genuine
signature of such person:
Name Title Signature
----- ---------
President ___________________
Secretary ___________________
Page 1
IN WITNESS WHEREOF, the undersigned has executed this Certificate this ___
day of _____________, 2002.
_____________, Secretary
The undersigned President of the Company, ____________, hereby certifies
that ____________ is the duly elected Secretary of the Company and, as of the
date hereof continues to hold such office, and the signature set forth above is
her genuine signature.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this ___
day of ____________, 2002.
_____________, President
Page 2
EXHIBIT B
FORM OF SOLVENCY CERTIFICATE
----------------------------
[SEE ATTACHED]
SOLVENCY CERTIFICATE
--------------------
OF MB SOFTWARE CORPORATION
--------------------------
The undersigned, the duly elected President of MB Software Corporation,
a Colorado corporation (the "Company"), pursuant to Section 2.2(b) of that
certain Restructure and Settlement Agreement, dated as of November 5, 2001 (the
"Agreement"), by and among the Company, Healthcare Innovations, LLC, Imagine
Investments, Inc. and XHI2, Inc., does hereby certify that he is authorized to
execute and deliver this Certificate in the name of and on behalf of the
Company. The undersigned further certifies that the Company that, the Company is
Solvent.
For purposes of this Certificate, each capitalized term used herein but not
defined shall have the meaning assigned to it in the Agreement.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ____ day
of November, 2002.
_______________, President
SOLVENCY CERTIFICATE
--------------------
OF HEALTHCARE INNOVATIONS, LLC
------------------------------
The undersigned, the duly elected President of Healthcare Innovations, LLC,
a Arkansas corporation (the "Company"), pursuant to Section 2.2(b) of that
certain Restructure and Settlement Agreement, dated as of November 5, 2001 (the
"Agreement"), by and among the MB Software Corporation, the Company, Imagine
Investments, Inc. and XHI2, Inc., does hereby certify that he is authorized to
execute and deliver this Certificate in the name of and on behalf of the
Company. The undersigned further certifies that the Company is Solvent.
For purposes of this Certificate, each capitalized term used herein but not
defined shall have the meaning assigned to it in the Agreement.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ____ day
of November, 2002.
_______________, President
EXHIBIT C
FORM OF SPECIAL CLOSING CERTIFICATE
-----------------------------------
[SEE ATTACHED]
SPECIAL CLOSING CERTIFICATE
---------------------------
OF MB SOFTWARE CORPORATION
--------------------------
The undersigned, the duly elected President of MB Software Corporation, a
Colorado corporation (the "Company"), pursuant to Section 2.2(b) of that certain
Restructure and Settlement Agreement, dated as of November 5, 2001 (the
"Agreement"), by and among the Company, Healthcare Innovations, Imagine
Investments, Inc. and XHI2, Inc., does hereby certify that he is authorized to
execute and deliver this Certificate in the name of and on behalf of the
Company. The undersigned further certifies that (i) each of the representations
and warranties of the Company contained in Article VI of the Agreement was true
and correct on and as of the Signing Date and is true and correct as of the
Closing Date as though made or given again on and as of the Closing Date, and
(ii) the business of NFPM has been operated in the Ordinary Course of Business
during the period between the Signing Date and the Closing Date.
For purposes of this Certificate, each capitalized term used herein but not
defined shall have the meaning assigned to it in the Agreement.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ____ day
of November, 2002.
_______________, President
SPECIAL CLOSING CERTIFICATE
---------------------------
OF HEALTHCARE INNOVATIONS, LLC
------------------------------
The undersigned, the duly elected President of Healthcare Innovations, LLC,
a Arkansas corporation (the "Company"), pursuant to Section 2.2(b) of that
certain Restructure and Settlement Agreement, dated as of November 5, 2001 (the
"Agreement"), by and among MB Software Corporation, the Company, Imagine
Investments, Inc. and XHI2, Inc., does hereby certify that he is authorized to
execute and deliver this Certificate in the name of and on behalf of the
Company. The undersigned further certifies that (i) each of the representations
and warranties of the Company contained in Article VI of the Agreement was true
and correct on and as of the Signing Date and is true and correct as of the
Closing Date as though made or given again on and as of the Closing Date, and
(ii) the business of NFPM has been operated in the Ordinary Course of Business
during the period between the Signing Date and the Closing Date.
For purposes of this Certificate, each capitalized term used herein but not
defined shall have the meaning assigned to it in the Agreement.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this ____ day
of November, 2002.
_______________, President