EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of March
14, 1997, by and among XXXXX XXXXX, INC., a New Jersey corporation having its
principal place of business at 00 Xxxxxx Xxxx, Xxxxxx, Xxx Xxxxxx ("VSI"), VSI
ACQUISITION CORPORATION, a Colorado corporation and a wholly-owned subsidiary of
VSI, having its principal place of business at 00 Xxxxxx Xxxx, Xxxxxx, Xxx
Xxxxxx ("Xxxxx"), and MARQUEST MEDICAL PRODUCTS, INC., a Colorado corporation
having its principal place of business at 00000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxx (the "Company"),
WITNESSETH THAT:
WHEREAS, the Boards of Directors of VSI, Newco and the Company, deeming
it advisable for the mutual benefit of VSI, Newco and the Company and their
respective shareholders, that VSI acquire the Company by the merger of the
Company and Newco under the terms and conditions hereinafter set forth (the
"Merger"), have approved this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, the parties hereto hereby agree
that the Company and Newco shall be merged in accordance with the terms of this
Agreement and that the terms and conditions of the Merger and the mode of
carrying the same into effect shall be as follows:
ARTICLE I
PLAN OF MERGER
SECTION 1.1 Structure. Upon performance of all of the covenants and
obligations of the parties contained herein and upon fulfillment (or waiver) of
all of the conditions to the obligations of the parties contained herein, at the
Effective Time of the Merger (as hereinafter defined) and pursuant to the
Business Corporation Act of the State of Colorado (the "BCA"), the following
shall occur:
1.1.1 Newco shall be merged with and into the Company. The Company
shall be the surviving corporation (the "Surviving Corporation") and upon
consummation of the Merger shall become a wholly-owned subsidiary of VSI.
The separate existence and corporate organization of Newco shall cease at
the Effective Time of the Merger, and thereupon the Company and Newco shall
be a single corporation, the name of which shall be Marquest Medical
Products, Inc. The Company, as the Surviving Corporation, shall succeed,
insofar as permitted by law, to all of the rights, assets, liabilities and
obligations of Newco in accordance with the BCA.
1.1.2 The Articles of Incorporation of the Company shall be amended to
contain such provisions as VSI shall determine prior to the Effective Time
of the Merger and as such shall be the Articles of Incorporation of the
Surviving Corporation until amended as provided by law.
1.1.3 The By-Laws of the Company shall be amended to contain such
provisions as VSI shall determine prior to the Effective Time of the Merger
and as such shall be the by-laws of the Surviving Corporation until amended
as provided by law.
1.1.4 Until changed in accordance with the articles of incorporation
and by-laws of the Surviving Corporation, the directors of Newco
immediately prior to the Effective Time of the Merger shall be the
directors of the Surviving Corporation.
1.1.5 Until changed in accordance with the articles of incorporation
and by-laws of the Surviving Corporation, the officers of Newco immediately
prior to the Effective Time of the Merger shall be the officers of the
Surviving Corporation.
1.1.6 As soon as practicable after the terms and conditions of this
Agreement have been satisfied, and upon consummation of the closing
referred to in Article IX hereof (the "Closing"), articles of merger
consistent with this Agreement, in the form prescribed by, and properly
executed in accordance with, the BCA and in form and substance satisfactory
to the parties hereto (the "Articles of Merger"), shall be filed with the
Secretary of State of the State of Colorado. The Merger shall become
effective when the Articles of Merger are so filed. The date and time when
the Merger shall become effective is referred to in this Agreement as the
"Effective Time of the Merger".
SECTION 1.2 Common Stock of Surviving Corporation. Upon consummation
of the Merger, each of the issued and outstanding shares of common stock of
Newco shall be automatically converted into such number of shares of the common
stock of the Surviving Corporation as shall equal the "Outstanding Number". Each
such share shall be held by VSI and shall be fully paid and non-assessable. For
purposes of this Agreement, the term "Outstanding Number" shall mean the
aggregate number of shares of Company Common Stock (as hereinafter defined)
outstanding immediately prior to the Effective Time of the Merger divided by the
number of shares of common stock of Newco outstanding immediately prior to the
Effective Time of the Merger.
SECTION 1.3 Cancellation or Conversion of Company Common Stock. As of
the Effective Time of the Merger, by virtue of the Merger and without any action
on the part of any shareholder:
1.3.1 Any shares of the Company's common stock, no par value ("Company
Common Stock"), held in the treasury of the Company, and any shares of
Company Common Stock issued and outstanding immediately prior to the
Effective Time of the Merger which are owned by VSI or Newco, shall be
canceled and retired. No cash, securities or other consideration shall be
paid or delivered in exchange for such Company Common Stock under this
Agreement.
1.3.2 Except as provided herein with respect to Dissenting Shares (as
hereinafter defined), the following provisions shall apply with respect to
all shares of Company Common Stock outstanding immediately prior to the
Effective Time of the Merger other than the shares canceled pursuant to
Section 1.3.1 hereof:
1.3.2.1 Subject to Section 1.3.2.4 hereof, at the Effective Time
of the Merger, each such share of Company Common Stock outstanding
shall be converted, without any action by the holder thereof, into the
right to receive from VSI $0.797 in cash, without interest (the
"Purchase Price").
1.3.2.2 At the Effective Time of the Merger, (i) VSI shall
deliver to American Stock Transfer and Trust Company or such other
institution as shall be designated by VSI as exchange agent (the
"Exchange Agent") $12,497,360 in immediately available funds and (ii)
the Company shall deliver to the Exchange Agent immediately available
funds equal to the amount of consideration received by the Company
after the date hereof and prior to the Effective Time of the Merger
from the exercise of options and warrants, such amounts to be held by
the Exchange Agent, to effect conversions of outstanding Company
Common Stock into cash pursuant to Section 1.3.2.1 hereof and to
effect exercises of options and warrants that remain exercisable for
cash after the Effective Time of the Merger (as described in Section
1.4 hereof), in accordance with the terms of an exchange agency
agreement between VSI and the Exchange Agent.
1.3.2.3 At the Effective Time of the Merger and subject to
Section 1.3.2.4 hereof, each holder of an outstanding certificate or
certificates representing Company Common Stock ("Company Stock
Certificates") shall, upon surrender thereof to the Exchange Agent
together with a letter of transmittal in the form of the letter of
transmittal furnished by VSI pursuant to Section 1.3.3 hereof, be
entitled to receive a cash amount equal to the Purchase Price, without
interest, in exchange for each share of Company Common Stock
surrendered. Until so surrendered, each outstanding Company Stock
Certificate shall be deemed for all purposes to represent the right to
receive the Purchase Price in cash without interest. Whether or not a
Company Stock Certificate is surrendered, from and after the Effective
Time of the Merger such certificate shall under no circumstances
evidence, represent or otherwise constitute any stock or other
interest whatsoever in the Company, the Surviving Corporation, VSI or
any other person, firm or corporation.
1.3.2.4 VSI and the Exchange Agent shall not be required to pay a
fraction of a xxxxx to any former shareholder of the Company. In lieu
of paying any such fraction, VSI and the Exchange Agent shall
determine the aggregate consideration payable to each shareholder with
respect to all of such shareholder's shares of Company Common Stock
and upon tender of all such shares in accordance with the provisions
of this Agreement, shall round such consideration up to the nearest
whole xxxxx.
1.3.3 Promptly after the Effective Time of the Merger, VSI shall
deliver to holders of Company Stock Certificates letters of transmittal
pursuant to which such certificates may be submitted to the Exchange Agent.
SECTION 1.4 Options, Warrants and Convertible Securities. The Company
covenants, warrants and represents as follows:
1.4.1 Option Plan. As of the date hereof, options covering 633,166
shares of Company Common Stock are outstanding under the Company's
Incentive and Non- Qualified Stock Option Plan (the "Stock Option Plan").
Of these "Employee Options" (as defined in Section 2.2 hereof), options
covering 297,168 shares of Company Common Stock have per share exercise
prices that are less than the Purchase Price. At least 35 days prior to the
Effective Time of the Merger, the Company shall provide to each holder of
an Employee Option a notice, in accordance with Section 4.2 of the Stock
Option Plan, advising each such holder of the terms of the Merger and
describing the consequences of the Merger to holders of Employee Options.
By virtue of such notice, all outstanding Employee Options shall become
exercisable in full and all Employee Options which are not exercised prior
to the Effective Time of the Merger shall terminate as of the Effective
Time of the Merger. As a result of such termination, neither the Company
nor VSI shall have any obligation under the Employee Options at or after
the Effective Time of the Merger.
1.4.2 Director Options. Options covering 150,000 shares of Company
Common Stock granted to directors of the Company pursuant to Non-Qualified
Director Stock Option Agreements were canceled on March 14, 1997. As a
result of such cancellations, neither the Company nor VSI shall have any
obligation under any such agreements at or after the Effective Time of the
Merger.
1.4.3 Convertible Securities. Pursuant to the terms of the "Xxxxxx
Xxxxxxx Inducement Agreement" (as defined in Section 2.27 hereof), Xxxxxx
X. Xxxxxxx, Xx. has agreed to convert all principal payable under the
"Convertible Note" (as defined in Section 2.2 hereof) into a total of
1,000,000 shares of Company Common Stock prior to the Effective Time of the
Merger. By virtue of such conversion, there will be no obligation to pay
any interest under the Convertible Note to Xxxxxx X. Xxxxxxx, Xx. after the
effective date of such conversion. There are no other debt or equity
instruments outstanding which are convertible into the Company's Common
Stock.
1.4.4 Xxxxxxx Healthcare Warrants. Pursuant to the terms of the
"Xxxxxxx Healthcare Inducement Agreement" (as defined in Section 2.27
hereof), Xxxxxxx Healthcare, Inc. ("Xxxxxxx") has agreed that as of the
Effective Time of the Merger, it will exchange the "First ABG Warrants" and
"Second ABG Warrants" (as defined in Section 2.2 hereof) and the "Current
Warrants" (as defined in Section 2.2 hereof) for a payment equal to
$309,260 (representing the number of shares of Company Common Stock covered
by the First ABG Warrants, the Second ABG Warrants and the Current Warrants
(6,580,000) multiplied by the amount by which the Purchase Price exceeds
$0.75, the per share exercise price of the First ABG Warrants, the Second
ABG Warrants and the Current Warrants).
1.4.5 Swiss Warrants. As of the date hereof, "Swiss Warrants" (as
defined in Section 2.2 hereof) covering 1,083,317 shares of Company Common
Stock are outstanding. Pursuant to the Swiss Warrant Agreement (as defined
in Section 2.2 hereof), the Company and VSI are not required to provide the
holders of the Swiss Warrants or any other person or entity any notice
describing the consequences of the Merger to holders of Swiss Warrants. By
virtue of the provisions of the Swiss Warrant Agreement, upon consummation
of the Merger, each outstanding Swiss Warrant shall be converted, without
any action by the holder thereof, into the right to receive, upon exercise
thereof pursuant to the terms of the Swiss Warrant and the Swiss Warrant
Agreement, an amount of cash equal to the Purchase Price in lieu of each
share of Company Common Stock deliverable upon such exercise.
1.4.6 Settlement Options. Pursuant to promissory notes (the
"Settlement Notes") issued in accordance with the "Settlement Agreement"
(as defined in Section 2.2 hereof), two individuals each have an option to
acquire 100,000 shares of Company Common Stock by reducing the principal
amount of the Settlement Notes. The Company shall pay the holders of the
Settlements Notes all amounts outstanding under the Settlement Notes prior
to the Effective Time of the Merger. As a result, no obligation to issue
capital stock or otherwise will exist after the Effective Time of the
Merger pursuant to the Settlement Notes.
1.4.7 Consultant's Options. As of the date hereof, the Company is
obligated to issue 50,000 shares of Company Common Stock pursuant to the
Consultant's Options (as defined in Section 2.2 hereof) at an exercise
price of $0.75 per share. At least 35 days prior to the Effective Time of
the Merger, the Company shall provide to the holder of the Consultant's
Option a notice, in accordance with Section 5(b) of the agreement setting
forth the terms of the Consultant's Options, advising such holder of the
terms of the Merger and describing the consequences of the Merger to
holders of Employee Options. By virtue of such notice, all of the
Consultant's Options which are not exercised prior to the Effective Time of
the Merger shall terminate as of the Effective Time of the Merger. As a
result of such termination, neither the Company nor VSI shall have any
obligation under the Consultant's Options at or after the Effective Time of
the Merger.
1.4.8 Xxxxxxx Warrants. As of the date hereof, the Company is
obligated to issue 75,326 shares of Company Common Stock pursuant to the
Xxxxxxx Warrants (as defined in Section 2.2 hereof) at an exercise price of
$1.50 per share. At least 15 days prior to the Effective Time of the
Merger, the Company shall provide to the holder of the Xxxxxxx Warrants the
notice required pursuant to Section "e" of the Xxxxxxx Warrant Agreement
(as defined in Section 2.2 hereof). By virtue of the provisions of the
Xxxxxxx Warrant Agreement, upon consummation of the Merger, each
outstanding Xxxxxxx Warrant shall be converted, without any action by the
holder thereof, into the right to receive, upon exercise thereof pursuant
to the terms of the Xxxxxxx Warrant and the Xxxxxxx Warrant Agreement, an
amount of cash equal to the Purchase Price in lieu of each share of Company
Common Stock deliverable upon such exercise.
1.4.9 ITT Warrants. As of the date hereof, the Company is obligated to
issue 10,000 shares of Company Common Stock pursuant to the ITT Warrants
(as defined in Section 2.2 hereof) at an exercise price of $4.00 per share.
At least 25 days prior to the Effective Time of the Merger, the Company
shall provide to the holder of the ITT Warrants the notice required
pursuant to Section 4(f) of the ITT Warrant Agreement (as defined in
Section 2.2 hereof). By virtue of the provisions of the ITT Warrant
Agreement, upon consummation of the Merger, each outstanding ITT Warrant
shall be converted, without any action by the holder thereof, into the
right to receive, upon exercise thereof pursuant to the terms of the ITT
Warrant and the ITT Warrant Agreement, an amount of cash equal to the
Purchase Price in lieu of each share of Company Common Stock deliverable
upon such exercise.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
References herein to the "Disclosure Letter" shall mean the letter from
the Company to VSI, dated the date hereof, pursuant to which the Company has
made certain representations and described certain exceptions to the
representations set forth in this Article II by means of express
cross-references to the Sections hereof requiring that exceptions be made.
Except as set forth in the Disclosure Letter, the Company hereby represents,
warrants, and agrees as follows:
SECTION 2.1 Organization. The Company is a corporation, duly
organized, validly existing, and in good standing under the laws of the State of
Colorado, and has all requisite corporate power and authority to own its
property and conduct the business in which it is engaged. The Disclosure Letter
contains an accurate and complete list of the dates of filing of the Company's
articles of incorporation and all amendments thereto with the Colorado Secretary
of State and the date of the Company's current by-laws.
SECTION 2.2 Capitalization. The Company is solely authorized to issue
50,000,000 shares of Company Common Stock. As of the date hereof, there were
14,296,773 shares of Company Common Stock issued and outstanding (the
"Outstanding Common Shares"). The Outstanding Common Shares include 25,000
shares of Company Common Stock which were initially issued to Xxxx X. York as
restricted shares, all of which restrictions have lapsed. The Outstanding Common
Shares do not include any restricted shares issued to any other director of the
Company. If the Effective Time of the Merger occurs prior to August 31, 1997,
any restricted shares outstanding on the date hereof, other than the restricted
shares owned by Xxxx X. York, will, by their terms, be forfeited and deemed not
to be outstanding as of the Effective Time of the Merger. All of the Outstanding
Common Shares have been fully paid, have been validly issued, and are
nonassessable. No shares of Company Common Stock have been issued in violation
of the preemptive rights of any person or entity and the holders of Outstanding
Common Shares do not possess preemptive rights. Except with respect to (i)
options covering not more than 633,166 shares of Company Common Stock granted
pursuant to the Company's Incentive and Non-Qualified Stock Option Plan (the
"Stock Option Plan"), (ii) warrants covering up to 1,083,317 shares of Company
Common Stock which were granted to former holders of Swiss bonds at an exercise
price of $.75 per share pursuant to a warrant agreement (the "Swiss Warrant
Agreement"), dated June 15, 1993, between the Company and Chemical Trust Company
of California, as warrant agent (the "Swiss Warrants"), (iii) warrants to
purchase through March 31, 1999 up to 1,530,000 shares of Company Common Stock
at an exercise price of $.75 per share (the "First ABG Warrants"), which First
ABG Warrants were granted to Xxxxxxx pursuant to an omnibus agreement, dated
April 12, 1993, between the Company and Xxxxxxx (the "Omnibus Agreement"), (iv)
warrants to purchase through March 31, 2003 up to 4,250,000 shares of Company
Common Stock at an exercise price of $.75 per share (the "Second ABG Warrants"),
which Second ABG Warrants were granted to Xxxxxxx pursuant to the Omnibus
Agreement, (v) warrants to purchase through March 31, 1999 up to 800,000 shares
of Company Common Stock at an exercise price of $.75 per share (the "Current
Warrants"), which Current Warrants were granted to Xxxxxxx pursuant to a warrant
agreement dated April 12, 1993, (vi) a convertible secured promissory note in
the principal amount of $700,000 entitling the holder thereof to acquire up to
1,000,000 shares of Company Common Stock upon conversion thereof (the
"Convertible Note"), which Convertible Note was issued to Xxxxxxx Capital, LLC
on March 28, 1996 and which currently is owned by Xxxxxx X. Xxxxxxx, Xx., (vii)
stock options covering up to 50,000 shares of Company Common Stock granted by
the Company to Xxxxx Xxxxxxxxxx at an exercise price of $.75 per share (the
"Consultant Options"), the terms of which Consultant Options are reflected in an
option agreement, dated August 26, 1993, (viii) options granted pursuant to a
settlement agreement dated April 30, 1995 (the "Settlement Agreement"), which
options (the "Settlement Options") entitle the holders thereof to purchase up to
200,000 shares of Company Common Stock at an exercise price of $1.00 per share,
which price is payable by reducing amounts otherwise payable by the Company,
(ix) Warrants to purchase through September 30, 1997 up to 10,000 shares of
Company Common Stock at an exercise price of $4.00 per share (the "ITT
Warrants"), which ITT Warrants were granted to ITT Commercial Finance
Corporation pursuant to a warrant agreement dated October 1, 1992 (the "ITT
Warrant Agreement"), (x) warrants to purchase through December 20, 1997 up to
75,326 shares of Company Common Stock at an exercise price of $1.50 per share
(the "Xxxxxxx Warrants"), which Xxxxxxx Warrants were granted to Xxxxxx X.
Xxxxxxx pursuant to a warrant agreement dated November 18, 1992 (the "Xxxxxxx
Warrant Agreement"), and (xi) certain rights (the "Rights") granted pursuant to
the Company's Rights Agreement, dated as of August 8, 1991, between the Company
and Bank of America National Trust & Savings Association, as amended (the
"Rights Agreement"), the Company does not have outstanding any options or
warrants to purchase, or contracts to issue, or contracts or any other rights
entitling anyone to acquire, shares of its capital stock of any class or kind,
or securities convertible into or exchangeable for such shares. In light of
commitments made by Xxxxxx X. Xxxxxxx, Xx. and Xxxxxxx to VSI in the Inducement
Agreements with respect to the Convertible Note, the First ABG Warrants, the
Second ABG Warrants and the Current Warrants, immediately prior to the Effective
Time of the Merger the outstanding shares of Company Common Stock shall not
exceed the above-mentioned 14,296,773 Outstanding Common Shares plus (a) up to
633,166 shares of Company Common Stock which may be issued between the date
hereof and the Closing Date upon the exercise of options previously granted
pursuant to the Option Plan, (b) up to 1,083,317 shares of Company Common Stock
which may be issued between the date hereof and the Closing Date upon exercise
of the Swiss Warrants, (c) up to 800,000 shares of Company Common Stock which
may be issued by the Company upon the exercise of the Current Warrants, (d) the
1,000,000 shares of Company Common Stock to be issued upon conversion of the
Convertible Note, (e) up to 50,000 shares of Company Common Stock which may be
issued upon the exercise of the Consultant's Options, (f) up to 200,000 shares
of Company Common Stock which may be issued upon the exercise of the Settlement
Options, (g) up to 10,000 shares of Company Common Stock which may be issued
upon exercise of the ITT Warrants and (h) up to 75,326 shares of Company Common
Stock which may be issued upon exercise of the Xxxxxxx Warrants. The Disclosure
Letter contains a complete and accurate schedule setting forth the names of each
holder of the options currently outstanding under the Option Plan ("Plan
Options" or "Employee Options"), the First ABG Warrants, the Second ABG
Warrants, the Current Warrants, the Convertible Note, the Consultant's Options,
the Settlement Options, the ITT Warrants and the Xxxxxxx Warrants, the number of
shares of Company Common Stock currently issuable to each such holder pursuant
to such options, warrants and Convertible Note (after giving effect to the
anti-dilution provisions applicable thereto), the current exercise price of each
of such options, warrants and Convertible Note (after giving effect to the
anti-dilution provisions applicable thereto), the dates on which each such
option or warrant granted to such holder becomes exercisable (or if such option
becomes exercisable in installments, the dates and percentages applicable to
such installments) and the date on which each such option or warrant terminates.
The Company has amended its Rights Agreement in such a manner that the execution
of this Agreement and the consummation of the Merger will not cause any of the
Rights to become exercisable with or without the passage of time.
SECTION 2.3 Subsidiaries. The Company's subsidiaries (collectively,
the "Subsidiaries" and each such entity individually, a "Subsidiary") are
corporations duly organized, validly existing and in good standing under the
laws of their respective jurisdictions of incorporation, and each Subsidiary has
all requisite corporate power and authority to own its respective property and
conduct the respective business in which it is engaged. The Disclosure Letter
contains an accurate and complete list of (i) all of the Subsidiaries and (ii)
the dates of filing of each Subsidiary's articles of incorporation and all
amendments thereto with the Secretary of State of the applicable jurisdiction of
organization and the dates of the current by-laws of each such Subsidiary. The
Company has no equity interest in any corporation, partnership, limited
liability company or other entity other than its interests in the Subsidiaries.
All of the Subsidiaries are inactive.
SECTION 2.3A ABG. As set forth in the Omnibus Agreement, Xxxxxxx
leases to the Company certain equipment pursuant to the "Equipment Lease" (as
such phrase is defined in the Omnibus Agreement) and licenses to the Company
certain intellectual property pursuant to the "License of Intellectual Property"
(as such phrase is defined in the Omnibus Agreement). The assets leased and
licensed by Xxxxxxx to the Company pursuant to the Equipment Lease and the
License of Intellectual Property, together with any "Improvements" (as such term
is defined in the License of Intellectual Property), are all included within the
definition of Scheduled Assets in the Xxxxxxx Healthcare Inducement Agreement
and comprise the only assets of the blood gas collection product line marketed
and sold by the Company (such assets and Improvements being hereinafter referred
to as the "ABG Assets", such product line being hereinafter referred to as the
"ABG Product Line" and the business presently operated by the Company with
respect to the ABG Product Line being hereinafter referred to as the "ABG
Business") that are owned by any entity other than the Company. All of the
equipment leased by Xxxxxxx pursuant to the Equipment Lease is located in the
Company's premises in Englewood, Colorado. With the exception of the Terumo
litigation referred to herein, the Company is not aware of any basis or claim
for material indemnification by Xxxxxxx against the Company under the Equipment
Lease or the License of Intellectual Property.
SECTION 2.4 Qualifications. The Disclosure Letter contains an accurate
and complete list of all States in which the Company and each Subsidiary are
qualified to do business. The Company and each Subsidiary are qualified to do
business in each State and in each foreign country in which their failure to so
qualify would have a material adverse effect on the financial condition, assets,
business or operations of the Company and its Subsidiaries, taken as a whole.
SECTION 2.5 SEC Filings. Since March 30, 1994, the Company has filed
with the Securities and Exchange Commission (the "SEC") all reports and
statements (consisting solely of those reports described in the Disclosure
Letter) which it was required to file with the SEC pursuant to the Securities
Exchange Act of 1934 (the "1934 Act"). None of the reports and statements filed
by the Company with the SEC pursuant to the 1934 Act from March 30, 1994 through
the date hereof (collectively, the "Reports") contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
SECTION 2.6 Owned Real Estate. The only real estate owned by the
Company or any of its Subsidiaries is the real estate on which the Company's
principal office is located at 00000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx.
None of the ABG Assets constitute real estate. All buildings located on such
owned real estate (the "Owned Buildings") comply in all material respects with
all municipal, state and federal statutes, ordinances, rules and regulations
applicable to the construction of such buildings and their actual use.
SECTION 2.7 Leased Real Estate. The Company and its Subsidiaries do
not lease any real estate other than pursuant to two real estate leases (the
"Leases"). The Business is conducted solely from either the Owned Buildings or
from real estate subject to the Leases. The Disclosure Letter contains an
accurate and complete list of the dates of the Leases and any amendments
thereto. The Company and the Subsidiaries are not in material default under the
Leases and the Company is not aware of any facts which, with notice and/or the
passage of time, would constitute such a default. Consent is required under both
of the Leases in connection with the Merger.
SECTION 2.8 Leased Tangible Personal Property. The Company and its
Subsidiaries do not lease any personal property other than pursuant to (i)
leases which expire on not more than 90 days notice by the Company or a
Subsidiary, (ii) leases which require annual rentals of not more than $25,000,
(iii) the "Equipment Lease" (as defined in the Omnibus Agreement) and (iv)
leases ("Personalty Leases") listed in the Disclosure Letter. Xxxxxxx is not a
lessee of any of the ABG Assets. The Company and the Subsidiaries are not in
material default under any of the Personalty Leases or the Equipment Lease and
the Company is not aware of any fact which, with notice and/or passage of time,
would constitute such a default. No consent is required under the Personalty
Leases or the Equipment Lease in connection with the Merger.
SECTION 2.9 Intentionally Omitted.
SECTION 2.10 Intangible Personal Property. The Disclosure Letter
contains an accurate and complete list of all distributorship, franchise and
license agreements (whether the Company or any of its Subsidiaries is the
grantor or grantee of such distributorship, franchise or license), and all
patents, patent applications, trademarks, trademark applications and trade names
(whether the Company or any of its Subsidiaries owns such items or is licensed
to use them) currently owned or used by the Company or, with respect to the ABG
Assets, Xxxxxxx (the "Intellectual Property"). The Company or a wholly-owned
Subsidiary of the Company, or, with respect to the ABG Assets, Xxxxxxx, is the
sole and exclusive owner of, or (in the case of the Company or any of its
Subsidiaries) is a valid licensee or lessee of, or has the right to use in the
manner currently used, each of said items of Intellectual Property and has the
right to use in the manner currently used all other items of intangible personal
property (including, without limitation, copyrights) owned or used by the
Company or any of its Subsidiaries in any of their businesses or used by
Xxxxxxx, the Company or any of its Subsidiaries with respect to the ABG Assets
or the ABG Business (together with the Intellectual Property, the "Intangible
Property"); said items of Intangible Property represent the only intangible
personal property required by the Company and its Subsidiaries in order to
operate the ABG Business and the businesses presently conducted by the Company
and its Subsidiaries; there are no claims or demands against Xxxxxxx, the
Company or any of its Subsidiaries with respect to any of such items of
Intangible Property, and no proceedings have been instituted, are pending, or to
the knowledge of the Company have been threatened to terminate or cancel any
such agreements or which challenge the right of Xxxxxxx, the Company or any of
its Subsidiaries with respect to any of said items of Intangible Property; and
there are no facts known to the Company which make it likely that any such
agreements will not be renewed at their next expiration date or which might
reasonably serve as the basis, in whole or in part, of any claim that any part
of the business carried on by the Company or any of its Subsidiaries infringes
the patent, trademark, trade name, copyright, or other rights of any other
person. With respect to the Terumo litigation referenced in the Disclosure
Letter, the Company makes no representation as to the likelihood of any ultimate
determination, whether positive or negative. Subject to the interests of the
Company's distributors in information generated by such distributors, the
Company and its Subsidiaries have the unrestricted right to use, free from any
rights or claims of others, all trade secrets and customer lists which the
Company or any of its Subsidiaries has used or which the Company or any of its
Subsidiaries is now using in connection with the sale of any and all products or
services which have been or are being sold by the Company or any of its
Subsidiaries, including assets included within the ABG Business.
SECTION 2.11 Accounts Receivable and Inventory.
2.11.1 All accounts receivable of the Company and its Subsidiaries
have originated in the ordinary course of business, are valid and are not
subject, to any material extent, to any defense, counterclaim or setoff.
2.11.2 All inventory in the possession of the Company or any of its
Subsidiaries is owned by the Company or one or more of its Subsidiaries and
recorded on such entities' books and records in accordance with generally
accepted accounting principles consistently applied. All such inventory has
been valued at the lower of cost, calculated on a FIFO method, or market.
No inventory in the possession of the Company or any of its Subsidiaries
has been consigned. The Company believes that the reserves for inventory
obsolescence contained in the Company's December 31, 1995 and September 29,
1996 consolidated financial statements are adequate. No inventory relating
to the ABG Business is owned by Xxxxxxx.
SECTION 2.12 Title to Assets.
2.12.1 The Company and its Subsidiaries have good and marketable title
in and to all of their property reflected in the December 28, 1996
consolidated balance sheet referred to in Section 2.22.1 hereof (the
"Balance Sheet") plus all assets purchased by the Company and its
Subsidiaries since December 28, 1996, less all assets which the Company or
its Subsidiaries have disposed of in the ordinary course since such date,
which property presently owned by the Company or any of its Subsidiaries is
free and clear of all security interests, consignments, liens, judgments,
encumbrances, restrictions, or claims of any kind except (a) those items
that secure liabilities that are reflected on the Balance Sheet or that are
described in the notes thereto, (b) with respect to owned real property,
title imperfections accurately and completely noted in the title reports
listed in the Disclosure Letter, and minor title imperfections which do
not, in the aggregate, adversely affect the Company's ability to use such
property as it is currently being used, and (c) liens for current taxes or
assessments not yet due or delinquent.
2.12.2 To the best of the Company's knowledge, Xxxxxxx has good and
marketable title in and to all of the ABG Assets to the extent described in
the Disclosure Letter, which property presently owned by Xxxxxxx is free
and clear of all security interests, consignments, liens, judgments,
encumbrances, restrictions, or claims of any kind except (a) Xxxxxxx'x
obligations under the Equipment Lease and the License of Intellectual
Property and (b) liens for current taxes or assessments not yet due or
delinquent.
SECTION 2.13 Material Contracts.
2.13.1 The Disclosure Letter accurately identifies all of the
following contracts or other obligations (and any amendments thereto) to
which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound: (a) any written contracts with
or loans to any of the Company's, or any of the Subsidiaries', shareholders
(including, without limitation, Xxxxxxx and its affiliates), officers,
directors, employees, consultants, salespersons, distributors or sales
representatives; (b) any employee benefit plan made available by the
Company or any of its Subsidiaries to any of their employees, including
without limitation any medical benefits payable to retired employees of the
Company or its Subsidiaries; (c) any collective bargaining agreement; (d)
any outstanding option plans, options, warrants, warrant agreements and
rights agreements; (e) any contracts with customers and suppliers other
than purchase orders delivered in the ordinary course of business; (f) any
deeds of trust, mortgages, conditional sales contracts, security
agreements, pledge agreements, trust receipts, or any other agreements or
arrangements whereby any material amount of the assets of the Company or
any Subsidiary are subject to a lien, encumbrance, charge or other
restriction; (g) any loan agreements, letters of credit or lines of credit,
including without limitation any documents pertaining to the Company's
Swiss bonds and Swiss notes; (h) any contracts restricting the Company or
any Subsidiary from doing business in any areas or in any way limiting
competition; (i) any contracts calling for aggregate payments by the
Company or any Subsidiary in excess of $25,000 and which are not terminable
without cost or liability on notice of 90 days or less; (j) any joint
venture, partnership or limited partnership agreement or limited liability
company operating agreement involving the Company or any Subsidiary; (k)
any guarantees by the Company or any Subsidiary of the obligations of any
other party except those resulting from the endorsement of checks deposited
by the Company or any Subsidiary for collection; (l) any engagement letter
relating to the Merger; (m) any other contracts which could have a material
impact on the Company's consolidated results of operations or consolidated
financial condition; and (n) any commitments to enter into any of the types
of contracts and obligations referred to in this Section 2.13.1. The
Company and its Subsidiaries are not in material default under any of such
contracts, obligations or commitments and the Company is not aware of any
facts which, with notice and/or the passage of time, would constitute such
a default and are not aware of any default by any party thereto which would
have a materially adverse effect upon the results of operations or
financial condition of the Company and its Subsidiaries taken as a whole.
No consent is required under any of the contracts, obligations and
commitments referred to in this Section 2.13.1 in connection with the
Merger.
2.13.2 No purchase commitment of the Company or any of its
Subsidiaries is substantially in excess of the normal, ordinary, and usual
requirements of the business of the Company and its Subsidiaries.
2.13.3 The Company and its Subsidiaries are not a party to or
otherwise bound by any contract, agreement, plan, lease, license,
commitment, or undertaking which is materially adverse, materially onerous,
or materially harmful to any aspect of the businesses of the Company and
its Subsidiaries; provided, however, that no representation is made in this
Section 2.13.3 with respect to any agreement that has been identified in
any section of the Disclosure Letter.
2.13.4 To the best of the Company's knowledge, Xxxxxxx is not under
any material contractual obligation with respect to the ABG Product Line
other than as set forth in the Omnibus Agreement, the Equipment Lease and
the License of Intangible Property.
SECTION 2.14 Customers and Suppliers. The Disclosure Letter contains a
complete and accurate list setting forth, for the ten months ended January 25,
1997, all customers who purchased more than $100,000 in goods from the Company
and its Subsidiaries and all suppliers from whom the Company and its
Subsidiaries purchased more than $100,000 in products, the total value of
business transacted by the Company and its Subsidiaries with such customers or
suppliers during such period, and, if applicable, the reasons that any such
contracts were terminated. Except as set forth in the Disclosure Letter and
subject to arrangements agreed upon by the Company and VSI with respect to the
distribution of the Company's products subsequent to the date hereof, the
Company has not been notified that any of such customers or suppliers intends to
terminate or change significantly its relationship with the Company and its
Subsidiaries on or after the Effective Time of the Merger. None of the Company's
presently outstanding proposals to customers which are subject to competitive
bidding would, if accepted, materially adversely affect the Company's profit
margins. For the twelve months ended December 28, 1996, approximately 40% of the
Company's business was subject to competitive bidding. For the twelve months
ending December 28, 1997, the Company does not reasonably expect that more than
approximately 40% of its business will be subject to competitive bidding.
SECTION 2.15 Transactions With Directors, Officers, Employees and
Affiliates. Except as disclosed in reports filed by the Company with the SEC,
there have been no transactions since July 1, 1993 between the Company and any
director, officer, employee or affiliate (as defined in Rule 405 promulgated by
the SEC, it being agreed by the parties that Xxxxxxx and its officers, directors
and 10% shareholders shall be deemed "affiliates" of the Company for purposes of
this Agreement) of the Company, except on an arm's length basis in accordance
with normal business practices. Since July 1, 1993, none of the officers,
directors or affiliates of the Company, or any member of the immediate family of
any such persons, has been a director or officer of, or has had a material
interest in, any firm, corporation, association or business enterprise which
during such period has been a material supplier, customer or sales agent of the
Company or any of its Subsidiaries or has competed to a material extent with the
Company or any of its Subsidiaries.
SECTION 2.16 Litigation.
2.16.1 Except as disclosed in the Reports: (i) there are no legal,
administrative, arbitration or other proceedings or claims pending or to
the knowledge of the Company threatened against the Company or any of its
Subsidiaries (other than proceedings or claims which are reasonably likely
not to have a material adverse effect upon the Company's financial
condition or results of operations); (ii) the Company and its Subsidiaries
are not subject to any existing judgment; (iii) the Company and its
Subsidiaries have not received any inquiry from any agency of the federal
or of any state or local government about the transactions contemplated
hereby, or about any violation or possible violation of any law, regulation
or ordinance affecting its business, its assets, the ABG Business, the ABG
Assets or the ABG Product Line; and (iv) the Company and its Subsidiaries
have not been subject to any products liability claims during the three
years ended on the date of this Agreement. During the three year period
ending on the date of this Agreement, no claim has been made, and to the
best of the knowledge of the Company, no basis exists for any claim, by any
current or former director, officer, employee or other agent of the Company
or any of its Subsidiaries seeking indemnification, whether pursuant to
statute, court rule, contract, by-law, a provision in an article of
association or otherwise, based on such person's involvement in the
business of the Company or any of its Subsidiaries.
2.16.2 To the best of the Company's knowledge, (i) there are no legal,
administrative, arbitration or other proceedings or claims pending or
threatened against Xxxxxxx with respect to the ABG Product Line or the ABG
Assets (other than proceedings or claims which, if made against the
Company, would not be reasonably likely to have a material adverse effect
upon the Company's financial condition or results of operations); (ii)
Xxxxxxx is not subject to any existing judgment which would adversely
affect Xxxxxxx'x obligations to convey the ABG Assets upon exercise of the
Repurchase Option (as hereinafter defined); and (iii) Xxxxxxx has not
received any inquiry from any agency of the federal or of any state or
local government about the transactions contemplated hereby, about any
exercise of the Repurchase Option or about any violation or possible
violation of any law, regulation or ordinance affecting the ABG Assets, the
ABG Business or the ABG Product Line.
SECTION 2.17 Insurance. The Disclosure Letter contains an accurate and
complete list of all insurance coverage maintained by the Company and its
Subsidiaries on the date hereof. Except as otherwise indicated in the Disclosure
Letter, such coverage applies to the Company's interests in the ABG Product
Line. The Company and its Subsidiaries have not received any notice of
cancellation with respect to any insurance policy relating to such coverage. All
premiums due under any such insurance policy have been paid in full.
SECTION 2.18 Licenses and Permits. The Company and its Subsidiaries
and the employees and agents of the Company and its Subsidiaries have all
material licenses, permits, orders, approvals and authorizations required for
the conduct of their respective businesses as presently conducted, including
without limitation the ABG Business. In all material respects, the Company and
its Subsidiaries are acting within the terms of such licenses, permits, orders,
approvals and authorizations, and, to the best knowledge of the Company, no
suspension or cancellation thereof has been threatened.
SECTION 2.19 Authority Relative to Agreement; Enforceability. The
execution, delivery and performance of this Agreement by the Company (A) are
within the legal capacity and power of the Company; (B) have been duly
authorized by all requisite corporate action on the part of the Company, other
than shareholder approval; (C) require the approval or consent of, or filing
with, no persons, entities or agencies, other than such approvals as shall be
required under the 1934 Act and state securities laws and such filings as shall
be required pursuant to the Xxxx Xxxxx Xxxxxx Antitrust Improvements Act (the
"Xxxx Xxxxx Xxxxxx Act"); and neither violate nor constitute a default under,
nor create a lien or breach under, the terms of the articles of incorporation
and by-laws of the Company or any Subsidiary or of any material agreement,
document or instrument binding upon the Company or any Subsidiary. This
Agreement is a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except insofar as the
enforcement thereof may be limited by bankruptcy, insolvency, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
subject to equitable principles limiting the availability of equitable remedies.
At the Special Meeting (as hereinafter defined), approval of the Merger by
holders of two-thirds of the shares of Company Common Stock outstanding on the
applicable record date will be sufficient to constitute shareholder approval of
the Merger under Colorado law and under the Company's articles of incorporation
and by-laws.
SECTION 2.20 Compliance With Applicable Laws; Environmental Matters.
2.20.1 The Company and its Subsidiaries and all real property now
owned by the Company and its Subsidiaries ("Company Owned Real Property")
are in compliance in all material respects with all federal, state, county,
and municipal laws, ordinances, regulations, rules, reporting requirements,
judgments, orders, decrees and requirements of common law applicable to the
conduct of the Company and its Subsidiaries and to the assets owned, used
or occupied by the Company and its Subsidiaries (collectively referred to
hereinafter as the "General Laws"), including without limitation all
applicable federal, state, county and municipal laws, ordinances,
regulations, rules, reporting requirements, judgments, orders, decrees and
requirements of common law concerning or relating to the protection of
health and the environment (collectively referred to hereinafter as the
"Environmental Laws"). To the best of the Company's knowledge, all real
property owned, operated, used or leased by, to or for the Company and its
Subsidiaries, with respect to any aspect of their businesses including,
without limitation, the ABG Business, at any time since 1990 other than the
Company Owned Real Property (the "Company Leased/Previously Owned
Property"), was and is in compliance in all material respects with the
General Laws and the Environmental Laws. The Company and its Subsidiaries
have not received any notification of violation, citation, complaint,
request for information, order, directive, compliance schedule or other
similar enforcement order, or any other notice from any administrative or
governmental agency or entity, indicating that any business or operation of
or any real property owned, operated, used or leased by, to or for the
Company or any Subsidiary, was not or currently is not in compliance in all
material respects with all Environmental Laws and General Laws. To the best
of the Company's knowledge, Xxxxxxx has not received any notification of
violation, citation, complaint, request for information, order, directive,
compliance schedule or other similar enforcement order, or any other notice
from any administrative or governmental agency or entity, indicating that
any aspect of the ABG Business was not or currently is not in compliance in
all material respects with all Environmental Laws and General Laws.
2.20.2 All businesses and operations of the Company and its
Subsidiaries (including without limitation the ABG Business), the Company
Owned Real Property and, to the best of the Company's knowledge, the
Company Leased/Previously Owned Property, are in compliance in all material
respects with all: (i) judgments, orders, directives, decrees or awards of
any court, arbitrator or administrative or governmental agency or entity
concerning compliance with the Environmental Laws; and (ii) consent
decrees, administrative orders, settlement agreements or other settlement
documents entered into with any administrative or governmental agency or
entity concerning compliance with the Environmental Laws.
2.20.3 All assets owned, leased, licensed or otherwise used by the
Company or any of its Subsidiaries, including, without limitation, the
Company Owned Real Property, and, to the best of the Company's knowledge,
the Company Leased/Previously Owned Property, are free of all materials
designated as hazardous substances, wastes, hazardous materials, pollutants
or contaminants under any Environmental Law (collectively, "Hazardous
Materials") and physical conditions which violate any Environmental Laws;
all storage tanks and associated pipes, pumps and structures (whether above
or below ground) located in or on the Company Owned Real Property and, to
the best of the Company's knowledge, the Company Leased/Previously Owned
Property, have been identified in the Disclosure Letter, are in sound
condition, free of corrosion, meet all design and performance standards
required by all Environmental Laws, and do not now, and did not at any time
in the past, evidence impaired integrity or leakage. No Hazardous Materials
used or generated by the Company or any of its Subsidiaries or generated at
the Company Owned Real Property or, to the best of the Company's knowledge,
generated at the Company Leased/Previously Owned Property, have been
treated, stored, transported or disposed of in violation of any
Environmental Laws; and all Hazardous Materials which have been utilized in
the business or operation of the Company or any of its Subsidiaries
(including without limitation the ABG Business) or which have been removed,
released, discharged or emitted from the Company Owned Real Property or, to
the best of the Company's knowledge, from the Company Leased/Previously
Owned Property, were and are documented, transported and disposed of in
compliance in all material respects with all Environmental Laws.
2.20.4 The Disclosure Letter lists all permits, licenses and other
authorizations issued by administrative or governmental agencies or
entities under the General Laws and the Environmental Laws which are held
by the Company or any of its Subsidiaries or which are held by Xxxxxxx with
respect to the ABG Business (the "General and Environmental Permits"). The
General and Environmental Permits include all such permits which are
necessary to the business and operations of the Company and its
Subsidiaries (including without limitation the ABG Business) and the
Company, the Subsidiaries and, to the best of the Company's knowledge,
Xxxxxxx are and have been in compliance in all material respects with the
terms and conditions of the General and Environmental Permits. Under the
General Laws, the Environmental Laws and the General and Environmental
Permits, the consummation of the transactions contemplated by this
Agreement and any exercise of the Repurchase Option do not and will not:
(i) affect the validity of the General and Environmental Permits; or (ii)
require the consent of any governmental authority or third party.
SECTION 2.21 ERISA and Employment Matters.
2.21.1 The Disclosure Letter contains an accurate and complete list of
all funded or unfunded, written or oral, employee benefit plans, contracts,
agreements, incentives and salary, wage or other compensation plans or
arrangements, including but not limited to all pension and profit sharing
plans, savings plans, bonus plans, deferred compensation plans, incentive
compensation plans, stock purchase plans, supplemental retirement plans,
severance or termination pay plans, stock option plans, hospitalization
plans, medical plans, life insurance plans, dental plans, disability plans,
cafeteria plans, dependent care plans, tuition reimbursement plans,
educational assistance plans, salary continuation plans, vacation plans,
supplemental unemployment benefit plans, collective bargaining agreements,
employment contracts, consulting agreements, retiree benefits and
agreements, severance agreements and each other employee benefit program,
plan, policy or arrangement (each a "Benefit Plan") maintained, contributed
to, or required to be contributed to by the Company or any Subsidiary with
respect to any current or former employees, directors, officers, agents or
consultants of the Company or any Subsidiary, or for which the Company or
any Subsidiary may be responsible or with respect to which it may have any
liability, whether or not subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Disclosure Letter indicates
whether each Benefit Plan is funded or unfunded, and insured or uninsured.
2.21.2 The Disclosure Letter contains an accurate and complete list of
all documents embodying or relating to the Benefit Plans and of all
employee handbooks and policy manuals utilized by the Company or any of the
Subsidiaries within the past five years. Each of the Benefit Plans listed
in the Disclosure Letter is and has at all times been in compliance in all
material respects with all applicable provisions of ERISA, the Code, the
Age Discrimination in Employment Act of 1967, the Americans with
Disabilities Act of 1990, the Family Medical Leave Act of 1993 and all
other laws applicable to the Benefit Plans.
2.21.3 Each Company "employee pension benefit plan" as defined in
ss.3(2) of ERISA (each a "Pension Plan") which is intended to meet the
requirements of Section 401(a) of the Code now meets, and since its
inception has met, the requirements for qualification under Section 401(a)
of the Code and nothing has occurred which would adversely affect the
qualified status of any such Pension Plan. The Internal Revenue Service has
issued a favorable determination letter with respect to the qualification
under the Code (including without limitation the Tax Reform Act of 1986) of
each Pension Plan, the Disclosure Letter contains an accurate and complete
list of the dates of such letters and the Internal Revenue Service has not
taken any action to revoke any such letter.
2.21.4 Each fiduciary and every plan official of each Benefit Plan is
bonded to the extent required by Section 412 of ERISA. The Company and the
Subsidiaries have not maintained, contributed to or been required to
contribute to (i) any Pension Plan under which more than one employer makes
contributions (as contemplated by Section 4064(a) of ERISA) or (ii) a
"multiemployer plan" as defined in Section 3(37)(A) and (D) of ERISA, nor
have they withdrawn from any Pension Plan as a "substantial employer" as
defined in Section 4001(a)(2) of ERISA so as to become subject to the
provisions of Section 4063 of ERISA, or ceased operations at any facility
so as to become subject to the provisions of Section 4062 of ERISA. The
Disclosure Letter sets forth an accurate and complete list of all annual
reports filed during the last three years with the Internal Revenue
Service, the Department of Labor or the Pension Benefit Guaranty
Corporation by or on behalf of every Benefit Plan.
2.21.5 The execution and performance of the transactions contemplated
by this Agreement will not, alone or together with any other event,
constitute an event under any Benefit Plan or individual agreement that
will result in any payment (whether of severance pay or otherwise), or
acceleration, vesting or increase in benefits, with respect to any current
or former employee, officer, consultant, agent or director of the Company
or any Subsidiary.
2.21.6 Long-term disability benefits for any employee of the Company
and each Subsidiary who has become disabled (including without limitation
any individual who is disabled but has not satisfied any applicable waiting
period) and death benefits for any employee of the Company and each
Subsidiary who has died are described in the Disclosure Letter and are
insured in amounts and with insurance companies described in the Disclosure
Letter.
2.21.7 Each group health plan (within the meaning of Section
5000(b)(1) of the Code) maintained by the Company or any Subsidiary has
been administered in substantial compliance with the coverage continuation
requirements contained in the Consolidated Omnibus Budget Reconciliation
Act of 1985 ("COBRA") and as provided under Section 4980B of the Code and
any regulations promulgated or proposed under the Code. No current or
former employee, officer, consultant, agent or director of the Company and
the Subsidiaries, and/or their spouses or dependents, is presently entitled
or may be entitled in the future to any post- termination employment,
health, dental, disability or life insurance benefits, except to the
minimum extent required by COBRA.
2.21.8 The Company and the Subsidiaries have made all contributions
required to be made to each Benefit Plan under the terms of the plan and
applicable law, and are not in default under any Benefit Plan. No
prohibited transaction (as defined in Section 4975 of the Code or Section
406 of ERISA) has occurred with respect to any Benefit Plan which could
subject any Benefit Plan or any related trust, the Company, any Subsidiary,
the Surviving Corporation or any director or employee of any of them to any
tax or penalty imposed under Section 4975 of the Code or Section 502(i) or
502(1) of ERISA, either directly or indirectly, and whether by way of
indemnity or otherwise. No event or set of circumstances has occurred under
which the Company, any of its Subsidiaries, any Benefit Plan, or any
fiduciary thereof, could directly or indirectly be subject to any other
liability (other than benefits payable in accordance with the terms of such
Benefit Plan and related expenses) under ERISA (including, but not limited
to, Sections 409, 510, 4062, 4064 or 4069 thereof), the Code (including,
but not limited to, Sections 4971, 4972, 4976 or 4980B thereof), the Family
Medical Leave Act of 1993 or any other applicable law.
2.21.9 The Company or the plan "administrator" (as defined in Section
3(16) of ERISA) of each Benefit Plan has timely filed all ERISA and Code
required reporting and disclosure forms, including, but not limited to, the
Form 5500 series, with the appropriate government agencies, with respect to
every Benefit Plan required to file such forms.
2.21.10 There are and there have been no inquiries, proceedings,
claims, audits or suits pending or, to the best knowledge of any Company
Party, threatened by any governmental agency or authority or by any
participant or beneficiary against the Company, any of its Subsidiaries,
any of their respective directors, officers or employees, any Benefit Plan
of the Company or any of its Subsidiaries, or any fiduciary of a Benefit
Plan, with respect to the operation of any Benefit Plan.
2.21.11 Neither the Company nor any of its Subsidiaries have any
obligation to pay medical benefits to retired employees.
2.21.12 The Disclosure Letter contains a list, as of the date hereof,
showing the names of all employees of the Company and the Subsidiaries,
their original dates of employment, their job titles and their hourly
rates.
2.21.13 All employees of the Company and the Subsidiaries are
employees at will who may be terminated by the Company at any time with no
obligation to make any payment except wages to the date of termination and
such other amounts as may be required by law.
2.21.14 The Company and the Subsidiaries are in compliance in all
material respects with all federal and state laws respecting employment,
wages and hours. Such entities have not engaged in any discriminatory
hiring or employment practices or any unfair labor practices nor have any
employment discrimination or unfair labor practice complaints against such
entities been filed, or, to the knowledge of the Company, been threatened
to be filed, with any federal or state agency having jurisdiction over the
labor matters of the Company and the Subsidiaries. There are no outstanding
threats by any former employee of the Company or its Subsidiaries of any
suit alleging wrongful termination. The Company has no knowledge of facts
which might form a basis for any complaint or suit of a type described in
this Section 2.21.14. The Company and the Subsidiaries have no actual
knowledge that they employ any alien who does not have a valid permit to
work in the United States of America.
2.21.15 To the best of the knowledge of the Company's executive
officers, no current employee of the Company or any of the Subsidiaries is
bound by any previous non-competition agreement (other than agreements
given to the Company) and no employee, in his or her capacity as an agent
of the Company, has violated a confidentiality agreement or non-compete
agreement with an unrelated entity.
2.21.16 With respect to each facility in which the Company or any of
its Subsidiaries does business, the Company and its Subsidiaries and each
such facility are in compliance in all material respects with the Americans
With Disabilities Act.
2.21.17 During the three years ended December 28, 1996, there has not
been any labor dispute (including a strike, slowdown or work stoppage) or
threat of a labor dispute involving the Company or any of its Subsidiaries
or any attempt or threat of an attempt by a labor union to organize any
employees of the Company or any of its Subsidiaries. No employee of the
Company or any of its Subsidiaries is a member of or represented by any
labor union.
2.21.18 Intentionally omitted.
SECTION 2.22 Financial Statements.
2.22.1 Prior to the date hereof, the Company has delivered to VSI its
consolidated Balance Sheet dated December 28, 1996, its consolidated income
statement for the three months then ended and its consolidated statement of
cash flows for the three months then ended (such financial statements are
referred to herein as the "December Financial Statements"). The December
Financial Statements and the consolidated financial statements of the
Company included within the Reports filed with the SEC since January 1,
1996 fairly present the consolidated financial position of the Company and
the consolidated results of operations of the Company as at the dates and
for the periods to which they apply; such statements have been prepared in
conformity with generally accepted accounting principles, applied on a
consistent basis throughout the periods involved, and such financial
statements comply with all applicable provisions of Regulation S-X of the
SEC. The December Financial Statements and the interim financial statements
presented in such Reports include all adjustments (subject only to normal
recurring year-end adjustments) necessary for a fair presentation of the
Company's consolidated financial position and consolidated results of
operations as of the dates and for the periods presented therein.
2.22.2 On March 30, 1996 and December 28, 1996, the Company and its
Subsidiaries had no material liabilities (whether absolute, accrued,
contingent or otherwise) which were required to be reflected in and
disclosed on the Company's March 30, 1996 audited consolidated balance
sheet or the Balance Sheet (as to December 28, 1996) or in the notes
thereto pursuant to Regulation S-X of the SEC or in accordance with
generally accepted accounting principles, consistently applied, but were
not so reflected and disclosed. Since December 28, 1996, the Company and
its Subsidiaries have incurred no liabilities (whether absolute, accrued,
contingent or otherwise) in addition to those reflected in or disclosed on
the Balance Sheet or the related notes, except liabilities incurred in the
ordinary course of business and the execution by the Company of this
Agreement.
2.22.3 The books, records and system of internal accounting controls
of the Company and its Subsidiaries comply in all material respects with
Section 13(b) of the 0000 Xxx.
2.22.4 The Disclosure Letter contains an accurate and complete list of
the most recent management letters received by the Company or any of its
Subsidiaries.
SECTION 2.23 Taxes.
2.23.1 All tax and information returns required to have been filed by
the Company and its Subsidiaries have been filed with the appropriate
authority; and all federal, state and local taxes (including without
limitation income, franchise, property, sales, use, value-added,
withholding, excise, capital or other tax liabilities), charges,
assessments, penalties and interest of the Company and its Subsidiaries
("Tax Liabilities") required to be paid on or before December 28, 1996 were
paid on or before that date or accrued on the books of the Company and its
Subsidiaries as of that date. Such returns were correct in all material
respects as filed. No assessments or additional Tax Liabilities have been
proposed or threatened against the Company or any of its Subsidiaries or
any of their assets, and neither the Company nor any of its Subsidiaries
have executed any waiver of the statute of limitations on the assessment or
collection of any Tax Liabilities. The Balance Sheet includes adequate
provision for Tax Liabilities incurred or accrued as of December 28, 1996.
The Disclosure Letter contains an accurate and complete list of the dates
of filing of the Company's and each Subsidiary's most recent federal, state
and local tax returns.
2.23.2 The federal tax returns of the Company and its Subsidiaries
have been audited or examined by the Internal Revenue Service through the
dates specified in the Disclosure Letter. Adjustments, if any, to all such
returns have been agreed upon and paid by the Company or its Subsidiaries
or are being contested as indicated in the Disclosure Letter. There are no
pending investigations of the Company or any of its Subsidiaries or their
tax returns by any federal, state or local taxing authority and there are
no federal, state or local tax liens upon any of the assets of the Company
or any of its Subsidiaries. The Disclosure Letter contains an accurate and
complete description of the Company's transfer pricing policy and such
transfer pricing policy is in accordance with the specific pricing methods
described in regulations promulgated by the Internal Revenue Service under
Section 482 of the Code. To the best of the Company's knowledge, as of
March 30, 1996, the Company had net operating loss carryforwards totaling
$23,084,830, of which $7,329,242 were encumbered by the restrictions under
Section 382 of the Code (the "restricted NOLs"). The "section 382 annual
limitation" (within the meaning of Section 382 of the Code) with respect to
the restricted NOLs is $486,900. The Disclosure Letter contains an accurate
and complete list of (i) the years in which the Company's net operating
loss carryforwards expire, (ii) the amount of net operating loss
carryforwards which will expire in each of those years (separately broken
out to indicate the restricted NOLs and the nonrestricted NOLs) and (iii)
the extent of any "owner shift" or "equity structure shift" (within the
meaning of Section 382 of the Code) as of the date of this Agreement.
SECTION 2.24 Business Changes. Except for the transactions
contemplated by this Agreement, since March 30, 1996 there has not been:
2.24.1 any reduction through December 28, 1996 in the Company's
"Special Treatment Sales" (as defined herein), as compared with Special
Treatment Sales during the comparable period in the immediately preceding
fiscal year (it being understood that the term "Special Treatment Sales"
shall mean all of the Company's sales other than sales made through the
Company's United States (including Puerto Rico) dealers and sales made
through distributors of the Company's medical-surgical products);
2.24.2 any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the business of the Company
and its Subsidiaries taken as a whole (including without limitation the ABG
Business) or any material deterioration in (x) the condition of the Owned
Buildings or the personal property owned by the Company or any of its
Subsidiaries or leased, licensed or otherwise used by the Company or any of
its Subsidiaries in their respective businesses (including without
limitation the ABG Business) or (y) the condition or operation of the
heating, air conditioning, plumbing and electrical systems of the Owned
Buildings, excluding ordinary wear and tear;
2.24.3 any disposition, mortgage, pledge, or subjection to any lien,
claim, charge, option, or encumbrance of any property or asset of the
Company or any of its Subsidiaries or, to the best of the Company's
knowledge, of any of the assets included within the ABG Product Line, or
any cancellation or compromise of any debt or claim of the Company or any
of its Subsidiaries otherwise than in the ordinary course of business;
2.24.4 any acquisition by the Company or any of its Subsidiaries of
the assets or capital stock of another business entity;
2.24.5 any distribution or disposition of the assets of the Company or
any of its Subsidiaries other than in the ordinary course of business or
any distribution by Xxxxxxx of any of the ABG Assets;
2.24.6 any action taken by the United States Food and Drug
Administration (the "FDA"), including without limitation the delivery of a
report on Form 483, which could have a material adverse effect upon the
Company's consolidated financial condition or consolidated results of
operations;
2.24.7 any statute, order, judgment, writ, injunction, decree, permit,
rule or regulation of any court or any governmental or regulatory body
adopted or entered or proposed to be adopted or entered which may
materially and adversely affect the property or business of the Company or
any of its Subsidiaries (including without limitation the ABG Business),
other than those statutes, orders, judgments, writs, injunctions, decrees,
permits, rules or regulations which are applicable to the business of
health care generally or the business of manufacturing and selling medical
products generally and which do not and will not have a disproportionate
effect on the business of the Company or any of its Subsidiaries (including
without limitation the ABG Business) relative to the effect on other
entities in the business of manufacturing and selling similar medical
products; or
2.24.8 any dividend or distribution declared, set aside or paid in
respect of the Company Common Stock or any repurchase by the Company of
shares of Company Common Stock.
SECTION 2.25 Brokerage. Except as described in the Disclosure Letter,
neither the Company nor any of its Subsidiaries has engaged any broker or finder
to render services in connection with this Agreement or in connection with any
fairness opinions to be delivered in connection with this Agreement.
SECTION 2.26 Industrial Revenue Bonds. The Company and its
Subsidiaries are not indebted under any industrial revenue bonds.
SECTION 2.27 Inducement Agreements. Concurrent with the execution of
this Agreement, Xxxxxxx has delivered to VSI an inducement agreement, a copy of
which has been furnished to the Company (the "Xxxxxxx Healthcare Inducement
Agreement"), and Xxxxxx Xxxxxxx has delivered to VSI an inducement agreement, a
copy of which has been furnished to the Company (the "Xxxxxx Xxxxxxx Inducement
Agreement" and, collectively with the Xxxxxxx Healthcare Inducement Agreement,
the "Inducement Agreements"). The Company understands that the receipt of the
Inducement Agreements by VSI represents a material inducement to VSI to enter
into this Agreement and that VSI has relied upon the Inducement Agreements in
entering into this Agreement.
SECTION 2.28 Information. Any information in written or electronic
format provided or to be provided by or on behalf of the Company, Xxxxxxx or
their representatives to VSI or its representatives in connection with this
Agreement or the Merger (the "Information") has been, and will be, accurate in
all material respects. The Company has disclosed to VSI all information
regarding the Company and its Subsidiaries (including without limitation the ABG
Business) which is material to VSI's determination to execute this Agreement.
SECTION 2.29 Reorganization. The Company has not taken any action
other than relating to the consummation of the Merger, and is not aware of any
actions which have been taken or may be taken by any person, which would further
limit the Company's ability to utilize its net operating loss carryforwards
under Section 382 of the Code from the amounts described in Section 2.23.2
hereof.
SECTION 2.30 ABG Product Line. Xxxxxxx has agreed to extend the
repurchase option described in Section 2.03 of the Omnibus Agreement (the
"Repurchase Option") until June 15, 1999. The aggregate purchase price required
for the Company to exercise the Repurchase Option currently is $5,535,000, which
amount increases by $22,500 per month as of the first day of each calendar
month. The Company has delivered to VSI's counsel copies of each xxxx of sale,
assignment and other instrument of transfer and conveyance pursuant to which
Xxxxxxx acquired the Purchased Assets from the Company pursuant to the Omnibus
Agreement. The Disclosure Letter sets forth the calculation of all amounts paid
by the Company to Xxxxxxx by calendar year pursuant to the Equipment Lease and
the License of Intellectual Property. The Company has paid to Xxxxxxx all
amounts due to Xxxxxxx under the Equipment Lease and the License of Intellectual
Property through January 25, 1997 and the Company will have no obligation to pay
any amounts to Xxxxxxx with respect to the period from such date until the
Effective Time of the Merger other than to pay to Xxxxxxx an amount equal to
3.25% of the Company's net sales of the ABG Product Line during such period.
SECTION 2.31 FDA Matters. The Company and its Subsidiaries are in
compliance in all material respects with the United States Food, Drug and
Cosmetics Act, with all rules and regulations of the FDA applicable to the
Company or any of its Subsidiaries (including without limitation all Good
Manufacturing Practices regulations) and with all comparable state laws, rules
and regulations applicable to the Company or any of its Subsidiaries
(collectively, the "Device Laws"). The Disclosure Letter contains an accurate
and complete list of all dates of inspections of the Company or any of its
Subsidiaries made by the FDA or any similar state agencies during the six years
ended on the date of this Agreement, the dates of all correspondence between the
Company or any Subsidiary and the FDA or any such state agency with respect to
any such inspections and the dates of all reports delivered during such six year
period by any third-parties to the Company or any of its Subsidiaries with
respect to the compliance by the Company or any of its Subsidiaries with the
Device Laws. The Disclosure Letter contains an accurate and complete list of the
dates of all notices received by the Company or any of its Subsidiaries within
such six year period from the FDA or any other agency that enforces any of the
Device Laws. The Company has made available to representatives of VSI all
complaint files maintained by the Company and its Subsidiaries and all other
files maintained by the Company and its Subsidiaries with respect to compliance
with any aspect of the Device Laws. During the three years ended February 28,
1997, neither the FDA nor any comparable state agency has taken any action which
has had a material adverse effect upon the Company's consolidated financial
condition, results of operations, business or prospects.
SECTION 2.32 Full Disclosure. No representation or warranty made by
the Company in this Agreement or the Disclosure Letter, no certification
furnished or to be furnished by the Company to VSI pursuant to this Agreement,
and no document or electronic transmission delivered by the Company to VSI or
its counsel hereunder, including without limitation the Information, contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained herein or
therein not misleading. All documents delivered or to be delivered by the
Company to VSI and/or its counsel in connection with the negotiation, execution
and performance of this Agreement and the matters ancillary hereto are and will
be accurate and complete, and will contain all amendments through the date of
such delivery.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF VSI
VSI hereby represents, warrants and agrees as follows:
SECTION 3.1 Organization. VSI is a corporation, duly organized,
validly existing, and in good standing under the laws of the State of New
Jersey, and has all requisite corporate power and authority to own its property
and conduct the business in which it is engaged.
SECTION 3.2 Authority Relative to Agreement; Enforceability. The
execution, delivery and performance of this Agreement are (A) within the legal
capacity and power of VSI and Newco; (B) have been duly authorized by all
requisite corporate action on the part of VSI and Newco; (C) require the
approval or consent of, or filing with, no persons, entities or agencies, other
than the approval of one or more institutions that have extended credit to VSI
and the New Jersey Economic Development Authority and filings to be made
pursuant to the Xxxx Xxxxx Xxxxxx Act; and (D) neither violate, nor constitute a
default under, nor create a lien or breach under the terms of, the certificate
of incorporation and by-laws of VSI or Newco or any other subsidiary of VSI or
of any material agreement, document or instrument binding upon VSI or Newco or
any other subsidiary of VSI (other than loan agreements as to which appropriate
consents or waivers shall avoid any defaults). This Agreement is a legal, valid
and binding obligation of VSI and Newco enforceable against VSI and Newco in
accordance with its terms, except insofar as the enforcement thereof may be
limited by bankruptcy, insolvency, moratorium or similar laws affecting the
enforcement of creditors' rights generally and subject to equitable principles
limiting the availability of equitable remedies.
SECTION 3.3 Brokerage. VSI has not engaged any broker or finder to
render services in connection with this Agreement.
SECTION 3.4 Full Disclosure. No representation or warranty made by VSI
in this Agreement, no certification furnished or to be furnished by VSI to the
Company pursuant to this Agreement, and no document or electronic transmission
delivered by VSI to the Company or its counsel hereunder, contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or therein not
misleading.
ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.1 Regular Course of Business. Except as otherwise consented
to in writing by VSI prior to the Effective Time of the Merger or as
contemplated by this Agreement or any other agreement executed by VSI, the
Company will (and will cause each of its Subsidiaries to) carry on its business
(including without limitation the ABG Business) diligently and in the ordinary
course and use reasonable efforts to preserve its present business (including
without limitation the ABG Business) organization intact, keep available the
services of its present executive officers and preserve its present
relationships with persons having business dealings with it.
SECTION 4.2 Restricted Activities and Transactions. Except as
otherwise consented to in writing by VSI, prior to the Effective Time of the
Merger the Company will not and the Company will cause each of its Subsidiaries
not to:
4.2.1 amend its articles of incorporation or by-laws;
4.2.2 issue, sell or deliver, or agree to issue, sell or deliver, or
grant, or declare any stock divided or stock split with respect to, any
shares of any class of capital stock of the Company or any securities
convertible or exchangeable into any such shares or convertible or
exchangeable into securities in turn so convertible or exchangeable, or any
options, warrants or other rights calling for the issuance, sale or
delivery of any such shares or any such convertible or exchangeable
securities, except that the Company may issue shares of Company Common
Stock pursuant to the Employee Options, the Director Options, the Swiss
Warrants, the Consultant's Options, the Xxxxxxx Warrants, the ITT Warrants,
the Convertible Note or the Settlement Agreement, provided that such
options, warrants or Note are exercisable by their terms on the date of
such issuance and are outstanding on the date hereof and provided that the
applicable provisions of the Convertible Note and the Settlement Agreement
remain in full force and effect on the date of such issuance;
4.2.3 except in the ordinary course of business or as required upon
exercise of directors' fiduciary duties, mortgage or pledge any of its
assets, tangible or intangible;
4.2.4 (i) borrow, or agree to borrow, any funds, other than in the
ordinary course of business pursuant to the Company's existing credit
facilities in amounts that will not preclude the Company from satisfying
the condition set forth in Section 7.6 hereof, or (ii) except in the
ordinary course of business (and consistent with past practice),
voluntarily incur, assume or become subject to, whether directly or by way
of guarantee or otherwise, any obligation or liability (absolute or
contingent), (iii) except in the ordinary course of business (and
consistent with past practice), cancel or agree to cancel any material
debts of third-parties or claims against third-parties, (iv) except in the
ordinary course of business (and consistent with past practice), lease,
sell or transfer, or grant or agree to grant any preferential rights to
lease or acquire, any of its material assets, property or rights, or (v)
except in the ordinary course of business (and consistent with past
practice), make or permit any substantive amendment or termination of any
material contract, agreement, license or other right of which it is a
party;
4.2.5 adopt, materially amend or terminate any employee benefit plan
or materially increase the compensation or other benefits payable to any of
its employees; provided, however, that the Company may pay fiscal year-end
bonuses to its employees in an aggregate amount up to the amount disclosed
to VSI's Chief Financial Officer immediately prior to the execution of this
Agreement;
4.2.6 acquire control of, or an ownership interest in, any other
corporation, association, joint venture, partnership, business trust,
limited liability company or other business entity, or acquire control or
ownership of all or a substantial portion of the assets of any of the
foregoing, or enter into any agreement providing for any of the foregoing;
4.2.7 directly or indirectly solicit, encourage or authorize any
individual, corporation or entity (including without limitation its
directors, officers, employees, attorneys, accountants and investment
bankers) to directly or indirectly solicit or encourage any inquiry,
proposal, offer or possible offer from a third party relating to (i) the
purchase of shares of any class of capital stock of the Company or any
securities convertible or exchangeable into any such shares or convertible
or exchangeable into securities in turn so convertible or exchangeable, or
the acquisition of any option, warrant or other right to purchase or
otherwise acquire any such shares or convertible/exchangeable securities,
(ii) a tender or exchange offer for any shares of Company Common Stock,
(iii) a purchase, lease or other acquisition of the shares of Company
Common Stock owned by Xxxxxxx or all or a substantial portion of the assets
of the Company or any product line or line of business of the Company or
any of its Subsidiaries, or any other material asset of the Company or any
of its Subsidiaries, or (iv) a merger, consolidation or other combination
involving the Company (any such inquiry, proposal, offer or possible offer
being hereinafter referred to as a "Takeover Proposal"); or, subject to the
fiduciary obligations of the Company's Board of Directors, provide any
individual, corporation or other entity with information or assistance or
negotiate with any individual, corporation or entity in furtherance of any
Takeover Proposal;
4.2.8 enter into any agreement with any third-party with respect to
any of the types of transactions referred to in Section 4.2.7 hereof, other
than pursuant to the exercise by the Company's Board of Directors of its
fiduciary duties;
4.2.9 except in the ordinary course of business and consistent with
practices customary for the Company during the current fiscal year and
except for the buy-out of certain leases entered into with Finova for which
the Company has received comparable sums from Nexstar, enter into or agree
to enter into any transaction, or incur or discharge any obligation or
liability, material to the business of the Company and its Subsidiaries
taken as a whole;
4.2.10 except with respect to dividend or distribution payments made
to the Company or any Subsidiary wholly-owned by the Company, declare or
pay any dividend on its capital stock in cash, stock or property, or
redeem, purchase or otherwise acquire any shares of capital stock or any
options or warrants to purchase any shares of its capital stock;
4.2.11 enter into any material licensing or marketing arrangement or
other material contract with any party other than VSI or the Premier
purchasing group;
4.2.12 settle any pending litigation in a manner that is materially
adverse to the Company or commence any material litigation; or
4.2.13 take any action, or omit to take any action, the results of
which will prevent any of the warranties and representations set forth in
Article II hereof from being true in all material respects (or, in the case
of a representation or warranty that is, by its terms, qualified as to
materiality, from being true and accurate in all respects) as of the
Effective Time of the Merger.
SECTION 4.3 No Default or Violation. Except as otherwise consented to
in writing by VSI, prior to the Effective Time of the Merger the Company will
(and will cause each of its Subsidiaries to) use its best efforts not to (i)
violate, or commit a breach of or a default under, any material contract,
obligation or commitment to which it is a party or to which any of its assets
may be subject or (ii) violate any applicable federal, state or municipal
statutes, regulations or ordinances or any injunctions, orders or judgments
binding upon the Company or its Subsidiaries, the effect of which in any such
case would be materially adverse to the business of the Company and its
Subsidiaries taken as a whole.
SECTION 4.4 Insurance. Except as otherwise consented to in writing by
VSI, prior to the Effective Time of the Merger, the Company will (and will cause
its Subsidiaries to) maintain in full force and effect all policies of insurance
in substantially the same amounts and types of coverage as are presently in
effect on the date of this Agreement or in such greater amounts or with such
expanded coverage as the Company shall determine in good faith to be
appropriate.
SECTION 4.5 Reports; Taxes; Etc. Except as otherwise consented to in
writing by VSI, prior to the Effective Time of the Merger:
4.5.1 the Company will (and will cause each of its Subsidiaries to)
duly and timely (by the due date or any duly granted extension thereof)
file all reports and returns required to be filed with all applicable
federal, state and local authorities; and
4.5.2 unless it is contesting the same in good faith and, if
appropriate, has established reasonable reserves therefor, the Company will
(and will cause each of its Subsidiaries to) (i) promptly pay all Tax
Liabilities indicated by such returns or otherwise lawfully levied or
assessed upon it or any of its properties and (ii) withhold or collect and
pay to the proper governmental authorities or hold in separate bank
accounts for such payment all taxes and other assessments which it believes
in good faith to be required by law to be so withheld or collected;
provided, however, that this Section 4.5.2 shall not affect the Company's
plans to pay out approximately $640,000 over time in order to discharge
certain tax liens, as described in the Disclosure Letter.
SECTION 4.6 Advice of Changes. The Company will promptly advise VSI
orally and in writing of (i) any event occurring subsequent to the date of this
Agreement which would render any representation or warranty of the Company
contained in this Agreement, if made on or as of the date of such event or the
Closing Date, untrue, inaccurate or incomplete in any material respect (or, in
the case of a representation or warranty that is, by its terms, qualified as to
materiality, untrue, inaccurate or incomplete in any respect) and (ii) any
material adverse change in the consolidated working capital, financial
condition, assets, liabilities (whether absolute, accrued contingent or
otherwise), operating profits, business or prospects of the Company and its
Subsidiaries taken as a whole.
SECTION 4.7 Notification of Takeover Proposal and Other Matters. The
Company shall promptly advise VSI orally and in writing of any Takeover Proposal
or of any inquiry or proposal which the Company has reason to believe may lead
to a Takeover Proposal. The Company shall promptly advise VSI orally and in
writing of the receipt by the Company of any notification submitted to the
Company pursuant to any law of any purchase or proposed purchase of any
securities of the Company by any person.
SECTION 4.8 Consents, Approvals and Filings. The Company will (and
will cause each of its Subsidiaries to) use its best efforts to obtain as
promptly as possible all necessary approvals, authorizations, consents,
licenses, clearances or orders of governmental and regulatory authorities and to
complete all filings required in order for the Company to perform all of its
obligations hereunder.
SECTION 4.9 Access to Records and Properties. VSI may, prior to the
Effective Time of the Merger, through its employees, agents and representatives,
make or cause to be made a detailed review of the business (including without
limitation the ABG Business) and financial condition of the Company and its
Subsidiaries and make or cause to be made such investigation as it deems
necessary or advisable of the properties, assets, businesses (including without
limitation the ABG Business), books and records of the Company and its
Subsidiaries. The Company agrees (and will cause its Subsidiaries to agree) to
assist VSI in conducting such review and investigation and will provide, and
will cause its Subsidiaries and its independent public accountants to provide,
VSI and its employees, agents and representatives full access to, and complete
information concerning, all aspects of the businesses of the Company and its
Subsidiaries, including their books, records (including tax returns filed or in
preparation), personnel and premises, the audit work papers and other records of
their independent public accountants and any documents (including any documents
filed on a confidential basis) included in any report filed with the SEC.
Neither any investigation by VSI nor the receipt by VSI of any data or
information from the Company shall impair the right of VSI to terminate this
Agreement as provided in Article X hereof.
SECTION 4.10 Best Efforts. The Company shall use its best efforts (a)
to cause to be fulfilled and satisfied all of the conditions to the Closing to
be fulfilled and satisfied by the Company and (b) to cause to be performed all
of the matters required of the Company at or prior to the Closing. The Company
shall use its best efforts to make all of its warranties and representations
contained in this Agreement (except those representations and warranties
regarding the number of shares of Company Common Stock issued and outstanding on
the date hereof set forth in Section 2.2 hereof) true and correct in all
material respects as at the Closing, with the same effect as if the same had
been made and this Agreement had been dated as at the Closing.
SECTION 4.11 Maintenance of Assets. The Company shall (and shall cause
its Subsidiaries to) keep the property and assets used in its businesses
(including without limitation the ABG Business) in good order, repair and
operating condition.
SECTION 4.12 8-K. At least 10 days prior to the Effective Time of the
Merger, the Company shall furnish VSI with all such information and financial
statements as VSI may reasonably require in order for VSI to prepare a Current
Report on Form 8-K (describing the Merger pursuant to Items 2 and 7 of such
Form) for filing with the SEC promptly after the Effective Time of the Merger.
Immediately prior to the Closing, the Company shall cause its independent
accountants to provide any report of such accountants which VSI determines must
be included in such filing on Form 8-K and a consent (in form and substance
satisfactory to VSI) to the filing of any report of such accountants which VSI
determines must be included or incorporated by reference in such filing on Form
8-K.
SECTION 4.13 Shareholders' Meeting. The Company shall call a special
meeting of its shareholders (the "Special Meeting"), to be held as soon as
practicable after the Proxy Statement (as hereinafter defined) is mailed to the
Company's shareholders, for the purpose of voting upon the Merger and this
Agreement. Notwithstanding the foregoing, the Special Meeting shall not be held
until after Xxxxxxx shall have conducted a meeting of its shareholders for the
purpose of seeking approval from the shareholders of Xxxxxxx for Xxxxxxx to vote
its shares of Company Common Stock in favor of the Merger and to consummate the
transactions contemplated by the Xxxxxxx Healthcare Inducement Agreement (the
"Xxxxxxx Shareholder Approval"). In connection with the Company's meeting, the
members of the Company's Board of Directors shall recommend that the Company's
shareholders approve the Merger and this Agreement and use their best efforts to
obtain such shareholder approval, subject to the exercise by the members of such
Board of Directors of their fiduciary duties.
SECTION 4.14 Anti-Dilution. The Company shall not permit any event to
occur that will trigger the anti-dilution provisions of any option, warrant,
Convertible Note or other security (collectively, the "Subscription Securities")
in a manner that would change in any respect the number of shares of Company
Common Stock issuable pursuant to any such Subscription Securities from the
number of shares set forth with respect to such Subscription Securities in
Section 2.2 hereof and Exhibit 2.2 to the Disclosure Letter or that would change
in any respect the exercise price applicable to any such Subscription Securities
from the exercise price set forth with respect to such Subscription Securities
in Exhibit 2.2 to the Disclosure Letter.
SECTION 4.15 Rights Plan. The Company shall amend the Rights Agreement
in such a manner that the execution of this Agreement and the consummation of
the Merger will not cause any of the Rights to become exercisable with or
without the passage of time.
SECTION 4.16 SEC Reports. Between the date hereof and the Closing
Date, the Company shall timely file with the SEC (and, contemporaneously with
such filings, shall deliver to VSI a copy of) all reports and statements
required to be filed by the Company under the 1934 Act. None of such reports or
statements shall contain an untrue statement of a material fact or shall omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
SECTION 4.17 Notification Regarding Dissenters' Shares. The Company
shall give VSI (i) prompt notice of any notice of intent to demand fair value
for any shares of Company Common Stock, any withdrawals of such notices, and any
other instruments served pursuant to the Appraisal Laws and received by the
Company and (ii) the opportunity to direct any negotiations and proceedings with
respect to demands for fair value for shares of Company Common Stock under the
Appraisal Laws. The Company shall not, without the prior written consent of VSI,
voluntarily make payment with respect to any demands for fair value of shares of
Company Common Stock or offer to settle or settle any such demands.
SECTION 4.18 Separate Funds. The Company shall establish and maintain
a separate account in which it shall deposit all funds it receives between the
date hereof and the Closing Date upon the exercise of any option or warrant.
Such funds shall be held in such account until such time as they are to be
delivered to the Exchange Agent pursuant to Section 1.3.2.2 hereof.
SECTION 4.19 Intentionally Omitted.
SECTION 4.20 Repurchase Option. The Company shall not exercise the
Repurchase Option under the Omnibus Agreement at any time prior to the earlier
of the Effective Time of the Merger or the date on which this Agreement is
terminated.
ARTICLE V
COVENANTS OF VSI
SECTION 5.1 Best Efforts. VSI shall use its best efforts (a) to cause
to be fulfilled and satisfied all of the conditions to the Closing to be
fulfilled and satisfied by it, and (b) to cause to be performed all of the
matters required of it at or prior to the Closing. VSI shall use its best
efforts to make all of its warranties and representations contained in this
Agreement true and correct in all material respects as at the Closing, with the
same effect as if the same had been made and this Agreement had been dated as at
the Closing.
SECTION 5.2 Consents, Approvals and Filings. VSI will use its best
efforts to obtain as promptly as possible all necessary approvals,
authorizations, consents, licenses, clearances or orders of governmental and
regulatory authorities and to complete all filings required in order for VSI to
perform its obligations hereunder.
SECTION 5.3 Advice of Changes. VSI will promptly advise the Company
orally and in writing of (i) any event occurring subsequent to the date of this
Agreement which would render any representation or warranty of VSI contained in
this Agreement, if made on or as of the date of such event or the Closing Date,
untrue, inaccurate or incomplete in any material respect (or, in the case of a
representation or warranty that is, by its terms, qualified as to materiality,
untrue, inaccurate or incomplete in any respect).
ARTICLE XX
XXXX XXXXX XXXXXX, INTERIM BALANCE SHEET
AND PROXY STATEMENT MATTERS
SECTION 6.1 Xxxx Xxxxx Xxxxxx Filings. VSI and the Company agree to
make any required filings promptly pursuant to the Xxxx Xxxxx Xxxxxx Act, and to
use their best efforts, and to cooperate with each other in their efforts, to
effect compliance with the Xxxx Xxxxx Xxxxxx Act. If the parties should receive
a second request for information from either the Federal Trade Commission or the
United States Department of Justice, VSI and the Company shall use their best
efforts to comply promptly with such request and to persuade the agency seeking
such information to permit the parties to consummate the Merger. Notwithstanding
any provision herein to the contrary, VSI shall not be required to enter into
any consent decree or to make any divestitures, before or after Closing, of its
assets or of the assets to be acquired from the Company pursuant to this
Agreement.
SECTION 6.2 Interim Balance Sheet; Statement of Special Treatment
Sales At least ten days prior to the Closing Date, the Company shall deliver to
VSI a consolidated balance sheet of the Company as of the last day of the
calendar month immediately prior to the calendar month in which the Closing will
be held, or if the Closing is to be held within the first twenty days of a
calendar month, as of the last day of the calendar month which is two calendar
months prior to the calendar month in which the Closing will be held (the
"Interim Balance Sheet"). The Interim Balance Sheet shall be prepared in
accordance with generally accepted accounting principles, in a manner consistent
with the preparation of the Balance Sheet. Contemporaneous with the delivery of
the Interim Balance Sheet, the Company shall deliver to VSI a certificate of the
chief financial officer of the Company certifying that the Interim Balance Sheet
has been prepared in accordance with this Section 6.2 and shall provide VSI's
representatives with access to such documentation as they shall require in order
to review and evaluate the Interim Balance Sheet delivered by the Company. At
least two days prior to the Closing Date, the Company shall deliver to VSI a
statement (the "Sales Statement"), prepared in accordance with generally
accepted accounting principles consistently applied, setting forth the Company's
Special Treatment Sales (as defined in Section 2.24.1 hereof) for the period
from the date hereof through the seventh day prior to the Closing Date and for
the comparable period in 1996. Contemporaneous with the delivery of the Sales
Statement, the Company shall deliver to VSI a certificate of the chief financial
officer of the Company certifying that the Sales Statement has been prepared in
accordance with this Section 6.2 and shall provide VSI's representatives with
access to such documentation as they shall require in order to review and
evaluate the Sales Statement delivered by the Company.
SECTION 6.3. Proxy Statement. Promptly after this Agreement is
executed, VSI and the Company shall cooperate in preparing a proxy statement
(describing the Merger) for filing with the SEC and ultimately for mailing to
the Company's shareholders (the "Proxy Statement"). The Company shall not file
the Proxy Statement preliminarily or in final form unless and until VSI consents
to such filings. VSI shall not unreasonably withhold or delay any such consent.
The Proxy Statement shall contain such notifications regarding dissenters'
rights as are required by the BCA. The Company represents and warrants to, and
covenants with, VSI that the Proxy Statement will comply in all material
respects with the 1934 Act and the rules and regulations promulgated thereunder,
that the Proxy Statement will not contain any untrue statements of material fact
and will not omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
such representation, warranty and covenant shall not apply with respect to any
information regarding VSI. The Company will promptly advise VSI in writing if at
any time prior to the Effective Time of the Merger it shall obtain knowledge of
any facts that might make it necessary or appropriate to amend or supplement the
Proxy Statement in order to make the statements contained or incorporated by
reference therein not misleading or to comply with applicable law. At VSI's
request, the mailing of the Proxy Statement shall be delayed until VSI or the
Company shall have received, from such accountants as VSI shall specify, letters
of the type contemplated by Statement on Auditing Standards No. 72 and based
upon procedures carried out to such date as VSI shall reasonably specify. After
VSI consents to the mailing of the Proxy Statement and all necessary SEC filing
requirements have been satisfied, the Company shall mail the Proxy Statement to
its shareholders in accordance with all applicable federal and state securities
laws and shall use its best efforts to solicit proxies in favor of the Merger.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF
VSI AND NEWCO
The obligations of VSI and Newco under this Agreement to consummate
the Merger shall be subject to the satisfaction, or to the waiver by them in the
manner contemplated by Section 11.2 hereof, on or before the Closing Date, of
the following conditions:
SECTION 7.1 Company Representations and Warranties True. The
representations and warranties of the Company contained in this Agreement shall
be true and accurate in all material respects (or, in the case of a
representation or warranty that is, by its terms, qualified as to materiality,
shall be true and accurate in all respects) as of the date when made, and,
except as to representations and warranties (consisting solely of
representations and warranties regarding the number of shares of Company Common
Stock issued and outstanding on the date hereof set forth in Section 2.2 hereof)
which are expressly limited to a state of facts existing at a time prior to the
Closing Date, shall be true and accurate in all material respects (or, in the
case of a representation or warranty that is, by its terms, qualified as to
materiality, shall be true and accurate in all respects) at and as of the
Closing Date as if made on the Closing Date, without giving effect to any funds
received by the Company after December 28, 1996 upon the exercise of any option
or warrant or to the reduction of indebtedness resulting from the conversion of
any promissory note or other instrument convertible into shares of the Company's
capital stock.
SECTION 7.2 Performance of Covenants. The Company shall have performed
and complied in all material respects with each and every covenant, agreement
and condition required by this Agreement to be performed or complied with by the
Company prior to or on the Closing Date.
SECTION 7.3 No Governmental or Other Proceeding or Litigation. No
order of any court or administrative agency shall be in effect which restrains
or prohibits any transaction contemplated hereby or transactions contemplated by
the Inducement Agreements or which would limit or affect VSI's ownership of the
Company or any of its Subsidiaries or of the ABG Assets; no suit, action (other
than the exercise of dissenters' rights), investigation, inquiry or proceeding
by any governmental body or other person or entity shall be pending or
threatened against VSI, Newco or any subsidiary of VSI or the Company, which
challenges the validity or legality, or seeks to restrain the consummation, of
the transactions contemplated hereby or by the Inducement Agreements or which
seeks to limit or otherwise affect VSI's ownership of the Company or any of its
Subsidiaries or of the ABG Assets; and no written advice shall have been
received by VSI, Newco or the Company, or their respective counsel from any
governmental body, and remain in effect, stating that an action or proceeding
will, if the Merger is consummated or sought to be consummated, be filed seeking
to invalidate or restrain the Merger or the transactions contemplated by the
Inducement Agreements or limit or otherwise affect VSI's ownership of the
Company or any of its Subsidiaries or of the ABG Assets.
SECTION 7.4 Approvals and Consents. The approval of the shareholders
of the Company referred to in Section 8.4 hereof, the Xxxxxxx Shareholder
Approval, and all approvals of applications to public authorities, Federal,
state, or local, if any, the expiration of all waiting periods under the Xxxx
Xxxxx Xxxxxx Act and any other applicable law and all consents or approvals of
any non-governmental persons, the granting or expiration of which is necessary
for the consummation of the Merger and the consummation of the transactions
contemplated by this Agreement and the Xxxxxxx Inducement Agreements or for
preventing the termination or breach of any material real property lease, right,
privilege, license or agreement of VSI or its subsidiaries or of the Company or
its Subsidiaries or pertaining to the ABG Assets, or which is necessary for
preventing any material loss or disadvantage to VSI and its subsidiaries taken
as a whole or the Company and its Subsidiaries taken as a whole, by reason of
the Merger and the consummation of the transactions contemplated hereby and by
the Inducement Agreements, shall have been obtained; and no such consent or
approval shall have imposed a condition to such consent or approval, and no
condition shall have been imposed in connection with any filings made under the
Xxxx Xxxxx Xxxxxx Act or under any other law, which condition in the opinion of
VSI is unduly burdensome to the consolidated financial condition or operations
of VSI or to the business of the Company and its subsidiaries taken as a whole.
All conditions required to be satisfied prior to the Effective Time of the
Merger by the terms of such approvals and consents shall have been satisfied;
and all statutory waiting periods applicable to the parties hereto and the
parties to the Inducement Agreements (including without limitation all
applicable waiting periods under the Xxxx Xxxxx Xxxxxx Act) shall have expired.
SECTION 7.5 Opinion of Counsel. VSI and Newco shall have received an
opinion of LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P., counsel to the Company, dated
the Closing Date and addressed to VSI and Newco, in form and substance and
covering such matters as are reasonably agreed to by the parties. LeBoeuf, Lamb,
Xxxxxx & XxxXxx, L.L.P. may rely upon certificates with respect to factual
matters.
SECTION 7.6 Indebtedness. As of the Closing Date, the Company and its
Subsidiaries shall not be indebted with respect to "Debt" (as defined herein) in
an aggregate amount in excess of $6.4 million. For purposes of this Agreement,
the term "Debt" shall mean all amounts owed by the Company and its Subsidiaries
(i) to financial institutions, Xxxxxxx and affiliates of Xxxxxxx, (ii) on
capital leases, (iii) to the Internal Revenue Service and (iv) to holders of the
Company's 8.0% Notes due March 31, 1999 issued pursuant to Section 3.03 of the
Omnibus Agreement. At the Closing, the Company's chief financial officer shall
have delivered a certificate to VSI specifying the amount of such Debt as of the
Closing Date.
SECTION 7.7 Certificates. The Company shall have furnished VSI with
certificates of the Company, in form and substance satisfactory to VSI, signed
by its president or executive vice president, to the effect that the
representations and warranties of the Company contained in this Agreement are
true and correct in all material respects (or, in the case of representations or
warranties that are, by their terms, qualified as to materiality, are true and
accurate in all respects) on and as of the Closing Date as though such
representations and warranties were made at such time (except as contemplated in
Section 7.1 hereof) and that the Company has complied in all material respects
with all terms, covenants and provisions of this Agreement required to be
complied with by it prior to or on the Closing Date. Xxxxxxx shall have
furnished VSI with a certificates of Xxxxxxx, in form and substance satisfactory
to VSI, signed by its president or executive vice president, to the effect that
the representations and warranties of Xxxxxxx contained in the Xxxxxxx
Inducement Agreement are true and correct in all material respects (or, in the
case of representations or warranties that are, by their terms, qualified as to
materiality, are true and accurate in all respects) on and as of the Closing
Date as though such representations and warranties were made at such time and
that Xxxxxxx has complied in all material respects with all terms, covenants and
provisions of the Xxxxxxx Healthcare Inducement Agreement required to be
complied with by it prior to or on the date of the closings referenced to
therein.
SECTION 7.8 Exchange Agency Agreement. VSI shall have entered into an
agreement, in form and substance satisfactory to VSI, with American Stock
Transfer and Trust Company or another institution satisfactory to VSI, pursuant
to which such institution shall serve as exchange agent for the Merger in
accordance with the terms of this Agreement.
SECTION 7.9 Employment Agreement. The Company, Xxxxxxx Xxxxxxxx
("Xxxxxxxx") and Xxxxxxx shall have entered into an agreement pursuant to which
Xxxxxxxx'x existing employment agreement with the Company (the "Employment
Agreement") shall terminate as of the Effective Time of the Merger and the
Company thereafter shall have no liabilities under the Employment Agreement.
SECTION 7.10 Rights Agreement. The Company shall have amended the
Rights Agreement in such a manner that the execution of this Agreement and the
consummation of the Merger will not cause any of the Rights to become
exercisable with or without the passage of time. Prior to the consummation of
the Closing, no Rights shall have been exercised under the Rights Agreement.
SECTION 7.11 Xxxxxxx Matters.
7.11.1 The representations and warranties of Xxxxxxx and Xxxxxx
Xxxxxxx contained in the Inducement Agreements shall be true and accurate
in all material respects (or, in the case of a representation or warranty
that is, by its terms, qualified as to materiality, shall be true and
accurate in all respects) as of the date when made, and shall be true and
accurate in all material respects (or, in the case of a representation or
warranty that is, by its terms, qualified as to materiality, shall be true
and accurate in all respects) at and as of the Closing Date as if made on
the Closing Date.
7.11.2 Xxxxxxx and Xxxxxx Xxxxxxx shall have performed and complied in
all material respects with each and every covenant, agreement and condition
required by the Inducement Agreements to be performed or complied with by
such entity or person prior to or on the Closing Date and on the dates of
the closings referred to therein.
7.11.3 Xxxxxxx, Xxxxxx Xxxxxxx and VSI shall have agreed upon the form
and substance of all documents to be executed and delivered at the closings
contemplated by the Inducement Agreements.
SECTION 7.12 Closing Documentation. VSI shall have received such
additional documentation at the Closing as VSI and its counsel may reasonably
require to evidence compliance by the Company with all of their obligations
hereunder and to evidence compliance by Xxxxxxx and Xxxxxx Xxxxxxx with all of
their obligations under the Inducement Agreements.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company under this Agreement to consummate the
Merger shall be subject to the satisfaction, or to the waiver by it in the
manner contemplated by Section 11.2 hereof, on or before the Closing Date of the
following conditions:
SECTION 8.1 Representations and Warranties True. The representations
and warranties of VSI contained in this Agreement shall be true and accurate in
all material respects (or, in the case of a representation or warranty that is,
by its terms, qualified as to materiality, shall be true and accurate in all
respects) as of the date when made, and shall be true and accurate in all
material respects (or, in the case of a representation or warranty that is, by
its terms, qualified as to materiality, shall be true and accurate in all
respects) at and as of the Closing Date as if made on the Closing Date.
SECTION 8.2 Performance of Covenants. VSI and Newco shall have
performed and complied in all material respects with each and every covenant,
agreement and condition required by this Agreement to be performed or complied
with by it prior to or on the Closing Date.
SECTION 8.3 No Governmental or Other Proceedings or Litigation. No
order of any court or administrative agency shall be in effect which restrains
or prohibits any transaction contemplated hereby; no suit, action (other than
the exercise of dissenters' rights), investigation, inquiry or proceeding by any
governmental body or other person or entity shall be pending or threatened
against VSI, Newco or the Company, which challenges the validity or legality, or
seeks to restrain the consummation, of the transactions contemplated hereby; and
no written advice shall have been received by VSI, Newco or the Company or their
respective counsel from any governmental body, and remain in effect, stating
that an action or proceeding will, if the Merger is consummated or sought to be
consummated, be filed seeking to invalidate or restrain the Merger.
SECTION 8.4 Approvals. The Company's shareholders shall have approved
the Merger by the requisite vote under the BCA and the Company's articles of
incorporation, the Xxxxxxx Shareholder Approval shall have been obtained, and
all approvals of applications to public authorities, Federal, state or local,
the granting of which is necessary for the consummation of the Merger, shall
have been obtained. All conditions required to be satisfied prior to the
Effective Time of the Merger by the terms of such approvals shall have been
satisfied; and all applicable statutory waiting periods under the Xxxx Xxxxx
Xxxxxx Act and under all other laws shall have expired.
SECTION 8.5 Opinion of Counsel. The Company shall have received an
opinion of Xxxxxxxxxx, Sandler, Kohl, Xxxxxx & Xxxxxx, P.C., counsel to VSI,
dated the Closing Date and addressed to the Company, in form and substance and
covering such matters as are reasonably agreed to by the parties. Xxxxxxxxxx,
Sandler, Kohl, Xxxxxx & Xxxxxx, P.C. may rely upon the written opinion of Krys,
Boyle, Xxxxxxxx, Xxxxx & Xxxxxx with respect to matters of Colorado law and upon
certificates with respect to factual matters.
SECTION 8.6 Certificates. VSI and Newco shall have furnished the
Company with certificates of VSI and Newco, respectively, in form and substance
satisfactory to the Company, signed by their respective presidents or executive
vice presidents, to the effect that the representations and warranties of such
corporations contained in this Agreement are true and correct in all material
respects (or, in the case of representations or warranties that are, by their
terms, qualified as to materiality, are true and accurate in all respects) on
and as of the Closing Date as though such representations and warranties were
made at such time and that such corporations have complied in all material
respects with all terms, covenants and provisions of this Agreement required to
be complied with by them prior to or on the Closing Date.
SECTION 8.7 Closing Documentation. The Company shall have received
such additional documentation at the Closing as the Company and its counsel may
reasonably require to evidence compliance by VSI and Newco with all of their
obligations under this Agreement.
ARTICLE IX
CLOSING; CLOSING DATE
Unless this Agreement shall have been terminated and the Merger herein
contemplated shall have been abandoned pursuant to a provision of Article X
hereof, a closing (the "Closing") will be held on a date mutually acceptable to
VSI and the Company as soon as practicable after the latest to occur of (i) the
Special Meeting referred to in Section 4.13 hereof, (ii) the receipt of all
consents and approvals referred to in Sections 7.4 and 8.4 hereof or the waiver
thereof by VSI in the case of consents by private parties, and (iii) the
expiration of all waiting periods referred to in Sections 7.4 and 8.4 hereof, at
the offices of VSI's special Colorado counsel, Krys, Boyle, Xxxxxxxx, Xxxxx &
Xxxxxx, at Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxx Xxxxx, Xxxxxx, Xxxxxxxx, commencing
at 10:00 A.M. At such time, date (the "Closing Date") and place, the documents
referred to in Articles VII and VIII hereof will be exchanged by the parties
and, promptly thereafter, the Articles of Merger will be filed by Newco and the
Company with the Secretary of State of the State of Colorado; provided, however,
that if any of the conditions provided for in Articles VII and VIII hereof shall
not have been met or waived by the date on which the Closing is otherwise
scheduled, then, subject to Section 10.1.4 hereof, the party to this Agreement
which is unable to meet such condition or conditions shall be entitled to
postpone the Closing for a reasonable period of time by notice to the other
parties until such condition or conditions shall have been met (which such
notifying party will seek to cause to happen at the earliest practicable date)
or waived.
ARTICLE X
TERMINATION
SECTION 10.1 Termination and Abandonment. This Agreement may be
terminated and the Merger may be abandoned before the Effective Time of the
Merger, notwithstanding any approval and adoption of this Agreement by the
shareholders of the Company or Newco:
10.1.1 by the mutual written consent of VSI, Newco and the Company; or
10.1.2 by VSI or the Company, if (w) the shareholders of the Company
fail to approve the Merger at the Special Meeting, (x) the shareholders of
Xxxxxxx fail to give the Xxxxxxx Shareholder Approval at a meeting of
Xxxxxxx'x shareholders convened to vote upon the Xxxxxxx Shareholder
Approval, (y) the Board of Directors of the Company shall fail to recommend
or shall withdraw or condition its recommendation that the shareholders of
the Company approve this Agreement and the Merger or shall have resolved to
do so or (z) the Board of Directors of Xxxxxxx shall fail to recommend or
shall withdraw or condition its recommendation that the shareholders of
Xxxxxxx give the Xxxxxxx Shareholder Approval or shall have resolved to do
so; or
10.1.3 by VSI if there has been a misrepresentation or breach on the
part of the Company in any of the representations or warranties of the
Company set forth herein that are, by their terms, qualified as to
materiality, or if there has been a material misrepresentation or breach on
the part of the Company in any of the representations or warranties of the
Company set forth herein that are not so qualified, or if there has been
any material failure on the part of the Company to comply with its
obligations hereunder, or if the Company's Special Treatment Sales (as
defined in Section 2.24.1 hereof) for the period from December 29, 1996
through the date seven days prior to the Closing (the "Pre-Closing Date")
are less than eighty percent (80%) of the Company's Special Treatment Sales
during the period from the first day of the Company's fiscal quarter
commencing in December 1995 through the date one year prior to the
Pre-Closing Date, or if there has been a misrepresentation or breach on the
part of Xxxxxxx or Xxxxxx Xxxxxxx (collectively, the "Xxxxxxx Parties") in
any of the representations or warranties of any of the Xxxxxxx Parties set
forth in the Inducement Agreements that are, by their terms, qualified as
to materiality, or if there has been a material misrepresentation or breach
on the part of any of the Xxxxxxx Parties in any of the representations or
warranties of the Xxxxxxx Parties set forth in the Inducement Agreements
that are not so qualified, or if there has been any material failure on the
part of any of the Xxxxxxx Parties to comply with such entity's or such
person's obligations under the Inducement Agreements, or if any of the
conditions to VSI's obligation to consummate the Merger set forth in
Article VII or to VSI's obligation to consummate the transactions
contemplated by the Inducement Agreements has not been satisfied as of the
Closing Date, or by the Company if there has been a misrepresentation or
breach on the part of VSI or Newco in any of the representations or
warranties of VSI or Newco set forth herein that are, by their terms,
qualified as to materiality, or if there has been a material
misrepresentation or breach on the part of VSI in any of the
representations or warranties of VSI set forth herein that are not so
qualified, or if there has been any material failure on the part of VSI or
Newco to comply with their respective obligations hereunder, or if any of
the conditions to the Company's obligation to consummate the Merger set
forth in Article VIII hereof has not been satisfied as of the Closing Date;
or
10.1.4 by either the Company or VSI, at its discretion, if the Merger
is not effective by July 31, 1997, except that a party whose breach of this
Agreement has caused a delay in the consummation of the Merger shall not be
entitled to terminate this Agreement pursuant to this Section 10.1.4.
SECTION 10.2 Termination Procedures. The power of termination provided
for by this Article X will be effective only after written notice thereof,
signed on behalf of the party for which it is given by its President or other
duly authorized officer, shall have been given to the other parties hereto. If
this Agreement is terminated in accordance with this Article X, then the Merger
shall be abandoned without further action by the Company, VSI and Newco, and
their officers shall not file the Articles of Merger with the Secretary of State
of the State of Colorado.
SECTION 10.3 Liability Upon Termination. In the event of termination
of this Agreement and abandonment of the Merger pursuant to this Article X, no
party hereto shall have any liability or further obligation to any other party
hereto except as follows:
10.3.1 A party that is in breach of its representations or warranties
hereunder shall not be liable for damages incurred by the other parties
hereto as a result of such breach. A party that is in breach of its
covenants hereunder shall be liable for damages incurred by the other
parties hereto only if (i) such breach is a material breach of a material
covenant and (ii) the party asserting such breach gives the breaching party
notice of such breach and such breach is not cured within twenty days
thereafter (provided, however, that if such breach is not reasonably
curable within such twenty day period but is curable prior to the date set
forth in Section 10.1.4 hereof, no party shall be entitled to damages
pursuant to this Section 10.3. if the breaching party diligently seeks to
effect such cure and does in fact effect such cure prior to the date set
forth in Section 10.1.4 hereof). If VSI terminates this Agreement as a
result of any such material breach of a covenant and is entitled to damages
pursuant to this Section 10.3.1, the Company shall be liable to VSI only to
the extent that such damages are proximately caused by such breach. The
parties acknowledge that it is not possible to calculate the damages that
the Company would suffer in the event that VSI were to materially breach
any of its material covenants hereunder. Accordingly, if the Company
terminates this Agreement as a result of one or more material breaches of
material covenants by VSI or Newco and is entitled to damages pursuant to
this Section 10.3, the parties hereby agree that the Company shall be
entitled to the sum of $800,000 (and no more) as liquidated damages with
respect to such breaches.
10.3.2 In the event that (x) this Agreement is terminated by any party
pursuant to Section 10.1.2, by VSI pursuant to Section 10.1.3 or by VSI
pursuant to Section 10.1.4, (y) prior to the date on which this Agreement
is terminated (i) an offer is made in any manner contemplating a merger
with the Company, an acquisition of the Company or its assets, a tender or
exchange offer with respect to the Company, a consolidation with the
Company, a liquidation of the Company, a recapitalization of the Company or
any other Purchase Event (as defined below) or Takeover Proposal (as
defined in Section 4.2.7 hereof), (ii) a claim is made that such offer
could result in greater value to the Company's shareholders than the value
to be received by them upon consummation of the Merger and (iii) after such
offer is known to the Company or any of its officers or directors, the
shareholders of the Company do not approve the Merger, the shareholders of
Xxxxxxx fail to grant the Xxxxxxx Shareholder Approval, the Company
breaches any of its obligations hereunder or all of the conditions
precedent described in Article VII hereof are not satisfied, and (z) within
twenty-four months after the termination of this Agreement, a Purchase
Event occurs, the Company shall pay to VSI, no later than the date on which
such Purchase Event occurs, a cash fee equal to $1,500,000. For purposes of
this Agreement, the term "Purchase Event" means any of the following
events:
10.3.2.1 Without VSI's prior written consent, the Company or any
of its officers or directors shall have recommended, publicly proposed
or publicly announced an intention to authorize, recommend or propose,
or entered into an agreement with any person (other than VSI or any
subsidiary of VSI) to effect (A) a merger, consolidation or similar
transaction involving the Company or any Subsidiary which would
constitute a "significant subsidiary" within the meaning of Rule 405
of the SEC (a "Significant Subsidiary") (other than transactions
solely between the Company's Subsidiaries that are not violative of
this Agreement), (B) the disposition, by sale, lease, exchange or
otherwise, of the Company or of assets of the Company or any of its
Subsidiaries representing 25% or more of the consolidated assets of
the Company and its Subsidiaries or (C) the issuance, sale or other
disposition by the Company of (including by way of merger,
consolidation, share exchange or any similar transaction) securities
representing 25% or more of the voting power of the Company or any of
its Significant Subsidiaries, other than, in the case of (A), (B) or
(C), any merger, consolidation or similar transaction involving the
Company or any of its Subsidiaries in which the voting securities of
the Company outstanding immediately prior thereto continue to
represent (by either remaining outstanding or being converted into the
voting securities of the surviving entity of any such transaction) at
least 75% of the combined voting power of the voting securities of the
Company or the surviving entity outstanding immediately after the
consummation of such merger, consolidation, or similar transaction
(provided any such transaction is not violative of this Agreement); or
10.3.2.2 any person (other than Xxxxxxx, affiliates of Xxxxxxx,
VSI or any subsidiary of VSI) shall have acquired beneficial ownership
(as such term is defined in Rule 13d- 3 promulgated under the 0000
Xxx) of or the right to acquire beneficial ownership of, or any
"group" (as such term is defined in Section 13(d)(3) of the 1934 Act),
other than a group of which Xxxxxxx, subsidiaries of Xxxxxxx, VSI or a
subsidiary of VSI are the sole members, shall have been formed which
beneficially owns, or has the right to acquire beneficial ownership
of, 25% or more of the voting power of the Company or any of its
Significant Subsidiaries.
10.3.3 Notwithstanding the foregoing, the Company shall not be
obligated to pay the $1,500,000 amount set forth in Section 10.3.2 hereof
in the event that each of the following circumstances occur in the
following order:
10.3.3.1 this Agreement is terminated after a public announcement
is made that a specific third-party other than Xxxxxxx (such
third-party being hereinafter referred to as the "Potential Acquirer")
is proposing one or more transactions which, if consummated, would
constitute a Purchase Event;
10.3.3.2 subsequent to the termination of this Agreement, a
public announcement is made that the Potential Acquirer no longer
intends to pursue any transactions which would constitute a Purchase
Event and, in fact, the potential purchaser does not pursue a Purchase
Event;
10.3.3.3 the Company offers in writing to VSI the opportunity to
enter into an agreement and plan of merger which is, in all
substantial respects (including, without limitation, the nature and
amount of the consideration payable by VSI thereunder), identical to
this Agreement and Xxxxxxx and Xxxxxx Xxxxxxx offer in writing to VSI
the opportunity to enter into agreements which are, in all substantial
respects (including, without limitation, the amounts payable by VSI
thereunder), identical to the Inducement Agreements; and
10.3.3.4 VSI either declines in writing to pursue such offers or
fails to respond to the Company, Xxxxxx Xxxxxxx and Xxxxxxx within 20
days after receipt of notice given in accordance with Section 11.7
hereof.
10.3.4 In addition, the Company shall not be obligated to pay the
$1,500,000 amount set forth in Section 10.3.2 hereof in the event that each
of the following circumstances occur in the following order:
10.3.4.1 this Agreement is terminated after a public announcement
is made that a Potential Acquirer other than Xxxxxxx is proposing one
or more transactions which, if consummated, would constitute a
Purchase Event;
10.3.4.2 subsequent to the termination of this Agreement, a
public announcement is made that the Potential Acquirer no longer
intends to pursue any transactions which would constitute a Purchase
Event and, in fact, the potential purchaser does not pursue a Purchase
Event;
10.3.4.3 the Company offers in writing to VSI the opportunity to
enter into an agreement and plan of merger which is, in all
substantial respects (including, without limitation, the nature and
amount of the consideration payable by VSI thereunder), identical to
this Agreement and Xxxxxxx and Xxxxxx Xxxxxxx offer in writing to VSI
the opportunity to enter into agreements which are, in all substantial
respects (including, without limitation, the amounts payable by VSI
thereunder), identical to the Inducement Agreements;
10.3.4.4 the Company and VSI enter into such an agreement and
plan of merger (the "New Agreement") and VSI enters into such
inducement agreements;
10.3.4.5 subsequent to the execution of the New Agreement, the
New Agreement is terminated for reasons that would not give rise to
the payment of any sum by the Company pursuant to the section of the
New Agreement that is analogous to Section 10.3.2 hereof and at a time
when Xxxxxxx has made no public announcement of any intention to
acquire the Company; and
10.3.4.6 subsequent to such termination of the New Agreement,
Xxxxxxx determines to pursue the merger of the Company with Xxxxxxx or
a wholly-owned subsidiary of Xxxxxxx and such transaction is
consummated.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1 Amendment and Modification. To the fullest extent
permitted by applicable law, this Agreement may be amended, modified and
supplemented with respect to any of the terms contained herein by mutual consent
of the Company, VSI and Newco by an appropriate written instrument executed by
each of such parties at any time prior to the Effective Time of the Merger;
provided, however, that following an affirmative vote at the Special Meeting,
this Agreement may not be amended to reduce the consideration payable in the
Merger in respect of shares of Company Common Stock without obtaining the
approval of the Company's shareholders in the manner required by law.
SECTION 11.2 Waiver of Compliance. To the fullest extent permitted by
law, each of VSI, Newco and the Company may, by an instrument in writing, extend
the time for or waive the performance of any of the obligations of the other
parties hereto or waive compliance by the other parties hereto with any of the
covenants, or waive any of the conditions of its obligations, contained herein;
provided, however, that the obtaining of the approval of the Company's
shareholders referred to in Sections 7.4 and 8.4 hereof and the expiration of
all applicable waiting periods under the Xxxx Xxxxx Xxxxxx Act shall not be
waivable. No such extension of time or waiver shall operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
SECTION 11.3 Survival. The respective representations and warranties
of each party hereto contained herein shall not be deemed to be waived or
otherwise affected by any investigation made by the other parties hereto. None
of the representations or warranties of the parties hereto set forth in Articles
II and III hereof, or in any document furnished pursuant hereto, shall survive
the Merger. The terms and conditions set forth in Sections 10.3, 11.4, 11.5 and
11.6 hereof, as well as this Section 11.3, shall survive any termination of this
Agreement.
SECTION 11.4 No Third Party Rights. Except as otherwise expressly
provided in this Agreement, nothing herein expressed or implied is intended, nor
shall be construed, to confer upon or give any person, firm or corporation,
other than VSI, Newco and the Company and their respective security holders, any
rights or remedies under or by reason of this Agreement.
SECTION 11.5 Confidentiality. VSI and the Company shall honor the
confidentiality agreements previously delivered by each such party to the other
with respect to matters pertaining to the Merger.
SECTION 11.6 Expenses. Each party hereto will bear all expenses
incurred by it in connection with this Agreement and the transactions
contemplated hereby.
SECTION 11.7 Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand or when mailed by
registered or certified mail, postage prepaid, or when given by telex or
facsimile transmission (promptly confirmed in writing), as follows:
(a) If to the Company:
Marquest Medical Products, Inc.
00000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxxx
Telephone: 000-000-0000, ext. 404
Telecopy: 000-000-0000
with a copy to:
Xxxxxx Xxxxx, Esq.
LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
or to such other person as the Company shall designate in writing, such writing
to be delivered to VSI in the manner provided in this Section 11.7;
(b) If to VSI or Newco:
Xxxxx Xxxxx, Inc.
00 Xxxxxx Xxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn: Xx. Xxxxxxx X. Xxxxx
Telephone: 000-000-0000, ext. 371
Telecopy: 000-000-0000
with a copy to:
Xxx Xxxxx, Esq.
General Counsel
Xxxxx Xxxxx, Inc.
00 Xxxxxx Xxxx
Xxxxxx, Xxx Xxxxxx 00000
Telephone: 000-000-0000, ext. 372
Telecopy: 000-000-0000
and with a copy to:
Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxxxxxx, Sandler, Kohl,
Xxxxxx & Xxxxxx, P.C.
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
or to such other person as VSI shall designate in writing, such writing to be
delivered to the Company in the manner provided in this Section 11.7.
SECTION 11.8 Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other parties
hereto; provided, however, that Newco may assign this Agreement and its rights,
interests and obligations hereunder to another directly or indirectly
wholly-owned subsidiary of VSI without the consent of the Company.
SECTION 11.9 Governing Law. This Agreement and the legal relations
between the parties hereto shall be governed by and construed in accordance with
the laws of the State of New Jersey.
SECTION 11.10 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts and by the different parties hereto
on separate counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
SECTION 11.11 Headings and References. The headings of the Sections
and Articles of this Agreement are inserted for convenience of reference only
and shall not constitute a part hereof. All references herein to Sections and
Articles are to sections and articles of this Agreement, unless otherwise
indicated.
SECTION 11.12 Entire Agreement. This Agreement (including the
Disclosure Letter and the documents and agreements referred to herein, all of
which form a part hereof), any other document executed by the parties hereto
concurrently herewith, the confidentiality agreements delivered by VSI and the
Company to each other and any other document signed by the parties hereto
referencing this Section 11.12 contain the entire understanding of the parties
hereto in respect of the subject matter contained herein and supersede all prior
agreements and understandings between the parties with respect to such subject
matter.
SECTION 11.13 Publicity. Except as otherwise required by law or the
rules of the Nasdaq Stock Market, so long as this Agreement is in effect,
neither VSI nor the Company shall issue or cause the publication of any press
release with respect to the transactions contemplated by this Agreement without
the consent of the other parties hereto, which consent shall not be unreasonably
withheld or delayed.
SECTION 11.14 General Interpretive Principles. For purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
11.14.1 the terms defined in this Agreement have the meanings assigned
to them in this Agreement and include the plural as well as the singular,
and the use of any gender herein shall be deemed to include the other
genders;
11.14.2 accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles;
11.14.3 a reference to a Section or Article without further reference
to Subsections within such Section or without further reference to
Subsections or Sections within such Article shall constitute a reference to
all Subsections within such Section or all Sections and Subsections within
such Article unless the context otherwise expressly indicates;
11.14.4 the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision;
11.14.5 the term "include" or "including" shall mean without
limitation by reason of enumeration; and
11.14.6 the parties hereto do not intend for this Agreement or any
other document prepared in connection with the Merger to be construed
against the party that drafted this Agreement or such other document merely
by virtue of the fact that such party drafted this Agreement or such other
document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date and year first written above.
XXXXX XXXXX, INC.
By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx,
Executive Vice President
VSI ACQUISITION CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx,
Executive Vice President
MARQUEST MEDICAL PRODUCTS,
INC.
By: /s/ Xxxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx
President
