Exhibit 10.50
MERGER AGREEMENT AND PLAN OF REORGANIZATION
THIS MERGER AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is
dated as of August 16, 2006, by and among MedSolutions, Inc., a Texas
corporation ("MedSolutions"), SteriLogic Acquisition Subsidiary, Inc., a Texas
corporation (the "Merger Sub"), SteriLogic Waste Systems, Inc., a Pennsylvania
corporation ("SteriLogic"), Xxxxx-Xxxx Investments, LLC, a Delaware limited
liability company and the sole shareholder of SteriLogic ("Xxxxx"), and the
members of Xxxxx set forth on Exhibit A attached hereto (collectively with
Xxxxx, the "Shareholders," and each individually, a "Shareholder").
RECITALS:
WHEREAS, the respective Boards of Directors of MedSolutions, the Merger Sub
and SteriLogic have each approved the merger of SteriLogic into the Merger Sub
(the "Merger"), pursuant to the Certificate of Merger set forth in Exhibit B
hereto (the "Merger Certificate") and the transactions contemplated hereby, in
accordance with the applicable provisions of the statutes of the States of Texas
and Pennsylvania, respectively, which permit such a merger, contingent upon
satisfaction prior to closing of all of the terms and conditions of this
Agreement; and
WHEREAS, the parties hereto desire to make certain representations,
warranties and agreements in connection with completion of the Merger.
NOW, THEREFORE, in consideration of the foregoing recitals, which shall be
considered an integral part of this Agreement, and the covenants, conditions,
representations and warranties hereinafter set forth, the parties hereby agree
as follows:
ARTICLE I
THE MERGER
1.01 The Merger. At the Effective Time (as hereinafter defined), and
subject to the terms and conditions of this Agreement and the Merger
Certificate, SteriLogic will be merged with and into the Merger Sub, and the
Merger Sub will be the Surviving Corporation. For purposes of this Agreement,
the term "Surviving Corporation" shall mean the Merger Sub after the
consummation of the Merger. The Merger Sub's existence, and all its purposes,
powers, and objectives will continue unaffected and unimpaired by the Merger,
and as the Surviving Corporation it will be governed by the laws of the State of
Texas and succeed to all of SteriLogic's rights, assets, liabilities, and
obligations in accordance with the laws of the States of Texas and Pennsylvania,
respectively. For federal income tax purposes, it is intended that the Merger
shall constitute a reorganization within the meaning of Sections 368(a)(1)(A)
and 368(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the "Code").
Notwithstanding any provision of this Agreement to the contrary, for tax and
accounting purposes only the Merger shall be deemed to have occurred effective
as of July 1, 2006.
1.02 Closing and Effective Time. Subject to the provisions of this
Agreement, the parties hereto shall hold a closing (the "Closing") on (i) the
first Business Day (as defined in Article X of this Agreement) on which the last
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of the conditions set forth in Article VII to be fulfilled prior to the Closing
is fulfilled or waived or (ii) such other date as the parties hereto may agree
(the "Closing Date"), at such time and place as the parties hereto may agree.
Immediately upon the Closing, the parties hereto will cause the Merger
Certificate to be filed with the respective offices of the Secretary of State of
the State of Texas and the Secretary of State of the State of Pennsylvania in
accordance with the applicable provisions of the statutes of such states.
Subject to and in accordance with such statutes, the Merger will become
effective at the date and time the Certificate of Merger is filed with the
latter of the respective offices of the Secretary of State of the State of Texas
and the Secretary of State of the State of Pennsylvania (the "Effective Time").
1.03 Survival of Assets and Liabilities.
(a) All rights and interests of each of SteriLogic and the Merger Sub in
and to every type of property shall be transferred to and vested in the
Surviving Corporation by virtue of the Merger without any deed or other
transfer. The Surviving Corporation, as of the Effective Time of the Merger and
without any order or other action on the part of any court or otherwise, shall
hold and enjoy all rights of property, franchises and interests in the same
manner and to the same extent as such rights, franchises, and interests were
held or enjoyed by each of SteriLogic and the Merger Sub immediately prior to
the Effective Time of the Merger.
(b) After the Effective Time, the Surviving Corporation shall be liable for
all liabilities of each of SteriLogic and the Merger Sub, and all debts,
liabilities, obligations and contracts of each of SteriLogic and the Merger Sub
matured or unmatured, whether accrued, absolute, contingent, or otherwise, and
whether or not reflected or reserved against on balance sheets, books of account
or records of either SteriLogic or the Merger Sub, as the case may be, shall be
those of and are hereby expressly assumed by the Surviving Corporation and shall
not be released or impaired by the Merger; and all rights of creditors and other
obligees and all liens on property of either SteriLogic or the Merger Sub shall
be preserved unimpaired.
1.04 Conversion of Shares in the Merger. Pursuant to the Merger
Certificate, at the Effective Time, by virtue of the Merger and without any
action on the part of any holder of any capital stock of the Merger Sub or any
shareholder of SteriLogic, each share of common stock, par value $0.01, of
SteriLogic (the "SteriLogic Common Stock") which is issued and outstanding
immediately prior to the Effective Time held by shareholders of SteriLogic who
do not dissent from the Merger shall be converted into 200 shares of common
stock, par value $0.001, of MedSolutions (the "MedSolutions Common Stock"). The
shares of MedSolutions Common Stock to be issued pursuant to this Section 1.04
are referred to herein as the "Merger Shares." From and after the Effective
Time, no shares of SteriLogic Common Stock shall be deemed to be outstanding,
and holders thereof shall cease to have any rights with respect thereto, except
as provided herein or by law. All of the Merger Shares will be, when issued in
accordance with this Agreement, duly authorized, validly issued, fully paid,
nonassessable and free and clear of all liens, claims, pledges, options, adverse
claims or charges of any nature whatsoever, except as otherwise set forth in
this Agreement.
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1.05 Cancellation of SteriLogic Common Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of any holder of shares
of SteriLogic Common Stock, all outstanding shares SteriLogic Common Stock shall
be cancelled.
1.06 Stock Certificates. At and after the Effective Time, each holder of
shares of SteriLogic Common Stock shall be entitled to receive in exchange
therefor, upon surrender thereof to MedSolutions, a certificate or certificates
representing the number of whole shares of MedSolutions Common Stock into which
such holder's shares of SteriLogic Common Stock were converted pursuant to
Section 1.04; provided, however, that certificates for the Merger Shares shall
not be physically delivered to the holders of SteriLogic Common Stock until
after determination of the Revenues Adjustment Amount and the EBITDA Adjustment
Amount (each as defined in Section 1.08 below), if any. At and after the
Effective Time, MedSolutions shall be entitled to treat all of the outstanding
certificates which prior to that time represented shares of SteriLogic Common
Stock, and which have not been surrendered for exchange, as evidencing the
ownership of the number of whole shares of MedSolutions Common Stock into which
the shares of SteriLogic Common Stock represented by such certificates have been
converted as herein provided, notwithstanding the failure to surrender the
certificates representing such interests. The provisions of this Section 1.06
shall not apply to any shares of SteriLogic Common Stock in respect of which the
holder thereof pursues the remedy of dissent in accordance with 15 Pa.C.S.
xx.xx. 1571 through 1580, inclusive, unless and until such holder has exhausted
his right of dissent thereunder, at which time the provisions of Sections 1.04,
1.05 and 1.06 of this Agreement shall apply in their entirety thereto.
1.07 No Fractional Shares. No fractional shares of MedSolutions Common
Stock shall be issued in connection with the Merger. In lieu of such fractional
shares, any holder who would otherwise be entitled to receive a fraction of a
share of MedSolutions Common Stock (after separately aggregating all fractional
shares of stock issuable to such holder) shall be issued, in lieu of such
fractional shares, cash in the amount equal to the product of the percentage of
a share of MedSolutions Common Stock such aggregate fractional shares represent
multiplied by $1.50.
1.08 Cash and Promissory Note. At the Effective Time, MedSolutions shall
issue to Xxxxx-Xxxx Investments, LLC, to be held in trust for the benefit of all
of the shareholders of SteriLogic who do not dissent from the Merger, (a)
$50,000 in readily available funds (the "Cash"), and (b) a convertible
promissory note (the "Note," and together with the Merger Shares and the Cash,
the "Merger Consideration") in the form attached hereto as Exhibit C in the
original principal amount of $250,000 with simple interest at the annual rate of
8% accruing from the Effective Time and payable in 12 equal installments of
interest only in the amount of $1,666.67 each due monthly beginning on the 30th
day after the Effective Time, and 24 equal installments of principal and
interest in the amount of $11,306.82 each due monthly thereafter; provided,
however, that:
(a) the principal amount of the Note shall be reduced by a percentage equal
to the percentage of shares of SteriLogic Common Stock held by shareholders of
SteriLogic who dissent from the Merger; and
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(b) beginning with the first day of the first full calendar month
immediately succeeding the Effective Time and for 12 months thereafter (the
"12-Month Post-Closing Period"), in the event that either
(1) the amount of MedSolutions' average monthly accrual basis sales
(on a consolidated basis) to SteriLogic's customers immediately prior to
the Effective Time (the "Existing Customers") or to "Pipeline Customers"
(so called herein), as such are set forth on Schedule 1.08, (exclusive of
any intercompany sales between and among MedSolutions and its affiliates,
and any improvements, fees, price increases or surcharges implemented by
MedSolutions or its affiliates during such 12-Month Post-Closing Period)
during the 12-Month Post-Closing Period (the "12-Month Post-Closing Average
Monthly Gross Revenues") is less than $1,200,000.00, or
(2) MedSolutions' earnings before interest, taxes, depreciation and
amortization on a consolidated basis ("EBITDA") from such Existing
Customers and Pipeline Customers (exclusive of any intercompany sales
between and among MedSolutions and its affiliates (unless such affiliates
were Existing Customers or Pipeline Customers prior to the Effective Time),
and any improvements, fees, price increases or surcharges implemented by
MedSolutions or its affiliates during such 12-Month Post-Closing Period)
(the "12-Month Post-Closing EBITDA") is less than $300,000.00, the greater
of
(i) 1.5 multiplied by the difference between the 12-Month
Post-Closing Average Monthly Gross Revenues and $1,200,000.00 and
(ii) six multiplied by the difference between the 12-Month
Post-Closing EBITDA and $300,000.00,
shall be calculated to obtain an adjustment amount (the "Adjustment
Amount"), and such Adjustment Amount shall be deducted from the Merger
Consideration as follows: 25% of the Adjustment Amount shall be deducted
from the outstanding principal amount of the Note, and 75% of the
Adjustment Amount shall be deducted from the Merger Shares, pro rata
against each former holder of SteriLogic Common Stock that received Merger
Shares in proportion to the percentage of the Merger Shares received by
each such holder, at the rate of $1.50 per share; provided further,
however, that in no event shall MedSolutions be permitted to deduct more
than 400,000 Merger Shares with respect to the Adjustment Amount.
(c) In the event that MedSolutions ceases to provide goods or services to
any Existing Customer during the 12-Month Post-Closing Period, the average
monthly revenues received from such Existing Customer by MedSolutions and/or
SteriLogic, as the case may be, during the 12 months immediately prior to the
date on which MedSolutions ceases to provide such goods or services (exclusive
of any improvements, fees, price increases or surcharges implemented by
MedSolutions or its affiliates during such period) shall be annualized, and such
annualized amount shall be included within the 12-Month Post-Closing Gross
Revenues and the 12-Month Post-Closing EBITDA as if such annualized amount was
actually received by MedSolutions during the 12-Month Post-Closing Period;
provided, however, that such annualized amount shall not be included within the
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12-Month Post-Closing Gross Revenues and the 12-Month Post-Closing EBITDA if
MedSolutions ceases to provide goods and services to such Existing Customer due
to the failure of such Existing Customer to pay any or all amounts due to
MedSolutions when and as due.
(d) The following guidelines shall apply when determining the 12-Month Post
Closing EBITDA for purposes of this Section 1.08:
(i) In the event that MedSolutions merges with or otherwise acquires
any Existing Customer during the 12-Month Post-Closing Period, an amount
equal to the product of the aggregate amount of revenues received from such
Existing Customer by MedSolutions and/or SteriLogic, as the case may be,
during the 12-month period immediately preceding the date of the
consummation of such merger or other acquisition multiplied by a fraction
the numerator of which is the number of days remaining in the 12-Month
Post-Closing Period after the date of the consummation of such merger or
other acquisition and the denominator of which is 365, shall be included
within the 12-Month Post-Closing Gross Revenues and the 12-Month
Post-Closing EBITDA as if such amount was actually received by MedSolutions
during the remainder of the 12-Month Post-Closing Period after the date of
consummation of such merger or other acquisition.
(ii) In the event that MedSolutions merges with or otherwise acquires
any Pipeline Customer during the 12-Month Post-Closing Period, MedSolutions
shall credit $10.00 to the 12-Month Post-Closing EBITDA and $15.85 to the
12-Month Post Closing Gross Revenues for each intercompany sale of a
reusable medical waste disposal container after the date of the
consummation of such merger or other acquisition attributable to the
operations acquired from such Pipeline Customer.
(iii) During the 12-Month Post-Closing Period, except with the consent
of Xxxxx to be granted or withheld in its sole discretion, MedSolutions and
its Affiliates shall not apply to the Merger Sub for purposes of this
Section 1.08 any general and administrative expenditures or other operating
expenses not related to the operations of SteriLogic as they existed as of
the Effective Time.
(iv) During the 12-Month Post-Closing Period, MedSolutions and its
Affiliates shall not apply any expenses to the Merger Sub for purposes of
this Section 1.08 for (A) salary increases of personnel attributable to the
Merger Sub's operations in excess of 5% of such salaries as in effect at
SteriLogic as of the Effective Time, or (B) salaries for additional
personnel attributable to the Merger Sub's operations in excess of that in
effect at SteriLogic as of the Effective Time except in the ordinary course
of business consistent with the past practices of MedSolutions.
(v) All payments made to Consular, LLC pursuant to the Consulting
Agreement (as such term is defined in Section 7.02(h) hereof) that relate
to the existing (as of the Effective Time) New York or Systems divisions of
SteriLogic to be merged into the Merger Sub pursuant to the Merger shall be
applied to Merger Sub during the 12-Month Post-Closing Period.
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(e) In any instance during the 12-Month Post-Closing Period, if an Existing
Customer requires the replacement of its sharps container system(s) and the
respective mounting hardware therefor (collectively, "Equipment"), or if the
Surviving Corporation replaces any such Equipment in connection with the
renewal, replacement or extension of a customer contract with an Existing
Customer, the Shareholders shall be liable, jointly and severally, for 50% of
the Surviving Corporation's actual costs and expenses incurred in connection
with the replacement of such Equipment, including without limitation the cost of
such new systems and hardware (the "Replacement Allocation"); the Replacement
Allocation shall be deducted from the Merger Consideration on the date on which
the 12-Month Post-Closing EBITDA is calculated as follows: the Replacement
Allocation shall be deducted first from the outstanding principal amount of the
Note, and next from the Merger Shares, pro rata against each former holder of
SteriLogic Common Stock that received Merger Shares in proportion to the
percentage of the Merger Shares received by each such holder, at the rate of
$1.50 per share; provided further, however, that in no event shall MedSolutions
be permitted to deduct more than 400,000 Merger Shares with respect to the
Replacement Allocation. Notwithstanding any provision of this Section 1.08(e) to
the contrary, in the event that the 12-Month Post-Closing EBITDA exceeds
$300,000, the Shareholders shall receive a $1.00 credit against the Replacement
Allocation for each $1.00 by which the 12-Month Post-Closing EBITDA exceeds
$300,000.
(f) In any instance during the 12-Month Post-Closing Period, if the
Surviving Corporation is required to replace any of its regulated medical waste
containers and any respective mounting hardware therefor with respect to the
operations of the Surviving Corporation as in effect as of the Effective Time
(collectively, "Containers"), the Shareholders shall be liable, jointly and
severally, for 1/60th of the Surviving Corporation's actual costs and expenses
incurred in connection with the replacement of such Containers, including
without limitation the cost of such new containers and hardware, per month for
each month remaining during the 12-Month Post-Closing Period following the date
of such replacement, due in installments on each one-month anniversary of the
Effective Time following the date such Containers are replaced (and pro rated as
appropriate if the first such installment covers only a partial month) with the
final such installment due on the one-year anniversary of the Effective Time
(collectively, a "Container Allocation"); installments of each Container
Allocation shall be deducted from the Merger Consideration on each one-month
anniversary of the Effective Time as follows: such Container Allocation shall be
deducted first from the outstanding principal amount of the Note, and next from
the Merger Shares, pro rata against each former holder of SteriLogic Common
Stock that received Merger Shares in proportion to the percentage of the Merger
Shares received by each such holder, at the rate of $1.50 per share; provided
further, however, that in no event shall MedSolutions be permitted to deduct
more than 400,000 Merger Shares with respect to the Container Allocations.
(g) In the event that either the Merger or any other transaction
contemplated by this Agreement results in the acceleration of the performance
required by, or causes the acceleration of the maturity of, any of SteriLogic's
liabilities, then all costs and expenses incurred by MedSolutions and/or the
Surviving Corporation in connection with securing financing to repay the
accelerated portion of such liabilities shall be deducted first from the
outstanding principal amount of the Note, and next from the Merger Shares, pro
rata against each former holder of SteriLogic Common Stock that received Merger
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Shares in proportion to the percentage of the Merger Shares received by each
such holder, at the rate of $1.50 per share; provided further, however, that in
no event shall MedSolutions be permitted to deduct more than 400,000 Merger
Shares with respect to the Replacement Allocation.
(h) In the event that the outstanding principal amount of the Note or the
value of the Merger Shares is insufficient to permit the full deduction
allocated thereto as set forth in this Section 1.08, any such deficiency shall
be reallocated first to the outstanding principal amount of the Note and last to
the Merger Shares (subject to the 400,000 share cancellation limitation set
forth in this Section 1.08). Any deduction to the outstanding principal amount
of the Note pursuant to this Section 1.08 shall be applied to the first payment
due thereunder and then to subsequent payments due thereunder in chronological
order, but the interest due shall be calculated on the adjusted principal amount
of the Note as if all such principal was deducted immediately. No later than 30
days after the end of the 12-Month Post-Closing Period, MedSolutions shall
provide Xxxxx with a true, correct and complete copy of its invoice register for
such 12-Month Post-Closing Period with respect to the Existing Customers.
1.09 Officers, Directors; Bylaws. The officers and directors of the Merger
Sub immediately prior to the Effective Time shall serve as the officers and
directors of the Surviving Corporation as of the Effective Time. The Bylaws of
the Merger Sub immediately prior to the Effective Time shall continue to govern
as the Bylaws of the Surviving Corporation as of the Effective Time.
1.10 Principal Office. The established offices and facilities of the Merger
Sub immediately prior to the Merger shall become the established offices and
facilities of the Surviving Corporation after the Effective Time.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF STERILOGIC AND THE
SHAREHOLDERS
To induce MedSolutions and the Merger Sub to enter into this Agreement and
to consummate the transactions contemplated hereby, (i) SteriLogic represents
and warrants to MedSolutions and the Merger Sub, and (ii) each of the
Shareholders jointly and severally represent and warrant to MedSolutions and the
Merger Sub, as follows:
2.01 Organization and Good Standing. SteriLogic is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Pennsylvania. Schedule 2.01 includes (i) a true and complete copy of
SteriLogic's Certificate of Incorporation and all amendments thereto, certified
by the Pennsylvania Secretary of State; and (ii) true and complete copies of
certificates of existence, qualification and account status, certified by the
Secretary of State of Pennsylvania as of the Closing Date.
2.02 Authority; Capacity. SteriLogic has all requisite corporate power and
authority to own its property, to conduct its business, and to execute and
deliver this Agreement and any instruments and agreements contemplated herein
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that are required to be executed and delivered by SteriLogic pursuant to its
obligations under this Agreement, and to perform its obligations hereunder and
thereunder. This Agreement has been approved by SteriLogic's Board of Directors
and shareholders in accordance with applicable law and has been duly authorized,
executed, and delivered by SteriLogic. No other corporate act or proceeding on
the part of SteriLogic is necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement represents a valid and binding
obligation of SteriLogic, enforceable against SteriLogic in accordance with its
terms, except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and similar laws affecting the enforcement of creditors' rights
generally and the application of general principles of equity and judicial
discretion. Attached hereto as Schedule 2.02 are copies of the resolutions of
SteriLogic's Board of Directors and shareholders, respectively, certified as
true and correct by SteriLogic's Secretary, approving this Agreement and
authorizing the execution hereof by SteriLogic's President.
Each Shareholder that is an individual has full capacity to execute and
deliver this Agreement and any instruments and agreements contemplated herein
that are required to be executed and delivered by such Shareholder pursuant to
his or her obligations under this Agreement, and to perform his or her
obligations hereunder and thereunder. Each Shareholder that is a corporation,
limited liability company, partnership, trust or other form of entity has all
requisite power and authority to execute and deliver this Agreement and any
instruments and agreements contemplated herein that are required to be executed
and delivered by such Shareholder pursuant to its obligations under this
Agreement, and to perform its obligations hereunder and thereunder. With respect
to each Shareholder that is a corporation, limited liability company,
partnership, trust or other form of entity, this Agreement has been approved by
such Shareholder's Board of Directors and shareholders, or corresponding
governing bodies, in accordance with applicable law and has been duly
authorized, executed, and delivered by such Shareholder, and no other act or
proceeding on the part of such Shareholder is necessary to authorize this
Agreement or the transactions contemplated hereby. This Agreement represents a
valid and binding obligation of each Shareholder, enforceable against each such
Shareholder in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting
the enforcement of creditors' rights generally and the application of general
principles of equity and judicial discretion.
2.03 No Violation. Neither the execution and delivery by SteriLogic or the
Shareholders of this Agreement nor the consummation by SteriLogic or the
Shareholders of the transactions contemplated hereby will (i) violate any
provision of Title 15 of the Pennsylvania Consolidated Statutes or the
Certificate of Incorporation of SteriLogic, or the Bylaws of SteriLogic; (ii)
except as set forth on Schedule 2.03, violate, or be in conflict with, or
constitute a default (or an event or condition that, with notice or lapse of
time, or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or cause the acceleration of the
maturity of any of SteriLogic's liabilities, or result in the creation or
imposition of any security interest, lien, charge, or other encumbrance upon any
of SteriLogic's assets under, any note, bond, mortgage, indenture, deed of
trust, license, lease, contract, commitment, understanding, arrangement,
agreement, or restriction of any kind or character to which SteriLogic is a
party or by which SteriLogic may be bound or affected or to which any of
SteriLogic's assets is subject; or (iii) violate any statute or law or any
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judgment, decree, order, writ, injunction, regulation, or rule of any court or
Governmental Authority (as defined in Article X of this Agreement).
2.04 Brokers. Neither SteriLogic nor any Shareholder has employed any
broker, agent, or finder in connection with any transaction contemplated by this
Agreement for which MedSolutions, the Merger Sub, or the Surviving Corporation
may be liable or responsible to pay.
2.05 Capitalization. The capitalization of SteriLogic immediately prior to
the Closing consists of the following:
(a) Common Stock. A total of 10,000 authorized shares of SteriLogic Common
Stock, of which 5,000 shares are issued and outstanding.
(b) Options, Warrants, Etc. There are no outstanding options, warrants,
rights (including conversion or preemptive rights) or agreements for the
purchase or acquisition from SteriLogic of any shares of its capital stock or
any securities convertible into or ultimately exchangeable or exercisable for
any shares of capital stock of SteriLogic. No shares of SteriLogic's outstanding
capital stock are subject to any rights of first refusal or other rights to
purchase such stock (whether in favor of the SteriLogic or any other Person).
(c) Valid Issuance. The outstanding shares of the capital stock of
SteriLogic are duly authorized and validly issued, fully paid and nonassessable,
and have been approved by all requisite shareholder and board action. The offer
and sale by SteriLogic of all capital stock, convertible securities, rights,
warrants, or options of SteriLogic issued prior to the Closing was conducted in
material compliance with all applicable federal and state securities laws, and
to the Knowledge of SteriLogic and each of the Shareholders, no holder of any
such securities has a right of rescission or has made or threatened to make a
claim for rescission or damages with respect thereto.
2.06 No Undisclosed Liabilities. Except as disclosed on any schedule to
this agreement or on Schedule 2.06, there are no liabilities, liens, mortgages,
encumbrances, and imperfections of title to which SteriLogic or its assets are
subject or for which SteriLogic or the Surviving Corporation may be responsible
(the "Disclosed Encumbrances"). Except for the Disclosed Encumbrances and
express liabilities arising under the contracts set forth on Schedule 2.22,
there are no liabilities or obligations of SteriLogic, whether accrued,
absolute, contingent, or otherwise, that have affected or could affect in any
way SteriLogic's assets, or any of them. Except as set forth on Schedule 2.06,
there is no basis for the assertion against SteriLogic of any liability or
obligation of any nature whatsoever that could result in the creation or
imposition of any security interest, lien, charge, or encumbrance upon
SteriLogic's assets.
2.07 Title to the Assets; Encumbrances. Except for the Disclosed
Encumbrances, SteriLogic has good and marketable title to its assets free and
clear of all liens, mortgages, claims, easements, pledges, security interests,
or other imperfections of title.
2.08 Environmental Compliance.
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(a) With respect to SteriLogic's assets and any other Property (as defined
in Article X of this Agreement) owned or operated by SteriLogic, SteriLogic is
in compliance with all applicable Environmental Laws (as defined in Article X of
this Agreement) and has obtained and is in compliance with all permits,
licenses, and other authorizations required under any Environmental Law. There
is no past or present event, condition or circumstance that is likely to
interfere with the utilization of SteriLogic's assets by the Surviving
Corporation (provided such assets are utilized in a manner consistent with their
use prior to the Effective Time) constituting a violation of Environmental Laws
or resulting from any failure to comply therewith;
(b) SteriLogic does not now and has not leased, operated, owned, or
exercised managerial functions at any facilities or real property with respect
to which such facility or real property is subject to any Proceeding (as defined
in Article X of this Agreement) under any Environmental Law, and SteriLogic is
not aware of any facts or circumstances that could give rise to such a
Proceeding;
(c) There are no actions or Proceedings pending or, to SteriLogic's or each
of the Shareholders' Knowledge (as defined in Article X of this Agreement),
threatened against SteriLogic under any Environmental Law, and SteriLogic has
not received any notice (whether from any regulatory body or private person) of
any violation, or potential or threatened violation, of any Environmental Law;
(d) There are no actions or Proceedings pending or, to SteriLogic's or each
of the Shareholders' Knowledge, threatened under any Environmental Law involving
the release or threat of release of any Polluting Substances (as defined in
Article X of this Agreement) at or on (i) any Property currently or in the past
owned, operated or leased by SteriLogic or over which SteriLogic exercised
managerial functions, or (ii) at any Property where Polluting Substances
generated by SteriLogic have been disposed;
(e) Except as set forth on Schedule 2.08, there is no Property for which
SteriLogic is or was required to obtain any permit under an Environmental Law to
construct, demolish, renovate, occupy, operate, or use such Property or any
portion of it;
(f) SteriLogic has not generated any Polluting Substances;
(g) There has been no release of Polluting Substances by SteriLogic in
violation of any Environmental Law that would require any report or notification
to any governmental or regulatory authority in or on any Property;
(h) SteriLogic is not under investigation or subject to pending or, to
SteriLogic's or each of the Shareholders' Knowledge, threatened litigation by
federal, state, or local officials or a private litigant as a result of any
previous on-site management, treatment, storage, release, or disposal of
Polluting Substances or exposure to any Polluting Substances;
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(i) There are no underground or above ground storage tanks on or under any
Property that are not in conformity with any Environmental Law, and any Property
previously containing such tanks has been remediated in compliance with all
Environmental Laws; and
(j) There is no asbestos-containing material on any Property of SteriLogic.
2.09 Financial Statements. Attached as Schedule 2.09 are true, correct, and
complete copies of the following financial statements for SteriLogic: unaudited
balance sheets, statements of income, and statements of cash flows as of and for
the years ended December 31, 2003, 2004 and 2005, and an unaudited balance
sheet, statement of income, and statement of cash flows as of and for the six
months ended June 30, 2006 (collectively, the "SteriLogic Financial
Statements"). The SteriLogic Financial Statements have been prepared
consistently during the periods indicated, are correct and complete in all
respects, accurately present the financial condition and results of operations
of SteriLogic as of the dates set forth, and have been prepared in accordance
with generally accepted accounting principles, consistently applied. Except as
set forth on Schedule 2.09, Since the date of the SteriLogic Financial
Statements, there has not been any change in the business, operations,
prospects, assets, results of operations or condition (financial or other) of
SteriLogic, and no event has occurred or circumstance exists that may result in
such a change.
2.10 Changes. Except as set forth on Schedule 2.10, since June 30, 2006
(the date of most recent financial statements provided to MedSolutions), there
has not been:
(a) any change in the assets, liabilities, financial condition or operating
results of SteriLogic from that reflected in the SteriLogic Financial
Statements, except changes in the ordinary course of business, that has had a
Material Adverse Effect (as defined below);
(b) any damage, destruction or loss to any assets or properties of
SteriLogic, whether or not covered by insurance, that has had a Material Adverse
Effect;
(c) any waiver by SteriLogic of a valuable right or of a material debt owed
to it;
(d) any change or amendment to an agreement by which SteriLogic or any of
its assets or properties is bound or subject that has had a Material Adverse
Effect;
(e) any loans made by SteriLogic to or for the benefit of its employees,
officers or directors, or any members of their immediate families, other than
travel advances and other advances made in the ordinary course of its business;
(f) any resignation or termination of any executive officer or key employee
of SteriLogic;
(g) any material change in any compensation arrangement or agreement with
any employee, director or shareholder of SteriLogic;
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(h) any sale, assignment or transfer of any Intellectual Property or other
intangible assets of SteriLogic;
(i) any satisfaction or discharge of any lien, claim, or encumbrance or
payment of any obligation by SteriLogic, except in the ordinary course of
business and that is not material to the business, properties or financial
condition of SteriLogic;
(j) any declaration, setting aside or payment or other distribution in
respect of any of SteriLogic's capital stock, or any direct or indirect
redemption, purchase or other acquisition of any of such stock by SteriLogic;
(k) any mortgage, pledge, transfer of a security interest in, or lien,
created by SteriLogic, with respect to any of its material properties or assets,
except liens for taxes not yet due or payable;
(l) any receipt of notice that there has been a loss of, or material order
cancellation by, any major customer of SteriLogic;
(m) any other event or condition of any character that has had a Material
Adverse Effect; or
(n) any agreement or commitment by SteriLogic to do any of the things
described in this Section 2.10.
2.11 Intellectual Property.
(a) Except as set forth in Schedule 2.11(a), SteriLogic is the owner of
all, or has the license or right to use, sell and license all of, the
Copyrights, Patents, Trade Secrets, Trademarks, Software and other proprietary
rights (collectively, "Intellectual Property") that are used in connection with
its business as presently conducted as of the Effective Time. For the purposes
of this Agreement, "Copyrights" means any foreign or United States copyright
registrations and applications for registration thereof, and any non-registered
copyrights; "Patents" means any foreign or United States patents and patent
applications, including any divisions, continuations, continuations-in-part,
substitutions or reissues thereof, whether or not patents are issued on such
applications and whether or not such applications are modified, withdrawn or
resubmitted; "Trade Secrets" means any trade secrets, research records,
processes, procedures, manufacturing formulae, technical know-how, technology,
blue prints, designs, plans, inventions (whether patentable and whether reduced
to practice), invention disclosures and improvements thereto; "Trademarks" means
any foreign or United States trademarks, service marks, trade dress, trade
names, brand names, designs and logos, corporate names, product or service
identifiers, whether registered or unregistered, and all registrations and
applications for registration thereof; and "Software" means any computer
software programs, source code, object code, data and documentation.
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(b) Except as set forth in Schedule 2.11(b), none of the Intellectual
Property owned by SteriLogic is subject to any outstanding judgment, decree,
order, writ, injunction, regulation, or rule of any court or governmental
authority, and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand is pending or, to SteriLogic's or each of the
Shareholders' Knowledge, threatened, which challenges the validity,
enforceability, use or ownership of SteriLogic's Intellectual Property.
2.12 Financial Institution Accounts; Powers of Attorney. Schedule 2.12 sets
forth (i) the name of each financial institution in which SteriLogic maintains
an account or safe deposit box and the names of all persons authorized to draw
thereon or to have access thereto, and (ii) the names of all persons, if any,
holding powers of attorney from SteriLogic and a summary statement of the terms
thereof.
2.13 Taxes.
(a) Except as set forth on Schedule 2.13, SteriLogic has (i) timely filed
all returns required to be filed by it with respect to all federal, state,
local, and foreign income, payroll, withholding, unemployment, excise, added
value, social security, sales and use, real and personal property, use and
occupancy, business and occupation, mercantile, real estate, capital stock, and
franchise or other tax (including interest and penalties thereon and including
estimated taxes thereof) (hereinafter referred to collectively as "Taxes"); (ii)
paid all Taxes shown to have become due pursuant to such returns; and (iii) paid
all other Taxes for which a notice of assessment or demand for payment has been
received;
(b) All returns for Taxes filed by or on behalf of SteriLogic have been
prepared in accordance with all applicable laws and requirements and accurately
reflect the taxable income (or other measure of Tax) of the entity filing the
return; and
(c) There are no Tax liens upon any of SteriLogic's assets, and SteriLogic
is not aware of any audit or other proceeding or investigation, or of any
position taken on a Tax return of SteriLogic, that could give rise to a Tax lien
upon any of SteriLogic's assets. SteriLogic has previously provided MedSolutions
with complete, true, and correct copies of all of SteriLogic's federal income
tax returns.
2.14 Intangible Assets. SteriLogic owns and possesses all necessary
certificates, permits, authorizations, licenses (collectively, "Licenses") that
are required by the nature of SteriLogic's business as conducted as of the
Effective Time.
2.15 Litigation. Except as set forth on Schedule 2.15, there are no
Proceedings (as defined in Article X of this Agreement) in progress, pending,
or, to SteriLogic's or each of the Shareholders' Knowledge, threatened against
or affecting SteriLogic, its assets, or the transactions contemplated hereby in
any court or before any arbitration panel of any kind or before or by any
Governmental Authority (as defined in Article X of this Agreement), nor to
SteriLogic's or each of the Shareholders' Knowledge, is there any valid basis
for any such arbitration, claim, action, proceeding, inquiry or investigation,
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which would have a material adverse affect on the business of SteriLogic or the
Merger Sub as such business is conducted as of the Effective Time.
2.16 Consents. Except as set forth on Schedule 2.16 and the consents of the
Board of Directors and shareholders of SteriLogic, no consent, approval,
license, permit, authorization, or order of any Person is required in connection
with the execution and delivery of this Agreement by SteriLogic or the
consummation of the transactions contemplated hereby by SteriLogic.
2.17 Permits, Licenses, Etc. SteriLogic has received no written
notification of any threatened suspension or cancellation of any permit,
license, franchise, order, certificate, consent, authorization, or approval of
any Governmental Authority or administrative authority required to permit
SteriLogic to conduct its business as conducted as of the Effective Time.
2.18 Absence of Unethical Business Practices. Neither SteriLogic nor any
officer, employee or agent thereof has directly or indirectly given or agreed to
give any gift or similar benefit to any customer, contractor, Governmental
Authority, or any employee, agent, broker or affiliate of such Person or
Governmental Authority who was or is in a possible position to help or hinder
SteriLogic, which gift or benefit (a) would subject SteriLogic to any damages or
penalties in any civil or criminal proceeding, or (b) would have a Material
Adverse Effect (as defined in Article X of this Agreement) on SteriLogic if
discontinued.
2.19 Books and Records. The books of account and other financial records of
SteriLogic, all of which have been made available to MedSolutions, are complete
and correct in all material respects. The minute books of SteriLogic which have
been made available to MedSolutions do not contain accurate and complete records
of all meetings held of, and corporate action taken by the Board of Directors,
committees of the Board of Directors and the shareholders of SteriLogic. All
actions taken by the Board of Directors of SteriLogic, any committees of such
Board of Directors, and any officers of SteriLogic prior to the Effective Time
have been ratified by the Board of Directors and the shareholders of SteriLogic.
2.20 Condition of Assets; Inventory.
(a) Each of SteriLogic's material assets is in good repair and good
operating condition, is suitable for immediate use, provided such use is
consistent with the manner in which such assets are being used as of the
Effective Date. To SteriLogic's and each of the Shareholders' Knowledge, each of
SteriLogic's material assets is free from latent and patent defects, and, except
with respect to SteriLogic's sharps container system and the respective mounting
hardware (which requires replacement as described in Section 1.08(e) above) none
of such material assets are in need of repair or replacement. All assets used in
SteriLogic's business are in the possession of SteriLogic.
(b) All of SteriLogic's inventory is merchantable and fit for the purposes
for which it was procured or manufactured.
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2.21 Certain Properties. Schedule 2.21 sets forth all of the personal
property and real estate leased to SteriLogic and specifies, in the case of real
estate, the location of each property, the use of the facility thereon, the name
of the owner or the names of the lessor and the lessee, the square footage of
improvements and the acreage of land if raw property. SteriLogic has delivered
to MedSolutions a copy of each lease by which SteriLogic acquired its interest
in the real estate and personal property described in Schedule 2.21, all of
which documents are true and complete copies thereof as in effect on the date
hereof.
2.22 Contracts; No Defaults. Schedule 2.22 contains an accurate and
complete list, and SteriLogic has delivered to MedSolutions accurate and
complete copies of each written contract and written amendment, supplement or
modification in respect to any such contract, and an accurate and complete
description of the material terms of each oral contract and oral amendment,
supplement or modification in respect to any oral or written contract, in each
such case to which SteriLogic is a party (collectively, the "Contracts"). Except
as otherwise set forth on Schedule 2.22, and except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting
the enforcement of creditors' rights generally and the application of general
principles of equity and judicial discretion, each Contract is in full force and
effect and is valid and enforceable in accordance with its terms, is not in
default nor has any event occurred which with the passage of time would result
in a default, and does not require the consent or approval of any party thereto
with respect to the transactions contemplated by this Agreement.
2.23 Employees. There are no strike, labor dispute or union organization
activities pending or threatened between SteriLogic and its employees. None of
SteriLogic's employees belongs to any union or collective bargaining unit.
Except as set forth on Schedule 2.23, SteriLogic is not a party to or bound by
any currently effective employment contract, deferred compensation agreement,
bonus plan, incentive plan, stock option plan, profit sharing plan, retirement
agreement, or other employee compensation agreement. To SteriLogic's or each of
the Shareholders' Knowledge, no officer or key employee intends to terminate his
or her employment with SteriLogic, nor does SteriLogic have a present intention
to terminate the employment of any officer or key employee. Except as set forth
on Schedule 2.23, subject to general principles related to wrongful termination
of employees, the employment of each officer and employee of SteriLogic is
terminable at the will of SteriLogic.
2.24 Employee Benefits. SteriLogic has no Employee Benefit Plans that are
required to comply with ERISA. For purposes of this Agreement, "Employee Benefit
Plan" means any "employee pension benefit plan" (as defined in Section 3(2) of
ERISA), any "employee welfare benefit plan" (as defined in Section 3(1) of
ERISA), and any other written or oral plan, agreement or arrangement involving
direct or indirect compensation, including insurance coverage, severance
benefits, disability benefits, deferred compensation, bonuses, stock options,
stock purchase, phantom stock, stock appreciation or other forms of incentive
compensation or post-retirement compensation. For purposes of this Agreement,
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
2.25 Insurance. Schedule 2.25 lists each insurance policy (including fire,
theft, casualty, general liability, professional liability, workers
compensation, business interruption, environmental, product liability and
15
automobile insurance policies and bond and surety arrangements) to which
SteriLogic is a party. There is no material claim pending under any such policy
as to which coverage has been questioned, denied or disputed by the underwriter
of such policy. All premiums due and payable under all such policies have been
paid, SteriLogic is not liable for any retroactive premiums or similar payments,
and SteriLogic is otherwise in compliance in all material respects with the
terms of such policies applicable to it. Neither SteriLogic nor any Shareholder
has any Knowledge of any threatened termination of, or material premium increase
(other than increases that are consistent with the increases experienced by the
industry in which SteriLogic does business) with respect to, any such policy.
2.26 Obligations to Related Parties. No employee, officer, director or,
shareholder of SteriLogic or member of his or her immediate family is indebted
to SteriLogic, nor is SteriLogic indebted (or committed to make loans or extend
or guarantee credit) to any of them other than (i) for payment of salary for
services rendered, (ii) reimbursement for reasonable expenses incurred on behalf
of SteriLogic and (iii) for other standard employee benefits made generally
available to all employees (including stock option agreements outstanding under
any stock option plan approved by SteriLogic's Board of Directors and stock
purchase agreements approved by SteriLogic's Board of Directors). None of such
persons has any direct or indirect ownership interest in any firm or corporation
with which SteriLogic is affiliated or with which SteriLogic has a business
relationship, or any firm or corporation that competes with SteriLogic, except
in connection with the ownership of stock in publicly traded companies. No
employee, officer, director or shareholder of SteriLogic, nor any member of
their immediate families, is, directly or indirectly, interested in any material
Contract with SteriLogic (other than such contracts as relate to any such
person's ownership of capital stock or other securities of SteriLogic or such
person's employment agreement with SteriLogic).
2.27 Accounts Receivable. The accounts receivable shown on the SteriLogic
Financial Statements and the accounts receivable of SteriLogic arising after the
date of the SteriLogic Financial Statements and prior to the Effective Time
arose from bona fide transactions in the ordinary course of business and have
been collected or will be collectible in the book amounts thereof. None of such
accounts receivable is subject to any claim of offset, recoupment or
counterclaim, and neither SteriLogic nor any Shareholder has any Knowledge of
any specific facts that would be likely to give rise to any such claim. No
amount of such accounts receivable is contingent upon the performance by
SteriLogic of any obligation and no agreement for deduction or discount or any
type of credit has been made with respect to any such accounts receivable. No
customer of the Company has proposed any discount or reduction with respect to
such customer's accounts receivable.
2.28 Representations Regarding the Acquisition of the Merger Shares.
(a) Acquire Entirely for Own Account. This Agreement is made with
SteriLogic and the Shareholders in reliance upon Xxxxx'x representation to
MedSolutions that the Merger Shares to be received by Xxxxx will be acquired for
investment for Xxxxx'x own account, not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof, and that Xxxxx has no
present intention of selling or granting any participation in or otherwise
distributing the same. Xxxxx further represents that it does not have any
16
contract, undertaking, agreement or arrangement with any Person to sell,
transfer or grant participations to such Person or to any third Person with
respect to the Merger Shares.
(b) Sophistication; Accredited Investor Status. Xxxxx is a Person who
either alone or with its purchaser representative(s) has sufficient knowledge
and experience in financial and business matters to be capable of evaluating the
merits and risks of an investment in MedSolutions.
(c) Speculative Investment. Xxxxx understands the speculative nature and
risks of investments associated with MedSolutions and confirms that it is able
to bear the risk of the investment, and that there may not be any public market
for the Merger Shares received hereby.
(d) No Coercion or Solicitation. Xxxxx has freely entered this Agreement
and has been subject to neither pressure to make a xxxxx or uninformed decision
to enter into this Agreement nor solicitation to receive the Merger Shares.
(e) Transfer Restrictions. Xxxxx hereby acknowledges that MedSolutions is
not under any obligation to register or seek an exemption under any federal
and/or state securities laws for any sale or transfer of the Merger Shares by
Xxxxx, and Xxxxx hereby further acknowledges that the Merger Shares constitute
restricted securities as that term is defined in Rule 144 under the Securities
Act and that the Merger Shares may not be sold, transferred, assigned or
hypothecated unless there is an effective registration statement under the
Securities Act covering the Merger Shares, the sale is made in accordance with
Rule 144 under the Securities Act, or MedSolutions receives an opinion of
counsel of Xxxxx reasonably satisfactory to MedSolutions, stating that such
sale, transfer, assignment or hypothecation is exempt from the registration and
prospectus delivery requirements of the Securities Act.
(f) Disclosure of Information. Xxxxx has received all the information that
it considers necessary or appropriate for deciding whether to acquire the Merger
Shares. Xxxxx further represents that it has had the opportunity to ask
questions of MedSolutions and receive answers from MedSolutions, to the extent
that MedSolutions possessed such information or could acquire it without
unreasonable effort or expense, necessary to evaluate the merits and risks of
any investment in MedSolutions. Further, Xxxxx has been given an opportunity to
question the appropriate executive officers of MedSolutions.
(g) Lock-up Agreement. Xxxxx hereby acknowledges that the shareholder
lock-up agreement with respect to the Merger Shares between MedSolutions and
Xxxxx in the form attached hereto as Exhibit D shall follow the Merger Shares
upon the sale, transfer, assignment or hypothecation of any or all of the Merger
Shares to any transferee of Xxxxx.
17
(h) Legends. It is understood that the certificates evidencing the Merger
Shares will bear the legend set forth below:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY OTHER JURISDICTIONS. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR
RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS
SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF
THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR
RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A SHAREHOLDER LOCK-UP
AGREEMENT THAT PLACES CERTAIN RESTRICTIONS UPON THE SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION OF ANY OR ALL OF SUCH SHARES. SUCH RESTRICTIONS
SHALL FOLLOW THE SHARES REPRESENTED HEREBY UPON THE SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION OF ANY OR ALL OF SUCH SHARES TO ANY TRANSFEREE
BY THE HOLDER HEREOF. A COPY OF THE FORM OF SHAREHOLDER LOCK-UP AGREEMENT
MAY BE OBTAINED FROM THE ISSUER UPON WRITTEN REQUEST THEREFOR MAILED OR
DELIVERED TO THE FOLLOWING ADDRESS: MEDSOLUTIONS, INC., 00000 XXXXX XXXXX,
XXXX XXXXXXX XXX, XXXXX 000, XXXXXX, XXXXX 00000, ATTN: SECRETARY."
The legend set forth above shall be removed by MedSolutions from any certificate
evidencing Merger Shares upon delivery to MedSolutions of an opinion by counsel,
reasonably satisfactory to MedSolutions, that a registration statement under the
Securities Act is at that time in effect with respect to the legended security
or that such security can be freely transferred in a public sale without such a
registration statement being in effect and that such transfer will not
jeopardize the exemption or exemptions from registration pursuant to which
MedSolutions issued the Merger Shares.
2.29 Full Disclosure. No representation or warranty regarding SteriLogic or
any Shareholder made in this Agreement, the Exhibits and Disclosure Schedules
hereto, or the documents to be delivered by SteriLogic and the Shareholders at
the Closing, contains any untrue statement of a material fact, or omits to state
a material fact necessary to make the statements or facts contained herein or
therein not misleading. Each of the Exhibits and Disclosure Schedules attached
18
hereto is a true and complete list or description, as appropriate, of the items
purported to be listed or described thereon.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MEDSOLUTIONS
AND THE MERGER SUB
To induce SteriLogic and the Shareholders to enter into this Agreement and
to consummate the transactions contemplated hereby, MedSolutions and the Merger
Sub jointly and severally represent and warrant to SteriLogic and the
Shareholders as follows:
3.01 Organization and Good Standing. Each of MedSolutions and the Merger
Sub is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Texas. Exhibits 3.1 through 3.6, inclusive, to
MedSolutions' Form 10-KSB for the fiscal year ended December 31, 2005 (the "Form
10-KSB") are true and complete copies of MedSolutions' Articles of Incorporation
and all amendments thereto. Exhibit 3.7 to the Form 10-KSB is a true and
complete copy of the bylaws of MedSolutions as presently in effect. Schedule
3.01 includes (i) a true and complete copy of the Merger Sub's Certificate of
Formation, certified by the Texas Secretary of State; (ii) a true and complete
copy of the Bylaws of the Merger Sub presently in effect, certified as true and
correct by the Merger Sub's Secretary; and (iii) true and complete copies of
certificates of existence and account status for each of MedSolutions and the
Merger Sub, certified by the Secretary of State of Texas and the Texas
Comptroller of Public Accounts, respectively, as of the Effective Time.
3.02 Authority. MedSolutions has all requisite corporate power and
authority to execute and deliver this Agreement and the Note and to consummate
the transactions contemplated hereby and thereby. The Merger Sub has all
requisite corporate power and authority to execute and deliver this Agreement
and the Merger Certificate and to consummate the transactions contemplated
hereby and thereby. This Agreement and the Note have been approved by the
MedSolutions' Board of Directors and have been duly authorized, executed, and
delivered by MedSolutions. This Agreement and the Merger Certificate have been
approved by the Merger Sub's Board of Directors and have been duly authorized,
executed, and delivered by the Merger Sub. No other corporate act or proceeding
on the part of either MedSolutions or the Merger Sub is necessary to authorize
this Agreement, the Note or the Merger Certificate (collectively, the
"Transaction Documents"), as applicable, or the transactions contemplated hereby
or thereby. The Transaction Documents have been duly authorized, executed, and
delivered by each of MedSolutions and the Merger Sub, as applicable, and
constitute a valid and binding obligation of each of MedSolutions and the Merger
Sub, as applicable, enforceable against such party in accordance with their
terms, except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and similar laws affecting the enforcement of creditors' rights
generally and the application of general principles of equity and judicial
discretion. MedSolutions has delivered to SteriLogic a copy of the resolutions
of MedSolutions' Board of Directors, certified as true and correct by
MedSolutions' Secretary, approving this Agreement, the issuance of the Merger
Shares and the Note, and authorizing the execution hereof and thereof by
MedSolutions' President. The Merger Sub has delivered to SteriLogic a copy of
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the resolutions of the Merger Sub's Board of Directors, certified as true and
correct by the Merger Sub's Secretary, approving this Agreement and authorizing
the execution hereof and thereof by the Merger Sub's President.
3.03 No Violation. Neither the execution and delivery by MedSolutions of
the Transaction Documents nor the consummation by MedSolutions of the
transactions contemplated thereby will (i) violate any provision of the Texas
Business Corporation Act, the Articles of Incorporation of MedSolutions, or the
Bylaws of MedSolutions; (ii) violate, or be in conflict with, or constitute a
default (or an event or condition that, with notice or lapse of time, or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or cause the acceleration of the
maturity of any agreement to which MedSolutions is subject, or result in the
creation or imposition of any security interest, lien, charge, or other
encumbrance upon any of MedSolutions' assets under, any note, bond, mortgage,
indenture, deed of trust, license, lease, contract, commitment, understanding,
arrangement, agreement, or restriction of any kind or character to which
MedSolutions is a party or by which MedSolutions may be bound or affected or to
which any of MedSolutions' assets is subject; or (iii) violate any statute or
law or any judgment, decree, order, writ, injunction, regulation, or rule of any
court or Governmental Authority.
Neither the execution and delivery by the Merger Sub of the Transaction
Documents nor the consummation by the Merger Sub of the transactions
contemplated thereby will (i) violate any provision of the Texas Business
Organizations Code, the Certificate of Formation of the Merger Sub, or the
Bylaws of the Merger Sub; (ii) violate, or be in conflict with, or constitute a
default (or an event or condition that, with notice or lapse of time, or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or cause the acceleration of the
maturity of any agreement to which the Merger Sub is subject, or result in the
creation or imposition of any security interest, lien, charge, or other
encumbrance upon any of the Merger Sub's assets under, any note, bond, mortgage,
indenture, deed of trust, license, lease, contract, commitment, understanding,
arrangement, agreement, or restriction of any kind or character to which the
Merger Sub is a party or by which the Merger Sub may be bound or affected or to
which any of the Merger Sub's assets is subject; or (iii) violate any statute or
law or any judgment, decree, order, writ, injunction, regulation, or rule of any
court or Governmental Authority.
3.04 Brokers. Neither MedSolutions nor the Merger Sub has employed any
broker, agent, or finder in connection with any transaction contemplated by this
Agreement for which SteriLogic or the Shareholders may be liable or responsible
to pay.
3.05 Litigation. Except as disclosed in the Form 10-KSB, there are no
suits, arbitrations, claims, actions, Proceedings, investigations, or inquiries
in progress, pending, or, to MedSolutions' Knowledge, threatened against or
affecting MedSolutions, MedSolutions' assets, or the transactions contemplated
hereby in any court or before any arbitration panel of any kind or before or by
any Governmental Authority, except such Proceedings which would not have a
Material Adverse Effect.
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3.06 Full Disclosure. No representation or warranty of MedSolutions or the
Merger Sub made in this Agreement contains any untrue statement of a material
fact that affects the ability of MedSolutions to consummate the transactions
contemplated by this Agreement or omits to state a material fact necessary to
make the statements or facts contained herein not misleading.
3.07 Consents. No consent, approval, license, permit, authorization, or
order of any person is required in connection with the execution and delivery of
Transaction Documents by MedSolutions or the Merger Sub or the consummation of
the transactions contemplated hereby by MedSolutions or the Merger Sub.
3.08 Exemption. The issuance of the Merger Shares hereunder to Xxxxx, to
the extent the representations and warranties set forth in Section 2.28 hereof
are true, correct and complete in all respects, is exempt from the registration
requirements under the Securities Act of 1933, as amended, and all applicable
state securities laws.
3.09 Issuance of Common Stock. The Merger Shares being issued hereunder,
when issued in accordance with this Agreement, will have been validly issued,
fully paid and non-assessable and will be free and clear of any lien, charge or
other encumbrance (other than as set forth in this Agreement) and will not be
subject to any preemptive or similar rights.
ARTICLE IV
COVENANTS OF STERILOGIC AND THE SHAREHOLDERS
4.01 Covenants of SteriLogic. During the period from the date of this
Agreement and continuing until the Effective Time, SteriLogic agrees (except as
expressly contemplated or permitted by this Agreement, or to the extent that
MedSolutions shall otherwise consent in writing) that:
(a) Ordinary Course. SteriLogic shall carry on its business in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted;
(b) Dividends; Changes in Stock. Except as set forth on Schedule 4.01,
SteriLogic shall not (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock, or (ii) repurchase or
otherwise acquire, or permit any subsidiary to purchase or otherwise acquire,
any shares of its capital stock.
(c) Issuance of Securities. Except as set forth on Schedule 4.01, prior to
Closing hereunder, SteriLogic shall not issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of its capital stock of
any class, any voting debt or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting debt or convertible
securities;
(d) Governing Documents. SteriLogic shall not amend or propose to amend its
organizational charter or bylaws;
21
(e) No Dispositions. Except as set forth on Schedule 4.01, except for the
transfer of assets in the ordinary course of business consistent with prior
practice, SteriLogic shall not sell, lease, encumber or otherwise dispose of, or
agree to sell, lease, encumber or otherwise dispose of, any of its assets, which
are material, individually or in the aggregate, to SteriLogic;
(f) Indebtedness. SteriLogic shall not incur any indebtedness for borrowed
money or guarantee any such indebtedness or issue or sell any debt securities or
warrants or rights to acquire any debt securities of such party or guarantee any
debt securities of others other than in each case in the ordinary course of
business consistent with prior practice;
(g) Employee Compensation. Except in the ordinary course of business,
SteriLogic shall not grant any severance or termination pay (other than pursuant
to policies or contracts of SteriLogic in effect on the date hereof and
disclosed to MedSolutions in the Disclosure Schedules attached hereto) to, or
enter into or amend any employment or severance agreement with, any of its
directors, officers or employees; adopt any new employee benefit plan or
arrangement of any type; or award any increase in compensation or benefits to
its directors, officers or employees;
(h) Other Actions. SteriLogic shall not take any action that would or is
reasonably likely to result in any of its representations and warranties set
forth in this Agreement being untrue as of the date made (to the extent so
limited), or in any of the conditions precedent set forth in Article VII hereof
not being satisfied; or
(i) Certain Agreements. SteriLogic shall not enter into any agreement or
commitment to contravene any of its obligations set forth in this Section 4.01.
4.02 No Solicitation. So long as this Agreement remains in effect, neither
SteriLogic nor any Shareholder shall, directly or indirectly, encourage or
solicit or hold discussions or negotiations with, or provide any information to,
any person, entity or group (other than MedSolutions or the Merger Sub)
concerning any merger or sale of shares of capital stock of SteriLogic or sale
of a substantial portion or all of SteriLogic's assets or liabilities outside of
the ordinary course of its business.
4.03 Approval of the Shareholders. SteriLogic will (i) take all steps
necessary to duly call, give notice of, convene and hold a meeting of its
shareholders (the "Shareholders Meeting"), if and as required by applicable law,
for the purpose of securing such shareholders' approval of this Agreement and
the Merger, (ii) recommend to its shareholders the approval of this Agreement
and the transactions contemplated hereby and use their reasonable best efforts
to obtain, as promptly as practicable, such approval, and (iii) cooperate and
consult with MedSolutions with respect to each of the foregoing matters.
4.04 Oral Contracts. The Shareholders shall deliver or cause to be
delivered to MedSolutions, on or before the six-month anniversary of the
Effective Time, executed written contracts (of at least ninety percent (90%) of
all oral contracts) in form and substance reasonably acceptable to MedSolutions
replacing each oral contract listed on Schedule 2.22.
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ARTICLE V
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION.
5.01 Indemnification of MedSolutions and the Surviving Corporation. Each of
the Shareholders hereby agrees, jointly and severally, to indemnify, defend, and
hold harmless MedSolutions and the Surviving Corporation, and their successors
in interest, and their respective officers, directors, employees, agents,
attorneys, and stockholders (each a "MedSolutions Indemnitee") from and against
all demands, claims, actions, or causes of action, assessments, losses, taxes,
damages, liabilities, costs, and expenses, including, without limitation,
interest, penalties, and reasonable attorneys' fees and expenses (collectively
"Damages"), asserted against, assessed upon, resulting to, imposed upon, or
incurred by a MedSolutions Indemnitee by reason of or resulting from a breach of
any representation, warranty, or a breach or threatened breach of any covenant,
obligation, or agreement of SteriLogic or a Shareholder contained in or made
pursuant to this Agreement, including the Disclosure Schedules and Exhibits
hereto. In addition, each Shareholder agrees to indemnify any MedSolutions
Indemnitee for Damages as they are incurred by the MedSolutions Indemnitee
irrespective of any ongoing or continuing legal proceedings and the relative
timeframes and issues associated with such proceedings, or the relative success
or nonsuccess the MedSolutions Indemnitee may experience in such proceedings.
5.02 Indemnification of the Shareholders. MedSolutions hereby agrees to
indemnify, defend, and hold harmless the Shareholders, their successors in
interest, heirs and assigns, and their respective officers, managers, employees,
agents, attorneys and members (each a "Shareholder Indemnitee") from and against
all Damages asserted against, assessed upon, resulting to, imposed upon, or
incurred by a Shareholder Indemnitee by reason of or resulting from a breach of
any representation or warranty of MedSolutions or the Merger Sub contained in or
made pursuant to this Agreement and the other Transaction Documents, including
the Exhibits and Disclosure Schedules thereto and the operation of Merger Sub
after the Effective Time. In addition, MedSolutions agrees to indemnify any
Shareholder Indemnitee for Damages as they are incurred by the Shareholder
Indemnitee irrespective of any ongoing or continuing legal proceedings and the
relative timeframes and issues associated with such proceedings, or the relative
success or nonsuccess the Shareholder Indemnitee may experience in such
proceedings.
5.03 Indemnification Claims Procedure. All claims subject to
indemnification under Section 5.01 or 5.02 above shall be asserted and resolved
in accordance with the following provisions. Promptly after receipt by a
MedSolutions Indemnitee or a Shareholder Indemnitee (either is referred to as an
"Indemnitee" in this Section 5.03) of notice of the commencement of any action
(including any governmental action), such Indemnitee will, if a claim in respect
thereof is to be made against any indemnifying party (the "Indemnifying Party")
under this Article V, deliver to the Indemnifying Party a written notice of the
commencement thereof and the Indemnifying Party shall have the right to
participate in, and, to the extent the Indemnifying Party so desires, jointly
with any other Indemnifying Party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an Indemnitee (together with all other Indemnitees that may be represented
without conflict by one counsel) shall have the right to retain one separate
23
counsel at its own cost. The failure to deliver written notice to the
Indemnifying Party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such Indemnifying Party of any liability to the Indemnitee under this
Article V to the extent of the prejudice caused by such failure.
5.04 Expiration of Indemnification Obligations. All obligations to provide
indemnification pursuant to this Article V shall terminate on the second
anniversary of the Closing Date, other than claims arising from environmental,
employee benefit or tax issues, which shall not terminate until the applicable
statutes of limitations for such claims have expired.
5.05 Indemnification Threshold. The parties to this Agreement agree that no
Indemnitee will seek indemnification for any and all claims hereunder unless and
until such claim or claims aggregate to Twenty Thousand Dollars ($20,000.00)
(the "Indemnification Threshold"). After the Indemnification Threshold has been
reached, such party may seek indemnification for the amount of any and all
claims hereunder, including without limitation all amounts up to and including
the Indemnification Threshold. The parties to this Agreement further agree that
the liability of each of MedSolutions or the Shareholders relating to the
indemnification of Indemnitees hereunder shall not exceed, in the aggregate, One
Million Eight Hundred Thousand Dollars ($1,800,000.00); provided, however that
such limitation shall not apply with respect to claims by MedSolutions arising
from environmental issues hereunder.
5.06 Offset Disputes. In the event that MedSolutions desires to offset the
amount of any claim or claims hereunder against the outstanding principal amount
of the Note, MedSolutions shall provide written notice (an "Offset Notice") to
Xxxxx setting forth the amount to be offset and the reason therefor. Xxxxx may
dispute any such offset by providing written notice (a "Dispute Notice") to
MedSolutions within 10 calendar days of the date of MedSolutions' Offset Notice.
Notwithstanding any provision of this Agreement to the contrary, a Dispute
Notice shall be deemed received by MedSolutions only upon actual receipt
thereof. In the event that MedSolutions has not received a Dispute Notice from
Xxxxx within such 10-day period, Xxxxx shall be deemed to have accepted the
offset described in the Offset Notice. In the event that MedSolutions receives a
Dispute Notice from Xxxxx within such 10-day period, and MedSolutions and Xxxxx
are not able to resolve such dispute within 30 days of the date on which
MedSolutions receives such Dispute Notice, MedSolutions shall place the amount
which is in dispute into escrow with Park Cities Bank, Dallas, Texas ("Escrow
Agent") at such times and in such installments as would otherwise be payable to
Xxxxx pursuant to the terms of the Note, and such amount shall remain in escrow
until such time as such dispute has been resolved in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, at which
time such escrowed amount shall be disbursed by the Escrow Agent upon receipt of
a joint written direction from MedSolutions or Xxxxx to MedSolutions or Xxxxx,
as the case may be, together with any earnings thereon, in accordance with the
determination of such arbitration proceedings.
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 Legal Conditions to Merger. Each of MedSolutions, the Merger Sub and
SteriLogic shall take all reasonable actions necessary to comply promptly with
all legal requirements which may be imposed on it with respect to the Merger and
will promptly cooperate with and furnish information to each other in connection
with any such requirements imposed upon any of them or upon any of their related
entities or subsidiaries in connection with the Merger. Each party shall take
all reasonable actions necessary to obtain (and will cooperate with each other
in obtaining) any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity or other public or private third party, required to
be obtained or made by MedSolutions, the Merger Sub or SteriLogic or any of
their related entities or subsidiaries in connection with the Merger or the
taking of any action contemplated thereby or by this Agreement.
6.02 SteriLogic's and the Merger Sub's Action. The Board of Directors of
each of SteriLogic and the Merger Sub has (i) determined that the Merger is fair
and in the best interests of such corporation and its respective shareholders,
and (ii) adopted this Agreement in accordance with the applicable provisions of
the statutes of the States of Pennsylvania and Texas, respectively. The Board of
Directors of each of SteriLogic and the Merger Sub has directed that this
Agreement and the Merger be submitted to its respective shareholders for their
adoption and approval and resolved to recommend that its shareholders vote in
favor of the adoption of this Agreement and the approval of the Merger.
6.03 Disclosure Schedules. A fact or item disclosed on any disclosure
schedule shall be considered disclosed for purposes of any other schedule,
representation or warranty hereto. If any representation, warranty or statement
of SteriLogic or any Shareholder in this Agreement or any of the disclosure
schedules delivered to MedSolutions shall be incorrect prior to the Closing
Date, SteriLogic and the Shareholders shall deliver to MedSolutions a supplement
in order that said representation, warranty, disclosure schedule or statement,
as so supplemented, shall be true and correct to the extent provided in this
Agreement. Except for matters which are immaterial, the delivery of such
supplement to MedSolutions shall not in any manner constitute a waiver by
MedSolutions of any of its rights under this Agreement.
6.04 Certain Liabilities. The Shareholder shall deliver to MedSolutions
full copies of all documentation relating to the liabilities of SteriLogic set
forth on Schedule 2.22 hereto within 15 days of the Effective Time.
ARTICLE VII
CONDITIONS PRECEDENT
7.01 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligations of each party to effect the Merger shall be conditioned
upon the filing and obtainment of all authorizations, consents, orders or
approvals of, or declarations or filings with, or expirations of waiting periods
imposed by, any Governmental Entity or by any applicable law, rule, or
regulation governing the transactions contemplated hereby, including without
25
limitation the approval of the Merger by the holders of not less than a majority
of the issued and outstanding shares of SteriLogic Common Stock.
7.02 Conditions to Obligations of MedSolutions and the Merger Sub. The
obligations of MedSolutions and the Merger Sub to effect the Merger are subject
to the satisfaction of the following conditions on or before the Closing Date
unless waived by MedSolutions and the Merger Sub:
(a) Representations and Warranties. The representations and warranties of
SteriLogic and the Shareholders set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and (except to
the extent such representations and warranties speak as of an earlier date) as
of the Closing Date as though made on and as of the Closing Date, except as
otherwise contemplated by this Agreement, and MedSolutions shall have received a
certificate signed on behalf of SteriLogic by the President of SteriLogic to
such effect.
(b) Performance of Obligations of SteriLogic and the Shareholders.
SteriLogic and the Shareholders shall have performed in all material respects
all obligations required to be performed by them under this Agreement at or
prior the Closing Date, and MedSolutions shall have received a certificate
signed on behalf of SteriLogic by the President of SteriLogic to such effect.
(c) Closing Documents. MedSolutions and the Merger Sub shall have received
such certificates and other closing documents from SteriLogic and the
Shareholders as counsel for MedSolutions and the Merger Sub shall reasonably
request.
(d) Consents. SteriLogic shall have obtained the consent or approval of
each person whose consent or approval shall be required in connection with the
transactions contemplated hereby under any loan or credit agreement, note,
mortgage, indenture, lease or other agreement or instrument, except those for
which failure to obtain such consents and approvals would not, in the reasonable
opinion of MedSolutions or the Merger Sub, individually or in the aggregate,
have a material adverse effect on the Surviving Corporation taken as a whole
upon the consummation of the transactions contemplated hereby. SteriLogic shall
also have received the approval of its shareholders with respect to the Merger
in accordance with applicable law.
(e) Due Diligence Review. MedSolutions and the Merger Sub shall have
completed to their reasonable satisfaction a review of the business, operations,
finances, assets and liabilities of SteriLogic and shall not have determined
that any of the representations or warranties of SteriLogic or any Shareholder
contained herein are, as of the date hereof or the Closing Date, inaccurate in
any material respect or that SteriLogic or any Shareholder is otherwise in
violation of any of the provisions of this Agreement.
(f) Pending Litigation. There shall not be any litigation or other
proceeding pending or threatened to restrain or invalidate the transactions
contemplated by this Agreement, which, in the sole reasonable judgment of
MedSolutions or the Merger Sub, made in good faith, would make the consummation
26
of the Merger imprudent. In addition, there shall not be any other litigation or
other proceeding pending or threatened against SteriLogic, the consequences of
which, in the sole judgment of MedSolutions or the Merger Sub, could be
materially adverse to the Surviving Corporation.
(g) Non-Competition and Non-Solicitation Agreements. Each of Xxxxxxx
Xxxxxxxxxxx Xxxx and Xxxxxxxxxxx X. Xxxxx shall have executed and delivered to
MedSolutions a non-competition and non-solicitation agreement in the form
attached hereto as Exhibit E.
(h) Consulting Agreement. Consular, LLC, a limited liability company of
which Xxxxxxx Xxxxxxxxxxx Xxxx is the sole member, shall have executed and
delivered to MedSolutions a consulting agreement in the form attached hereto as
Exhibit F (the "Consulting Agreement").
(i) Transfer of Certain Assets and Liabilities. SteriLogic shall have
transferred, to the sole and absolute satisfaction of MedSolutions, all of its
outstanding liabilities other than those liabilities set forth on Schedule 2.06
attached hereto and its Maine operating division into Oxus Environmental, LLC
("Oxus"), such that after such transfer SteriLogic shall only have the assets
and liabilities reflected on the balance sheet attached hereto as Schedule
7.02(i).
(j) Supply and Right of First Refusal Agreement. Oxus shall have executed
and delivered to MedSolutions a supply and right of first refusal agreement in
the form attached hereto as Exhibit G.
7.03 Conditions to Obligations of SteriLogic and the Shareholders. The
obligation of SteriLogic and the Shareholders to effect the Merger is subject to
the satisfaction of the following conditions unless waived by SteriLogic and all
of the Shareholders:
(a) Representations and Warranties. The representations and warranties of
MedSolutions and the Merger Sub set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and (except to
the extent such representations speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date, except as otherwise
contemplated by this Agreement, and SteriLogic shall have received certificates
signed on behalf of MedSolutions and the Merger Sub by the President of each
respective company to such effect.
(b) Performance of Obligations of MedSolutions and the Merger Sub.
MedSolutions and the Merger Sub shall each have performed in all material
respects all obligations required to be performed by them under this Agreement
at or prior to the Closing Date, and SteriLogic shall have received certificates
signed on behalf of MedSolutions and the Merger Sub by the President of each
respective company to such effect.
(c) Closing Documents. SteriLogic shall have received such certificates and
other closing documents from MedSolutions and the Merger Sub as counsel for
SteriLogic shall reasonably request.
27
(d) Pending Litigation. There shall not be any litigation or other
proceeding pending or threatened to restrain or invalidate the transactions
contemplated by this Agreement, which, in the sole reasonable judgment of
SteriLogic, made in good faith, would make the consummation of the Merger
imprudent.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.01 Termination. This Agreement may be terminated at any time prior to the
Effective Time:
(a) By mutual consent of MedSolutions and SteriLogic;
(b) By MedSolutions if there has been a material breach of any
representation, warranty, covenant or agreement on the part of SteriLogic or any
Shareholder set forth in this Agreement, or by SteriLogic if there has been a
material breach of any representation, warranty, covenant or agreement on the
part of MedSolutions or the Merger Sub, which breach has not been cured within
ten (10) Business Days following receipt by the breaching party of written
notice of such breach (or if cure is impossible within such ten (10) day period,
begin to take all applicable actions within such ten (10) day period to cure the
breach, but in no event shall any party have more than 20 days to cure any such
breach);
(c) By either MedSolutions or SteriLogic if any permanent injunction or
other order of a court or other competent authority preventing the consummation
of the Merger shall have become final and non-appealable;
(d) By MedSolutions in the event that any Shareholder exercises any
dissenter's or appraisal rights applicable to his or her shares of SteriLogic
Common Stock with respect to the Merger; or
(e) By either MedSolutions or SteriLogic if the Merger shall not have been
consummated on or before August 31, 2006.
8.02 Effect of Termination. In the event of termination of this Agreement
by either MedSolutions or SteriLogic as provided in Section 8.01, this Agreement
shall forthwith become void and there shall be no liability or obligation on the
part of any party hereto. In such event, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses. Upon termination , all books and
records delivered by any party to the other party shall be promptly returned.
8.03 Amendment. This Agreement may be amended by the mutual written
agreement of all parties hereto, provided no amendment shall be made which by
law requires approval by the shareholders of any party without such further
approval.
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8.04 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
ARTICLE IX
GENERAL PROVISIONS
9.01 Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Closing Date
until the second anniversary of the Closing Date, other than representations,
warranties and agreements relating to environmental, employee benefit or tax
issues, which shall not terminate until the applicable statutes of limitations
for such claims have expired.
9.02 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered personally, telecopied (which
is confirmed) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
If to MedSolutions MedSolutions, Inc.
or the Merger Sub to: 00000 Xxxxx Xxxxx, Xxxx Xxxxxxx XXX, Xxxxx 000
Dallas, Texas 75251
Attn: Xxxxxxx X. Xxxxxxx, President & CEO
Facsimile: (000) 000-0000
With a copy to: Xxxxxx X. Block
Fish & Xxxxxxxxxx P.C.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
If to SteriLogic or: c/o Xxxxxxx X. Xxxx
the Shareholders: Xxxxx Xxxx Investments, LLC
00 Xxxx 00, Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
With a copy to: Xxxxxxx X. Xxxxxx, Esq.
Scolaro, Shulman, Xxxxx, Xxxxxx & Xxxxxxxx, PC
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
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9.03 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available.
9.04 Counterparts. This Agreement may be executed in multiple counterparts,
including by facsimile signature, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
9.05 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership.
This Agreement (including the documents and the instruments referred to herein)
constitutes the entire agreement and supersedes all prior and contemporaneous
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, and, except as otherwise set forth herein,
is not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
9.06 Governing Law; Venue. This Agreement shall be governed and construed
in accordance with the laws of the State of New York without regard to
principles of conflicts of law. Venue for any action or proceeding arising out
of or relating to this Agreement shall be proper exclusively in the federal or
state courts situated in the county in which the principal executive offices or
primary residence of the respondent thereto are located.
9.07 Reformation and Severability. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof:
(a) in lieu of such illegal, invalid, or unenforceable provision, there
shall be added automatically as a part of this Agreement a provision as similar
in terms to such illegal, invalid, or unenforceable provision as may be possible
and be legal, valid, and enforceable; and
(b) the legality, validity, and enforceability of the remaining provisions
hereof shall not in any way be affected or impaired thereby.
9.08 No Remedy in Certain Circumstances. Each party agrees that, should any
court or other competent authority hold any provision of this Agreement or part
hereof or thereof to be null, void or unenforceable, or order any party to take
any action inconsistent herewith or not to take any action required herein, the
other party shall not be entitled to specific performance of such provision or
part hereof or thereof or to any other remedy, including but not limited to
30
money damages, for breach hereof or thereof or of any other provision of this
Agreement or part hereof or thereof as a result of such holding or order.
9.09 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
9.10 Headings. The headings of sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
9.11 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that, except as otherwise set forth herein, the parties
hereto shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
9.12 Court Costs and Attorneys' Fees. If any action at law or in equity,
including an action for declaratory relief, is brought to enforce or interpret
the provisions of this Agreement, the prevailing party shall be entitled to
recover costs of court and reasonable attorneys' fees from the other party or
parties to such action, which fees may be set by the court in the trial of such
action or may be enforced in a separate action brought for that purpose, and
which fees shall be in addition to any other relief that may be awarded.
9.13 Expenses, Taxes, Etc. Except as otherwise provided herein, the
Shareholders shall pay all fees, taxes, and expenses incurred by them or
SteriLogic in connection with this Agreement, and MedSolutions and the Merger
Sub shall pay all fees and expenses incurred by them in connection with the
transactions contemplated by this Agreement.
ARTICLE X
DEFINITIONS
The following terms as used in this Agreement shall have the meanings set
forth below:
"Affiliate" shall mean, as to any Person, any Person controlled by,
controlling, or under common control with such Person, and, in the case of a
Person who is an individual, a member of the family of such individual
consisting of a spouse, sibling, in-law, lineal descendant, or ancestor
(including by adoption), and the spouses of any such individuals. For purposes
of this definition, "control" (including the terms "controlling", "controlled
by" and "under common control with") of a Person means the possession, directly
or indirectly, alone or in concert with others, of the power to direct or cause
31
the direction of the management and policies of such Person, whether through the
ownership of securities, by contract, or otherwise, and no Person shall be
deemed in control of another solely by virtue of being a director, officer, or
holder of voting securities of any entity. A Person shall be presumed to control
any partnership of which such Person is a general partner.
"Business Day" shall mean any day other than a Saturday, Sunday, or any day
on which banks located in Dallas, Texas are authorized to be closed by
applicable law.
"Code" shall mean the Internal Revenue Code of 1986, as amended. All
references herein to sections of the Code shall include any corresponding
provision or provisions of succeeding law.
"Environmental Laws" shall mean laws, including, without limitation,
federal, state, or local laws, ordinances, rules, regulations, interpretations,
and orders of courts or administrative agencies or authorities relating to
pollution, environmental protection, health and safety, or similar laws
(including, without limitation, ambient air, surface water, ground water, land
surface, and subsurface strata), including, without limitation, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended ("CERCLA"), the Federal Clean Water Act ("CWA"), the Safe Drinking Water
Act ("SDWA"), the Resource Conservation and Recovery Act of 1976, as amended
("RCRA"), the Clean Air Act ("CAA"), the Emergency Planning and Community Right
to Know Act ("EPCRA"), OSHA, the Medical Waste Tracking Act of 1988 ("MWTA"),
the Hazardous Materials Transportation Authorization Act of 1994 ("HMTAA"), any
regulations issued by the Texas Department of Health (the "TDH"), the Texas
Natural Resource Conservation Commission (the "TNRCC"), or the Texas Commission
on Environmental Quality (the "TCEQ"), and other laws relating to pollution or
protection of the environment, or to the manufacturing, processing,
distribution, use, treatment, handling, storage, disposal, or transportation of
Polluting Substances.
"Governmental Authority" means any nation or government, any state,
regional, local, or other political subdivision thereof, and any entity or
official exercising executive, legislative, judicial, regulatory, or
administrative functions of or pertaining to government.
"Knowledge" - An individual shall be deemed to have "knowledge" of a
particular fact or other matter if (i) such individual is actually aware of such
fact or other matter, or (ii) a person serving in the same capacity as such
individual would be expected to discover or otherwise become aware, after
reasonable due inquiry, of such fact or other matter in the course of performing
the official duties of such individual. A corporation or limited liability
company shall be deemed to have "knowledge" of a particular fact or other matter
if the executive officers of the corporation have Knowledge (as set forth above)
of such fact or other matter.
"Material Adverse Effect" means any effect(s), individually or in the
aggregate, that would be materially adverse to: (i) a party's assets in an
amount of $10,000 or more; or (ii) the ability of a party to timely consummate
the transactions contemplated hereby.
32
"Person" shall have the meaning given in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended, as modified and used in Sections 13(d)(3) and
14(d)(2) of such act.
"Polluting Substances" shall be construed broadly to include (a) asbestos,
(b) petroleum products or wastes, (c) biomedical or biological wastes, and (d)
all pollutants, contaminants, chemicals, or industrial, toxic, or hazardous
substances or wastes and shall include, without limitation, any flammable
explosives, radioactive materials, oil, hazardous materials, hazardous or solid
wastes, hazardous or toxic substances or regulated materials defined in CERCLA,
CWA, SDWA, RCRA, EPCRA, CAA, OSHA, MWTA, and HMTAA, and/or any other
Environmental Laws, as amended, and in the regulations adopted and publications
promulgated thereto, including without limitation those issued by the TDH, the
TNRCC and the TCEQ; provided, to the extent that the laws of the State of Texas
establish a meaning for "hazardous substance," "hazardous waste," "hazardous
materials," "solid waste," or "toxic substance," which is broader than that
specified in any of CERCLA, CWA, SDWA, RCRA, EPCRA, CAA, OSHA, MWTA, HMTAA or
other Environmental Laws such broader meaning shall apply.
"Proceeding" shall mean any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
judicial, or investigative, whether public or private) commenced, brought,
conducted, or heard by or before, or otherwise involving any Governmental
Authority or arbitrator.
"Property" includes any property (whether real or personal) that SteriLogic
currently or in the past has leased, operated, owned, or managed in any manner,
including, without limitation, any property acquired by foreclosure or deed in
lieu thereof and property held as security for a loan or other indebtedness as
of the Effective Time.
33
IN WITNESS WHEREOF, this Merger Agreement and Plan of Reorganization has
been signed by the parties set forth below as of the date set forth above.
MEDSOLUTIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President & CEO
STERILOGIC ACQUISITION SUBSIDIARY, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
STERILOGIC WASTE SYSTEMS, INC.
By: /s/ Xxxxxxx Xxxxxxxxxxx Xxxx
------------------------------
Name: Xxxxxxx Xxxxxxxxxxx Xxxx
Title: President
XXXXX:
XXXXX-XXXX INVESTMENTS, LLC
By: /s/ Xxxxxxx Xxxxxxxxxxx Xxxx
------------------------------
Name: Xxxxxxx Xxxxxxxxxxx Xxxx
Title:
/s/ Xxxxxxx Xxxxxxxxxxx Xxxx
---------------------------------------
Xxxxxxx Xxxxxxxxxxx Xxxx
/s/ Xxxxxxxxxxx X. Xxxxx
---------------------------------------
Xxxxxxxxxxx X. Xxxxx
34
A-1
EXHIBIT A
XXXXX MEMBERS
Xxxxxxx Xxxxxxxxxxx Xxxx
Xxxxxxxxxxx X. Xxxxx
A-1
EXHIBIT B
FORM OF CERTIFICATE OF MERGER
B-1
EXHIBIT C
FORM OF NOTE
CONVERTIBLE PROMISSORY NOTE
---------------------------
$250,000.00 Syracuse, New York August 16,2006
FOR VALUE RECEIVED, the undersigned, MedSolutions, Inc., a Texas
corporation (the "Maker"), hereby unconditionally promises to pay to the order
of Xxxxx-Xxxx Investments, LLC, a Delaware limited liability company (the
"Payee"), at such place as designated by the Payee, or at such other place or to
such other party or parties as may be designated by the Payee from time to time,
in lawful money of the United States of America, the principal amount (the
"Principal Amount") of $250,000.00, subject to adjustment in accordance with
Section 1.08 of that certain Merger Agreement and Plan of Reorganization
executed between the Maker, SteriLogic Acquisition Subsidiary, Inc., SteriLogic
Waste Systems, Inc. and the shareholders of SteriLogic Waste Systems, Inc.
signatory thereto as of the date hereof (the "Merger Agreement"), with simple
interest at an annual rate of 8.0%. All capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Merger Agreement.
1. Subject to adjustment as set forth below, this Convertible Promissory
Note (the "Note") shall be due and payable in 12 equal installments of interest
only in the amount of $1,666.67 each due monthly beginning on September 16,
2006, and 24 equal installments of principal and interest in the amount of
$11,306.82 each due thereafter with the final such installment due on August 16,
2009 (the "Maturity Date"). Each date on which a payment is due, including the
Maturity Date, shall be referred to herein as a "Payment Date"; provided,
however, that if a Payment Date should fall on a Saturday, Sunday, or bank
holiday, then the Payment Date shall be the next business day. The Maker may
prepay any portion or this entire Note without penalty at any time. Any
prepayment will be applied first against accrued but unpaid interest and then
against the outstanding principal balance. At the request of the Payee, the
Maker may make any payments due under the Note directly to the creditors of the
Payee. The Payee hereby acknowledges that this Note and the Principal Amount are
subject to certain offset rights by the Maker pursuant to the Merger Agreement.
To the extent that any interest is paid on the Note and the Principal Amount is
subsequently reduced in accordance with the terms of the Merger Agreement, any
interest previously paid in excess of an 8% annual rate of return on the
adjusted Principal Amount will be credited, in the sole discretion of the Maker
and upon prior written notice to Payee, against the future interest payment(s)
and/or the Principal Amount such that the amount of interest paid on the
adjusted Principal Amount does not exceed 8.0%. To the extent that the Principal
Amount is subsequently reduced in accordance with the Merger Agreement, the
amount of each payment set forth in the payment schedule above shall be
proportionately reduced to reflect such reduction.
2. If the Maker fails to pay the full amount then due on any Payment Date
and such failure remains uncured for a period of three calendar days following
written notice of such default by the Payee, then, at the election of the Payee,
this Note shall immediately become due and payable in full, interest on such
principal amount and unpaid interest shall thereafter accrue at the lesser of
12% or the highest lawful rate permissible under applicable law (the "Default
Rate"), and the Payee shall be entitled to pursue any remedy to which it is
entitled under applicable law.
3. The makers, signers, sureties, guarantors, and endorsers of this Note
severally waive valuation and appraisal, demand, presentment, notice of
dishonor, notice of intent to demand or accelerate payment hereof, notice of
demand, notice of acceleration, diligence in collecting, grace, notice, and
protest. If this Note is not paid when due, the Maker agrees to pay all costs of
collection, including, but not limited to, reasonable attorneys' fees and all
expenses incurred by the holder hereof on account of any such collection,
whether or not suit is filed hereon.
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4. Except as expressly set forth in Section 1 hereof, the Maker shall have
no right of setoff, counterclaim, recoupment or other deduction with respect to
the payment required hereunder, and such payment constitutes the absolute and
unconditional obligation of the Maker.
5. Each right and remedy available to the holder hereof shall be cumulative
of and in addition to each other such right and remedy. No delay on the part of
the holder hereof in the exercise of any right or remedy available to the holder
hereof shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude other or further exercise thereof or exercise of any
other such right or remedy.
6. Regardless of any provision contained in this Note, Payee shall never be
entitled to receive, collect or apply, as interest on this Note, any amount in
excess of the maximum lawful rate permitted by applicable law and, in the event
Payee ever receives, collects or applies as interest any such excess, such
amount that would be excessive interest shall be deemed a partial prepayment of
principal and treated under this Note as such by Maker. In determining whether
or not the interest paid or payable on this Note exceeds such maximum lawful
rate, Maker and Payee shall, to the maximum extent permitted under applicable
law, (a) characterize any nonprincipal payment as an expense, fee or premium
rather than as interest, (b) exclude voluntary prepayments and the effects
thereof, and (c) amortize, prorate, allocate and spread, in equal parts, the
total amount of interest throughout the entire contemplated term of this Note so
that the interest rate does not exceed the maximum lawful rate at any time
during the entire term of this Note. However, if this Note is paid in full or
all or a portion of the principal is set off under the Merger Agreement prior to
the scheduled maturity hereof, and if the interest received for the actual
period of existence thereof exceeds such maximum lawful rate, Payee shall refund
the amount of such excess and shall not be subject to any applicable penalties
provided by any laws for contracting for, charging, taking, reserving or
receiving interest in excess of such maximum lawful rate.
7. Conversion.
(a) Subject to and upon compliance with the provisions of this Section
7, the Payee shall have the right (the "Conversion Right"), at its option, at
any time and from time to time on or before August 16, 2007, to convert all or
any portion of the outstanding principal amount of and accrued but unpaid
interest on this Note into the number of fully paid and nonassessable shares of
Common Stock, par value $.001, of the Maker (the "Common Stock"), obtained by
dividing (i) the amount of this Note to be so converted, by (ii) the Conversion
Price. For purposes of this Note, the term "Conversion Price" means $1.50, as
adjusted from time to time pursuant to the provisions of Section 8 below.
(b) In order to exercise the conversion right provided in subsection (a)
above, the Payee shall notify the Maker in writing (a "Conversion Notice") that
the Payee elects to convert this Note or a specified portion thereof, and the
Payee shall contemporaneously surrender this Note at the office of the Maker for
cancellation. Unless the shares of Common Stock issuable upon conversion are to
be issued in the name of the Payee, the Conversion Notice shall be accompanied
by instruments of transfer, in a form reasonably satisfactory to the Maker, duly
executed by the Payee or its duly authorized attorney and an amount sufficient
to pay any transfer or similar tax (or evidence reasonably satisfactory to the
Maker demonstrating that such taxes have been paid).
As promptly as practicable after the compliance by the Payee with any
other conditions set forth in this subsection (b), the Maker shall issue and
shall deliver to the Payee, or otherwise in accordance with the Payee's written
instruction, (i) a certificate or certificates for the number of full shares of
Common Stock issuable upon the conversion of this Note in accordance with the
provisions of this Section 7 (and any fractional interest in respect of a share
of Common Stock arising upon such conversion shall be settled as provided in
subsection (c) of this Section 7), and (ii) if applicable, a new Note of like
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tenor in the original principal amount equal to the portion of this Note that
has not been so converted.
Each conversion of this Note shall be deemed to have been effected
immediately prior to the close of business on the date on which the Conversion
Notice is received by the Maker. The person or persons in whose name or names
any certificate or certificates for the shares of Common Stock issuable upon any
conversion of this Note shall be deemed to have become the holder or holders of
record of the shares of Common Stock represented thereby at the time and on the
date determined in accordance with the first sentence of this paragraph, and
such conversion shall be at the Conversion Price in effect at such time on such
date. All shares of Common Stock delivered upon conversion of this Note shall
upon delivery be duly and validly issued and fully paid and nonassessable.
(c) No fractional shares of Common Stock shall be issued upon conversion
of this Note. Instead of any fractional shares of Common Stock that would
otherwise be issuable upon conversion of this Note, the Maker shall pay a cash
adjustment in respect of such fractional share in an amount equal to the same
fraction of the current market price (as defined below) per share of Common
Stock at the close of business on the day of conversion. For the purpose of any
computation under this paragraph (c), the "current market price" per share of
Common Stock on any date shall be: (A) if the principal trading market for such
securities is a national or regional securities exchange, the closing price on
such exchange on such day; or (B) if sales prices for shares of Common Stock are
reported by the NASDAQ National Market System (or a similar system then in use),
the last reported sales price so reported on such day; or (C) if neither (A) nor
(B) above are applicable, and if bid and ask prices for shares of Common Stock
are reported in the over-the-counter market by NASDAQ (or, if not so reported,
by the National Quotation Bureau), the average of the high bid and low ask
prices so reported on such day. Notwithstanding the foregoing, if there is no
reported closing price, last reported sales price, or bid and ask prices, as the
case may be, for the day in question, then the current market price shall be
determined as of the latest date prior to such day for which such closing price,
last reported sales price, or bid and ask prices, as the case may be, are
available, unless such securities have not been traded on an exchange or in the
over-the-counter market for 30 or more days immediately prior to the day in
question, in which case the current market price shall be determined in good
faith by the Board of Directors of the Maker.
(d) This Note does not entitle the holder hereof to any voting rights or
other rights as a member of the Maker, nor to any other rights whatsoever except
the rights herein set forth.
8. Effect of Certain Events.
(a) Adjustment Due to Merger, Consolidation, Etc. If, at any time when
any of the principal amount of and accrued but unpaid interest on this Note is
outstanding, there shall be any merger, consolidation, exchange of capital
stock, recapitalization, reorganization, reclassification, or other similar
event, as a result of which shares of Common Stock of the Maker shall be changed
into the same or a different number of shares of the same or another class or
classes of stock or securities of the Maker or another entity, including without
limitation by way of subdividing its outstanding shares of Common Stock into a
greater number of shares or combining such outstanding shares of Common Stock
into a smaller number of shares, or in case of any sale or conveyance of all or
substantially all of the assets of the Maker other than in connection with a
plan of complete liquidation of the Maker, then the Payee shall thereafter have
the right to receive upon conversion of this Note, upon the basis and upon the
terms and conditions specified herein and in lieu of the number of shares of
Common Stock immediately theretofore issuable upon conversion, such stock,
securities or assets which the Payee would have been entitled to receive in such
transaction had this Note been converted in full immediately prior to such
transaction, and in any such case appropriate provisions shall be made with
respect to the rights and interests of the Payee to the end that the provisions
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hereof (including, without limitation, provisions for adjustment of the
Conversion Price and of the number of shares of Common Stock issuable upon
conversion of the Note) shall thereafter be applicable, as nearly as may be
practicable in relation to any securities or assets thereafter deliverable upon
the conversion hereof. The Maker shall not effect any transaction described in
this Section 8(a) unless (i) it first gives seven (7) days prior written notice
of the record date of the special meeting of shareholders of the Maker to
approve, or if there is no such record date, the consummation of, such merger,
consolidation, exchange of capital stock, recapitalization, reorganization,
reclassification or other similar event or sale of assets (during which time the
Payee shall be entitled to convert this Note) and (b) if applicable, the
resulting successor or acquiring entity (if not the Maker) assumes by written
instrument the obligations of this Section 8(a). The above provisions shall
similarly apply to successive mergers, consolidations, exchanges of capital
stock, recapitalizations, reorganizations, reclassifications or other similar
events.
(b) Notice of Adjustments. Upon the occurrence of each adjustment or
readjustment of the Conversion Price as a result of the events described in this
Section 8, the Maker, at its expense, shall promptly compute such adjustment or
readjustment and prepare and furnish to the Payee a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Maker shall, upon the written request
at any time of the Payee, but not more frequently than once during each calendar
quarter, furnish to such Payee a like certificate setting forth (i) such
adjustment or readjustment, (ii) the Conversion Price as of a date specified in
such written request (which shall not be a date after the date of such request)
and (iii) the number of shares of Common Stock and the amount, if any, of other
securities or property which would be received upon conversion of the Note as of
a date specified in such written request (which shall not be a date after the
date of such request).
9. At the option of the Payee, this Note shall become immediately due and
payable upon the occurrence of any of the following events of default:
(a) The insolvency of the Maker, the appointment of a receiver of its
assets, or the institution of any involuntary proceeding under any bankruptcy or
insolvency law relating to the relief of debtor for the readjustment or relief
of any indebtedness of Maker, whether as a reorganization, composition,
extension or otherwise, which involuntary proceeding is not terminated,
dismissed or concluded in a manner not adverse to Maker within thirty (30) days
of the commencement of such proceeding; or
(b) The filing by Maker of an application or an assignment for the
benefit of creditors or for taking advantage of the same under any bankruptcy or
insolvency law.
10. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAWS RULES OR CHOICE OF LAWS RULES THEREOF.
C-4
EXECUTED effective as of the date first set forth above.
MAKER:
MedSolutions, Inc.
By:______________________________
Xxxxxxx X. Xxxxxxx, President/CEO
C-5
EXHIBIT D
FORM OF SHAREHOLDER LOCK-UP AGREEMENT
LOCK-UP AGREEMENT
MedSolutions, Inc.
00000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Dear Sirs:
The undersigned, a shareholder of MedSolutions, Inc., (the "Company"),
understands that the Company has filed with the Securities and Exchange
Commission ("SEC") a Form 10-SB (the "Form 10-SB") pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and as a result thereof
the Company has become a fully reporting Company under the Exchange Act, thus
creating the statutory foundation for the development of a public market for the
Company's common stock, par value $.001 per share (the "Common Stock"). The
Company's management believes that the Company soon will be in a position to
have the trading of the Common Stock quoted on the OTC Bulletin Board(R), after
certain steps are completed, including the execution of this Lock-Up Agreement
by a sufficient number of the Company's shareholders. In recognition of the
benefit that the quotation of the trading of the Common Stock would confer upon
the undersigned as a shareholder of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned agrees with the Company that, except for the "Allowable
Transactions" defined herein, during the period of twelve (12) months following
the date on which the Common Stock is initially quoted on the OTC Bulletin
Board(R) or other national exchange (the "Effective Date"), the undersigned will
not, without the prior written consent of the Company, directly or indirectly,
with regard to shares of Common Stock held by the undersigned on the Effective
Date but not shares of Common Stock acquired thereafter, (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant for the sale of,
or otherwise dispose of hypothecate, or transfer any shares of Common Stock or
any securities convertible into or exchangeable or exercisable for Common Stock,
or request that the Company file any registration statement under the Securities
Act of 1933, as amended, with respect to any of the foregoing or (ii) enter into
any swap or any other agreement or any transaction that transfers, in whole or
in part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction is to be settled by delivery
of Common Stock or other securities, in cash or otherwise (collectively the
"Lock-Up Provisions").
The Company's consent, however, is not required for the following transfers
(the "Allowable Transactions"): (a) after the expiration of one year from the
Effective Date, 20% of the shares of Common Stock owned by the undersigned will
no longer be subject to the Lock-Up Provisions; (b) after the expiration of 90
days following the completion of one year from the Effective Date, 40% of the
shares of Common Stock owned by the undersigned will no longer be subject to the
Lock-Up Provisions; (c) after the expiration of 180 days following the
completion of one year from the Effective Date, 60% of the shares of Common
Stock owned by the undersigned will no longer be subject to the Lock-Up
Provisions; (d) after expiration of 270 days following the completion of one
year from the Effective Date, 80% of the shares of Common Stock owned by the
undersigned will no longer be subject to the Lock-Up Provisions; (e) after
expiration of two years from the Effective Date, 100% of the shares of Common
Stock owned by the undersigned will no longer be subject to the Lock-Up
Provisions; (f) a bona fide gift or gifts made by the undersigned, provided that
the donee of such shares of Common Stock or securities convertible into or
exchangeable or exercisable for any shares of Common Stock agree in writing to
be bound by the terms of this letter agreement prior to such gift; (g) a
distribution to partners or stockholders of the undersigned (and to any direct
or indirect partner or stockholder thereof), provided that the ultimate
distributees of such shares of Common Stock or securities convertible into or
exchangeable or exercisable for any shares of Common Stock agree in writing to
D-1
be bound by the terms of this letter agreement prior to such distribution; or
(h) transfers, without consideration, of shares of Common Stock or securities
convertible into or exchangeable or exercisable for any shares of Common Stock
to family members or to one or more trusts established for the benefit of one or
more family members, provided that the transferee of such shares of Common Stock
or securities convertible into or exchangeable or exercisable for any shares of
Common Stock agree in writing to be bound by the terms of this letter agreement
prior to such transfer. The undersigned further agrees for the Company to place
a restrictive legend on any share certificates representing shares of Common
Stock that are subject to the Lock-Up Provisions, and to place stop-transfer
orders with the Company's transfer agent in order to prevent the transfer of
shares of Common Stock in contravention of the Lock-Up Provisions. This letter
agreement, once executed by the undersigned shareholder of the Company, shall
supersede and replace in its entirety any prior lock-up arrangement the
shareholder may have entered into with the Company.
Very truly yours,
SHAREHOLDER:
XXXXX-XXXX INVESTMENTS, LLC
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Date:
------------------------------
MEDSOLUTIONS, INC.
By:_________________________________
Xxxxxxx X. Xxxxxxx, President/CEO
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EXHIBIT E
FORM OF NON-COMPETITION AND NON-SOLICITATION AGREEMENT
CONFIDENTIALITY AND
NON-COMPETITION AGREEMENT
This Confidentiality and Non-competition Agreement (the "Agreement") is
made and entered into as of ___________, 2006, by and between
______________________________, an individual (the "SteriLogic Representative"),
and MedSolutions, Inc., a Texas corporation (the "Company").
RECITALS:
A. The Company is acquiring by way of merger (the "Merger") the assets and
liabilities of SteriLogic Waste Systems, Inc. ("SteriLogic"), as set forth in
that certain Merger Agreement and Plan of Reorganization, dated __________,
2006, (the "Merger Agreement") between the Company, SteriLogic Acquisition
Subsidiary, Inc., SteriLogic and the Shareholders (as such term is defined in
the Merger Agreement) signatory thereto. This Agreement is ancillary to and part
of such Merger Agreement.
B. The SteriLogic Representative is an officer, director, shareholder
and/or employee of SteriLogic.
C. The SteriLogic Representative is intimately familiar with confidential
information and trade secrets of SteriLogic. The SteriLogic Representative is
also in a position to affect the goodwill associated with SteriLogic's business.
Further, the SteriLogic Representative acknowledges that the Company is
acquiring such confidential information, trade secrets, and goodwill of
SteriLogic pursuant to the Merger Agreement.
D. The SteriLogic Representative's access to and knowledge of proprietary
and confidential information, trade secrets, and goodwill of SteriLogic will
present the SteriLogic Representative with the opportunity to benefit himself
and others wrongly at the expense of the Company, its customers, and SteriLogic,
if the SteriLogic Representative does not abide by the terms of this Agreement.
If the SteriLogic Representative were to compete with the Company, it would be
highly unlikely that the SteriLogic Representative could do so without
misappropriating for himself or for any competing employer information obtained
through his employment with the Company or SteriLogic, thereby causing
irreparable harm to the business of the Company.
E. The SteriLogic Representative will receive, directly or indirectly,
financial consideration from the Company as a result of the Merger Agreement,
given SteriLogic Representative's position as a member of the sole shareholder
of SteriLogic.
F. In addition to this Agreement, the SteriLogic Representative may be
entering into an employment or consulting agreement with the Company as part of
the Merger Agreement. If so, this Agreement is ancillary to such employment or
consulting agreement.
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G. For purposes of this Agreement, the term "Company" shall mean and
include the Company and its affiliates, and all of their direct and indirect
subsidiaries.
AGREEMENTS:
THEREFORE, in exchange for the consideration contained herein, as well as
the consideration contained in the Merger Agreement inuring to the SteriLogic
Representative's benefit as a result of such agreement, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the SteriLogic Representative agrees with the Company as follows:
ARTICLE I
CONFIDENTIALITY OF COMPANY INFORMATION
Confidentiality Agreement. The SteriLogic Representative acknowledges that,
during the negotiation of the Merger Agreement, during the course of his
employment with, management of or ownership of the SteriLogic, and during the
course of his employment or consulting relationship with the Company, if any,
the SteriLogic Representative has or will become privy to certain Confidential
Information (hereinafter defined) of the Company and/or SteriLogic and the
SteriLogic Representative agrees that he shall not, without the prior written
consent of the Company, at any time, whether before, during, or after the term
of his employment with the Company, if applicable, except as required to perform
his duties of employment with the Company, use, disseminate, disclose, or
communicate any Confidential Information to any person or entity inside or
outside the United States. As used herein, the term "Confidential Information"
means: (i) all information about the Company disclosed or made known to the
SteriLogic Representative as a direct or indirect consequence of or through the
Merger Agreement, (ii) all information about SteriLogic disclosed or made known
to the SteriLogic Representative during the course of his employment with,
management of or ownership of SteriLogic, and (iii) all information about the
Company disclosed or made known to the SteriLogic Representative during the
course of his employment or consulting with the Company, that is not generally
known in the industries in which the Company or any of its affiliates or
subsidiaries is or may become engaged, including, but not limited to,
information about: (A) financial position, product line, customers, suppliers,
and market; (B) profit margins, pricing techniques, or pricing information as to
both purchase prices from suppliers and sale prices to customers; (C) past,
present, or future plans with respect to the business of the Company; (D) bids,
negotiations, or techniques in bidding or negotiating, pursuant to supplier,
wholesaler, customer or other contracts; (E) current or future Company
advertising or promotion plans or programs; (F) any Company system, procedure,
or administrative operations; (G) Company's structure, employees, or processes;
and (H) present or future plans for the extension of the present business or
commencement of a new business by the Company or any subsidiary or division of
the Company. Confidential information shall exclude information that: (w) is
already known by the receiving party prior to disclosure by the other party from
a source other than the disclosing party and not under a duty of confidentiality
to the Company, (x) is in the public domain, (y) ceases to be confidential
through no fault of the receiving party, or (z) is independently developed by
the receiving party.
E-2
ARTICLE II
NON-COMPETITION COVENANTS
2.01 Term of Non-Competition. The "Term of Non-Competition" means the
period beginning on the date hereof and continuing for a period of two years
following the date that the Merger becomes effective pursuant to the Merger
Agreement.
2.02 No Business Competition. During the Term of Non-Competition, the
SteriLogic Representative will not, in the States of Texas , Oklahoma,
Louisiana, Arkansas, Kansas, Missouri, New York, New Jersey, Connecticut,
Massachusetts, Delaware, Pennsylvania, New Hampshire, Vermont and Rhode Island,
own, manage, operate, join, control or participate in, directly or indirectly,
or be a partner or shareholder of (except for shares in the Company), any
business engaged in the (A) regulated medical waste transportation business, and
(B) sharps management business (collectively, the "Competing Businesses"), and
the SteriLogic Representative shall not render assistance or advice to any
person which is so engaged; provided however, that the passive ownership of less
than 5% of the equity securities of a publicly-traded company that is involved
in any of the foregoing businesses shall be permissible under this Section 2.02.
2.03 No Solicitation of Company's Customers. During the Term of
Non-Competition, the SteriLogic Representative shall not induce, request,
advise, attempt to influence, or solicit, directly or indirectly, any person or
entity that is an actual or prospective customer of the Company at any time
during the Term of Non-Competition to buy products or services from a competing
business. It is understood that this Section 2.03 shall be in addition to and
not construed as a limitation upon any other covenant in Article II hereof.
2.04 No Solicitation of Employees. During the Term of Non-Competition,
the SteriLogic Representative hereby agrees not to induce, directly or
indirectly, any person who is an employee of the Company to leave the employment
of the Company.
2.05 Tolling of Term. If, during any calendar month within the Term of
Non-Competition, the SteriLogic Representative is not in compliance with the
terms of this Article II, the Company shall provide the SteriLogic
Representative with notice of such non-compliance and shall be entitled to,
among other remedies, compliance by the SteriLogic Representative with the terms
of this Article II for an additional number of calendar months that equals the
number of calendar months during which such noncompliance occurred. The term
"Term of Non-Competition" shall also include this additional period.
2.06 Reasonableness of Restrictions. The SteriLogic Representative
acknowledges that the geographic boundaries, scope of prohibited activities, and
time duration of the provisions of this Article II are reasonable and are no
broader than are necessary to maintain the confidentiality of the Confidential
Information and the goodwill associated with the Company's goods and services,
and to protect the other legitimate business interests of the Company, including
its goodwill and the intent of the Merger Agreement.
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ARTICLE III
MISCELLANEOUS
3.01 Continuing Obligation. If the SteriLogic Representative also has an
employment or consulting agreement with the Company, the SteriLogic
Representative's obligations under this Agreement shall continue whether or not
the SteriLogic Representative's employment or consulting with the Company shall
be terminated voluntarily or involuntarily, with or without cause, and whether
or not the SteriLogic Representative or the Company breaches the employment or
consulting agreement between the SteriLogic Representative and the Company, if
any.
3.02 Parties Bound. This Agreement shall be binding upon the SteriLogic
Representative, the SteriLogic Representative's heirs, executors,
administrators, and assigns and shall inure to the benefit of the Company, its
successors, and assigns.
3.03 Counterparts. This Agreement may be executed in multiple counterparts,
including by facsimile signature, each of which shall be deemed to be an
original but all of which together shall constitute one and the same instrument.
3.04 Waiver. The Company may waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of the Company to any
such waiver shall be valid only if set forth in an instrument in writing signed
by the Company.
3.05 Entirety and Amendments. This Agreement constitutes the entire
understanding between the parties with respect to the subject matter hereof,
supersedes all prior agreements or understandings relating to the subject matter
hereof, and may be modified or amended only by an instrument in writing executed
by the parties hereto.
3.06 Headings. The heading contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
3.07 Governing Law. THE LAW OF THE STATE OF NEW YORK WILL GOVERN THE
INTERPRETATION, VALIDITY AND EFFECT OF THIS AGREEMENT WITHOUT REGARD TO THE
PLACE OF EXECUTION OR THE PLACE OF PERFORMANCE THEREOF.
3.08 Invalid Provisions and Request for Reformation. If any provision of
this Agreement (including, without limitation, any provision relating to the
activities covered by, or time period of, the non-competition covenants of
Article II) is held to be illegal, invalid, or unenforceable under present or
future laws effective during the term hereof, such provision shall be fully
severable; this Agreement shall be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part hereof; and the
remaining provisions shall remain in full force and effect and shall not be
affected by the illegal, invalid, or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid, or unenforceable
provision, there shall be added automatically as a part of this Agreement a
E-4
provision as similar in terms to such illegal, invalid, or unenforceable
provision as may be possible that is legal, valid, and enforceable, and the
Company hereby requests the court or any arbitrator to whom disputes relating to
this Agreement are submitted to reform the otherwise unenforceable covenant in
accordance with the preceding provision.
[The remainder of this page is left intentionally blank.]
E-5
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
MEDSOLUTIONS, INC.
By:
---------------------------------
Xxxxxxx X. Xxxxxxx, President/CEO
STERILOGIC REPRESENTATIVE
By:_________________________________
[Printed name]
E-6
EXHIBIT F
FORM OF CONSULTING AGREEMENT
CONSULTING AGREEMENT
This Agreement (this "Agreement") is made and entered effective as of
_______, 2006 (the "Effective Date"), by and between MedSolutions, Inc., a Texas
corporation (the "Company"), and Consular, LLC, a _____________ limited
liability company (the "Consultant").
RECITALS:
A. The Company is acquiring by way of merger (the "Merger") the assets and
liabilities of SteriLogic Waste Systems, Inc. ("SteriLogic"), as set forth in
that certain Merger Agreement and Plan of Reorganization, dated __________,
2006, (the "Merger Agreement") between the Company, SteriLogic Acquisition
Subsidiary, Inc., SteriLogic and the Shareholders (as such term is defined in
the Merger Agreement) signatory thereto. This Agreement is ancillary to and part
of such Merger Agreement.
B. The principal of the Consultant is an officer, director, shareholder
and/or employee of SteriLogic.
C. The principal of the Consultant has certain skills, experience, and
abilities that may be valuable to the successful transition of the business of
SteriLogic to the Company and to the success of the Company's operations and
future profitability;
D. The Company desires to retain the Consultant to render certain specific
consulting and advisory services for the Company on the terms and conditions set
forth in this Agreement, and the Consultant desires to be retained by the
Company on such terms and conditions; and
E. The Company and the Consultant desire to set forth the terms and
conditions pursuant to which the Consultant will render consulting and advisory
services to the Company.
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants and undertakings contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement hereby agree as follows:
ARTICLE I
PERFORMANCE OF THE SERVICES
1.01 Engagement and Duties. The Company and the Consultant hereby agree
that during the Term (defined below), the Consultant shall provide such
consulting services as are assigned or delegated to the Consultant by the
President of the Company (the "Services") to assist in the orderly transition of
the business of SteriLogic to the Company as contemplated by the Merger
Agreement. During the Term (as defined below), the Consultant shall devote such
business time, attention, skill and energy to the business of the Company as the
President of the Company shall request in his reasonable discretion, and shall
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assume and perform to the best of his ability the Services. The Consultant shall
report to the President of the Company during the Term.
1.02 Term and Termination. This Agreement shall continue and be in effect
from the Effective Date for a term of 12 months (the "Term").
1.03 Remuneration. The Consultant shall submit to MedSolutions, promptly
after the end of each calendar month during the Term, a detailed written invoice
(a "Monthly Invoice") of all Services provided and the number of hours spent
providing such Services to MedSolutions during such calendar month. In
consideration for performance of the Services, the Consultant shall be paid a
fee of $31.25 per hour during the Term, payable on the 10th calendar day after
MedSolutions' receipt of each Monthly Invoice. The Company shall provide the
Consultant with no additional compensation, benefits or insurance.
1.04 Independent Contractor Status.
(a) Consultant may use any ethical and lawful means necessary and
appropriate to perform his obligations under this Agreement; provided, however,
that in no event shall Consultant take any action that would be adverse to the
business interests of the Company or that may subject Consultant or the Company
to civil or criminal liability. Consultant agrees to comply in full with all
applicable laws, rules and regulations and Consultant covenants and agrees that
he has no undisclosed interest that would conflict in any manner with the
performance of services under this Agreement. In recognition of the independent
contractor status of Consultant, the Company agrees that, subject to the
covenants contained in this Agreement and that certain Confidentiality and
Non-Competition Agreement entered into by and between the Company and the
Consultant as of the date hereof, Consultant may engage in additional activities
and may allocate his time between Consultant's obligations under this Agreement
and such other activities in any manner Consultant deems appropriate, so long as
Consultant's obligations under this Agreement are fully satisfied. Consultant
shall be responsible for all expenses incurred by the Consultant in furtherance
of his provision of the Services, except for expenses that are pre-approved in
writing by the Company. Consultant will have the sole right to supervise,
manage, control, and direct the performance of the details incident to
Consultant's duties described in this Agreement.
(b) Consultant is and shall be an independent contractor with the sole
right to supervise, manage, operate, control, and direct the performance of the
details incident to Consultant's duties under this Agreement. Nothing contained
in this Agreement shall be deemed or construed to create a partnership or joint
venture, to create the relationships of an employer-employee or principal-agent,
or to otherwise create any liability for or obligation of the Company whatsoever
with respect to the indebtedness, liabilities, and obligations of Consultant or
any other party. Consultant specifically understands and agrees that this
Agreement shall not be deemed to grant or imply that Consultant is authorized to
sign, contract, deal, or otherwise act in the name of or on behalf of the
Company, except as is expressly authorized in writing by the Company. The
Company shall not be obligated to maintain any insurance for Consultant,
including, but not limited to, medical, dental, life, or disability insurance.
Consultant stipulates and agrees that he will not be eligible for any employment
benefits from the Company. To the extent Consultant employs others in providing
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services under this Agreement, Consultant agrees to comply with all applicable
workers' compensation laws, to provide satisfactory assurances of such
compliance to the Company on request, and to indemnify and hold harmless the
Company from any liability or obligation in connection therewith. CONSULTANT
SHALL NOT BE CONSIDERED UNDER THE PROVISIONS OF THIS AGREEMENT OR OTHERWISE AS
HAVING THE STATUS OF AN EMPLOYEE OF THE COMPANY, OR AS BEING ENTITLED TO
PARTICIPATE IN ANY LIFE, ACCIDENT OR HEALTH INSURANCE PLANS, PENSION, STOCK,
BONUS, THRIFT OR PROFIT SHARING PLANS, WORKER'S COMPENSATION BENEFITS,
VACATION/SICK LEAVE BENEFITS, OR ANY SIMILAR BENEFITS WHICH MAY BE PROVIDED BY
THE COMPANY FOR ITS EMPLOYEES, AND CONSULTANT HEREBY EXPRESSLY WAIVES ANY SUCH
ENTITLEMENT, IF SUCH ENTITLEMENT EXISTS OR IS DEEMED TO EXIST.
1.05 Taxes and Withholding. The Consultant hereby acknowledges and agrees
that, as an independent contractor, he is legally required to determine and pay
his own estimated federal income taxes, FICA (including FICA-matching), and all
applicable federal and state payroll, excise, xxxxxxx'x compensation, and other
withholdings owed, or claimed to be owed, by Consultant by reason or arising out
of Consultant's relationship with the Company pursuant to this Agreement, and
Consultant shall indemnify and hold the Company harmless from and against, and
shall defend the Company against, any and all losses, damages, claims, costs,
penalties, liabilities, and expenses arising out of or incurred because of,
incident to, or otherwise with respect to any such taxes. The Consultant further
acknowledges that the Company is legally obligated, and shall endeavor to issue
timely, a yearly Form 1099 to the Consultant, and a Form 1096 to the Internal
Revenue Service, reporting the full amount of fees paid to the Consultant during
the reporting period.
1.06 Confidentiality, Non-Competition and Non-Solicitation. Other than such
actions as are required in discharging his obligations under this Agreement in
the ordinary course of business, the Consultant and his affiliates hereby agree
to abide by the terms and conditions of the Confidentiality and Non-Competition
Agreement entered into by between the Company and the Consultant as of the date
hereof which is ancillary to this Agreement.
ARTICLE II
MISCELLANEOUS
2.01 Further Assurances Each party hereto, without further consideration,
shall, at the reasonable request of any other party hereto after the
consummation of the transactions contemplated by this Agreement, execute and
deliver any instruments of conveyance, assignment, transfer, assumption, or
other instrument or document and take such other actions, as such other party
may reasonably request to more effectively consummate the transactions
contemplated by this Agreement.
2.02 Severability. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under any present or future law, and if the
rights or obligations of either of the parties hereto would not be materially
and adversely affected thereby, (a) such provisions shall be fully severable;
F-3
(b) this Agreement shall be construed and enforced as if such illegal, invalid,
or unenforceable provisions had never comprised a part hereof; (c) the remaining
provisions of this Agreement shall remain in full force and effect and shall not
be affected by the illegal, invalid, or unenforceable provision or by its
severance; (d) in lieu of such illegal, invalid, or unenforceable provision,
there shall be added automatically as a part of this Agreement a legal, valid,
and enforceable provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible.
2.03 Assignment. This Agreement shall be assigned and transferred to, and
shall be binding upon and shall inure to the benefit of, any successor of the
Company, and any such successor shall be deemed substituted as the "Company"
hereunder for all purposes. As used in this Agreement, the term "successor"
shall mean any person, firm, corporation, or business entity that at any time,
whether by merger, spin off, purchase, or otherwise, acquires all or
substantially all of the assets or business of the Company. Notwithstanding
anything contained herein to the contrary, the Parties acknowledge that this
Agreement is based on the particular abilities of Consultant and may not be
assigned, in whole or in part, by Consultant.
2.04 Number and Gender of Words. Any references herein to the masculine
gender, or to the masculine form of any noun, adjective, or possessive, shall be
construed to include the feminine or neuter gender and form, and vice versa.
Additionally, whenever used herein, the singular number shall include the
plural, and the plural number shall include the singular.
2.05 Headings. The headings contained in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning of any of the
provisions contained herein.
2.06 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CHOICE OR CONFLICT OF LAWS RULES
THEREOF OR OF ANY STATE.
2.07 Legal Remedies; Specific Performance. The parties to this Agreement
understand and agree that it will be impossible to measure in money the damages
that may accrue to a party to this Agreement or to its heirs, personal
representatives, or assigns by reason of a failure to perform any of the
obligations set forth in this Agreement, and that any such money damages would
be an insufficient remedy for such failure of performance. Therefore, each party
hereto hereby consents to be subject to the remedy of specific performance of
any provision of this Agreement if such party shall have been found to be in
violation of such provision by any court of competent jurisdiction. If any party
or its heirs, personal representatives, or assigns institute any action or
proceeding to specifically enforce the provisions of this Agreement, any person
against whom such action or proceeding is brought hereby waives the claim or
defense in such action or proceeding that such party has an adequate remedy at
law, and such person shall not urge in any such action or proceeding a claim or
defense that such remedy at law exists.
2.08 Court Costs and Attorneys' Fees. If any action at law or in equity,
including an action for declaratory relief or an action brought under Section
2.06 hereof, is brought to enforce or interpret the provisions of this
F-4
Agreement, the prevailing party shall be entitled to recover costs of court and
reasonable attorneys' fees from the other party or parties to such action, which
fees may be set by the court in the trial of such action or may be enforced in a
separate action brought for that purpose, and which fees shall be in addition to
any other relief that may be awarded.
2.09 Inurement. Subject to the restrictions against transfer or assignment
as herein contained, the provisions of this Agreement shall inure to the benefit
of, and shall be binding on, the assigns, successors in interest, personal
representatives, estates, heirs, and legatees of each of the parties hereto.
2.10 Notices. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be sent by first class U.S. mail
or facsimile transmission, or delivered by hand or by overnight or similar
delivery service, fees prepaid, to the party to whom it is to be given at the
address of such party set forth below or to such other address for notice as
such party shall provide in accordance with the terms of this section. Except as
otherwise specifically provided in this Agreement, notice so given shall, in the
case of notice given by certified mail (or by such comparable method) be deemed
to be given and received three business days after the time of certification
thereof (or comparable act), in the case of notice so given by overnight
delivery service, on the date of actual delivery, and, in the case of notice so
given by facsimile transmission or personal delivery, on the date of actual
transmission or, as the case may be, personal delivery.
If to the Company: MedSolutions, Inc.
Attn: President
00000 Xxxxx Xxxxx
Xxxx Xxxxxxx XXX, Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
If to the Consultant: ---------------------------
---------------------------
---------------------------
---------------------------
Facsimile: (___) ___ - ____
2.11 Waivers. No waiver of any provision or condition of this Agreement
shall be valid unless executed in writing and signed by the party to be bound
thereby, and then only to the extent specified in such waiver. No waiver of any
provision or condition of this Agreement shall be construed as a waiver of any
other provision or condition of this Agreement, and no present waiver of any
provision or condition of this Agreement shall be construed as a future waiver
of such provision or condition.
2.12 Amendment. This Agreement may be amended only by the unanimous written
consent of the parties hereto.
F-5
2.13 Entire Agreement. This Agreement contains the entire understanding
between the parties hereto concerning the subject matter contained herein. There
are no representations, agreements, arrangements, or understandings, oral or
written, between or among the parties hereto relating to the subject matter of
this Agreement that are not fully expressed herein.
2.14 Construction of Agreement. Each party and its counsel have
participated fully in the review and revision of this Agreement. Any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party shall not apply in the interpretation of this Agreement.
2.15 Execution. Each party to this Agreement hereby represents and warrants
to the other parties hereto that such party has full power and capacity to
execute, deliver, and perform this Agreement, which has been duly executed and
delivered by, and which evidences the valid and binding obligation of, such
party enforceable in accordance with its terms subject to applicable
liquidation, conservatorship, bankruptcy, insolvency, reorganization, or similar
laws affecting the enforcement of creditor's right's from time to time in effect
and to general principles of equity.
2.16 Multiple Counterparts. This Agreement may be executed in multiple
counterparts, including by facsimile signature, each of which shall be deemed to
be an original, but all of which together shall constitute one and the same
instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
F-6
IN WITNESS WHEREOF, the parties to this Agreement have set their respective
hands as of the Effective Date.
THE COMPANY:
MEDSOLUTIONS, INC.
By:
-------------------------------------
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
THE CONSULTANT:
CONSULAR, LLC
By:__________________________________
Xxxxxxx Xxxxxxxxxxx Xxxx
Title:
F-7
EXHIBIT G
FORM OF SUPPLY AND RIGHT OF FIRST REFUSAL AGREEMENT
SUPPLY AND RIGHT OF FIRST REFUSAL AGREEMENT
-------------------------------------------
This Supply and Right of First Refusal Agreement (this "Agreement"),
executed to be effective as of August 16, 2006 (the "Effective Date"), is made
and entered into by and between MedSolutions, Inc., a Texas corporation, for
itself and on the behalf of its affiliates (collectively, "MedSolutions"), and
Oxus Environmental, LLC, a Delaware limited liability company ("Oxus").
WITNESSETH:
WHEREAS, MedSolutions is acquiring through a merger transaction (the
"Merger") the assets and liabilities of SteriLogic Waste Systems, Inc.
("SteriLogic"), as set forth in that certain Merger Agreement and Plan of
Reorganization, dated of even date herewith (the "Merger Agreement") between
MedSolutions, SL Acquisition Subsidiary, Inc., SteriLogic and the shareholders
of SteriLogic signatory thereto. This Agreement is ancillary to and part of such
Merger Agreement; and
WHEREAS, Oxus is an affiliate of SteriLogic; and
WHEREAS, each of MedSolutions and Oxus is required to execute and deliver
to one another this Agreement as a condition precedent to the consummation of
the transactions contemplated by the Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
undertakings and covenants set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties to this Agreement hereby agree as follows:
ARTICLE I
---------
1.01 Supply of Products and Services. During the period beginning on the
Effective Date and ending on the third anniversary thereof, MedSolutions hereby
grants Oxus the right to purchase products and services from MedSolutions of the
nature offered by SteriLogic's Systems division prior to the Merger, solely to
the extent that MedSolutions continues to offer such products and services for
sale, at MedSolutions' cost plus 15%; provided, however, that Oxus shall only
purchase such products and services for use in connection with Oxus' Maine
operating division. In the event that Oxus uses such products and services for
purposes other than in connection with Oxus' Maine operating division,
MedSolutions shall have the right, exercisable in its sole discretion, to
terminate its any or all of its obligations pursuant to this Section 1.01 at any
time. In the event of the consummation of a Transaction (as such term is defined
in Section 2.01 hereof), MedSolutions shall have the right, exercisable in its
sole discretion, to terminate its any or all of its obligations pursuant to this
Section 1.01 at any time on or after the date of consummation of such
Transaction.
1.02 Lease of PIWS Mobile Treatment Unit. During the period beginning on
the Effective Date and ending on the third anniversary thereof, MedSolutions
hereby grants Oxus the right to lease one (1) PIWS mobile treatment unit from
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MedSolutions on terms mutually acceptable to MedSolutions and Oxus, including
without limitation, terms providing for a flat monthly usage fee for such unit
and an additional variable fee based on pounds processed through such unit;
provided, however, that Oxus shall only use such unit in connection with Oxus'
Maine operating division. In the event that Oxus uses such unit for purposes
other than in connection with Oxus' Maine operating division, MedSolutions shall
have the right, exercisable in its sole discretion, to terminate its any or all
of its obligations pursuant to this Section 1.02 at any time. Oxus may exercise
its right to lease such unit pursuant to this Section 1.02 by providing written
notice to MedSolutions of its election to exercise such right. In the event of
the consummation of a Transaction, MedSolutions shall have the right,
exercisable in its sole discretion, to terminate its obligations pursuant to
this Section 1.02 at any time on or after the date of consummation of such
Transaction.
ARTICLE II
2.01 Right of First Refusal. For the 36-month period immediately succeeding
the Effective Date, in the event that Oxus or its members receive or negotiate a
bona fide, noncollusive offer (the "Offer") with or from any independent third
party (an "Offeror") to acquire all or substantially all of the capital stock of
Oxus or Oxus' assets relating to its Maine operating division, or any affiliated
successor to the assets thereof, whether through a merger, consolidation,
purchase, or other transaction (the "Offeror Transaction"), and Oxus or its
members accept or desire to accept such Offer, Oxus hereby grants MedSolutions
an exclusive and irrevocable right and option (the "Option") to acquire such
stock or assets at the purchase price (subject to adjustment as set forth below)
and on the terms offered by the Offeror (the "Transaction"). In the event of an
Offer, Oxus shall be required to inform the Offeror of MedSolutions' Option, and
shall further be required to inform the Offeror that MedSolutions reserves the
right, to be exercised in MedSolutions' sole discretion, to cease selling
products and services to Oxus (or its successor pursuant to the Offeror
Transaction, as the case may be) in the event that MedSolutions elects not to
exercise its Option. In the event of an Offer, Oxus shall provide written notice
of the terms of such Offer (the "Offer Notice") to MedSolutions within three
days of its receipt of such Offer, providing the name of the Offeror, the amount
and/or nature of the capital stock or assets which the Offer is for, the Offer
price, proof the Offer was made, any other material terms of the Offer and the
structure of the Offeror Transaction. MedSolutions shall have 30 days (the
"Exercise Period") from the date of its receipt of the Offer Notice from Oxus
(the "Offer Notice Date") to exercise its Option by providing written notice of
its exercise of such Option to Oxus (the "Exercise Notice"). Any failure by
MedSolutions to provide an Exercise Notice to Oxus during the Exercise Period
shall constitute a rejection of the Option and Oxus shall be entitled to
consummate the Offeror Transaction with the Offeror on terms and conditions not
less favorable to Oxus than those described in the Offer Notice. In the event of
MedSolutions' timely delivery to Oxus of an Exercise Notice, Oxus and
MedSolutions shall have 60 days from the date of delivery of the Exercise Notice
to Oxus to negotiate in good faith and execute a definitive agreement on
substantially the same terms and conditions as set forth in the Offer Notice for
the acquisition of the capital stock or assets related to the Offer and to
consummate such acquisition; provided, however, that the purchase price offered
to Oxus or its members in connection with the Offer shall be appropriately
adjusted such that the purchase price to be paid by MedSolutions accounts for
any benefit received by Oxus on account of the discounted products and services
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sold to Oxus by MedSolutions pursuant to Article I of this Agreement. In the
event that MedSolutions delivers the Exercise Notice within the Exercise Period,
but the parties fail to consummate the Transaction within such 60-day period due
to the sole fault of MedSolutions, Oxus shall be entitled to enter into the
Offeror Transaction with the Offeror.
ARTICLE II
MISCELLANEOUS
3.01 Headings. The headings of sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
3.02 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties hereto shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
3.03 GOVERNING LAW; VENUE. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS RULES OR CHOICE OF LAWS RULES THEREOF OR OF ANY
STATE. VENUE FOR ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT SHALL BE PROPER EXCLUSIVELY IN THE FEDERAL OR STATE COURTS SITUATED IN
THE COUNTY IN WHICH THE PRINCIPAL EXECUTIVE OFFICES OF THE RESPONDENT THERETO
ARE LOCATED.
3.04 Court Costs and Attorneys' Fees. If any action at law or in equity,
including an action for declaratory relief, is brought to enforce or interpret
the provisions of this Agreement, the prevailing party shall be entitled to
recover costs of court and reasonable attorneys' fees from the other party or
parties to such action, which fees may be set by the court in the trial of such
action or may be enforced in a separate action brought for that purpose, and
which fees shall be in addition to any other relief that may be awarded.
3.05 Assignability and Binding Effect. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors, heirs, and permitted assigns. This Agreement and the rights and
obligations hereunder shall not be assignable without the prior written consent
of all parties hereto; provided, however, that MedSolutions may assign or
delegate any or all of its rights and obligations hereunder to an affiliate at
any time without the prior written consent of Oxus.
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3.06 Amendments. This Agreement may not be modified, amended, or
supplemented except by an agreement in writing signed by all of the parties
hereto.
3.07 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given when delivered personally, telecopied (which
is confirmed) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
If to MedSolutions: MedSolutions, Inc.
00000 Xxxxx Xxxxx, Xxxx Xxxxxxx XXX, Xxxxx 000
Dallas, Texas 75251
Attn: Xxxxxxx X. Xxxxxxx, President & CEO
Facsimile: (___) ___ - ____
With a copy to: Xxxxxx X. Block
Fish & Xxxxxxxxxx P.C.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
If to Oxus:
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Attn:
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Facsimile:
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With a copy to: Xxxxxxx X. Xxxxxx, Esq.
Scolaro, Shulman, Xxxxx, Xxxxxx & Xxxxxxxx, PC
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
3.08 Third Parties. Nothing herein expressed or implied is intended or
shall be construed to confer upon or give to any person other than the parties
hereto and their successors, heirs or permitted assigns, any rights or remedies
under or by reason of this Agreement.
3.09 Number and Gender of Words. When the context so requires in this
Agreement, words of gender shall include either or both genders and the singular
number shall include the plural.
3.10 Entire Agreement. This Agreement shall constitute the entire agreement
between the parties hereto with respect to the transactions contemplated hereby
and shall supersede all prior or contemporaneous negotiations, understandings
and agreements. There are no representations, agreements, arrangements, or
understandings, oral or written, between or among the parties hereto relating to
the subject matter of this Agreement that are not fully expressed herein.
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3.11 Multiple Counterparts. This Agreement may be executed in multiple
counterparts, including by facsimile signature, each of which shall be deemed to
be an original but all of which together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
MEDSOLUTIONS, INC.
By: ____________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: President and CEO
OXUS ENVIRONMENTAL, LLC
By: ____________________________________
Name: X.X. Xxxx
Title: President
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