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EXHIBIT 2.1
PLAN OF MERGER AND ACQUISITION AGREEMENT
among
LIFEQUEST MEDICAL, INC.
a Delaware corporation
VAL-U-MED, INC.,
a Nevada corporation
and
X. X. XXXXXXXXXX AND ASSOCIATES, INC.
a Vermont corporation
Xxxxxxx X. Xxxxxxxxxx
an individual
Xxxx X. Xxxxxxxxxx, M.D.
an individual
Xxxxxxxxx X. Xxxx, III
an individual
Xxxxxxx Xxxxxxxxxx, as Trustee
for the Xxxxxxxxxx Family Trust
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THIS PLAN OF MERGER AND ACQUISITION AGREEMENT ("Agreement") executed
and effective this 30th day of September, 1997, by and among X. X. XXXXXXXXXX
AND ASSOCIATES, INC., a Vermont corporation ("WHB"), Xxxxxxx X. Xxxxxxxxxx, an
individual ("Xxxxxxxxxx"), Xxxx X. Xxxxxxxxxx, M.D., an individual ("Xx.
Xxxxxxxxxx"), Xxxxxxxxx X. Xxxx, III ("Xxxx"), an individual, and Xxxxxxx
Xxxxxxxxxx, as Trustee for the Xxxxxxxxxx Family Trust ("Trustee"), as
shareholders of WHB (Xxxxxxxxxx, Xx. Xxxxxxxxxx, Xxxx and Trustee collectively
referred to as the "Shareholders," or individually as a "Shareholder"),
LIFEQUEST MEDICAL, INC., a Delaware corporation ("LifeQuest"), and VAL-U-MED,
INC., a Nevada corporation ("Purchaser," and together with LifeQuest, the
"LifeQuest Parties").
W I T N E S S E T H:
WHEREAS, LifeQuest is primarily in the business of developing and
commercializing minimally invasive surgery devices; and
WHEREAS, LifeQuest owns all of the issued and outstanding stock of Purchaser;
and
WHEREAS, WHB is in the business of selling and repairing general
surgical products in the northeastern United States;
WHEREAS, the Shareholders are individuals constituting the only
shareholders of WHB; holding 100% of the issued and outstanding stock of WHB;
WHEREAS, the respective boards of directors of Purchaser and WHB have
approved the merger of WHB with and into Purchaser (the "Merger") pursuant to
the terms and subject to the conditions of this Agreement; and
WHEREAS, this Agreement is intended to qualify under Section 368 of
the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the parties hereto agree that WHB shall be merged with and into
Purchaser and that the terms and conditions of the Merger, the method of
carrying the Merger into effect and certain other provisions relating thereto
shall be as hereinafter set forth and as set forth:
ARTICLE 1
DEFINITIONS
Defined Terms. As used herein, the terms below shall have the
following meanings herein specified applicable to both the singular and plural
forms of any of the terms.
1.1 "Affiliate" shall mean, with respect to a Person, any Person
that, directly or indirectly, controls or is controlled by or is under common
control with the Person.
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1.2 "Assets" shall mean the assets, properties and rights of WHB
of every nature, kind and description, wherever located, tangible and
intangible, real, personal and mixed, whether or not reflected in the books and
records of WHB necessary or desirable to permit the business of WHB to be
carried on in the manner as is presently conducted.
1.3 "Benefit Plans" shall mean bonus, deferred compensation,
severance, pension, profit sharing, retirement, stock purchase, stock option,
medical, hospitalization, accident insurance or any other employee benefit
plan, arrangement or practice, whether written or unwritten, which covers
employees of WHB.
1.4 "Certificate" shall mean each stock certificate representing
shares of WHB Stock.
1.5 "Closing" shall mean the meeting held on the Closing Date.
1.6 "Closing Date" shall have the meaning assigned to it in
Article 7.
1.7 "Effective Time" shall mean the time at which a properly
executed certificate of merger in substantially the form attached to this
agreement as Exhibit A (together with other documents required by law to effect
the Merger) shall have been filed with the Secretary of State of Nevada, and in
any other jurisdiction where such a certificate of merger is required.
1.8 "Environmental Conditions" shall mean material conditions with
respect to soil, surface waters, ground waters, stream sediments, underground
tanks, asbestos and similar conditions on-site and off-site of properties
owned, occupied or used by WHB, as the case may be, related to the presence or
Release of Hazardous Substances, which conditions could require remedial action
or may result in claims, demands and liabilities against, upon or,
respectively, by third parties, including, without limitation, governmental
entities, adjacent property owners and any individuals suffering property
damage or personal injury.
1.9 "Environmental Laws" shall mean all federal, state and local
laws, rules, regulations, codes, judgments and decrees concerning pollution or
protection of the environment.
1.10 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
1.11 "Financial Statements" shall mean the internally prepared
balance sheets, statements of income and retained earnings of WHB for the years
or periods ended June 30, 1997, December 31, 1996 and December 31, 1995.
1.12 "Former WHB Shareholder" shall mean each Person who was,
immediately before the Effective Time, a holder of issued and outstanding
shares of WHB Stock.
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1.13 "Hazardous Substances" shall include any dangerous substances,
toxic substances, hazardous materials or hazardous substances as defined in or
pursuant to the Resource Conservation and Recovery Act (42 U.S.C. Section 6901,
et seq.), as amended, the Comprehensive Environmental Response, Compensation
and Liability Act (42 U.S.C. Section 9601, et seq.) ("CERCLA"), as amended, or
any other Environmental Law.
1.14 "Intellectual Property" shall have the meaning assigned to it
in Section 3.8.
1.15 "IRS" shall mean the Internal Revenue Service.
1.16 "LifeQuest SEC Documents" shall mean each report, schedule,
registration statement and definitive proxy statement filed by LifeQuest with
the SEC since January 1, 1997.
1.17 "LifeQuest Stock" shall mean the common stock, $.001 par value
of LifeQuest.
1.18 "Losses" shall mean all damages, losses, obligations,
liabilities, claims, encumbrances, deficiencies, costs and expenses including,
without limitation, reasonable attorneys' fees and other costs and expenses
incident to any suit, action, investigation, claim or proceeding.
1.19 "Market Price" shall mean the average of the closing bid and
asked prices of a share of LifeQuest Stock for the 10 consecutive trading days
immediately prior to the third trading day prior to the Closing Date, as
reported in the over-the-counter market as reported by the National Association
of Securities Dealers Automated Quotation System.
1.20 "Merger Consideration" shall have the meaning assigned to it
in Section 2.6.
1.21 "Notice" shall mean any summons, citation, directive, order,
claim, litigation, proceeding, judgment, letter or other communication, written
or oral, actual or threatened, from the United States Environmental Protection
Agency or other federal, state or local agency or authority or any other entity
or any individual concerning any intentional or unintentional act or omission
which has resulted or may result in the Release of Hazardous Substances into
waters, or into the "environment" as such term is defined in CERCLA, from or on
property owned, occupied or used by WHB, and shall include the imposition of
any lien on property occupied or used by WHB, pursuant to any violation of any
Environmental Law, or any knowledge, after due inquiry and investigation, of
any acts that could give rise to any of the above.
1.22 "Person" shall mean an individual, corporation, partnership,
joint venture, trust or unincorporated organization, or a government or any
agency or political subdivision thereof.
1.23 "Purchaser Stock" shall mean the common stock, $.01 par value
of Purchaser.
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1.24 "Release" shall mean releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, disposing or
dumping.
1.25 "SEC" shall mean the United States Securities and Exchange
Commission.
1.26 "Securities Act" shall mean the Securities Act of 1933, as
amended.
1.27 "Subsidiary" shall mean, with respect to any Person (the
"parent"), (i) any corporation, association, joint venture, partnership or
other business entity of which securities or other ownership interests
representing more than 50% of the ordinary voting power or beneficial interest
are, at the time as of which any determination is being made, owned or
controlled by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent and (ii) any joint venture or
partnership of which the parent or any Subsidiary of the parent is a general
partner or has responsibility for its management (provided, however, that the
term "Subsidiary" shall not include joint operating agreements).
1.28 "Surviving Corporation" shall mean the corporation existing at
and after the Effective Time as a result of the Merger.
1.29 "WHB Stock" shall mean the common stock, $1.00 par value, of
WHB.
1.30 "WHB's Contracts" shall mean (a) the contracts described on
Schedule 3.12, (b) purchase orders from customers accepted in the ordinary
course of business, and (c) employment contracts terminable on not more than 30
days' notice.
ARTICLE 2
MERGER
2.1 The Merger. Subject to the terms and conditions of this
agreement, WHB shall be merged with and into Purchaser in accordance with all
applicable laws, with Purchaser being the Surviving Corporation. Purchaser and
WHB shall cause a certificate of merger to be filed with the Secretary of State
of Nevada, and in any other jurisdiction where such a certificate of merger is
required, on the Closing Date, unless legally prohibited from doing so. The
Merger shall be effective at the Effective Time.
2.2 Surviving Corporation. From and after the Effective Time, the
Surviving Corporation shall have the name "Val-U-Med, Inc." and shall possess
all assets and property of every description, and every interest in the assets
and property, wherever located, and the rights, privileges, immunities, powers,
franchises and authority, of a public as well as of a private nature, of each
of WHB and Purchaser, and all debts and all other things in action or belonging
or due to each of WHB and Purchaser, all of which shall be vested in the
Surviving Corporation without further act or deed, and title to any real estate
or any interest in the real estate vested in either WHB or Purchaser shall not
revert or in any way be impaired.
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2.3 Liabilities. The Surviving Corporation shall be liable for
all the debts, liabilities and duties of each of WHB and Purchaser; any action
or proceeding pending, by or against either WHB or Purchaser, may be prosecuted
to judgment, with right of appeal, as if the Merger had not taken place, or the
Surviving Corporation may be substituted in its place, and all the rights of
creditors of each of WHB and Purchaser shall be preserved unimpaired, and all
liens upon the property of each of WHB and Purchaser shall be preserved
unimpaired, on only the property affected by the liens immediately prior to the
Effective Time.
2.4 Certificate of Incorporation and Bylaws. The certificate of
incorporation and bylaws of Purchaser in effect immediately prior to the
Effective Time shall be the certificate of incorporation and bylaws of the
Surviving Corporation following the Merger until otherwise amended or repealed.
2.5 Directors and Officers. The directors and officers of
Purchaser immediately prior to the Effective Time shall be the directors and
officers of the Surviving Corporation until their successors are duly elected
or appointed and qualified in the manner provided in the bylaws of the
Surviving Corporation, or as otherwise provided by law.
2.6 Conversion or Cancellation of Stock Upon Merger. In
consideration for the Merger and the non-competition agreements in Section 12
hereof, as of the Effective Time, by virtue of the Merger and without any
action on the part of the holders of any shares of WHB Stock, or the holder of
the shares of Purchaser Stock, (a) the WHB Stock outstanding immediately before
the Effective Time shall be converted into the right to receive, subject to
Section 2.7 below, an aggregate number of shares of LifeQuest Stock, equal to
the quotient of $2,000,000 divided by the Market Price of a share of LifeQuest
Stock (the "Merger Consideration") and (b) each share of Purchaser Stock
outstanding immediately before the Effective Time shall be converted into one
share of common stock of the Surviving Corporation.
2.7 Fractional Shares. Notwithstanding Section 2.6, no
certificates or scrip representing fractional shares of LifeQuest Stock shall
be issued upon the surrender for exchange of certificates that prior to the
Effective Time represented shares of WHB Stock, no dividend or distribution of
LifeQuest shall relate to any fractional share interest and no fractional share
interest shall entitle the owner thereof to vote or to exercise any rights of a
shareholder of LifeQuest. In the event that any Former WHB Shareholder shall
be entitled to any fractional share interest then any fractional amount shall
be rounded up to the nearest whole share.
2.8 Exchange Requirements. After the Effective Time, (a) each
outstanding Certificate shall, until duly surrendered to Purchaser, be deemed
to represent only the right to receive the Merger Consideration, (b) there
shall be no further transfer on the records of WHB of Certificates, and (c)
each share of WHB Stock presented or surrendered to Purchaser shall be canceled
in exchange for the Merger Consideration as contemplated by Section 2.6. In no
event shall Purchaser be obligated to deliver Merger Consideration to any
holder of a Certificate until such holder surrenders such Certificate as
provided herein.
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2.9 Interim Dividends. No dividends or other distributions
declared after the Effective Time on LifeQuest Stock issuable pursuant to the
Merger and payable to any Former WHB Shareholder after the Effective Time shall
be paid to the holder of any unsurrendered certificates formerly representing
shares of WHB Stock until the certificates shall be surrendered as provided
herein, provided, however, that (a) upon surrender there shall be paid to the
shareholder in whose name the certificates representing the shares of LifeQuest
Stock shall be issued the amount of unpaid dividends with respect to the
holder's shares of LifeQuest Stock and (b) at the appropriate payment date, or
as soon as practicable thereafter, there shall be paid to the shareholder the
amount of dividends declared with respect to whole shares of LifeQuest Stock
with a record date on or after the Effective Time but before surrender and a
payment date subsequent to surrender, subject in any case to any applicable
escheat laws. No interest shall be payable with respect to the payment of
dividends or other distributions on surrender of outstanding certificates.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF XXXXXXXXXX
Xxxxxxxxxx represents and warrants to the LifeQuest Parties as
follows:
3.1 Corporate Organization. WHB is a corporation duly organized,
validly existing and in good standing under the laws of Vermont, and has full
power and authority to own its properties and to carry on its business as and
in the places where such properties are now owned or such business is now being
conducted. Complete and correct copies of the Articles of Incorporation of WHB
and all amendments thereto, certified in each case by the Secretary of State of
the State of Vermont, and of the Bylaws of WHB and all amendments thereto,
certified by the Secretary of WHB, heretofore have been delivered to LifeQuest.
Other than in the states of Maine, New Hampshire, New York and Xxxxx Xxxxxx,
XXX is duly qualified to do business and is in good standing in all
jurisdictions (each such jurisdiction is set forth on Schedule 3.1 attached
hereto and made a part hereof) in which such qualification is necessary because
of the character of the properties owned, leased or operated by it or the
nature of its activities. WHB has not knowingly taken any action, or failed to
take any action which action or failure will preclude or prevent WHB's business
from being conducted in substantially the same manner in which WHB has
heretofore conducted the same.
3.2 Subsidiaries. WHB has no subsidiaries.
3.3 Capitalization. WHB's authorized capital stock consists of
10,000 shares of WHB Stock, of which 111 shares are issued and outstanding and
are owned of record and beneficially by the Shareholders free and clear of all
liens, encumbrances or other obligations and issued without violation of the
preemptive, subscriptive or other similar rights of any person or entity.
There are no outstanding subscriptions, options, warrants, rights or other
agreements obligating WHB to issue any additional shares of WHB Stock, except
as set forth on Schedule 3.3 attached hereto and made a part hereof.
3.4 Authorization. Except as set forth on Schedule 3.4, WHB has
full power and authority, corporate and otherwise, to enter into this Agreement
and to assume and
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perform its obligations hereunder. The execution and delivery of this
Agreement and the performance by WHB of its obligations hereunder have been
duly authorized by the Board of Directors and the shareholders of WHB and no
further action or approval, corporate or otherwise, by WHB is required in order
to constitute this Agreement as a binding and enforceable obligation of WHB.
The execution and delivery of this Agreement and the performance by WHB of its
obligations hereunder do not and will not violate any provisions of the
Articles of Incorporation or Bylaws of WHB and, except as set forth on Schedule
3.4, do not and will not conflict with or result in any breach of any condition
or provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the Assets by reason
of the terms of any contract, mortgage, lien, lease, agreement, indenture,
instrument or judgment to which WHB is a party, or which is or purports to be
binding upon WHB or which affects or purports to affect any of the Assets.
3.5 Approvals and Consents. No action, approval, consent or
authorization, including, but not limited to, any action, approval, consent or
authorization by any governmental or quasi-governmental agency, commission,
board, bureau, or instrumentality is necessary as to WHB or the Shareholders in
order to constitute this Agreement as a valid, binding and enforceable
obligation of WHB and the Shareholders in accordance with its terms.
3.6 Permits, Licenses, Etc. Except as set forth on Schedule 3.6
WHB has all permits, licenses, orders and approvals, exclusive of those
required under Environmental Laws, of all federal, state, or local governmental
or regulatory bodies required for it to conduct its business as presently
conducted. All such permits, licenses, orders and approvals are in full force
and effect and no suspension or cancellation of any of them is threatened. WHB
is operating in compliance with all such permits, licenses, orders and
approvals, and none of such permits, licenses, orders or approvals will be
adversely affected by the consummation of the transactions contemplated by this
Agreement. WHB is in compliance in all material respects with each law, rule
and regulation other than Environmental Laws applicable to its business
including, without limitation, laws, rules and regulations respecting
occupational safety and employment practices. The conduct of the business of
WHB and all assets and properties utilized by WHB therein are in conformance
with the requirements and regulations of the Occupational Safety and Health
Administration ("OSHA").
3.7 Environmental Laws. WHB has, or has applied for, all permits,
licenses, orders and approvals of, and has made all required filings with, all
federal, state or local governmental or regulatory bodies relating to, arising
under or required by the Environmental Laws. All such permits, licenses,
orders and approvals are in full force and effect and no suspension or
cancellation of any of them is pending or threatened. None of such permits,
licenses, orders or approvals will be adversely affected by the consummation of
the transactions contemplated by this Agreement. WHB is in compliance with all
such permits, licenses, orders and approvals and with all limitations,
conditions, standards and requirements contained in Environmental Laws
applicable to it and the business conducted by it. Schedule 3.7 attached
hereto and made a part hereof contains a description of each summons, citation,
order, letter or other written communication received or sent by WHB from any
federal, state or local
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governmental or regulatory body under any of the Environmental Laws during the
five-year period ending on the date hereof.
There are no currently existing Environmental Conditions with respect
to properties owned, occupied or used by XXX. XXX has received no Notice with
respect to any Environmental Condition at any time prior to the date hereof.
3.8 Intellectual Property and Other Intangible Assets. Schedule
3.8 sets forth a description of all intellectual property owned, licensed or
claimed by WHB. To the best of Xxxxxxxxxx'x knowledge, WHB (a) owns or has the
right to use all inventions, discoveries, patents, copyrights, trademarks,
trade names, service marks, corporate names, licenses, trade secrets and know
how and all other intellectual property rights with respect to the foregoing,
used in or necessary for the conduct of its business as now conducted or as
proposed to be conducted without infringing upon or otherwise acting adversely
to the right or claimed right of any Person under or with respect to any of the
foregoing (such inventions, discoveries, patents, copyrights, trademarks, trade
names, service marks, corporate names, licenses, trade secrets and know how and
all other intellectual property rights with respect thereto being herein
referred to as the "Intellectual Property") and (b) is not obligated or under
any liability or claim whatsoever to make any payments by way of royalties,
fees or otherwise to any owner or licensee of, or other claimant to, any
inventions, discoveries, patents, copyrights, trademarks, trade names, service
marks, corporate names, licenses, trade secrets and know how and all other
intellectual property rights, with respect to the use thereof or in connection
with the conduct of its business or otherwise. A list of all such Intellectual
Property and a statement whether such Intellectual Property is owned or
licensed is set forth in Schedule 3.8 hereto. Except as specifically set forth
in Schedule 3.8 hereto, the Intellectual Property has been duly registered or
patented or sought to be registered or patented with appropriate state, federal
and foreign jurisdictions and, to the best of Xxxxxxxxxx'x knowledge, WHB is
the sole and exclusive owner or has the sole and exclusive right to use the
Intellectual Property.
3.9 Financial Statements. Attached hereto as Schedule 3.9 and
made a part hereof are the Financial Statements, prepared in accordance with a
tax basis of accounting. Any adjustment made to the Financial Statements in
order to bring them into compliance with generally accepted accounting
principles shall not be deemed to be a Loss for the purposes of this Agreement.
At the date of the Financial Statements, WHB had no liabilities or obligations
of any kind or nature, fixed or contingent, matured or unmatured or otherwise,
which are not fully reflected or reserved against on the Financial Statements
or disclosed on Schedule 3.9A; nor does WHB have any liability or obligation of
any kind or nature arising since that date other than those incurred in the
ordinary course of business consistent with past practices, none of which are
material except as disclosed on Schedule 3.9A. WHB owns outright and has good
and indefeasible title to all of the Assets, including, without limitation, all
of the assets and properties reflected on the Financial Statements or acquired
thereafter, free and clear of any mortgage, lien, pledge, charge, claim,
conditional sales or other agreement, lease, right or encumbrance of any sort
except: (x) to the extent stated or reserved against on the Financial
Statements and for changes occurring in the ordinary course of business after
the date thereof, none of which changes is adverse, and (y) as set forth on
Schedule 3.9A attached hereto and made a part hereof. Each such asset
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and item has been fully operational in the ordinary course of business for at
least the six months immediately preceding the date hereof. The Assets include
all assets and properties (real, personal and mixed, tangible and intangible)
and all rights necessary or desirable to permit WHB's business to be carried on
as presently conducted by WHB, and WHB has complete and unrestricted power and
the unqualified right to transfer, convey and assign the Assets.
3.10 Material Adverse Changes Since the Date of the Financial
Statements. Since June 30, 1997, except as set forth on Schedule 3.10, there
has been no material adverse change in the financial condition, assets,
liabilities, properties or business of WHB. Since June 30, 1997, except as set
forth on Schedule 3.10, WHB has not:
(a) issued or sold any stock, notes, bonds or other
securities, or any option to purchase the same, or entered into any agreement
with respect thereto;
(b) declared, set aside or made any dividend or other
distribution on its capital stock or redeemed, purchased or acquired any shares
thereof or entered into any agreement in respect of the foregoing;
(c) incurred any damage, destruction or similar loss, whether
or not covered by insurance, materially affecting its business or properties;
(d) other than in the ordinary course of business, sold,
assigned or transferred any of its tangible assets or any trade name,
franchise, design, or other intangible assets or property;
(e) other than in the ordinary course of business, mortgaged,
pledged or granted or suffered to exist any lien or other encumbrance or charge
on any of its assets or properties, tangible or intangible;
(f) other than in the ordinary course of business, waived any
rights of material value or canceled or modified any material debts or claims;
(g) incurred any liability or obligation for borrowed money
to any shareholder of WHB or any Affiliate of WHB;
(h) incurred any obligation or liability (absolute or
contingent) except current liabilities and obligations incurred in the ordinary
course of its business or paid any liability or obligation (absolute or
contingent) other than current liabilities and obligations incurred in the
ordinary course of business, none of which were material;
(i) entered into any transaction other than in the ordinary
course of business;
(j) became obligated to make any payment to any shareholder
or any Affiliate of WHB in any capacity, or entered into any transaction of any
nature with any shareholder or any Affiliate of WHB in any capacity, except in
respect of the foregoing for compensation to shareholders or Affiliates who are
employees of WHB in their capacity as such;
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(k) except for increases in the ordinary course and customary
in the business of WHB, which increases did not inure to officers, directors or
shareholders of WHB or to consultants to WHB, increased the compensation
payable to any employee of WHB or became obligated to increase any such
compensation, or their capacities as such; or
(l) entered into any transaction with any Affiliate of WHB,
except in respect of the foregoing for compensation to Affiliates who are
employees of WHB in their capacity as such.
3.11 Tax Returns. Except as set forth on Schedule 3.11, WHB has
duly filed all federal, state, county and local income, excise, sales and other
tax returns and reports required to have been filed by it to the date hereof,
after giving effect to any extensions of time to file duly obtained by WHB.
Each such return and report is true and correct and WHB has paid all taxes,
interest and penalties shown on such returns or reports to be due or claimed to
be due prior to the date hereof to any federal, state, county, local or other
taxing authority. Except as set forth on Schedule 3.11, WHB has no liability
for any taxes, assessments, amounts, interest or penalties of any nature
whatsoever other than as shown on the Financial Statements and there is no
basis for any additional claim or assessment. The IRS has not examined the
federal income tax returns of WHB. No waiver of the statute of limitations has
been given with respect to any taxable year of WHB. No government or
governmental authority is now asserting or threatening to assert any deficiency
or assessment for additional taxes or any interest, penalties or fines with
respect to WHB. Complete and correct copies of the federal income tax return
of WHB for the fiscal year ended December 31, 1996, as well as any other tax
returns requested by LifeQuest, have been heretofore delivered to LifeQuest.
3.12 Contracts. WHB is not a party to nor has any contract or
commitment of any kind or nature whatsoever, written or oral, including,
without limitation, any lease, license, franchise, employment, consultant or
commission agreement, pension, profit sharing, bonus, stock purchase,
retirement, hospitalization, insurance or other plan or arrangement involving
employee benefits, contract with any labor union or contract for services,
materials, supplies or equipment or for the sale or purchase of any of its
products or assets. Except as set forth therein, each of the WHB's Contracts
referred to on Schedule 3.12 is valid and existing, in full force and effect
and enforceable in accordance with its terms and no party thereto is in default
and no claim of default by any party has been made or is now pending and there
does not exist any event that with notice or the passing of time or both would
constitute a default or would excuse performance by any party thereto. None of
WHB's Contracts, except as expressly set forth therein, requires any consents
or approvals by any party to such contract to prevent a breach or to protect
and preserve the rights of the Surviving Corporation thereunder subsequent to
the consummation of the Merger. WHB has heretofore delivered to LifeQuest
complete and correct copies of each of WHB's Contracts.
3.13 Tangible Personal Property. Schedule 3.13 attached hereto and
made a part hereof is a true and complete list of all tangible personal
property owned by WHB having a book value at the date of the Financial
Statements. WHB owns and has good
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and indefeasible title in fee to all of its assets and properties including,
without limitation, all of the assets and properties reflected in the Financial
Statements and those identified on Schedule 3.13, free and clear of any
mortgage, lien, pledge, charge, claim, conditional sales or other agreement,
lease, right or encumbrance except (a) to the extent stated or reserved against
in the Financial Statements, (b) vendors' or other statutory liens which may
have resulted in the ordinary course of business, (c) minor imperfections of
title, liens and encumbrances which do not materially detract from the value or
the utility of the property subject thereto or materially impair the operations
of the owner thereof, and (d) as set forth in Schedule 3.13 attached hereto and
made a part hereof.
3.14 Real Property. WHB owns no real property. Except as set
forth on Schedule 3.14, WHB leases no real property. All leases of property
under which WHB purports to be a lessee are valid, binding and in full force
and effect, and WHB is not in default thereunder and there is no event or fact
which upon the passage of time or the giving of notice, or both, could
constitute a default by WHB under such lease.
3.15 Insurance. Schedule 3.15 attached hereto and made a part
hereof, is a true and complete list and brief description of all policies of
fire, liability and other forms of insurance owned or held by WHB. All of such
policies are valid and binding and in full force and effect as of the date
hereof and are in such amounts and cover such risks as are customarily carried
by other businesses similar to those conducted by WHB.
3.16 Banking. Schedule 3.16 attached hereto and made a part hereof
is a true and complete list setting forth the names and locations of all banks
at which WHB has an account or safe deposit box, the numbers of the accounts
and the names of all persons authorized to draw thereon.
3.17 Litigation. Except as set forth on Schedule 3.17, there are
no actions, suits, proceedings or investigations pending or threatened against
or affecting the assets or the business, operations or financial condition of
WHB, at law or in equity, in any court or before any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, nor is there any basis for any such action, suit, proceeding
or investigation. There are no judgments outstanding against WHB and WHB is
not in default in respect of any judgment, order, writ, injunction, or decree
of any court or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality.
3.18 Labor. There are no threats of strikes, work stoppages or
demands for collective bargaining by any union or labor organization against or
including WHB, no grievances, disputes or controversies with any union or any
other organization of the employees of WHB, and no pending or threatened
arbitration proceedings involving an employment grievance, dispute or
controversy.
3.19 Employee Benefit Plans. Except as set forth on Schedule 3.19
attached hereto and made a part hereof, WHB has no Benefit Plans, including,
without limitation, any "employee pension benefit plan" or "employee welfare
benefit plan" within the meaning of the Employee Retirement Income Security Act
of 1974, as
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amended (29 U.S.C. Section 1001, et seq.) ("ERISA"), and the final regulations
thereunder. True and complete copies of each written Benefit Plan sponsored by
WHB have heretofore been delivered to LifeQuest. WHB has no commitment,
written or oral, and whether legally binding or not, to create any Benefit
Plans in addition to those shown on Schedule 3.19. WHB has no benefit plan
that is a defined benefit plan within the meaning of ERISA Section 3(35)
maintained or contributed to by WHB and that covers employees of XXX. XXX has
no liability on account of any Benefit Plans, including but not limited to
liability for (a) additional contributions accruing under such Benefit Plans
with respect to periods commencing on or prior to the Closing Date; (b)
fiduciary breaches by WHB, the trustees under the trust created under any of
such plans, or any other persons under ERISA, or any other applicable statute,
regulation or rule; or (c) income taxes by reason of non-qualification of such
Benefit Plans. There are no pending claims against any Benefit Plan (other
than for benefits in accordance with its terms), nor has any claim been
threatened in writing by any participant thereof or beneficiary thereunder.
Without limiting the generality of the foregoing, all Benefit Plans are in full
compliance with all applicable reporting, disclosure, filing and other
administrative requirements pertaining to employee benefit plans set forth in
the Code and ERISA and rules and regulations promulgated under either.
3.20 Inventory. Inventory reflected on the Financial Statements as
of the date thereof was stated, on an aggregate basis, at historic cost and
consists solely of merchandise usable or saleable in the ordinary course of
business. The inventory conforms to customary trade standards for marketable
goods. Since the date of the Financial Statements, there have been no changes
in the inventory reflected on the Financial Statements except in the ordinary
course of business, none of which have been material.
3.21 Accounts Receivable. Except as set forth on Schedule 3.21,
each account receivable reflected on the Financial Statements constitutes a
bona fide receivable resulting from a bona fide sale to a customer in the
ordinary course of business, the amount of which was actually due on the date
thereof and has been or will be collected in the ordinary course of business,
net of the allowance for doubtful accounts reflected on the Financial
Statements. Except as set forth on Schedule 3.21, there are no defenses,
claims of disabilities, counterclaims, offsets, refusals to pay or other rights
of set-off against any accounts receivable and there is no threatened, intended
or proposed defense, claim of disability, counterclaim, offset, refusal to pay
or other right of set-off with respect thereto. Each account receivable, each
document and instrument and each transaction underlying or relating thereto
conforms, including, without limitation, in respect of interest rates charged,
notices given and disclosures made, to the requirements and provisions of each
applicable law, rule, regulation or other relating to credit, consumer credit,
credit practices, credit advertising, credit reporting, retail installment
sales, credit cards, collections, usury, interest rates and truth-in-lending,
including, without limitation, the Federal Truth in Lending Act, as amended,
and Regulation Z issued by the Board of Governors of the Federal Reserve System
thereunder. Of the accounts receivable existing on the Closing Date, net of
the allowances for doubtful accounts reflected in the Financial Statements, 90%
will be paid in full by not later than the 180th day after the closing. Such
reserves and allowances have been established on the basis of historical
experience and good faith estimates made by WHB management.
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3.22 Employee and Other Compensation. Schedule 3.22 attached
hereto and made a part hereof is a complete and correct list of the names and
current annual salary, bonus, commission and perquisite arrangements, written
or unwritten, for each director, officer and employee of WHB, including those
whose compensation was paid in whole or in part by persons or entities other
than WHB. No current or former shareholder, director, officer, employee or
Affiliate of WHB, nor any relative, associate or agent of such shareholder,
director, officer, employee or Affiliate, has any interest in any property of
WHB except as a shareholder, or is a party, directly or indirectly, to any
contract for employment or otherwise or any lease or has entered into any
transaction with WHB including, without limitation, any contract for the
furnishing of services by, or rental of real or personal property from or to,
or requiring payments to, any such stockholder, director, officer, employee,
Affiliate, relative, associate or agent. To the best knowledge of WHB and each
of the Shareholders, no employee listed thereon intends to terminate his
employment relationship with WHB and WHB has no contract for the future
employment of any officer or employee not listed on Schedule 3.22.
3.23 Customers and Suppliers. Schedule 3.23 attached hereto and
made a part hereof is a complete and correct list of the names and addresses of
the 10 largest customers and suppliers, respectively, of WHB during the last
fiscal year, and the total sales to or purchases from such customers and
suppliers made by WHB during the last fiscal year. No supplier or customer of
WHB representing in excess of 5% of WHB's purchases or sales during the last
fiscal year has advised WHB, formally or informally, that it intends to
terminate, discontinue or substantially reduce its business with WHB by reason
of the transactions contemplated by this Agreement or otherwise.
3.24 No Omission of Material Fact. No representation or warranty
by Xxxxxxxxxx in this Agreement or under any documents, instruments,
certificates or schedules furnished pursuant hereto or in connection with the
transactions contemplated hereby, 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.
3.25 Closing Date Effect. All of the representations and
warranties of each of the Shareholders are true and correct as of the date
hereof and shall be true and correct on and as of the Closing Date, with the
same force and effect as if such representations and warranties were made by
each of the Shareholders to the LifeQuest Parties on the Closing Date.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE LIFEQUEST PARTIES
The LifeQuest Parties represent and warrant to the Shareholders as
follows:
4.1 LifeQuest Corporate Organization. LifeQuest is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full power and authority to own its properties and to
carry on its business as
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and in the places where such properties are now owned or such businesses are
now being conducted.
4.2 Purchaser Corporate Organization. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada and has full power and authority to own its properties and to
carry on its business as and in the places where such properties are now owned
or such businesses are now being conducted.
4.3 Authorization. The LifeQuest Parties have full power and
authority, corporate and otherwise, to enter into this Agreement and to assume
and perform their respective obligations hereunder. The execution and delivery
of this Agreement and the performance by the LifeQuest Parties of their
respective obligations hereunder have been or will be duly authorized by the
Boards of Directors of the LifeQuest Parties and no further action or approval,
corporate or otherwise, by the LifeQuest Parties is or will be required in
order to constitute this Agreement as a binding and enforceable obligation of
the LifeQuest Parties.
ARTICLE 5
LIFEQUEST STOCK AND LIFEQUEST SEC DOCUMENTS
5.1 LifeQuest SEC Documents. LifeQuest has furnished each of the
Shareholders with a true and complete copy of the LifeQuest SEC Documents. As
of its filing date (and, with respect to any registration statement, the date
on which it was declared effective), each LifeQuest SEC Document was in
compliance, in all material respects, with the requirements of its form,
contained no untrue statement of a material fact and did not omit any statement
of a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of LifeQuest included in the
LifeQuest SEC Documents complied, at the time of filing with the SEC (and, with
respect to any registration statement, the date on which it was declared
effective), as to form, in all material respects, with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (subject,
in the case of unaudited statements, to the omission of certain footnotes) and
fairly present, in all material respects (subject, in the case of the unaudited
statements, to normal, recurring year-end audit adjustments) the consolidated
financial position of LifeQuest as at the dates thereof and the consolidated
results of their operations and changes in financial position for the periods
then ended. The consolidated financial statements of LifeQuest as of June 30,
1997, included in the LifeQuest SEC Documents disclose all liabilities of
LifeQuest required to be disclosed therein and contained adequate reserves for
taxes and all other material accrued liabilities. Since June 30, 1997, there
has not been any change in the business, assets, properties, condition
(financial or otherwise), results of operations or prospects of LifeQuest, and
no condition exists, which in any case would have or be a material adverse
effect on, or with respect to, LifeQuest.
5.2 No Omission of Material Fact. No representation or warranty
by the LifeQuest Parties in this Agreement or under any documents, instruments,
certificates
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or schedules furnished pursuant hereto or in connection with the transactions
contemplated hereby, 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.
5.3 Closing Date Effect. All of the representations and
warranties of the LifeQuest Parties are true and correct as of the date hereof
and shall be true and correct on and as of the Closing Date with the same force
and effect as if such representations and warranties were made by the LifeQuest
Parties to WHB on the Closing Date.
ARTICLE 6
AGREEMENT AND PLAN OF REORGANIZATION
6.1 Tax Treatment. WHB and the Shareholders, LifeQuest and
Purchaser intend that the transactions contemplated hereunder constitute a
tax-free reorganization (a "Reorganization") under Section 368 of the Code, and
agree to treat and report the transactions hereunder as a Reorganization. This
Agreement shall be construed in a manner to result in treatment of the
transactions hereunder as a Reorganization.
ARTICLE 7
CLOSING
7.1 The closing of the transactions contemplated hereby shall take
place on the Closing Date, September 30, 1997, at the offices of LifeQuest
Medical, Inc., 00000 Xxxx Xxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxx 00000, or at
such other place and on such other date as the parties shall agree. The date
of closing so determined is herein sometimes called the "closing" or the
"Closing Date."
ARTICLE 8
CONDITIONS OF CLOSING
8.1 LifeQuest Parties. The obligation of the LifeQuest Parties to
close hereunder shall be subject to the satisfaction of the following
conditions or the written waiver thereof by the LifeQuest Parties:
(a) Each of the agreements and covenants of WHB and each of
the Shareholders to be performed under this Agreement at or prior to the
Closing shall have been duly performed in all material respects.
(b) The representations and warranties of WHB and each of the
Shareholders in this Agreement shall be true and correct in all material
respects on and as of the Closing Date.
(c) No injunction or restraining order shall be in effect to
forbid or enjoin the consummation of the transactions contemplated by this
Agreement and no Federal, state, local or foreign statute, rule or regulation
shall have been enacted which prohibits, restricts or delays the consummation
hereof.
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(d) All consents, authorizations, orders or approvals of, and
filings or negotiations with, any Federal, state, local or foreign governmental
agency, commission, board or other regulatory body which are required for or in
connect on with the execution, delivery and performance of this Agreement by
WHB and each of the Shareholders and the consummation of the transactions
contemplated hereby, and in order to permit or enable the Surviving
Corporation, after the closing to operate a business substantially similar to
WHB's business as conducted by WHB as of the date hereof, shall have been duly
obtained or made, including, but not limited to, any approvals required under
the Xxxx- Xxxxx-Xxxxxx Antitrust Improvement Act.
(e) LifeQuest shall have received a certified copy of
resolutions duly adopted by each of the Board of Directors and the shareholders
of WHB authorizing and approving the execution and delivery of this Agreement
and performance by WHB of its obligations hereunder.
(f) Xxxxxxx X. Xxxxxxxxxx shall have executed and delivered
to the Company an Employment Agreement and a Non-Qualified Stock Option
Agreement in the forms attached hereto as Exhibit B and Exhibit C,
respectively.
(g) LifeQuest shall have received such further certificates
and documents as shall have been reasonably requested by the LifeQuest Parties,
including consents of all requisite third parties.
(h) The LifeQuest Parties shall have completed their
diligence activities to their satisfaction.
8.2 The Shareholders and WHB. The obligation of the Shareholders
and WHB to close hereunder shall be subject to the satisfaction of the
following conditions or the written waiver thereof by the Shareholders and WHB:
(a) Each of the agreements and covenants of the LifeQuest
Parties to be performed under this Agreement at or prior to the Closing shall
have been duly performed in all material respects.
(b) The representations and warranties of the LifeQuest
Parties in this Agreement shall be true and correct in all material respects on
and as of the Closing Date.
(c) The Board of Directors of LifeQuest shall elect one
person designated by the Shareholders to be a member of the Board of Directors
of LifeQuest. Following the Closing Date, so long as the Shareholders
collectively are the beneficial owners of at least 5% of the outstanding shares
of LifeQuest Stock, Purchaser shall use its best efforts to cause the Board of
Directors to nominate one person designated by the Shareholders for election to
the Board of Directors of LifeQuest.
(d) LifeQuest shall have executed and delivered to Xxxxxxx
Xxxx an Incentive Stock Option Agreement in the form attached hereto as Exhibit
D.
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(e) No injunction or restraining order shall be in effect to
forbid or enjoin the consummation of the transactions contemplated by this
Agreement and no Federal, state, local or foreign statute, rule or regulation
shall have been enacted which prohibits, restricts or delays the consummation
hereof.
(f) The Shareholders shall have received the Merger
Consideration.
(g) The indebtedness described on Schedule 8.2 shall have
been paid.
(h) The Shareholders shall have received such further
certificates and documents as he shall have reasonably requested.
ARTICLE 9
REMEDIES FOR BREACH
9.1 Arbitration. The Company and each of the Shareholders agree
that any dispute or controversy arising out of or in connection with this
Agreement or any alleged breach hereof shall be settled by arbitration in San
Antonio, Texas pursuant to the rules of the American Arbitration Association.
If the parties to such arbitration cannot jointly select a single arbitrator to
determine the matter, one arbitrator shall be chosen by each party (or, if a
party fails to make a choice, by the American Arbitration Association on behalf
of such party) and the two arbitrators so chosen will select a third. The
decisions of the single arbitrator jointly selected by the parties thereto, or,
if three arbitrators are selected, the decision of any two of them, will be
final and binding upon the parties thereto and the judgment of a court of
competent jurisdiction may be entered thereon. Fees of the arbitrators and
costs of arbitration shall be borne by the parties thereto in such manner as
shall be determined by the arbitrator or arbitrators.
9.2 Survival of Representations, Warranties and Agreements. All
of the representations, warranties, covenants and agreements made by the
parties to this Agreement shall survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereunder.
ARTICLE 10
INDEMNIFICATION
10.1 Indemnification. Xxxxxxxxxx shall defend and indemnify the
LifeQuest Parties and save and hold them harmless from, against, for and in
respect of, and pay any and all Losses in excess of $75,000 suffered,
sustained, incurred or required to be paid by any of the LifeQuest Parties by
reason of any breach or failure of observance or performance of any
representation, warranty, covenant, agreement or commitment made by WHB or any
of the Shareholders hereunder or relating to or as a result of any such
representation, warranty, covenant, agreement or commitment being untrue or
incorrect, or, as to products currently manufactured or sold by WHB, any action
for infringement upon or use adverse to the right or claimed right of any
Person to use all inventions, discoveries, patents, copyrights, trademarks,
trade names, service marks, corporate names, licenses, trade secrets and know
how and all other intellectual property rights with respect to the foregoing.
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10.2 Limitations on Indemnity. Xxxxxxxxxx will have no liability
(for indemnification or otherwise) under this Article 10 unless on or before
March 31, 1999, the LifeQuest Parties notify Xxxxxxxxxx of a claim specifying
the factual basis of such claim in reasonable detail to the extent then known
by such party. In the event Xxxxxxxxxx shall become obligated to indemnify any
of the LifeQuest Parties under this Article 10, Xxxxxxxxxx may, at his sole
option, satisfy such obligation, in whole or in part, with LifeQuest Stock,
valued at the per share closing price as reported by the National Association
of Securities Dealers Automated Quotation System on the date immediately prior
to the date Xxxxxxxxxx satisfies such obligation. The maximum liability of
Xxxxxxxxxx under this Article 10 shall be $2,000,000.
10.3 Procedure for Indemnification. In the event that Xxxxxxxxxx
shall be obligated to the LifeQuest Parties pursuant to this Article 10, or in
the event that a suit, action, investigation, claim or proceeding is begun,
made or instituted as a result of which Xxxxxxxxxx may become obligated to the
LifeQuest Parties hereunder, the LifeQuest Parties shall give prompt written
notice to Xxxxxxxxxx of the occurrence of such event. Xxxxxxxxxx agrees to
defend, contest or otherwise protect against any such suit, action,
investigation, claim or proceeding at Xxxxxxxxxx'x own cost and expense. The
LifeQuest Parties shall have the right, but not the obligation, to participate,
at its own expense, in the defense thereof by counsel of its own choice. In
the event that Xxxxxxxxxx fails timely to defend, contest or otherwise protect
against any such suit, action, investigation, claim or proceeding, the
LifeQuest Parties shall have the right to defend, contest or otherwise protect
against the same, and, upon 10 days' written notice to Xxxxxxxxxx, make any
compromise or settlement thereof and recover the entire cost thereof from
Xxxxxxxxxx, including, without limitation, reasonable attorneys' fees,
disbursements and all amounts paid as a result of such suit, action,
investigation, claim or proceeding or compromise or settlement thereof.
ARTICLE 11
REQUIREMENTS OF SECURITIES LAWS
11.1 Shareholders' Representations and Warranties. Each
Shareholder recognizes that the Merger Consideration is not being registered
under the Securities Act in reliance upon an exemption from the Securities Act
which is predicated, in part, on the representations and agreements of each of
the Shareholders set forth in this Agreement. Each Shareholder represents and
warrants to the LifeQuest Parties that he, together with his Purchaser
Representative, as that term is defined in Rule 501(h) of the Securities Act,
has such knowledge and experience in financial and business matters that he is
capable of evaluating the merits and risks of the transactions contemplated and
contained herein, and that the Merger Consideration is being acquired solely
for his own account for investment and not with a view to, or for offer or
resale in connection with, a distribution thereof within the meaning of the
Securities Act. Each Shareholder understands that the effect of such
representation and warranty is that the Merger Consideration must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available at the time for any proposed sale
or other transfer thereof. Each Shareholder also understands that LifeQuest is
under no obligation to file a registration statement under the Securities Act
covering the Merger Consideration or to take any other action to enable a
Shareholder to transfer or otherwise dispose of the Merger Consideration.
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Each Shareholder represents that he has consulted with his counsel in regard to
the Securities Act and that he is fully familiar with the circumstances under
which he is required to hold the Merger Consideration and the limitations upon
the transfer or other disposition thereof. Each Shareholder acknowledges that
the LifeQuest Parties are relying upon the truth and accuracy of the foregoing
representations and warranties in issuing the Merger Consideration under the
Securities Act. Each Shareholder agrees to indemnify and hold the LifeQuest
Parties harmless against all liabilities, costs and expenses, including
reasonable attorneys' fees, incurred by the LifeQuest Parties as a result of
any sale, transfer or other disposition by such Shareholder of all or any part
of the Merger Consideration in violation of the Securities Act.
11.2 Legend. The Merger Consideration shall bear the following
legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN EXEMPTION THEREFROM UNDER SAID ACT."
11.3 SEC Documents. Each Shareholder acknowledges that he has been
furnished by the LifeQuest Parties with (a) a copy of the Annual Report to
Stockholders of Lifequest for the year ended December 31, 1996, (b) a copy of
the Annual Report on Form 10-KSB of LifeQuest for the fiscal year ended
December 31, 1996, in the form filed with the SEC, and (c) copies of all
filings since December 31, 1996, by LifeQuest with the SEC in compliance with
Section 13 or 14 of the Exchange Act. Each Shareholder represents that he has
reviewed the foregoing documents and acknowledges that they have been afforded
the opportunity to obtain any additional information necessary to verify the
accuracy of the information contained in the foregoing documents, including the
opportunity to ask questions of, and receive answers from, officers and
representatives of LifeQuest concerning the LifeQuest Parties and the terms and
conditions of the transactions contemplated by this Agreement.
11.4 Incidental Registration. If, at any time between the
Effective Time and the one-year anniversary of the Effective Time, LifeQuest
proposes to register any of the LifeQuest Stock (whether unissued, yet to be
authorized or held by any person) under the Securities Act, LifeQuest shall, at
least 30 days prior to the filing under the Securities Act of the registration
statement relating thereto, give written notice to the Shareholders of its
intention to do so, and, upon the written request of any of the Shareholders
given within 10 days after the giving of any such notice (which request shall
state the proposed method of distribution), LifeQuest shall include or cause to
be included in any such registration statement, up to 20% of the Merger
Consideration; provided, however, that LifeQuest may at any time withdraw or
cease proceeding with any such registration if it shall at the time withdraw or
cease proceeding with the registration of such LifeQuest Stock originally
proposed to be registered; and provided further, that if the registration
proposed by LifeQuest relates to an underwritten offering, none of the
Shareholders shall have any right to sell the Merger Consideration
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in any manner or through any underwriter other than in the manner and through
the managing underwriter or underwriters being used by LifeQuest.
(a) Notwithstanding any other provision of this Section
11.4, if a registration pursuant to this Section 11.4 involves a firm
commitment, underwritten offering of the securities so being registered and if
the managing underwriter of such offering informs LifeQuest and the
Shareholders by letter of its belief that marketing factors require a
limitation of the number of shares to be underwritten, LifeQuest may limit the
amount of Merger Consideration to be included in the registration and
underwriting; provided that no such reduction shall reduce the securities being
offered by LifeQuest for its own account; and provided that those shares which
are excluded from the underwritten offering shall be withheld from the market
by the holders thereof for a period, not to exceed 180 days, which the managing
underwriter reasonably determines as necessary in order to effect the
underwritten offering.
(b) Registration Procedures and Expenses. If and
whenever LifeQuest is required to include a portion of the Merger Consideration
in a registration statement under the Securities Act, as provided in Section
11.4 hereof, LifeQuest shall, as expeditiously as is reasonably practicable, do
each of the following:
(i) prepare and file with the SEC a registration
statement with respect to the Merger Consideration and, subject to the
limitations under Section 11.4 hereof, use its best efforts to cause
such registration statement to become effective;
(ii) cooperate with the Shareholders and any underwriter
who shall sell the Merger Consideration in connection with their
review of LifeQuest made in connection with such registration;
(iii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for 120 days from the date of its effectiveness,
and to comply with the provisions of the Securities Act and the
Exchange Act with respect to the disposition of all the Merger
Consideration covered by such registration statement for such period;
(iv) furnish to the Shareholders such number of copies of
the prospectus forming a part of such registration statement
(including each preliminary prospectus), in conformity with the
requirements of the Securities Act, and such other documents as the
Shareholders may reasonably request in order to facilitate the
disposition of the Merger Consideration; and
(v) LifeQuest shall (a) notify the Shareholders at any time
when a prospectus relating to the Merger Consideration is required to
be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus forming a part of such
registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then
existing, and (b) at the
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request of the Shareholders, prepare and furnish to the Shareholders a
reasonable number of copies of any supplement to or any amendment of
such prospectus that may be necessary so that, as thereafter delivered
to the purchasers of the Merger Consideration, such prospectus shall
not include any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
then existing.
(c) Agreement by each of the Shareholders. In the event
that any Shareholder participates, pursuant to this Section 11.4, in the
offering of the Merger Consideration, such Shareholder shall;
(i) furnish LifeQuest all material information reasonably
requested by LifeQuest concerning such Shareholder and the proposed
method of sale or other disposition of the Merger Consideration and
such other information and undertakings as shall be reasonably
required in connection with the preparation and filing of the
registration statement covering the Merger Consideration in order to
ensure full compliance with the Securities Act and the rules and
regulations of the SEC thereunder;
(ii) cooperate in good faith with LifeQuest and its
underwriters, if any, in connect on with such registration, including
placing the Merger Consideration in escrow or custody to facilitate
the sale and distribution thereof provided that such escrow or custody
arrangement shall be no more restrictive upon such Shareholder than
upon any other holder of LifeQuest Stock for the benefit of whom such
registration is undertaken; and
(iii) make no further sales or other dispositions, or offers
therefor, of the Merger Consideration under such registration
statement if, during the effectiveness of such registration statement,
an intervening event should occur which, in the opinion of counsel to
LifeQuest, makes the prospectus included in such registration
statement no longer comply with the Securities Act, so long as written
notice containing the facts and legal conclusions relied upon by
LifeQuest in this regard has been received by such Shareholder from
LifeQuest, until such time as such Shareholder has received from
LifeQuest copies of a new, amended or supplemented prospectus
complying with the Securities Act, which prospectus shall be delivered
to such Shareholder by LifeQuest as soon as practicable after such
notice.
(d) Allocation of Expenses. If and whenever LifeQuest is
required by the provisions of this Section 11.4 to use its best efforts to
effect the registration of the Merger Consideration under the Securities Act,
LifeQuest shall pay the costs and expenses in connection therewith; provided,
however, that the Shareholders shall pay, in all events, all underwriting
discounts, selling commissions and stock transfer taxes attributable to the
Merger Consideration under such registration statement.
(e) Indemnification. In the event of any registration of
any of the Merger Consideration under the Securities Act pursuant to this
Section 11.4, each Shareholder shall indemnify and hold harmless, LifeQuest,
each director of LifeQuest,
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each officer of LifeQuest who shall sign such registration statement, each
underwriter and any person who controls LifeQuest or such underwriter within
the meaning of the Securities Act, with respect to any statement in or omission
from such registration statement, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, if such
statement or omission was made in reliance upon and in conformity with written
information furnished to LifeQuest or its underwriter through an instrument
duly executed by such Shareholder specifically for use in the preparation of
such registration statement, preliminary prospectus, final prospectus or
amendment or supplement.
11.5 Rule 144 Stock. Notwithstanding the foregoing provisions of
this Article 11, LifeQuest shall not be obligated to effect a registration
pursuant to Section 11.4(a) with respect to the Merger Consideration which
could then be sold pursuant to Rule 144 under the Securities Act.
ARTICLE 12
NON-COMPETITION AGREEMENT
12.1 Customer Lists; Non-Solicitation. Each Shareholder hereby
further covenants and agrees that he shall not, commencing on the Closing Date
and ending on the first anniversary date of the Closing Date, directly or
indirectly, (a) use or make known to any person or entity the names or
addresses of any clients or customers of WHB or any of the LifeQuest Parties or
any other information pertaining to them, (b) call on, solicit, take away or
attempt to call on, solicit or take away any clients or customers of WHB or any
of the LifeQuest Parties, nor (c) solicit for employment, recruit, hire or
attempt to recruit or hire any employees of WHB or any of the LifeQuest
Parties.
12.2 Covenants Independent. The covenants of each Shareholder
contained in Section 12.1 of this Agreement will be construed as independent of
any other provision in this Agreement; and the existence of any claim or cause
of action by a Shareholder against any of the LifeQuest Parties will not
constitute a defense to the enforcement by the LifeQuest Parties of said
provisions. Each Shareholder understands that the provisions contained in
Section 12.1 are essential elements of the transactions contemplated by this
Agreement and, but for the agreement of each Shareholder to Section 12.1, the
LifeQuest Parties would not have agreed to enter into this Agreement and the
transactions contemplated herein. Each Shareholder has been advised to consult
with counsel in order to be informed in all respects concerning the
reasonableness and propriety of Section 12.1 with specific regard to the nature
of the business conducted by WHB and any of the LifeQuest Parties. Each
Shareholder acknowledges that Section 12.1 is reasonable in all respects.
12.3 Remedies. In the event of a breach or a threatened breach by
a Shareholder of any of the provisions contained in Sections 12.1 or 12.2 of
this Agreement, each Shareholder acknowledges that the LifeQuest Parties will
suffer irreparable injury not fully compensable by money damages and,
therefore, will not have an adequate remedy available at law. Accordingly, the
LifeQuest Parties shall be entitled to obtain such injunctive relief or other
equitable remedy from any court of competent jurisdiction as may be necessary
or appropriate to prevent or curtail any
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such breach, threatened or actual. The foregoing shall be in addition to and
without prejudice to any other rights that the LifeQuest Parties may have under
this Agreement, at law or in equity, including, without limitation, the right
to xxx for damages.
ARTICLE 13
CONFIDENTIALITY
13.1 Nondisclosure. No Shareholder shall, without the prior
written consent of the Board of Directors of LifeQuest, disclose or use for any
purpose confidential information or proprietary data of WHB, Purchaser or
LifeQuest (or any of their respective subsidiaries), except as required by
applicable law or legal process; provided, however, that confidential
information shall not include any information known generally to the public or
ascertainable from public or published information (other than as a result of
unauthorized disclosure by such Shareholder) or any information of a type not
otherwise considered confidential by persons engaged in the same business or a
business similar to that conducted by WHB or LifeQuest (or any of their
respective subsidiaries).
ARTICLE 14
GENERAL PROVISIONS
14.1 Expenses. Each of the parties hereto shall pay all expenses
incurred by it incident to preparing for, entering into and carrying into
effect this Agreement.
14.2 Notices. Any notice, report, demand or payment required,
permitted or desired to be given pursuant to any of the provisions of this
Agreement shall be deemed to have been sufficiently given or served for all
purposes if hand delivered or delivered by responsible overnight courier or
sent by certified or registered air mail, return receipt requested, and postage
prepaid as follows:
If to the LifeQuest Parties:
LifeQuest Medical, Inc.
00000 Xxxx Xxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx
with a copy to: Fulbright & Xxxxxxxx L.L.P.
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Facsimile No. (000) 000-0000
If to Xxxxxxxxxx: Xxxxxxx X. Xxxxxxxxxx
000 Xxxxx Xxxxxx Xxxxx X-0
Xxxxxxx, Xxxxxxxxxxxxx 00000
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25
with a copy to: Xxxxxx Xxxxx & Xxxxx
Xxx Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Facsimile No: (000) 000-0000
If to Xx. Xxxxxxxxxx: Xxxx X. Xxxxxxxxxx, M.D.
Box 120 RFD Number 3
Xxxxxx, Xxxxxxx 00000
with a copy to: Xxxxxx Xxxxx & Xxxxx
Xxx Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Facsimile No: (000) 000-0000
If to Xxxx: Xxxxxxxxx X. Xxxx III
00 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxx 00000
with a copy to: Xxxxxx Xxxxx & Xxxxx
Xxx Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Facsimile No: (000) 000-0000
If to Trustee: Xxxxxxx X. Xxxxxxxxxx
000 Xxxxxxxxxxx Xxxxxx Xxx 0
Xxxxxx Xxxxxxxxxxxxx 00000
with a copy to: Xxxxxx Xxxxx & Xxxxx
Xxx Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Facsimile No: (000) 000-0000
Any of the foregoing parties may at any time and from time to time
change the address to which notice shall be sent hereunder, by notice to the
other parties given under this subsection. The date of the giving of such
notice delivered by hand or by responsible overnight courier shall be the date
of its delivery, and the date of the giving of such notice by certified or
registered mail shall be the date three days after the posting of the mail.
14.3 Finders. Each of the parties covenants and represents to the
other that there are no claims for brokerage commissions or finder's fees in
connection with the negotiation of this Agreement and the performance of the
transactions contemplated hereunder resulting from any action taken by it.
Each of the parties agrees to
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indemnify and hold harmless the other in respect of any and all Losses
sustained by the other as a result of any liability to any broker or finder on
the basis of any arrangement, agreement or acts made by or on behalf of such
party with any other person or persons whatsoever.
14.4 Complete Agreement. The representations, warranties,
covenants and agreements set forth in this Agreement and in any financial
statement, schedule or exhibit delivered pursuant hereto, constitute all of the
representations, warranties, covenants and agreements among the parties hereto
and upon which the parties have relied, and, except as may be specifically
provided herein, no change, modification, addition or termination of the
Agreement or any part thereof shall be valid unless in writing and signed by or
on behalf of the party to be charged therewith.
14.5 Prior Agreements. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes prior agreements relating thereto.
14.6 No Waiver. No waiver of the provisions hereof shall be
effective unless in writing and signed by the party to be charged with such
waiver. No waiver shall be deemed a continuing waiver or waiver in respect of
any subsequent breach or default, either of similar or different nature unless
expressly so stated in writing.
14.7 Headings. The headings or captions under Sections of this
Agreement are for convenience and reference only, and do not form a part
hereof, and do not in any way modify, interpret or construe the intent of the
parties or affect any of the provisions of this Agreement.
14.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
NON-EXCLUSIVE VENUE FOR ANY ACTION PERMITTED HEREUNDER SHALL BE PROPER IN SAN
ANTONIO, BEXAR COUNTY, TEXAS, AND EMPLOYEE CONSENTS TO SUCH VENUE.
14.9 Assignment. Neither this Agreement nor the rights of the
parties hereto shall be assignable, unless otherwise specifically provided.
14.10 Severability. If any term or provision of this Agreement
shall be held to be invalid or unenforceable for any reason, such term or
provision shall be ineffective to the extent of such invalidity or
unenforceability without invalidating the remaining terms and provisions
hereof, and this Agreement shall be construed as if such invalid or
unenforceable term or provision had not been contained herein. Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be held to be prohibited by or invalid under applicable law,
such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
14.11 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together
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shall constitute one and the same instrument. This Agreement shall be binding
when one or more counterparts hereof, individually or taken together, shall
bear the signatures of the parties reflected hereon as signatories.
14.12 Telecopy Execution and Delivery. A facsimile, telecopy or
other reproduction of this Agreement may be executed by one or more parties
hereto, and an executed copy of this Agreement may be delivered by one or more
parties hereto by facsimile or similar instantaneous electronic transmission
device pursuant to which the signature of or on behalf of such party can be
seen, and such execution and delivery shall be considered valid, binding and
effective for all purposes. At the request of any party hereto, all parties
hereto agree to execute an original of this Agreement as well as any facsimile,
telecopy or other reproduction hereof.
[signatures on following page]
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IN WITNESS WHEREOF, the parties hereto have caused this Plan of Merger
and Acquisition Agreement to be signed on the date and year first above
written.
LIFEQUEST MEDICAL, INC.
By:
---------------------------------------
Xxxxxxx X. Xxxxx,
President and Chief Executive Officer
VAL-U-MED, INC.
By:
---------------------------------------
Xxxxxxx X. Xxxxx,
Chief Executive Officer
X. X. XXXXXXXXXX AND ASSOCIATES, INC.
By:
---------------------------------------
Xxxxxxx X. Xxxxxxxxxx
President
------------------------------------------
Xxxxxxx X. Xxxxxxxxxx
------------------------------------------
Xxxx X. Xxxxxxxxxx, M.D.
------------------------------------------
Xxxxxxxxx X. Xxxx III
XXXXXXXXXX FAMILY TRUST
By:
---------------------------------------
Xxxxxxx Xxxxxxxxxx, as Trustee
27
29
SCHEDULES
Schedule 3.1 States In Which Qualified for Business
--------------------------------------
Schedule 3.3 Capitalization/List of Stockholders
-----------------------------------
Schedule 3.4 Exceptions to Authorizations
----------------------------
Schedule 3.6 Exceptions to Permits
---------------------
Schedule 3.7 Environmental
-------------
Schedule 3.8 Intellectual Property and Other Tangible Assets
-----------------------------------------------
Schedule 3.9 Financial Statements
--------------------
Schedule 3.9A Exceptions to Financial Statements
----------------------------------
Schedule 3.10 Material Adverse Changes
------------------------
Schedule 3.11 Exceptions to Tax Returns
-------------------------
Schedule 3.12 Contracts
---------
Schedule 3.13 Tangible Personal Property
--------------------------
Schedule 3.14 Real Property
-------------
Schedule 3.15 Insurance
---------
Schedule 3.16 Banking
-------
Schedule 3.17 Litigation
----------
Schedule 3.19 Employee Benefit Plans
----------------------
Schedule 3.21 Exceptions for Accounts Receivable
----------------------------------
Schedule 3.22 Employee and Other Compensation
-------------------------------
Schedule 3.23 Customers and Suppliers
-----------------------
Schedule 8.2 Indebtedness
------------
30
SCHEDULE 3.1
STATES IN WHICH QUALIFIED TO DO BUSINESS
31
SCHEDULE 3.3
CAPITALIZATION/LIST OF SHAREHOLDERS
Xxxxxxx X. Xxxxxxxxxx
Xxxx X. Xxxxxxxxxx, M.D.
Xxxxxxxxx X. Xxxx, III
Xxxxxxx Xxxxxxxxxx, as Trustee of the Xxxxxxxxxx Family Trust
32
SCHEDULE 3.4
EXCEPTIONS TO AUTHORIZATION
33
SCHEDULE 3.6
EXCEPTIONS TO PERMITS
34
SCHEDULE 3.7
ENVIRONMENTAL
35
SCHEDULE 3.8
INTELLECTUAL PROPERTY AND OTHER TANGIBLE ASSETS
36
SCHEDULE 3.9
FINANCIAL STATEMENTS
37
SCHEDULE 3.9A
EXCEPTIONS TO FINANCIAL STATEMENTS
38
SCHEDULE 3.10
MATERIAL ADVERSE CHANGES
39
SCHEDULE 3.11
EXCEPTIONS TO TAX RETURNS
40
SCHEDULE 3.12
CONTRACTS
41
1. Joint Venture Agreement dated April 10, 1995 by and between
Xxxxx-Xxxxxxx, Inc. and WHB dba Beta Teq whereby the parties create a
joint venture to organize and operate a general and endo surgical
instrumentation repair operation for profit. The Agreement expires
April 10, 1998, but it can be terminated by any party upon thirty (30)
days written notice to all parties. On September 24, 1997
Xxxxx-Xxxxxxx waived its objection to the transfer of WHB's interest
in the Joint Venture as a result of WHB's merger into Val-U-Med, Inc.
2. Distributor Agreement (unexecuted and not dated) by and between
Poly-Vac, Inc. and WHB whereby WHB purchases products from Poly-Vac,
Inc. and resells them in Missouri, Kansas, Nebraska and Iowa. Either
party may terminate the Agreement by giving sixty (60) days written
notice to the other party. Any transaction effecting a substantial
change in the ownership of or in control of WHB shall be deemed an
assignment by WHB.
3. Distribution Agreement dated August, 1996 by and between Alliance of
Choice Enterprises Operating Room Products, L.C., and WHB whereby WHB
markets A.C.E. products. The Agreement expires twelve months from
execution date and, thus, has expired.
4. EOGas Sterilizer Agreement dated May 20, 1997 by and between X.X.
Xxxxxxxx Products, Inc. and WHB whereby Xxxxxxxx provides specific
products and services to WHB. The Agreement runs for a period of one
year. Either party may terminate the Agreement upon thirty (30) days
written notice to the other party.
5. Distributor Agreement dated July 21, 1996 by and between Saber
Endoscopy, L.L.C. and WHB whereby WHB agrees to actively promote
Saber's products. The Agreement may be terminated by either party
with sixty (60) days written notice to the other party.
6. Miltex Distributor Agreement (unexecuted and not dated) by and between
Miltex Instrument Company, Inc. and WHB whereby WHB agrees to sell the
products of Miltex. Miltex can terminate without cause with thirty
(30) days written notice or with cause with ten (10) days written
notice. If all or substantially all of the assets of WHB are
transferred to another person or entity, Miltex may cancel the
Agreement.
7. Non-Disclosure Agreement dated effective October 29, 1996 by and
between WHB and Nuell Air Equipment and Hospital Supplies, Inc.
Nuell's obligation to maintain in confidence proprietary information
with regard to WHB continues for five years from date of Agreement or
until information is no longer proprietary.
8. Distributor Sales and Service Agreement dated ________, 1997 by and
between Nuell Air Equipment and Hospital Supplies, Inc. and WHB
whereby WHB purchases and sells products of Nuell. Either party may
terminate the
42
Agreement with ninety (90) days written notice. Nuell may, at its
option, terminate at once with written notice.
9. A letter of agreement by and between Everest Medical and WHB whereby
WHB sells the Everest Medical Laparoscopy product line may exist (see
fax dated April 18, 1996).
10. Agreement between Xxxx Xxxxxx of W.N. Xxxxxx & Associates, Inc. and
WHB whereby Xxxx Xxxxxx acquires and services accounts for WHB.
11. Agreement between Beta-TEQ Repair Service and Pilling Xxxx dated
November 13, 1996 whereby Beta-TEQ Repair Service agrees to comply
with certain repair and inspection criteria.
12. Contract dated July 1, 1995 between Boston City Hospital and WHB
whereby WHB provides maintenance and repair of surgical instruments.
Contract expired June 30, 1996.
13. Agreement dated September 1, 1993 by and between WHB and Codman &
Xxxxxxxxx, Inc. whereby WHB grants Codman a right of last refusal for
a period of five (5) years from date of Agreement [renewable for an
additional five (5) year period at Codman's option] to develop and
exclusively license certain medical instruments and a right of last
refusal on the sale of WHB to a third party. On September 26, 1997,
Codman & Xxxxxxxxx, Inc. waived its right of last refusal on the sale
of WHB to a third party.
14. Agreement effective May 1, 1994 whereby WHB distributes the retractor
blades of J. Xxxx Xxxxxx Instrument Company. The agreement can be
terminated by either party with thirty (30) days written notice.
15. Agreement dated ____________, 1996 by and between Xxxxxxx & Xxxxxxx
Professional, Inc. and WHB whereby WHB sells the Xxxxxxxxxx Retraction
System on a commission basis. The initial term of the agreement is
one year. It is unclear whether the renewal option is for one year or
five years.
16. Company Policy of WHB dated September 1, 1996 outlining the
obligations of the employees of WHB to WHB and the obligations of WHB
to its employees.
17. SBA Loan evidenced by Note dated October 4, 1996 in the amount of
$99,000.00 payable to The Milford National Bank and Trust Company
executed by WHB.
18. Confidential Non-Disclosure Agreement dated August 8, 1997 by and
between LifeQuest Medical, Inc. and WHB whereby each promises to hold
the Proprietary Information of the other in trust and confidence. The
agreement expires in three years but may be terminated sooner by
either party with thirty (30) days written notice.
43
SCHEDULE 3.13
TANGIBLE PERSONAL PROPERTY
44
SCHEDULE 3.14
REAL PROPERTY
45
SCHEDULE 3.15
INSURANCE
46
SCHEDULE 3.16
BANKING
47
SCHEDULE 3.17
LITIGATION
48
SCHEDULE 3.19
EMPLOYEE BENEFIT PLANS
49
SCHEDULE 3.21
EXCEPTIONS TO ACCOUNTS RECEIVABLE
50
SCHEDULE 3.22
EMPLOYEE AND OTHER COMPENSATION
51
SCHEDULE 3.23
CUSTOMERS AND SUPPLIERS
52
SCHEDULE 8.2
INDEBTEDNESS
53
LIST OF EXHIBITS
Exhibit A - Certificates of Merger
Exhibit B - Employment Agreement of Xxxxxxx X. Xxxxxxxxxx
Exhibit C - Non-Qualified Stock Option Agreement of Xxxxxxx X. Xxxxxxxxxx
Exhibit D - Incentive Stock Option Agreement of Xxxxxxxxx X. Xxxx III
54
Exhibit A
55
Exhibit B
56
Exhibit C
57
Exhibit D
