EXHIBIT 99.1
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of September 18, 1996 (the
"Agreement"), among MEDIQ Incorporated, a Delaware corporation ("MEDIQ"), MEDIQ
Investment Services, Inc., a Delaware corporation ("MIS" and together with
MEDIQ, collectively the "Seller"), and NutraMax Products, Inc., a Delaware
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Seller owns 4,037,258 shares of Common Stock of the Company
(the "NutraMax Shares"); and
WHEREAS, 2,254,902 of the NutraMax Shares are held in escrow (the
"Escrowed Shares") in support of MEDIQ's 7 1/2% Subordinated Debentures due 2003
(the "Bonds") pursuant to that certain Indenture dated as of July 30, 1993
between MEDIQ and First Fidelity Bank, N.A., Pennsylvania (the "Indenture") and
that certain Escrow Agreement dated July 30, 1993 among MEDIQ, MIS and First
Fidelity Bank, N.A., Pennsylvania (the "Escrow Agreement"); and
WHEREAS, the Seller desires to sell and the Company desires to purchase
all of the NutraMax Shares in accordance with the terms and conditions hereof;
and
WHEREAS, pursuant to Section 11.14 of the Indenture, MEDIQ has the right
to deliver cash in lieu of the Escrowed Shares upon exchange of the MEDIQ Bonds.
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties, the parties hereto
agree as follows:
1. SALE OF THE SHARES
1.1 On the dates and in the amounts as set forth herein, the Seller
shall transfer, assign, sell and deliver to the Company, and the Company shall
purchase from the Seller all of the NutraMax Shares for a purchase price of
$9.00 per share (the "Purchase Price"), or $36,335,332 in the aggregate for all
Shares. The closing of the sale and purchase and delivery of all of the Shares
other than the Escrowed Shares (the "Closing") shall be held as provided in
Section 1.2 and thereafter the sale and purchase and delivery against payment of
the Note (as hereinafter defined) of Escrowed Shares shall occur as provided in
Section 1.3.
1.2 Closing. The Closing of the purchase and sale of the NutraMax Shares
(other than the Escrowed Shares) shall be held on December 31, 1996 or such
other date as Seller and the Company may mutually agree (the "Closing Date"). At
the Closing (i) the purchase price for the NutraMax Shares other than the
Escrowed Shares shall be paid by the Company by wire transfer pursuant to
instructions previously given by Seller to the Company for that purpose against
delivery of certificates for the NutraMax Shares so purchased duly endorsed or
accompanied by stock powers duly executed in blank; (ii) payment for the
Escrowed Shares shall be made by delivery by the Company to Seller of a
promissory note of the Company in favor of Seller substantially in the form
attached hereto as Exhibit A, in the original principal amount of $20,294,118
(the "Note") secured by a letter of credit reasonably acceptable in form and
substance to Seller (the "Letter of Credit").
1.3 Delivery of Escrowed Shares. Seller shall, as Escrowed Shares are
released from escrow under the Indenture and Escrow Agreement, upon 3 business
days prior notice to the Company, sell, transfer, assign and deliver such
Escrowed Shares to the Company free and clear of all liens, claims, encumbrances
and restrictions (other than as imposed by applicable securities laws), upon
receipt by Seller from the Company of a prepayment of the Note in an amount
equal to the Purchase Price of the Escrowed Shares so delivered. Notwithstanding
the foregoing, the Company shall not be required to prepay the Note and accept
delivery of any of the Escrowed Shares except in lots of no less than 50,000
shares; provided, however, if there are less than 50,000 Escrowed Shares
remaining, the Company shall be required to prepay the Note upon delivery of
such remaining Escrowed Shares.
1.4 Delivery of Cash. To the extent that any holder of a MEDIQ Bond or
Bonds presents such MEDIQ Bond or Bonds for exchange for Escrowed Shares in
accordance with the terms of the Indenture and MEDIQ delivers Escrowed Shares to
such holder, (i) the principal amount of the Note shall be reduced by an amount
equal to the product of the number of Escrowed Shares so delivered by MEDIQ to
such holder and $9.00, and (ii) the principal amount of the Note shall further
be reduced by an amount (the "Excess Cash Amount") equal to the product of the
number of Escrowed Shares so delivered by MEDIQ to such holders and the number
which is equal to (X) $1,000 divided by the then Exchange Rate (as such term is
defined in the Indenture) minus (Y) $9.00, provided, however, that in lieu of
such further reduction in the principal amount of the Note under the foregoing
clause (ii), the Company may elect to receive an amount in cash from Seller
equal to the Excess Cash Amount.
1.5 Voting of Escrowed Shares, etc. Seller agrees that, from and after
the Closing, (i) at any meeting of stockholders of the Company, however called,
or in connection with a written consent of the Company's stockholders, Seller
shall vote (or cause to be voted) the Escrowed Shares in the manner directed by
the Company and (ii) the Company shall be entitled to receive any and all
dividends paid or payable with respect to the Escrowed Shares (other than
dividends apportioned to the Escrowed Shares pursuant to Section 11.05 of the
Indenture to which Seller is not entitled); provided, however, that the
obligations of Seller under the foregoing clause (i) and the right of the
Company to receive dividends pursuant to the foregoing clause (ii) shall
terminate upon an event of default under the Note.
2. CERTAIN REPRESENTATIONS AND WARRANTIES
2.1 Certain Representations and Warranties by the Seller. The Seller
represents and warrants to the Company that:
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(a) Organization and Good Standing. Each Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all necessary corporate power and authority to carry on its
business and to own and lease the assets which it owns and leases.
(b) Power and Authorization. Each Seller has full legal right, power and
authority to enter into and perform its obligations under this Agreement and the
other agreements and documents required to be delivered by it hereunder. The
execution, delivery and performance by each Seller of this Agreement and such
other agreements and documents have been duly authorized by all necessary
corporate action on the part of Seller. This Agreement has been duly and validly
executed and delivered by each Seller and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms. When
executed and delivered by such Seller as contemplated herein, each of such other
agreements and documents shall constitute the legal, valid and binding
obligation of each Seller, enforceable against it in accordance with its terms.
(c) No Conflicts. (i) Neither the execution of this Agreement nor the
consummation by each Seller of the transactions contemplated hereby will
constitute a violation of or default under, or conflict with, any statute or
regulation, contract, commitment, agreement, understanding, arrangement or
restriction of any kind to which such Seller is a party or by which it or any of
its properties are bound (which, in relation to a contract, commitment,
agreement, understanding, arrangement or restriction would have a material
adverse effect on the Seller or prohibit the transactions contemplated herein)
and (ii) no consent, approval, order or authorization of any court,
administrative agency, other governmental entity or any other person is required
(as opposed to voluntary) by or with respect to such Seller in connection with
the execution and delivery of this Agreement by such Seller.
(d) Ownership of Shares. (i) Upon transfer and delivery of the NutraMax
Shares by the Seller hereunder to the Company, as provided herein, Company shall
acquire good and marketable title to such shares, free and clear of all claims,
liens, charges, proxies, encumbrances and security interests and (ii) the Seller
does not own beneficially (as hereinafter defined) or of record any shares of
common stock of the Company other than the NutraMax Shares.
(e) No Broker. Neither Seller nor any director, officer, employee of
Seller has incurred or will incur on behalf of the Company any brokerage,
finder's or similar fee in connection with the transactions contemplated by this
Agreement.
2.2 Certain Representations and Warranties by the Company. The Company
represents and warrants to the Seller that:
(a) Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and
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has all necessary corporate power and authority to carry on its business and to
own and lease the assets which it owns and leases.
(b) Power and Authorization. The Company has legal right, power and
authority to enter into and perform its obligations under this Agreement and the
other agreements and documents required to be delivered by it hereunder. The
execution, delivery and performance by the Company of this Agreement and such
other agreements and documents have been duly authorized by all necessary
corporate action pursuant to the Delaware General Corporation Law and otherwise.
The transactions contemplated by this Agreement have been approved by a special
committee of the board of directors composed entirely of directors who are not
officers or employees of the Company and/or present or former employees or
consultants of MEDIQ. This Agreement has been duly and validly executed and
delivered by the Company and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms. When executed
and delivered as contemplated herein, each of such other agreements and
documents shall constitute the legal, valid and binding obligation of the
Company, enforceable against it in accordance with its terms.
(c) No Conflicts. (i) Neither the execution of this Agreement nor the
consummation by the Company of the transactions contemplated hereby will
constitute a violation of or default under, or conflict with, any statute or
regulation, contract, commitment, agreement, understanding, arrangement,
obligation, duty or restriction of any kind to which the Company is a party or
by which it or any of its properties is bound and (ii) no consent, approval,
order or authorization of or by the stockholders of the Company or of any court,
administrative agency, other governmental entity or any other person (other than
that which has already been obtained) is required (as opposed to voluntary) by
or with respect to the Company in connection with the execution and delivery of
this Agreement by it.
(d) Company SEC Documents. The Company has timely filed with the
Securities and Exchange Commission (the "SEC"), and has heretofore delivered to
Seller true, correct and complete copies of, all forms, reports, schedules,
statements and other documents required to be filed with the SEC by it since
December 31, 1993 pursuant to the Securities Exchange Act of 1934 (the "Exchange
Act") or the Securities Act of 1933 (the "Securities Act") (such documents, as
supplemented and amended since the time of filing, collectively, the "NutraMax
SEC Documents"). The NutraMax SEC Documents, including, without limitation, any
financial statements or schedules included therein, at the time filed (and in
the case of registration statements and proxy statements, on the dates of
effectiveness and the date of mailing, respectively) (a) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated herein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, and (b)
complied in all material respects with the applicable requirements of the
Exchange Act and the Securities Act, as the case may be. The financial
statements of the Company included in the NutraMax SEC Documents at the time
filed (and, in the case of registration statements and proxy statements, on the
date of effectiveness and the date of mailing, respectively) complied as to form
in all material respects with applicable accounting requirements and with the
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published rules and regulations of the Commission with respect thereto, were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the period involved (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q
of the Commission), and fairly present (subject in the case of unaudited
statements to normal, recurring audit adjustments) the consolidated financial
position of the Company as at the dates thereof and the consolidated results of
its operations and cash flows for the periods then ended.
(e) Capitalization. The Company's authorized issued and outstanding
capital stock and its other securities are fully and accurately described in the
Company's most recent SEC reports. Except for shares subject to the Company's
employee stock option and similar employee benefits plans, no person has any
preemptive or other similar rights and with respect to any such equity interests
or other securities and there are no offers, options, warrants, rights,
agreements or commitments of any kind (contingent or otherwise) relating to the
issuance, conversion, registration, voting, sale or transfer of any equity
interests or other securities of the Company (including, without limitation, the
NutraMax Shares) or obligating the Company or any other person to purchase or
redeem any such equity interests or other securities.
(f) No Brokers. Neither the Company nor any director, officer or
employee of the Company has incurred or will incur on behalf of the Company, any
brokerage, finder's or similar fee in connection with the transactions
contemplated by this Agreement.
3. CONDITIONS PRECEDENT
3.1 Mutual Condition. The obligation of the Company and the Seller to
enter and consummate the transactions contemplated hereby is subject to the
satisfaction of the following condition: the transactions contemplated hereby
shall not violate any order or decree of any court or governmental body of
competent jurisdiction and no suit, action, proceeding or investigation shall
have been brought or threatened by any person (other than Seller or the Company)
which questions the validity or legality of this Agreement or any of the
transactions contemplated hereby.
3.2 Certain Conditions Precedent to the Company's Obligations. The
obligation of the Company to enter into and complete the transactions
contemplated hereby is subject to the fulfillment (or waiver in writing by the
Company in its sole discretion) on or prior to the Closing Date of the
conditions that:
(a) the representations and warranties of the Seller contained in this
Agreement shall be true and correct in all material respects on and as of the
date hereof and on the Closing Date with the same force and effect as though
made on and as of the Closing Date;
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(b) the Seller shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement to be
performed or complied with by the Seller on or prior to the Closing Date;
(c) the Seller shall have delivered to the Company a certificate, dated
the Closing Date and signed by a duly authorized officer of the Seller, to the
foregoing effect; and
(d) the Company shall have received financing upon terms and for such
amount necessary to fulfill its obligations hereunder.
(e) Seller shall have delivered to the Company an opinion of counsel to
the Seller as to the matters set forth in Section 2.1(a), (b), (c) and (d)
hereof (provided that with respect to Sections 2.1(c) and (d) the opinion need
only relate to such factual matters as to which such counsel has knowledge.
(f) the Company shall have received a favorable vote of its shareholders
other than Seller with respect to the consummation of the transactions
contemplated by this Agreement.
(g) the Board of Directors of the Company shall have received a fairness
opinion from an internationally recognized investment banking firm to the effect
that the transactions contemplated by this Agreement are fair from a financial
point of view to the Shareholders of the Company (other than the Seller).
(h) the Board of Directors of the Seller shall have received a fairness
opinion from an internationally recognized investment banking firm to the effect
that the transactions contemplated by this Agreement are fair from a financial
point of view to the shareholders of the Seller.
3.3 Certain Conditions Precedent to Seller's Obligations. The obligation
of the Seller to enter into and complete the transactions contemplated hereby is
subject to the fulfillment (or waiver in writing by the Seller in its sole
discretion) on or prior to the Closing Date of the conditions that:
(a) the representations and warranties of the Company contained in this
Agreement shall be true and correct in all material respects on and as of the
date hereof and on the Closing Date with the same force and effect as though
made on and as of the Closing Date;
(b) the Company shall have performed and complied in all material
respects with all covenants and agreements required by this Agreement to be
performed or complete with the by the Company on or prior to the Closing Date;
(c) the Company shall have delivered to Seller a certificate, dated the
Closing Date and signed by a duly authorized officer of the Company, to the
foregoing effect;
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(d) the Company shall have obtained at its own expense and provided to
Seller the Letter of Credit securing its obligations under the Note; and
(e) the Company shall have delivered to Seller an opinion of counsel to
the Company as to the matters set forth in Section 2.2(a), (b), (c) hereof
(provided that with respect to Section 2.2(c) the opinion need only relate to
agreements as to which such counsel has knowledge).
(f) the Company shall have received a favorable vote of its shareholders
other than Seller with respect to the consummation of the transactions
contemplated by this Agreement.
(g) the Board of Directors of the Company shall have received a fairness
opinion from an internationally recognized investment banking firm to the effect
that the transactions contemplated by this Agreement are fair from a financial
point of view to the Shareholders of the Company (other than the Seller).
(h) the Board of Directors of the Seller shall have received a fairness
opinion from an internationally recognized investment banking firm to the effect
that the transactions contemplated by this Agreement are fair from a financial
point of view to the shareholders of the Seller.
4. CLOSING DELIVERIES
4.1 Seller's Deliveries. At the Closing, Seller shall deliver, or shall
cause to be delivered to the Company the following:
(a) certificates for all of the NutraMax Shares other than the Escrowed
Shares, duly endorsed or accompanied by stock powers duly executed in blank;
(b) an irrevocable proxy authorizing the Board of Directors of the
Company to vote all of the Escrowed Shares, in form and substance reasonably
satisfactory to the parties; provided that such proxy shall terminate upon an
event of default under the Note;
(c) copies of the resolutions of the Board of Directors of each Seller
authorizing the execution, delivery and performance of this Agreement, certified
as of the Closing by the Secretary or an Assistant Secretary of Seller; and
(d) such other documents and instruments as the Company may reasonably
request to effectuate or evidence the transactions contemplated by this
Agreement;
4.2 The Company's Deliveries. At the Closing, the Company shall deliver,
or shall cause to be delivered to Seller the items described below:
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(a) the Closing Payment;
(b) the Note;
(c) the Letter of Credit; and
(d) a copy of the resolutions of the Board of Directors of the
Company and each committee thereof authorizing the execution, delivery and
performance by the Company of this Agreement and the other agreements and
instruments referred to herein, certified as of the Closing by the Secretary or
an Assistant Secretary of the Company.
5. INDEMNIFICATION
5.1 Indemnification by Seller. Seller shall indemnify and hold the
Company and its officers, directors and shareholders harmless against and in
respect of any and all losses, costs, expenses, claims, damages, obligations and
liabilities, including interest, costs of investigation, penalties and
reasonable attorneys' fees and disbursements ("Damages") which Buyer or any such
person may suffer, incur or become subject to arising out of, based upon or
otherwise in respect of any inaccuracy in or breach of any representation or
warranty of Seller made in or pursuant to this Agreement or any agreement or
document required to be delivered pursuant to this Agreement or any breach or
nonfulfillment of any covenant or obligation of Seller contained in this
Agreement or such other agreements and documents.
5.2 Indemnification by the Company. The Company shall indemnify and hold
Seller and its officers, directors and shareholders harmless against and in
respect of any and all Damages which Seller or any such person may suffer, incur
or become subject to arising out of, based upon or otherwise in respect of any
inaccuracy in or breach of any representation or warranty of the Company made in
or pursuant to this Agreement or any agreement or document required to be
delivered pursuant to this Agreement or any breach or nonfulfillment of any
covenant or obligation of the Company contained in this Agreement or such other
agreements and documents.
5.3 Third Party Claims.
(a) Each party shall promptly notify the other of the assertion by any
third party of any claim with respect to which the indemnification set forth in
this Section relates. The indemnifying party shall have the right, upon notice
to the indemnified party within ten (10 business days after the receipt of any
such notice, to undertake the defense of or, with the consent of the indemnified
party (which consent shall not unreasonably be withheld), to settle or
compromise such claim. The failure of the indemnifying party to give such notice
and to undertake the defense of or to settle or compromise such a claim shall
constitute a waiver of the indemnifying party's rights under this Section 5.3(a)
and in the absence of gross negligence or willful misconduct on the part of the
indemnified party shall preclude the indemnifying party from disputing the
manner in which the indemnified party may conduct the defense of such claim or
the reasonableness of any amount paid by the indemnified party in satisfaction
of such claim.
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(b) The election by the indemnifying party, pursuant to Section 5.3(a),
to undertake the defense of a third party claim shall not preclude the party
against which such claim has been made also from participating or continuing to
participate in such defense, so long as such party bears its own legal fees and
expenses for so doing.
6. MISCELLANEOUS
6.1 Best Efforts. Each of the parties shall use its best reasonable
efforts to take all action and do all things necessary, proper or advisable to
consummate the transaction contemplated by this Agreement.
6.2 Parties in Interest; Assignment. Neither of the parties to this
Agreement may assign any of its rights or obligations under this Agreement
without the prior written consent of the other party hereto, provided that
Seller may pledge, assign or otherwise transfer part or all of its interest in
and to the Note without such consent. Subject to the foregoing, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the parties
hereto and their respective successors and permitted assigns.
6.3 Entire Agreement; Amendments; Waiver. This Agreement contains the
entire understanding between the Seller and the Company with respect to its
specific subject matter. This Agreement may be amended only by written
instrument duly executed by the parties hereto. No party may waive any term,
provision, covenant or restriction of this Agreement except by duly signed
writing referring to the specific provision to be waived.
6.4 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be delivered personally
or transmitted by telex, fax or telegram, to the respective parties as follows:
(a) If to the Seller, to it at:
MEDIQ Incorporated
Xxx XXXXX Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, President
Telecopier: (000) 000-0000
with a copy to:
Drinker, Xxxxxx & Xxxxx
Philadelphia National Bank Building
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: F. Xxxxxxx Xxxxxxx, III, Esquire
Telecopier: (000) 000-0000
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(b) If to the Company, to it at:
NutraMax Products, Inc.
0 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, President
Telecopier: 000-000-0000
with a copy to:
Xxxxxxx, Procter & Xxxx
Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Floor, P.C.
Telecopier: 000-000-0000
or to such other address as any party may have furnished to the others
in writing.
6.5 Governing Law. This Agreement will be governed by and construed in
accordance with the internal laws of the State of Delaware.
6.6 Survival. All representations, warranties, covenants and agreements
of the parties hereto shall survive indefinitely the Closing.
6.7 Termination.
(a) This Agreement may be terminated and the transactions contemplated
herein may be abandoned at any time prior to the Closing:
(i) by Company or Seller, if the Closing has not occurred by
December 31, 1996;
(ii) by mutual consent of Company and Seller;
(iii) by Company, if any representation or warranty of Seller made
in or pursuant to this Agreement is untrue or incorrect in any material
respect, Seller breaches its covenants or other terms of this Agreement
or any of the conditions precedent to Closing contained in Section 3.2
are not satisfied on or before December 31, 1996; or any event or
circumstance occurs such that any of such conditions will not be
satisfied as of such date; or
(iv) by Seller, if any representation or warranty of Company made in
or pursuant to this Agreement is untrue or incorrect in any material
respect, Company breaches the covenants or other terms of this Agreement
or any of the conditions precedent to Closing contained in Section 3.3
are not satisfied on or before December 31, 1996 or any
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event or circumstance occurs such that any of such conditions will not
be satisfied as of such date.
(b) A party terminating this Agreement pursuant to Section 6.7 shall
give written notice thereof to each other party hereto, whereupon this Agreement
shall terminate and the transactions contemplated hereby shall be abandoned
without further action by any party; provided, however, that if such termination
is pursuant to Section 6.7(a)(i) by reason of a breach by a party hereto, such
termination is by Company pursuant to Section 6.7(a)(iii) or if such termination
is by Seller pursuant to Section 6.7(a)(iv), nothing herein shall affect the
non- breaching party's right to damages on account of such other party's breach.
6.8 Specific Performance. The Seller acknowledges that the NutraMax
Shares are unique and that the Company will not have an adequate remedy at law
if the Seller fails to perform any of its obligations hereunder, and the Seller
agrees that the Company shall have the right, in addition to any other right it
has, to specific performance or equitable relief by way of injunction if the
Seller fails to perform any of its obligations hereunder.
6.9 Counterparts; Headings. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same document. The article and
section headings contained herein are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
6.10 Expenses. Each of the parties hereto shall pay the fees and
expenses it incurs in connection with this Agreement, other than as a result of
the breach hereof by the other party hereto.
6.11 Certain Definitions. For purposes of the Agreement:
(a) "beneficially owned" shall have the meaning set forth in Rule 13d-3
promulgated under the Exchange Act, as such Rule is in effect on the date
hereof.
(b) "business day" means any day which is neither a Saturday or Sunday
nor a legal holiday on which banks are authorized or required to be closed in
New York, New York or Philadelphia, Pennsylvania.
6.12 Stock Splits, etc. The number of NutraMax Shares and the purchase
price therefor specified in this Agreement shall be appropriately adjusted for
any stock split, reverse stock split, stock dividend or any similar event
occurring after the date hereof and prior to the consummation of the purchase
and sale of all such NutraMax Shares.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written.
MEDIQ INCORPORATED
By: /s/ Xxxxxxx Xxxxxxx
------------------------------
MEDIQ INVESTMENT SERVICES, INC.
By: /s/ Xxxxxxx Xxxxxxx
------------------------------
NUTRAMAX PRODUCTS, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
PROMISSORY NOTE
$20,294,118.00 _____________, 1996
FOR VALUE RECEIVED, NutraMax Products, Inc., a Delaware corporation with
its principal place of business at 0 Xxxxxxxxx Xxxxx, Xxxxxxxxxx, XX 00000
("Company"), hereby promises to pay to the order of MEDIQ Investment Services,
Inc. ("Seller"), a Delaware corporation with its principal place of business c/o
MEDIQ Incorporated ("MEDIQ"), Xxx XXXXX Xxxxx, Xxxxxxxxxx, XX 00000-0000, the
principal amount of TWENTY MILLION TWO HUNDRED NINETY-FOUR THOUSAND ONE HUNDRED
EIGHTEEN DOLLARS ($20,294,118.00) in installments as Escrowed Shares (as defined
in that certain Stock Purchase Agreement among MEDIQ, Seller and Company, dated
as of September 18, 1996 (the "Purchase Agreement")) are released from escrow
under the Indenture and the Escrow Agreement (as such terms are defined in the
Purchase Agreement) in accordance with Section 1.3 of the Purchase Agreement,
together with interest at the annual rate of 7 1/2%, payable quarterly in
arrears; provided, however, that (i) if this Note is still outstanding eighteen
(18) months after the Closing Date (as such date is defined in the Purchase
Agreement), the annual interest rate of this Note shall be reduced to 5%;
(ii) if this Note is still outstanding thirty (30) months after the
Closing Date, the annual interest rate on this Note shall be reduced to 4%;
(iii) if this Note is still outstanding forty-two (42) months after the Closing
Date, the annual interest rate on this Note shall be reduced to 3%; and (iv) if
this Note is still outstanding fifty-four (54) months after the Closing Date,
interest shall no longer accrue under this Note. Notwithstanding the foregoing,
the outstanding principal amount of this Note is subject to reduction in
accordance with the terms of the Purchase Agreement and is subject in all
respects thereto.
Payments of principal and interest shall be made in lawful money of the
United States of America by wire transfer of immediately available funds to
Seller at Xxx XXXXX Xxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000-0000 or at such other
place as Seller shall designate to Company in writing.
This Note is entitled to be benefits of, and is secured by that certain
Letter of Credit issued by ___________________________ (the "Letter of Credit").
The failure of Company to make any payment of principal or interest when
due under this Note shall consititute an "Event of Default" hereunder. Upon the
occurrence of an Event of Default, Seller may draw on the Letter of Credit to
satisfy the obligations of Company hereunder.
Payment under this Note is subject to the terms and conditions of the
Purchase Agreement, including, without limitation, the delivery of Escrowed
Shares to Company pursuant to Section 1.3 thereof.
This Note shall inure to the benefit of Seller and its successors and
assigns and shall be binding upon Company and its successors and assigns.
Subject to applicable law, this Note may be amended, modified and supplemented
only by written agreement of both Company and Seller.
Any notice, request or other communication pursuant to this Note shall
be deemed duly given if delivered pursuant to the notice provisions contained in
the Purchase Agreement.
No failure or delay on the part of Seller to insist on strict
performance of Company's obligations hereunder or to exercise any remedy shall
constitute a waiver of Seller's rights in that or any other instance. No waiver
of any of Seller's rights shall be effective unless in writing, and any waiver
of any default or any instance of non-compliance shall be limited to its express
terms and shall not extend to any other default or instance of non-compliance.
Company hereby waives presentment, notice of nonpayment or dishonor,
protest, notice of protest and all other notices in connection with the
delivery, acceptance, performance, default or enforcement of payment of this
Note, and hereby waives all notice or right of approval of any extensions,
renewals, modifications or forbearances which may be allowed.
Company shall pay all reasonable costs and expenses (including
attorneys' fees) incurred by Seller relating to the enforcement of this Note.
Any provision hereof found to be illegal, invalid or enforceable for any
reason whatsoever shall not affect the validity, legality or enforceability of
the remainder hereof.
If the effective interest rate on this Note would otherwise violate any
applicable usury law, then the interest rate shall be reduced to the maximum
permissible rate and any payment received by Seller in excess of the maximum
permissible rate shall be treated as a prepayment of the principal of this Note.
The execution, delivery and performance of this Note shall be governed
by and construed in accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, Company has caused this Note to be executed under
seal by its duly authorized representatives as of the date set forth above.
NUTRAMAX PRODUCTS, INC.
By:____________________________
Name:
Title:
ATTEST: ________________________
