MERGER AGREEMENT
THIS MERGER AGREEMENT (the "Agreement") is dated as of November 12,
2002, by and among SURG II, INC., a Minnesota corporation ("Surg"), CQ
ACQUISITION, INC., a Minnesota corporation and wholly-owned subsidiary of Surg
("Merger Sub"), and CHIRAL QUEST, LLC, a Pennsylvania limited liability company
("Chiral Quest").
W I T N E S S E T H
WHEREAS, the Boards of Directors of Surg, Merger Sub and Chiral Quest
have determined that it is in the best interests of such companies and their
respective shareholders or members to consummate the merger of Chiral Quest with
and into Merger Sub with Merger Sub as the surviving corporation (the "Merger")
in accordance with this Agreement and a Plan of Merger in the form set forth in
EXHIBIT A attached hereto (the "Plan of Merger");
WHEREAS, Surg, as the sole shareholder of Merger Sub, has approved this
Agreement, the Plan of Merger and the transactions contemplated by this
Agreement pursuant to action taken by written consent in accordance with the
requirements of the MBCA;
WHEREAS, pursuant to the Plan of Merger, among other things, the
outstanding membership interests of Chiral Quest shall be converted into the
right to receive upon the Effective Time (as hereinafter defined), the Merger
Consideration (as hereinafter defined); and
WHEREAS, the parties to this Agreement intend to adopt this Agreement
as a plan of reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations promulgated
thereunder, and intend that the Merger and the transactions contemplated by this
Agreement be undertaken pursuant to that plan.
NOW, THEREFORE, in consideration of the representations, warranties and
covenants contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the following meanings
(such meaning to be equally applicable to both the singular and plural forms of
the terms defined):
"Affiliate" has the meaning as defined in Rule 12b-2 under the Exchange
Act, as such regulation is in effect on the date hereof.
"Board of Directors" means, with respect to Surg and Merger Sub, the
duly constituted board of directors of Surg and Merger Sub, respectively, with
all the rights, powers and obligations provided by the articles of incorporation
and bylaws of Surg and Merger Sub and the MBCA, and with respect to Chiral
Quest, the duly constituted management committee / board of directors of Chiral
Quest, with all the right, powers and obligations provided by the certificate of
organization and Operating Agreement of Chiral Quest and the LLCL.
"Chiral Quest Membership Units" means the units of membership interest
of Chiral Quest described in the Operating Agreement.
"Code" has the meaning ascribed thereto in the preambles to this
Agreement.
"Effective Date" has the meaning as set forth in SECTION 2.1(C) hereof.
"Effective Time" has the meaning ascribed thereto in SECTION 2.1(C)
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
"Exchange Ratio" means the number equal to the quotient of (i) the
product of two (2) times the number of shares of Surg Common Stock outstanding
immediately prior to the Effective Time, divided by (ii) the number of Chiral
Quest Membership Units outstanding immediately prior to the Effective Time on a
fully-diluted basis, but excluding up to 1,150,000 units issuable upon the
exercise of options granted to Xxxx X. Xxxx, as described on SCHEDULE 3.3
hereof.
"Environmental Laws" means all applicable federal, state, local and
foreign laws, rules, regulations, codes, ordinances, orders, decrees,
directives, permits, licenses and judgments relating to pollution, contamination
or protection of the environment (including, without limitation, all applicable
federal, state, local and foreign laws, rules, regulations, codes, ordinances,
orders, decrees, directives, permits, licenses and judgments relating to
Hazardous Materials in effect as of the date of this Agreement).
"GAAP" means United States generally accepted accounting principles, as
in effect from time to time.
"Hazardous Materials" means any dangerous, toxic or hazardous
pollutant, contaminant, chemical, waste, material or substance as defined in or
governed by any federal, state or local law, statute, code, ordinance,
regulation, rule or other requirement relating to such substance or otherwise
relating to the environment or human health or safety, including without
limitation any waste, material, substance, pollutant or contaminant that might
cause any injury to human health or safety or to the environment or might
subject any Person to any imposition of costs or liability under any
Environmental Law.
"Knowledge" means, with respect to an individual, that such individual
is actually aware of a particular fact or other matter, with no obligation to
conduct any inquiry or other investigation to determine the accuracy of such
fact or other matter. A Person other than an individual shall be deemed to have
Knowledge of a particular fact or other matter if any officer, manager, member
of the Board of Directors or other management personnel or key employee of such
Person had Knowledge of such fact or other matter.
"LLCL" means the Pennsylvania Limited Liability Company Law of 1994, as
codified at Title 15, Chapter 89 of the Pennsylvania Code.
"Material Adverse Effect" means, with respect to an entity, any
condition, event, change or occurrence, individually or collectively, that has
had or may reasonably be expected to have a material adverse effect on the
business, operations, results of operations or financial condition of such
entity on a consolidated basis.
"MBCA" means the Minnesota Business Corporations Act, as codified at
Chapter 302A of the Minnesota Statutes.
"Members" means the holders of outstanding Chiral Quest Membership
Units.
"Merger" has the meaning ascribed thereto in the preambles of this
Agreement.
"Merger Consideration" means the shares of Surg Common Stock issuable
in connection with the Merger upon conversion and exchange of the Chiral Quest
Membership Interests, in accordance with SECTION 2.2.
"Minnesota Articles of Merger" means the articles of merger in
substantially the form attached hereto as EXHIBIT B.
"Operating Agreement" means all agreements to which all Members are a
party that govern the management and operation of Chiral Quest and the rights
and obligations of the Members, including that certain Operating Agreement dated
October 4, 2000.
"Pennsylvania Certificate of Merger" means the certificate of merger in
substantially the form attached hereto as EXHIBIT C.
"Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, governmental
authority or other entity.
"Proxy Statement" has the meaning ascribed thereto in SECTION 6.4.
"Release" means the spilling, leaking, disposing, discharging,
emitting, depositing, ejecting, leaching, escaping or any other release or
threatened release, however defined, whether intentional or unintentional, of
any Hazardous Material.
"Required Surg Proposal" has the meaning ascribed thereto in SECTION
6.4(A).
"Requisite Chiral Quest Member Vote" means the approval of this
Agreement and the adoption of the Plan of Merger in accordance with the LLCL and
the Operating Agreement.
"Requisite Surg Shareholder Vote" means the approval of the Surg
Proposals in accordance with the MBCA and the Articles of Incorporation (as
amended) of Surg.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"Subsidiary" means, with respect to any entity, each corporation,
partnership, limited liability company or other organization in which such
entity owns directly or indirectly fifty percent (50%) or more of the voting
securities of such corporation, partnership, limited liability company or other
organization and shall, unless otherwise indicated, be deemed to refer to both
direct and indirect subsidiaries of such entity.
"Surg Common Stock" means the common stock, $.01 par value per share,
of Surg.
"Surg 8-K Reports" has the meaning ascribed thereto in SECTION 4.4.
"Surg Proposals" has the meaning ascribed thereto in SECTION 6.4(A).
"Surg 10-K Reports" has the meaning ascribed thereto in SECTION 4.4.
"Surg 10-Q Reports" has the meaning ascribed thereto in SECTION 4.4.
"Surviving Company" has the meaning ascribed thereto in ARTICLE II.
"Tax or Taxes" means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, property or windfall profits taxes, environmental taxes, customs
duties, capital stock, franchise, employees' income withholding, foreign or
domestic withholding, social security, unemployment, disability, workers'
compensation, employment-related insurance, real property, personal property,
sales, use, transfer, value added, alternative or add-on minimum or other
governmental tax, fee, assessment or charge of any kind whatsoever including any
interest, penalties or additions to any Tax or additional amounts in respect of
the foregoing.
ARTICLE II
MERGER
Subject to the satisfaction or waiver of the conditions set forth in
ARTICLE VII, at the Effective Time (i) Chiral Quest will merge with and into
Merger Sub, in accordance with the Plan of Merger and (ii) Surg will change its
name to "Chiral Quest, Inc." The term "Surviving Company" as used herein shall
mean Merger Sub, after giving effect to the Merger. The Merger will be effected
pursuant to the Minnesota Articles of Merger in accordance with the provisions
of, and with the effect provided in, Sections 302A.601 through 302A.651 of the
MBCA and pursuant to the Pennsylvania Certificate of Merger in accordance with
the provisions of, and with the effect provided in, Subchapter G (Sections
8956-8959) of the LLCL.
2.1 EFFECT OF MERGER.
(a) From and after the Effective Time and until further amended in
accordance with law, (i) the Articles of Incorporation of Merger Sub as in
effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Company, and (ii) the Bylaws of Merger Sub as in
effect immediately prior to the Effective Time shall be the Bylaws of the
Surviving Company.
(b) Surg, Merger Sub and Chiral Quest, respectively, shall each use its
best efforts to take all such action as may be necessary or appropriate to
effectuate the Merger in accordance with the MBCA and the LLCL at the Effective
Time. If, at any time after the Effective Time, any further action is necessary
or desirable to carry out the purposes of this Agreement and to vest the
Surviving Company with full right, title and possession to all properties,
rights, privileges, immunities, powers and franchises of either Merger Sub or
Chiral Quest, the officers of the Surviving Company are fully authorized in the
name of Merger Sub and Chiral Quest or otherwise to take, and shall take, all
such lawful and necessary action.
(c) Subject to the provisions of ARTICLES VII AND VIII hereof, the
closing (the "Closing") of the transactions contemplated hereby shall take place
at such location, on such date (the "Closing Date") and at such time as Surg and
Chiral Quest mutually agree at the earliest practicable time after the
satisfaction or waiver of the conditions in ARTICLE VII, but in no event later
than February 28, 2003 or ten (10) business days after all such conditions have
been satisfied or waived, or on such other date as may be mutually agreed by the
parties hereto. On the Closing Date, to effect the Merger, the parties hereto
will cause the Pennsylvania Certificate of Merger and the Minnesota Articles of
Merger to be executed by the proper parties. Promptly following the Closing, but
not less than two (2) business days thereafter, the Pennsylvania Certificate of
Merger will be filed with the Pennsylvania Secretary of State in accordance with
the LLCL and the Minnesota Articles of Merger will be filed with the Minnesota
Secretary of State. The Merger shall be effective when both the Pennsylvania
Certificate of Merger has been filed with the Pennsylvania Secretary of State
and the Minnesota Articles of Merger have been filed with the Minnesota
Secretary of State or such other date as may be specified in the Pennsylvania
Certificate of Merger and the Minnesota Articles of Merger (the "Effective
Time"). As used herein, the term "Effective Date" shall mean the date on which
the Effective Time occurs.
2.2 EFFECT ON CHIRAL QUEST MEMBERSHIP UNITS.
(a) To effectuate the Merger, and subject to the terms and conditions
of this Agreement, at the Effective Time, each Chiral Quest Membership Unit
issued and outstanding immediately prior to the Effective Time shall
automatically be converted into and exchangeable for the number of shares of
Surg Common Stock equal to the Exchange Ratio, and Surg shall issue to the
holders of Chiral Quest Membership Units shares of Surg Common Stock, rounded to
the nearest whole share, based on the Exchange Ratio, in exchange for
certificates properly assigned for transfer representing such outstanding Chiral
Quest Membership Units.
(b) All options and warrants to purchase Chiral Quest Membership Units
outstanding immediately prior to the Effective Time shall convert into the right
to purchase the same number of shares of Surg Common Stock based on the Exchange
Ratio as the holder thereof would have been entitled to receive if such option
or warrant had been exercised immediately prior to the Effective Time, except
that any fractional shares of Surg Common Stock subject to any such converted
option or warrant must be rounded to the nearest whole share; and the exercise
price per share of Surg Common Stock under each such converted option or warrant
will be equal to the quotient obtained by dividing the exercise price per Chiral
Quest Membership Unit under each outstanding Chiral Quest option or warrant by
the Exchange Ratio, except that the exercise price under each converted option
or warrant must be made rounded to the nearest cent.
2.3 RIGHTS OF CHIRAL QUEST MEMBERS.
(a) On and after the Effective Date and until surrendered for exchange,
each outstanding certificate that immediately prior to the Effective Date
represented Chiral Quest Membership Units shall be deemed for all purposes, to
evidence ownership of and to represent the number of whole shares of Surg Common
Stock into which such Chiral Quest Membership Units shall have been converted
pursuant to SECTION 2.2 above. The record holder of each such outstanding
certificate representing Chiral Quest Membership Units, shall, after the
Effective Date, be entitled to vote the shares of Surg Common Stock into which
such Chiral Quest Membership Units shall have been converted on any matters on
which the holders of record of Surg Common Stock, as of any date subsequent to
the Effective Date, shall be entitled to vote. In any matters relating to such
certificates of Chiral Quest Membership Units, Surg may rely conclusively upon
the records members maintained by Chiral Quest containing the names and
addresses of the Members.
(b) On and after the Effective Date, Surg shall reserve a sufficient
number of authorized but unissued shares of Surg Common Stock for issuance of
the Merger Consideration.
2.4 PROCEDURE FOR EXCHANGE OF CHIRAL QUEST MEMBERSHIP UNITS.
(a) After the Effective Date, holders of certificates theretofore
evidencing outstanding Chiral Quest Membership Units, upon surrender of such
certificates to the registrar and transfer agent for Surg Common Stock, shall be
entitled to receive certificates representing the number of whole shares of Surg
Common Stock into which Chiral Quest Membership Units theretofore represented by
the certificates so surrendered shall have been converted as provided in SECTION
2.2(A) hereof. Surg shall not be obligated to deliver the Merger Consideration
to which any former holder of Chiral Quest Membership Units is entitled until
such holder surrenders the certificate or certificates representing such units.
Upon surrender, each certificate evidencing Chiral Quest Membership Units shall
be canceled. If there is a transfer of Chiral Quest Membership Unit ownership
that is not registered in the transfer records of Chiral Quest, a certificate
representing the proper number of shares of Surg Common Stock may be issued to a
Person other than the Person in whose name the certificate so surrendered is
registered if: (1) upon presentation to the Secretary of Surg, such certificate
shall be properly endorsed or otherwise be in proper form for transfer, and (2)
the Person requesting such payment shall pay any transfer or other taxes
required by reason of the issuance of shares of Surg Common Stock to a Person
other than the registered holder of such certificate or establish to the
reasonable satisfaction of Surg that such tax has been paid or is not
applicable.
(b) No fractional shares of Surg Common Stock shall be issued in
exchange for Chiral Quest Membership Units.
(c) All shares of Surg Common Stock issued in exchange for Chiral Quest
Membership Units in accordance with the above terms and conditions shall be
deemed to have been issued and paid in full satisfaction of all rights
pertaining to such Chiral Quest Membership Units.
(d) Any shares of Surg Common Stock issued in the Merger will not be
transferable except (1) pursuant to an effective registration statement under
the Securities Act or (2) upon receipt by Surg of a written opinion of counsel
reasonably satisfactory to Surg that is knowledgeable in securities laws matters
to the effect that the proposed transfer is exempt from the registration
requirements of the Securities Act and relevant state securities laws.
Restrictive legends must be placed on all certificates representing shares of
Surg Common Stock issued in the Merger, substantially as follows:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
THE SECURITIES LAWS OF ANY STATE, AND ARE BEING OFFERED AND
SOLD PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THESE
SECURITIES MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR SUCH OTHER LAWS."
(e) In the event any certificate for Chiral Quest Membership Units
shall have been lost, stolen or destroyed, Surg shall issue in exchange for such
lost, stolen or destroyed certificate, upon the making of an affidavit of that
fact by the holder thereof, such shares of Surg Common Stock as may be required
pursuant to this Agreement; provided, however, that Surg, in its discretion and
as a condition precedent to the issuance and payment thereof, may require the
owner of such lost, stolen or destroyed certificate to deliver a bond in such
sum as it may direct as indemnity against any claim that may be made against
Surg or any other party with respect to the certificate alleged to have been
lost, stolen or destroyed.
2.5 DIRECTORS OF THE SURVIVING COMPANY. From and after the Effective
Time, the directors of the Surviving Company shall be the persons identified on
SCHEDULE 2.5, who shall hold office for the term specified in, and subject to
the provisions contained in, the Articles of Incorporation and Bylaws of the
Surviving Company and applicable law.
2.6 DIRECTORS AND OFFICERS OF SURG. At and after the Effective Time,
the board of directors of Surg will consist of the individuals set forth on
SCHEDULE 2.6, who shall hold office for the term specified in, and subject to
the provisions contained in, the Articles of Incorporation and Bylaws of Surg
and applicable law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CHIRAL QUEST
Chiral Quest hereby represents and warrants as follows:
3.1 ORGANIZATION AND QUALIFICATION. Chiral Quest is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Pennsylvania, and has the requisite corporate power to carry on its
business as now conducted. The copies of the Certificate of Organization and
Operating Agreement of Chiral Quest (each as amended to date), which have been
made available to Surg prior to the date of this Agreement, are correct and
complete copies of such documents as in effect as of the date hereof.
3.2 AUTHORITY RELATIVE TO THIS AGREEMENT; NON-CONTRAVENTION. Except for
and subject to the Requisite Chiral Quest Member Vote (as hereafter defined),
Chiral Quest has the requisite corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder and thereunder. The
execution and delivery of this Agreement by Chiral Quest and the consummation by
Chiral Quest of the transactions contemplated hereby have been duly authorized
by the Board of Directors of Chiral Quest and, except for approval of this
Agreement and the Merger by the Requisite Chiral Quest Member Vote, no other
corporate proceedings on the part of Chiral Quest are necessary to authorize the
execution and delivery of this Agreement, the Plan of Merger, the Minnesota
Articles of Merger, the Pennsylvania Certificate of Merger and the consummation
of the transactions contemplated hereby and thereby. This Agreement has been
duly executed and delivered by Chiral Quest and, assuming it is a valid and
binding obligation of Surg, constitutes a valid and binding obligation of Chiral
Quest enforceable in accordance with its terms except as enforcement may be
limited by general principles of equity whether applied in a court of law or a
court of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally. The Plan of Merger, the Minnesota
Articles of Merger, the Pennsylvania Certificate of Merger, when executed and
delivered by Chiral Quest, will constitute the valid and binding obligation of
Chiral Quest, enforceable in accordance with its terms. Except as set forth in
SCHEDULE 3.2, Chiral Quest is not subject to, or obligated under, any provision
of (a) its Certificate of Organization or Operating Agreement, (b) any
agreement, arrangement or understanding, (c) any license, franchise or permit or
(d) subject to obtaining the approvals referred to in the next sentence, any
law, regulation, order, judgment or decree, which would conflict with, be
breached or violated, or in respect of which a right of termination or
acceleration or any security interest, charge or encumbrance on any of its
assets would be created, by the execution, delivery or performance of this
Agreement, the Minnesota Articles of Merger, the Pennsylvania Certificate of
Merger, or the consummation of the transactions contemplated hereby or thereby,
other than any such conflicts, breaches, violations, rights of termination or
acceleration or security interests, charges or encumbrances which, in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect on Chiral Quest. Except for (a) the filing of the Minnesota Articles of
Merger and the Pennsylvania Certificate of Merger with the Secretaries of State
of Minnesota and Pennsylvania, respectively, and (b) such filings,
authorizations or approvals as may be set forth in SCHEDULE 3.2, no
authorization, consent or approval of, or filing with, any public body, court or
authority is necessary on the part of Chiral Quest for the consummation by
Chiral Quest of the transactions contemplated by this Agreement, except for such
authorizations, consents, approvals and filings as to which the failure to
obtain or make the same will not, in the aggregate, have a Material Adverse
Effect on Chiral Quest or adversely affect the consummation of the transactions
contemplated hereby.
3.3 CAPITALIZATION. The authorized, issued and outstanding units of
membership interests of Chiral Quest as of the date hereof is correctly set
forth on SCHEDULE 3.3. The issued and outstanding units of membership interest
of Chiral Quest are duly authorized, validly issued, fully paid and
nonassessable and have not been issued in violation of any preemptive rights.
Other than as described on SCHEDULE 3.3, Chiral Quest has no other equity
securities or securities containing any equity or governance features or rights
authorized, issued or outstanding. Except as set forth in SCHEDULE 3.3 hereto,
there are no agreements or other rights or arrangements existing which provide
for the sale or issuance of a Chiral Quest Membership Interest and there are no
rights, subscriptions, warrants, options, conversion rights or agreements of any
kind outstanding to purchase or otherwise acquire from Chiral Quest any
membership interest or other securities of Chiral Quest of any kind. Except as
set forth on SCHEDULE 3.3, there are no agreements or other obligations
(contingent or otherwise) which may require Chiral Quest to repurchase or
otherwise acquire any of its membership interests.
3.4 FINANCIAL STATEMENTS. Prior to the execution of this Agreement,
Chiral Quest has delivered or made available to Surg complete and accurate
copies of Chiral Quest's (a) audited balance sheet as of the years ended
December 31, 2000 and 2001, and the related statements of income, cash flows and
stockholder equity for the year ended December 31, 2001, and (b) an unaudited
balance sheet, statement of income, cash flows and stockholder equity at and for
the nine (9) months ended September 30, 2002 (collectively, the "Chiral Quest
Financial Statements"). The Chiral Quest Financial Statements are based upon the
information contained in the books and records of Chiral Quest and fairly
present the financial condition of Chiral Quest as of the dates thereof and
results of operations for the periods referred to therein. The Financial
Statements have been prepared in accordance with GAAP.
3.5 LITIGATION. Except as set forth on SCHEDULE 3.5, there are no
material actions, suits, proceedings, orders or investigations pending or, to
the Knowledge of Chiral Quest, threatened against Chiral Quest, at law or in
equity, or before or by any federal, state or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign.
3.6 NO BROKERS OR FINDERS. Except as described in SECTION 6.15 or as
disclosed on SCHEDULE 3.6, there are no claims for brokerage commissions,
finders' fees, investment advisory fees or similar compensation in connection
with the transactions contemplated by this Agreement based on any arrangement,
understanding, commitment or agreement made by or on behalf of Chiral Quest.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except as reflected in the
unaudited balance sheet of Chiral Quest dated September 30, 2002 (the "Chiral
Quest Latest Balance Sheet Date"), Chiral Quest has no liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise, whether due or to
become due, whether known or unknown, and regardless of when asserted) arising
out of transactions or events heretofore entered into, or any action or
inaction, or any state of facts existing, with respect to or based upon
transactions or events heretofore occurring, except (i) liabilities which have
arisen after the Chiral Quest Latest Balance Sheet Date in the ordinary course
of business (none of which is a material uninsured liability for breach of
contract, breach of warranty, tort, infringement, claim or lawsuit), or (ii)
arising out of the transactions contemplated hereby or as otherwise set forth in
SCHEDULE 3.7 attached hereto.
3.8 NO MATERIAL ADVERSE CHANGE. Since the Chiral Quest Latest Balance
Sheet Date, there has been no material adverse change in the assets, financial
condition, operating results, customer, employee or supplier relations, or
business condition of Chiral Quest.
3.9 LEASED PREMISES. Chiral Quest owns no real property. The real
property demised to Chiral Quest by the leases (the "Chiral Quest Leases")
described in SCHEDULE 3.9 hereto constitutes all of the real property used or
occupied by Chiral Quest (the "Chiral Quest Real Property"). The Chiral Quest
Leases are in full force and effect, and Chiral Quest holds a valid and existing
leasehold interest under each of the Leases for the term set forth in SCHEDULE
3.9 hereto. Chiral Quest is not in default, and no circumstances exist which, if
unremedied, would, either with or without notice or the passage of time or both,
result in such default under any of the Leases; nor, to the best Knowledge of
Chiral Quest, is any other party to any of the Chiral Quest Leases in default.
3.10 TAX MATTERS.
(a) To Chiral Quest's Knowledge, Chiral Quest has: (i) timely
filed (or has had timely filed on its behalf) all returns, declarations,
reports, estimates, information returns, and statements ("Chiral Quest Returns")
required to be filed or sent by it in respect of any Taxes or required to be
filed or sent by it by any taxing authority having jurisdiction; (ii) timely and
properly paid (or has had paid on its behalf) all Taxes shown to be due and
payable on such Chiral Quest Returns; (iii) established on the Chiral Quest
Latest Balance Sheet, in accordance with GAAP, reserves that are adequate for
the payment of any Taxes not yet due and payable; (iv) complied with all
applicable laws, rules, and regulations relating to the withholding of Taxes and
the payment thereof (including, without limitation, withholding of Taxes under
Sections 1441 and 1442 of the Code, or similar provisions under any foreign
laws), and timely and properly withheld from individual employee wages and paid
over to the proper governmental authorities all amounts required to be so
withheld and paid over under all applicable laws.
(b) To Chiral Quest's Knowledge, there are no liens for Taxes
upon any assets of Chiral Quest, except liens for Taxes not yet due.
(c) Except as set forth on SCHEDULE 3.10, Chiral Quest has not
requested any extension of time within which to file any Chiral Quest Return,
which return has not since been filed.
3.11 CONTRACTS AND COMMITMENTS.
(a) SCHEDULE 3.11 hereto lists the following agreements, whether oral
or written, to which Chiral Quest is a party, which are currently in effect, and
which relate to the operation of Chiral Quest's business: (i) collective
bargaining agreement or contract with any labor union; (ii) bonus, pension,
profit sharing, retirement or other form of deferred compensation plan; (iii)
hospitalization insurance or other welfare benefit plan or practice, whether
formal or informal; (iv) stock purchase or stock option plan; (v) contract for
the employment of any officer, individual employee or other Person on a
full-time or consulting basis or relating to severance pay for any such Person;
(vi) confidentiality agreement; (vii) contract, agreement or understanding
relating to the voting of Chiral Quest Membership Units or the election of
managers of Chiral Quest; (viii) agreement or indenture relating to the
borrowing of money or to mortgaging, pledging or otherwise placing a lien on any
of the assets of Chiral Quest; (ix) guaranty of any obligation for borrowed
money or otherwise; (x) lease or agreement under which Chiral Quest is lessee
of, or holds or operates any property, real or personal, owned by any other
party, for which the annual rental exceeds $10,000; (xi) lease or agreement
under which Chiral Quest is lessor of, or permits any third party to hold or
operate, any property, real or personal, for which the annual rental exceeds
$10,000; (xii) contract which prohibits Chiral Quest from freely engaging in
business anywhere in the world; (xiii) license agreement or agreement providing
for the payment or receipt of royalties or other compensation by Chiral Quest in
connection with the
intellectual property rights listed in SCHEDULE 3.12 hereto; (xiv) contract or
commitment for capital expenditures in excess of $10,000; (xv) agreement for the
sale of any capital asset; (xvi) contract with any Chiral Quest Affiliate
thereof which in any way relates to Chiral Quest (other than for employment on
customary terms); or (xvii) other agreement which is either material to Chiral
Quest's business or was not entered into in the ordinary course of business.
(b) To Chiral Quest's Knowledge, Chiral Quest has performed all
material obligations required to be performed by it in connection with the
contracts or commitments required to be disclosed in SCHEDULE 3.11 hereto and
are not in receipt of any claim of default under any contract or commitment
required to be disclosed under such caption; Chiral Quest has no present
expectation or intention of not fully performing any material obligation
pursuant to any contract or commitment required to be disclosed under such
caption; and Chiral Quest has no Knowledge of any material breach or anticipated
breach by any other party to any contract or commitment required to be disclosed
under such caption.
3.12 INTELLECTUAL PROPERTY RIGHTS. SCHEDULE 3.12 hereto describes all
rights in patents, patent applications, trademarks, service marks, trade names,
corporate names, copyrights, mask works, trade secrets, know-how or other
intellectual property rights owned by, licensed to or otherwise controlled by
Chiral Quest or used in, developed for use in or necessary to the conduct of
Chiral Quest's business as now conducted or planned to be conducted. SCHEDULE
3.12 describes all intellectual property rights which have been licensed to
third parties and those intellectual property rights which are licensed from
third parties. Except as set forth on SCHEDULE 3.12: (i) Chiral Quest has not
received notice of any infringement or misappropriation by, or conflict from,
any third party with respect to the intellectual property rights which are
listed; (ii) no claim by any third party contesting the validity of any
intellectual property rights listed in SCHEDULE 3.12 hereto has been made, is
currently outstanding or, to the best Knowledge of Chiral Quest, is threatened;
(iii) Chiral Quest has not received any notice of any infringement,
misappropriation or violation by Chiral Quest of any intellectual property
rights of any third parties and Chiral Quest has not infringed, misappropriated
or otherwise violated any such intellectual property rights.
3.13 EMPLOYEES.
(a) To the Knowledge of Chiral Quest, no executive or key employee or
consultant of Chiral Quest has any plans to terminate his or her employment or
engagement with Chiral Quest; (b) to the Knowledge of Chiral Quest, Chiral Quest
has complied with all laws relating to the employment of labor, including
provisions thereof relating to wages, hours, equal opportunity, collective
bargaining and the payment of social security and other taxes; (c) Chiral Quest
has no material labor relations problem pending and its labor relations are
satisfactory; (d) there are no workers' compensation claims pending against
Chiral Quest nor is Chiral Quest aware of any facts that would give rise to such
a claim; (e) to the Knowledge of Chiral Quest, no key employee or consultant of
Chiral Quest is subject to any secrecy or noncompetition agreement or any other
agreement or restriction of any kind that would impede in any way the ability of
such employee or consultant to carry out fully all activities of such employee
or consultant in furtherance of the business of Chiral Quest; and (f) to the
Knowledge of Chiral Quest, no consultant, employee or former consultant or
employee of Chiral Quest has any claim with respect to any intellectual property
rights of Chiral Quest set forth in SCHEDULE 3.12 hereto.
3.14 EMPLOYEE BENEFIT PLANS.
(a) Except as set forth in SCHEDULE 3.14 hereto, with respect to all
employees and former employees of Chiral Quest and all dependents and
beneficiaries of such employees and former employees, (i) Chiral Quest does not
maintain or contribute to any nonqualified deferred compensation or retirement
plans, contracts or arrangements; (ii) Chiral Quest does not maintain or
contribute to any qualified defined contribution plans (as defined in Section
3(34) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 414(i) of the Code; (iii) Chiral Quest does not maintain
or contribute to any qualified defined benefit plans (as defined in Section
3(35) of ERISA or Section 414(j) of the Code); and (iv) Chiral Quest does not
maintain or contribute to any employee welfare benefit plans (as defined in
Section 3(1) of ERISA).
(b) To the extent required (either as a matter of law or to obtain the
intended tax treatment and tax benefits), all employee benefit plans (as defined
in Section 3(3) of ERISA) (collectively, the "Plans") which Chiral Quest does
maintain or to which it does contribute comply in all material respects with the
requirements of ERISA and the Code. With respect to such Plans, (i) all required
contributions which are due have been made and a proper accrual has been made
for all contributions due in the current fiscal year; (ii) there are no actions,
suits or claims pending, other than routine uncontested claims for benefits; and
(iii) there have been no prohibited transactions (as defined in Section 406 of
ERISA or Section 4975 of the Code).
(c) Chiral Quest does not contribute (and has not ever contributed) to
any multi-employer plan, as defined in Section 3(37) of ERISA. Chiral Quest has
no actual or potential liabilities under Section 4201 of ERISA for any complete
or partial withdrawal from a multi-employer plan. Chiral Quest has no actual or
potential liability for death or medical benefits after separation from
employment, other than (i) death benefits under the employee benefit plans or
programs (whether or not subject to ERISA) set forth in SCHEDULE 3.14 hereto and
(ii) health care continuation benefits described in Section 4980B of the Code.
(d) Neither Chiral Quest nor any of its directors, officers, employees
or other "fiduciaries", as such term is defined in Section 3(21) of ERISA, has
committed any breach of fiduciary responsibility imposed by ERISA or any other
applicable law with respect to the Plans which would subject Chiral Quest, Surg,
the Surviving Company, or any of their respective directors, officers or
employees to any liability under ERISA or any applicable law.
(e) Chiral Quest has not incurred any liability for any tax or civil
penalty or any disqualification of any employee benefit plan (as defined in
Section 3(3) of ERISA) imposed by Sections 4980B and 4975 of the Code and Part 6
of Title I and Section 502(i) of ERISA.
3.15 INSURANCE. SCHEDULE 3.15 hereto, lists and briefly describes each
insurance policy maintained by Chiral Quest with respect to Chiral Quest's
properties, assets and operations and sets forth the date of expiration of each
such insurance policy. All of such insurance policies are in full force and
effect and are issued by insurers of recognized responsibility. To the Knowledge
of Chiral Quest, Chiral Quest is not in default with respect to their respective
obligations under any of such insurance policies.
3.16 AFFILIATE TRANSACTIONS. Except as set forth in SCHEDULE 3.16
hereto, and other than pursuant to this Agreement, no officer, director or
employee of Chiral Quest, or any Person who beneficially owns 5 percent or more
of the outstanding Chiral Quest Membership Units, or any
member of the immediate family of any such officer, director, employee or
5-percent owner, or any entity in which any of such persons owns any beneficial
interest (other than any publicly-held corporation whose stock is traded on a
national securities exchange or in the over-the-counter market and less than
five percent of the stock of which is beneficially owned by any of such persons)
(collectively "Chiral Quest Insiders"), has any agreement with Chiral Quest
(other than normal employment arrangements) or any interest in any property,
real, personal or mixed, tangible or intangible, used in or pertaining to the
business of Chiral Quest (other than ownership of capital stock of Chiral
Quest). None of the Chiral Quest Insiders has any direct or indirect interest in
any competitor, supplier or customer of Chiral Quest or in any Person, firm or
entity from whom or to whom Chiral Quest leases any property, or in any other
Person, firm or entity with whom Chiral Quest transacts business of any nature.
For purposes of this SECTION 3.16, the members of the immediate family of an
officer, director or employee shall consist of the spouse, parents, children and
siblings of such officer, director or employee.
3.17 COMPLIANCE WITH LAWS; PERMITS.
(a) To the Knowledge of Chiral Quest, Chiral Quest, and its officers,
directors, agents and employees have complied in all material respects with all
applicable laws, regulations and other requirements, including, but not limited
to, federal, state, local and foreign laws, ordinances, rules, regulations and
other requirements pertaining to equal employment opportunity, employee
retirement, affirmative action and other hiring practices, occupational safety
and health, workers' compensation, unemployment and building and zoning codes,
which materially affect the business of Chiral Quest and to which Chiral Quest
may be subject, and no claims have been filed against Chiral Quest alleging a
violation of any such laws, regulations or other requirements. Chiral Quest is
not relying on any exemption from or deferral of any such applicable law,
regulation or other requirement that would not be available to Surg after it
acquires Chiral Quest's properties, assets and business.
(b) Chiral Quest has, in full force and effect, all licenses, permits
and certificates, from federal, state, local and foreign authorities (including,
without limitation, federal and state agencies regulating occupational health
and safety) necessary to conduct its business and operate its properties (other
than Environmental Permits, as such term is defined in SECTION 3.18 hereof)
(collectively, the "Chiral Quest Permits"). To the Knowledge of Chiral Quest,
Chiral Quest has conducted its business in compliance with all material terms
and conditions of the Permits.
(c) In particular, but without limiting the generality of the
foregoing, Chiral Quest has not violated and has no liability, and has not
received a notice or charge asserting any violation of or liability under, the
federal Occupational Safety and Health Act of 1970 or any other federal or state
acts (including rules and regulations thereunder) regulating or otherwise
affecting employee health and safety.
3.18 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of Chiral Quest, Chiral Quest and the Chiral Quest
Real Property are in material compliance with all applicable Environmental Laws.
(b) Chiral Quest has obtained, and maintained in full force and effect,
all environmental permits, licenses, certificates of compliance, approvals and
other authorizations necessary to conduct its business (collectively, the
"Environmental Permits"). Chiral Quest has conducted its business in compliance
with all terms and conditions of the Environmental Permits. To its Knowledge,
Chiral
Quest has filed all reports and notifications required to be filed under and
pursuant to all applicable Environmental Laws.
(c) Except as set forth in SCHEDULE 3.18 hereto, Chiral Quest has not
received notice alleging in any manner that Chiral Quest is, or might be
potentially responsible for any Release of Hazardous Materials, or any costs
arising under or violation of Environmental Laws.
(d) No expenditure will be required in order for Surg or the Surviving
Company to comply with any Environmental Laws in effect at the time of the
Closing in connection with the operation or continued operation of the business
in order to operate or continue operation of the business of Chiral Quest or the
Real Property in a manner consistent with the current operation thereof by
Chiral Quest.
(e) Chiral Quest is not and has not been listed on the United States
Environmental Protection Agency National Priorities List of Hazardous Waste
Sites, or any other list, schedule, law, inventory or record of hazardous or
solid waste sites maintained by any federal, state or local agency.
(f) No lien has been attached or filed against Chiral Quest or the
Chiral Quest Real Property in favor of any governmental or private entity for
(i) any liability or imposition of costs under or violation of any applicable
Environmental Law; or (ii) any Release of Hazardous Materials.
3.19 ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth on SCHEDULE
3.19, since the date of the Chiral Quest Latest Balance Sheet, Chiral Quest has
not:
(a) borrowed any amount or incurred or become subject to any liability
in excess of $10,000, except (i) current liabilities incurred in the ordinary
course of business, (ii) liabilities under contracts entered into in the
ordinary course of business, and (iii) ongoing patent maintenance and
prosecution fees and expenses;
(b) mortgaged, pledged, or subjected to any lien, charge or any other
encumbrance, any of its assets with a fair market value in excess of $10,000,
except (i) liens for current property taxes not yet due and payable, (ii) liens
imposed by law and incurred in the ordinary course of business for obligations
not yet due to carriers, warehousemen, laborers, materialmen and the like, (iii)
liens in respect of pledges or deposits under workers' compensation laws, (iv)
liens set forth in SCHEDULE 3.19 attached hereto, or (v) liens voluntarily
created in the ordinary course of business, all of which liens aggregate less
than $10,000;
(c) declared or paid any dividends or other distributions with respect
to any Chiral Quest Membership Interest or redeemed or purchased, directly or
indirectly, any Chiral Quest Membership Interest or any options relating
thereto;
(d) issued, sold or transferred any of its membership interests,
securities convertible into or exchangeable for its equity securities or
warrants, options or other rights to acquire its equity securities, or any bonds
or debt securities, except as otherwise described in SCHEDULE 3.19 hereto; or
(e) made any change in accounting principles or practices from those
utilized in the preparation of the Chiral Quest Financial Statements.
3.20 DISCLOSURE. The representations and warranties of Chiral Quest
contained in this Agreement are true and correct in all material respects, and
such representations and warranties do not omit any material fact necessary to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading. There is no fact known to Chiral Quest which has
not been disclosed to Surg pursuant to this Agreement, the Schedules hereto, all
taken together as a whole, which has had or could reasonably be expected to have
a Material Adverse Effect on Chiral Quest or materially adversely affect the
ability of Chiral Quest to consummate in a timely manner the transactions
contemplated hereby.
3.21 REORGANIZATION. Neither Chiral Quest nor, to Chiral Quest's
Knowledge, any of its Affiliates, has through the date of this Agreement taken
or agreed to take any action that would prevent the Merger from qualifying as a
reorganization under Section 368(a) of the Code.
3.22 VOTE REQUIRED. The affirmative vote of a majority of the
outstanding Chiral Quest Membership Units entitled to vote is the only vote of
the holders of any class or series of membership interest in Chiral Quest
necessary to approve the Merger.
3.23 MEMBERS. SCHEDULE 3.23 sets forth the names, addresses and tax
payer identification numbers of each Member, together with the number of Chiral
Quest Membership Units held by each Member. Except as set forth on SCHEDULE
3.23, each Member has identical financial and governance rights under the
Operating Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SURG
Surg and Merger Sub hereby represent and warrant to Chiral Quest as
follows:
4.1 ORGANIZATION AND QUALIFICATION. Surg and Merger Sub are each
corporations duly organized, validly existing and in good standing under the
laws of the State of Minnesota, and has the requisite corporate power to carry
on its business as now conducted. The copies of the Articles of Incorporation
and Bylaws of Surg and Merger Sub (each as amended to date), which have been
made available to Chiral Quest on or prior to the date of this Agreement, are
correct and complete copies of such documents as in effect as of the date of
this Agreement.
4.2 AUTHORITY RELATIVE TO THIS AGREEMENT; NON-CONTRAVENTION. Except for
and subject to the Requisite Surg Shareholder Vote, Surg and Merger Sub have the
requisite corporate power and authority to enter into this Agreement and to
carry out their respective obligations hereunder. The execution and delivery of
this Agreement by Surg and Merger Sub, and the consummation by Surg and Merger
Sub of the transactions contemplated hereby have been duly authorized by the
Boards of Directors of each of Surg and Merger Sub. Except for approval of the
Surg Proposals, no other corporate proceedings on the part of Surg are necessary
to authorize the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby and thereby. This Agreement has been
duly executed and delivered by Surg and Merger Sub and, assuming it is a valid
and binding obligation of Chiral Quest, constitutes a valid and binding
obligation of Surg and Merger Sub enforceable in accordance with its terms,
except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally. The Minnesota
Articles of Merger and the Pennsylvania Certificate of Merger, when executed and
delivered by Merger Sub,
will constitute the valid and binding obligation of Merger Sub enforceable in
accordance with their terms. Except as set forth in SCHEDULE 4.2, neither Surg
nor Merger Sub is subject to, or obligated under, any provision of (a) its
respective Articles or Bylaws, (b) any agreement, arrangement or understanding,
(c) any license, franchise or permit, nor (d) subject to obtaining the approvals
referred to in the next sentence, any law, regulation, order, judgment or
decree, which would conflict with, be breached or violated, or in respect of
which a right of termination or acceleration or any security interest, charge or
encumbrance on any of its assets would be created, by the execution, delivery or
performance of this Agreement and the Minnesota Articles of Merger, the
Pennsylvania Certificate of Merger, or the consummation of the transactions
contemplated hereby or thereby, other than any such conflicts, breaches,
violations, rights of termination or acceleration or security interests, charges
or encumbrances which, in the aggregate, could not reasonably be expected to
have a Material Adverse Effect on Surg. Except for (a) approvals of the SEC in
connection with the Proxy Statement, (b) the filing of the Articles of Merger
with the Minnesota Secretary of State and the Pennsylvania Certificate of Merger
with the Pennsylvania Secretary of State, and (c) such filings, authorizations
or approvals as may be set forth in SCHEDULE 4.2, no authorization, consent or
approval of, or filing with, any public body, court or authority is necessary on
the part of Surg for the consummation by Surg of the transactions contemplated
by this Agreement, except for such authorizations, consents, approvals and
filings as to which the failure to obtain or make the same will not, in the
aggregate, have a Material Adverse Effect on Surg.
4.3 CAPITALIZATION.
(a) The authorized, issued and outstanding shares of capital
stock of Surg as of the date hereof is correctly set forth on SCHEDULE 4.3(A).
The issued and outstanding shares of capital stock of each of Surg are duly
authorized, validly issued, fully paid and nonassessable and have not been
issued in violation of any preemptive rights. Except as disclosed on SCHEDULE
4.3(A), there are no options, warrants, conversion privileges or other rights,
agreements, arrangements or commitments obligating Surg to issue, sell, purchase
or redeem any shares of its capital stock or securities or obligations of any
kind convertible into or exchangeable for any shares of its capital stock.
SCHEDULE 4.3(A) contains true and correct copies of all such agreements,
arrangements (including all stock plans, but excluding individual stock option
agreements and warrants) or commitments. All of the outstanding shares of Surg
Common Stock are approved for listing and trading on the Over-the-Counter
Bulletin Board.
(b) The authorized capital of Merger Sub consists of 1,000
shares of common stock, par value $.01 per share, all of which are issued and
outstanding and held of record by Surg. The issued and outstanding shares of
capital stock of Merger Sub are duly authorized, validly issued, fully paid and
nonassessable and have not been issued in violation of any preemptive rights.
There are no options, warrants, conversion privileges or other rights,
agreements, arrangements or commitments obligating Merger Sub to issue, sell,
purchase or redeem any shares of its capital stock or securities or obligations
of any kind convertible into or exchangeable for any shares of its capital
stock.
4.4 EXCHANGE ACT REPORTS. Prior to the date hereof, Surg has delivered
or made available to Chiral Quest complete and accurate copies of (a) Surg's
Annual Reports on Form 10-KSB (as amended) for the years ended December 31,
1999, 2000 and 2001 (the "Surg 10-K Reports") as filed with the SEC, (b) all
Surg proxy statements and annual reports to shareholders used in connection with
meetings of Surg shareholders held since January 1, 2000 other than the Proxy
Statement described in Section 6.4 below (the "Surg Proxy Statements"); (c)
Surg's Quarterly Report on Form 10-Q (as amended) for the quarters ended March
31, 2002, June 30, 2002 and September 30, 2002 (the "Surg
10-QSB Reports") as filed with the SEC; and (d) all current reports on Form 8-K
filed with the SEC after December 31, 2001 (the "Surg 8-K Reports"). To the
Knowledge of Surg, as of their respective dates or as subsequently amended prior
to the date hereof, such documents (i) did not contain 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, in light of the circumstances under
which they were made, not misleading and (ii) complied as to form in all
material respects with the applicable rules and regulations of the SEC. To the
Knowledge of Surg and except for its Form 10-Q for the quarter ended March 31,
2002, since January 1, 2000, Surg has filed in a timely manner all reports that
it was required to file with the SEC pursuant to Section 13(a), 14(a), 14(c) and
15(d) of the Exchange Act. To the Knowledge of Surg, the financial statements
(including footnotes thereto) contained in the Surg 10-K Reports, the Surg 10-Q
Reports and the Surg Proxy Statements were prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except as otherwise
noted therein), are based upon the information contained in the books and
records of Surg and fairly present the financial condition of Surg as of the
dates thereof and results of operations for the periods referred to therein.
4.5 SUBSIDIARIES. Other than Merger Sub, Surg does not own any stock,
partnership interest, joint venture interest or any other security or ownership
interest issued by any other corporation, organization or entity. Merger Sub
does not own any stock, partnership interest, joint venture interest or any
other security or ownership interest issued by any other corporation,
organization or entity.
4.6 ABSENCE OF CERTAIN DEVELOPMENTS. Except as disclosed in Surg's
Quarterly Report on Form 10-Q for the period ended September 30, 2002, in the
Surg 8-K Reports or on SCHEDULES 4.3 (A), 4.6 or 4.7, or unless otherwise
expressly contemplated or permitted by this Agreement or as contemplated in the
Proxy Statement, since September 30, 2002 to the date hereof, Surg has not:
(a) issued or sold any of its equity securities other than Surg Common
Stock, securities convertible into or exchangeable for its equity securities
other than Surg Common Stock, warrants, options or other rights to acquire its
equity securities other than Surg Common Stock;
(b) reclassified any of its outstanding shares of capital stock except
pursuant to this Agreement;
(c) entered into a written agreement to do any of the foregoing;
(d) sold or otherwise disposed of any assets other than in the ordinary
course of business;
(e) mortgaged, pledged, or subjected to any lien, charge or any other
encumbrance, any of its assets with a fair market value in excess of $10,000,
except (i) liens for current property taxes not yet due and payable, (ii) liens
imposed by law and incurred in the ordinary course of business for obligations
not yet due to carriers, warehousemen, laborers, materialmen and the like, (iii)
liens in respect of pledges or deposits under workers' compensation laws, (iv)
liens set forth in SCHEDULE 4.6 attached hereto, or (v) liens voluntarily
created in the ordinary course of business, all of which liens aggregate less
than $10,000;
(f) declared or paid any dividends or other distributions with respect
to any shares of Surg's capital stock, or redeemed or purchased, directly or
indirectly, any shares of Surg's capital stock or any options, except for
fractional shares acquired in connection with the reverse stock split effected
by Surg with respect to the shareholders of record as of the close of business
on October 4, 2002; or
(g) made any change in accounting principles or practices from those
utilized in the preparation of the financial statements included in the Surg
10-K Reports.
4.7 ABSENCE OF UNDISCLOSED LIABILITIES. To the Knowledge of Surg,
except as reflected in the unaudited consolidated balance sheet of Surg as of
September 30, 2002 contained in Surg's 10-Q Report for the quarter ended
September 30, 2002 (the "Surg Latest Balance Sheet"), Surg has no material
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise,
whether due or to become due, whether known or unknown, and regardless of when
asserted) arising out of transactions or events heretofore entered into, or any
action or inaction, or any state of facts existing, with respect to or based
upon transactions or events heretofore occurring, except (i) liabilities which
have arisen after the date of the Surg Latest Balance Sheet in the ordinary
course of business or in connection with the transactions contemplated by this
Agreement (none of which is a material uninsured liability for breach of
contract, breach of warranty, tort, infringement, claim or lawsuit), or (ii) as
otherwise set forth in SCHEDULE 4.7 attached hereto.
4.8 Intentionally Omitted.
4.9 LITIGATION. There are no material actions, suits, proceedings,
orders or investigations pending or, to the Knowledge of Surg, threatened
against Surg, at law or in equity, or before or by any federal, state or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign.
4.10 NO BROKERS OR FINDERS. Except as described in SECTION 6.15 or as
otherwise disclosed on SCHEDULE 4.10, there are no claims for brokerage
commissions, finders' fees, investment advisory fees or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement, understanding, commitment or agreement made by or on behalf of Surg
or Merger Sub.
4.11 PROXY STATEMENT. At the time the Proxy Statement is mailed to the
shareholders of Surg in order to obtain approvals referred to in SECTION 6.4(A)
hereof and at all times subsequent to such mailing up to and including the times
of such approvals, the Proxy Statement (including any amendments or supplements
thereto), with respect to all information set forth therein relating to Surg and
its shareholders, this Agreement, the Minnesota Articles of Merger, the
Pennsylvania Certificate of Merger, and all other transactions contemplated
hereby, will (a) comply in all material respects with applicable provisions of
the Securities Act and the Exchange Act, and (b) not contain any untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein, in light
of the circumstances under which they are made, not misleading, except that, in
each case, no such representations shall apply to any written information,
including financial statements, of or provided by Chiral Quest for such Proxy
Statement.
4.12 VALIDITY OF MERGER CONSIDERATION. The shares of Surg Common Stock
to be issued to holders of the Chiral Quest Membership Units pursuant to this
Agreement, will be, when issued, duly authorized, validly issued, fully paid and
nonassessable.
4.13 LEASED PREMISES. Surg owns no real property. The real property
demised to Surg by the leases (the "Surg Leases") described in SCHEDULE 4.13
hereto constitutes all of the real property used or occupied by Surg (the "Surg
Real Property"). The Surg Leases are in full force and effect, and Surg holds a
valid and existing leasehold interest under each of the Leases for the term set
forth in SCHEDULE 4.13 hereto. Surg is not in default, and no circumstances
exist which, if unremedied, would, either with or without notice or the passage
of time or both, result in such default under any of the Leases; nor, to the
best Knowledge of Surg, is any other party to any of the Surg Leases in default.
4.14 TAX MATTERS.
(a) Surg has: (i) timely filed (or has had timely filed on its behalf)
all returns, declarations, reports, estimates, information returns, and
statements ("Surg Returns") required to be filed or sent by it in respect of any
Taxes or required to be filed or sent by it by any taxing authority having
jurisdiction; (ii) timely and properly paid (or has had paid on its behalf) all
Taxes shown to be due and payable on such Surg Returns; (iii) established on the
Surg Latest Audited Balance Sheet, in accordance with GAAP, reserves that are
adequate for the payment of any Taxes not yet due and payable; (iv) complied
with all applicable laws, rules, and regulations relating to the withholding of
Taxes and the payment thereof (including, without limitation, withholding of
Taxes under Sections 1441 and 1442 of the Code or similar provisions under any
foreign laws), and timely and properly withheld from individual employee wages
and paid over to the proper governmental authorities all amounts required to be
so withheld and paid over under all applicable laws.
(b) There are no liens for Taxes upon any assets of Surg, except liens
for Taxes not yet due.
(c) Surg has not requested any extension of time within which to file
any Surg Return, which return has not since been filed.
4.15 CONTRACTS AND COMMITMENTS.
(a) SCHEDULE 4.15 hereto lists the following agreements, whether oral
or written, to which Surg or any Surg Subsidiary is a party, which are currently
in effect, and which relate in any material way to the operation of Surg's or
such Subsidiary's business: (i) collective bargaining agreement or contract with
any labor union; (ii) bonus, pension, profit sharing, retirement or other form
of deferred compensation plan; (iii) hospitalization insurance or other welfare
benefit plan or practice, whether formal or informal; (iv) stock purchase or
stock option plan; (v) contract for the employment of any officer, individual
employee or other Person on a full-time or consulting basis or relating to
severance pay for any such Person; (vi) confidentiality agreement; (vii)
contract, agreement or understanding relating to the voting of Surg Common Stock
or the election of directors of Surg; (viii) agreement or indenture relating to
the borrowing of money or to mortgaging, pledging or otherwise placing a lien on
any of the assets of Surg or any Surg Subsidiary; (ix) guaranty of any
obligation for borrowed money or otherwise; (x) lease or agreement under which
Surg or any Surg Subsidiary is lessee of, or holds or operates any property,
real or personal, owned by any other party, for which the annual rental exceeds
$10,000; (xi) lease or agreement under which Surg or any Surg Subsidiary is
lessor of, or permits any third party to hold or operate, any property, real or
personal, for which the annual rental exceeds $10,000; (xii) contract that
prohibits Surg or any Surg Subsidiary from freely engaging in business anywhere
in the world; (xiii) license agreement or agreement providing for the payment or
receipt of royalties or other compensation by Surg in connection with the
intellectual property rights listed in SCHEDULE 4.16 hereto; (xiv) contract or
commitment for capital expenditures in excess of $10,000; (xv) agreement for the
sale of any capital asset; (xvi) agreements between Surg and any Affiliate; or
(xxii)
other agreement which is either material to the business of Surg or any Surg
Subsidiary or was not entered into in the ordinary course of business.
(b) To Surg's Knowledge, Surg or Merger Sub has performed all material
obligations required to be performed by them in connection with the contracts or
commitments required to be disclosed in SCHEDULE 4.15 hereto and is not in
receipt of any claim of default under any contract or commitment required to be
disclosed under such caption; Surg has no present expectation or intention of
not fully performing any material obligation pursuant to any contract or
commitment required to be disclosed under such caption; and Surg has no
Knowledge of any breach or anticipated breach by any other party to any contract
or commitment required to be disclosed under such caption.
4.16 INTELLECTUAL PROPERTY RIGHTS. SCHEDULE 4.16 hereto describes all
rights in patents, patent applications, trademarks, service marks, trade names,
corporate names, copyrights mask works, trade secrets, know-how or other
intellectual property rights owned by, licensed to or otherwise controlled by
Surg or used in, developed for use in or necessary to the conduct of Surg's
business as now conducted or planned to be conducted. Surg owns and possesses
all right, title and interest, or holds a valid license, in and to the rights
set forth in such schedule. SCHEDULE 4.16 describes all intellectual property
rights which have been licensed to third parties and those intellectual property
rights which are licensed from third parties. Surg has taken all necessary
action to protect the intellectual property rights set forth in such schedule.
Surg has not received any notice of, nor are there any facts known to Surg which
indicate a likelihood of, any infringement or misappropriation by, or conflict
from, any third party with respect to the intellectual property rights which are
listed; no claim by any third party contesting the validity of any intellectual
property rights listed in SCHEDULE 4.16 hereto has been made, is currently
outstanding or, to the best Knowledge of Surg, is threatened; Surg has not
received any notice of any infringement, misappropriation or violation by Surg
of any intellectual property rights of any third parties and Surg has not
infringed, misappropriated or otherwise violated any such intellectual property
rights.
4.17 EMPLOYEES. Surg has no employees. Except as contemplated in
SECTION 2.6 hereof, to the best Knowledge of Surg, (a) Surg has complied with
all laws relating to the employment of labor, including provisions thereof
relating to wages, hours, equal opportunity, collective bargaining and the
payment of social security and other taxes; (b) Surg has no material labor
relations problem pending and its labor relations are satisfactory; (c) other
than claims covered by applicable insurance, there are no workers' compensation
claims pending against Surg nor is Surg aware of any facts that would give rise
to such a claim; and (d) no employee or former employee of Surg has any claim
with respect to any intellectual property rights of Surg set forth in SCHEDULE
4.16 hereto.
4.18 EMPLOYEE BENEFIT PLANS.
(a) With respect to all employees and former employees of Surg and all
dependents and beneficiaries of such employees and former employees, (i) Surg
does not maintain or contribute to any nonqualified deferred compensation or
retirement plans, contracts or arrangements; (ii) Surg does not maintain or
contribute to any qualified defined contribution plans (as defined in Section
3(34) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 414(i) of the Code; (iii) Surg does not maintain or
contribute to any qualified defined benefit plans (as defined in Section 3(35)
of ERISA or Section 414(j) of the Code); and (iv) Surg does not maintain or
contribute to any employee welfare benefit plans (as defined in Section 3(1) of
ERISA).
(b) To the extent required (either as a matter of law or to obtain the
intended tax treatment and tax benefits), all employee benefit plans (as defined
in Section 3(3) of ERISA) which Surg does maintain or to which it does
contribute (collectively, the "Plans") comply in all material respects with the
requirements of ERISA and the Code. With respect to the Plans, (i) all required
contributions which are due have been made and a proper accrual has been made
for all contributions due in the current fiscal year; (ii) there are no actions,
suits or claims pending, other than routine uncontested claims for benefits; and
(iii) there have been no prohibited transactions (as defined in Section 406 of
ERISA or Section 4975 of the Code).
(c) Surg does not contribute to any multi-employer plan, as defined in
Section 3(37) of ERISA. Surg has no actual or potential liabilities under
Section 4201 of ERISA for any complete or partial withdrawal from a
multi-employer plan. Surg has no actual or potential liability for death or
medical benefits after separation from employment.
(d) Neither Surg nor any of its directors, officers, employees or other
"fiduciaries," as such term is defined in Section 3(21) of ERISA, has committed
any breach of fiduciary responsibility imposed by ERISA or any other applicable
law with respect to the Plans which would subject Surg, the Surviving Company,
or any of their respective directors, officers or employees to any liability
under ERISA or any applicable law.
(e) Surg has not incurred any liability for any tax or civil penalty or
any disqualification of any employee benefit plan (as defined in Section 3(3) of
ERISA) imposed by Sections 4980B and 4975 of the Code and Part 6 of Title I and
Section 502(i) of ERISA.
4.19 INSURANCE. Surg does not maintain any insurance.
4.20 AFFILIATE TRANSACTIONS. Other than pursuant to this Agreement,
no officer, director or employee of Surg, or any Person who beneficially owns 5
percent or more of the outstanding Surg Common Stock, or any member of the
immediate family of any such officer, director or employee, or any entity in
which any of such persons owns any beneficial interest (other than any
publicly-held corporation whose stock is traded on a national securities
exchange or in the over-the-counter market and less than one percent of the
stock of which is beneficially owned by any of such persons) (collectively,
"Insiders"), has any agreement with Surg (other than normal employment
arrangements) or any interest in any property, real, personal or mixed, tangible
or intangible, used in or pertaining to the business of Surg (other than
ownership of capital stock of Surg). None of the insiders has any direct or
indirect interest in any competitor, supplier or customer of Surg or in any
Person, firm or entity from whom or to whom Surg leases any property, or in any
other Person, firm or entity with whom Surg transacts business of any nature.
For purposes of this SECTION 4.20, the members of the immediate family of an
officer, director or employee shall consist of the spouse, parents and children
of such officer, director or employee.
4.21 COMPLIANCE WITH LAWS; PERMITS.
(a) To Surg's Knowledge, Surg and its respective officers, directors,
agents and employees have complied in all material respects with all applicable
laws, regulations and other requirements, including, but not limited to,
federal, state, local and foreign laws, ordinances, rules, regulations and other
requirements pertaining to equal employment opportunity, employee retirement,
affirmative action and other hiring practices, occupational safety and health,
workers' compensation, unemployment and building and zoning codes, which
materially affect the business of Surg or the Surg
Real Property and to which Surg may be subject, and no claims have been filed
against Surg alleging a violation of any such laws, regulations or other
requirements. Surg is not relying on any exemption from or deferral of any such
applicable law, regulation or other requirement that would not be available to
Chiral Quest after it acquires Surg's properties, assets and business.
(b) Surg has, in full force and effect, all licenses, permits and
certificates, from federal, state, local and foreign authorities (including,
without limitation, federal and state agencies regulating occupational health
and safety) necessary to conduct its business and own and operate its properties
(other than Environmental Permits, as such term is defined in SECTION 4.22
hereof) (collectively, the "Permits"). Surg has conducted its business in
compliance with all material terms and conditions of the Permits.
(c) In particular, but without limiting the generality of the
foregoing, Surg has not violated nor has any liability, nor has received a
notice or charge asserting any violation of or liability under, the federal
Occupational Safety and Health Act of 1970 or any other federal or state acts
(including rules and regulations thereunder) regulating or otherwise affecting
employee health and safety.
4.22 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of Surg, all of the Surg Real Property is in
material compliance with all applicable Environmental Laws, except as set forth
on Schedule 4.22(b).
(b) Surg has obtained, and maintained in full force and effect, all
environmental permits, licenses, certificates of compliance, approvals and other
authorizations necessary to conduct its business and own or operate the Surg
Real Property (collectively, the "Environmental Permits"). Surg has conducted
its business in compliance with all terms and conditions of the Environmental
Permits. To Surg's Knowledge, Surg has filed all reports and notifications
required to be filed under and pursuant to all applicable Environmental Laws.
(c) Surg has not received notice alleging in any manner that Surg is,
or might be potentially responsible for any Release of Hazardous Materials, or
any costs arising under or violation of Environmental Laws.
(d) No expenditure will be required in order for Surg or the Surviving
Company to comply with any Environmental Laws in effect at the time of the
Closing in connection with the operation or continued operation of the business
of Surg or the Surg Real Property in a manner consistent with the current
operation thereof by Surg.
(e) Surg and the Surg Real Property are not and have not been listed on
the United States Environmental Protection Agency National Priorities List of
Hazardous Waste Sites, or any other list, schedule, law, inventory or record of
hazardous or solid waste sites maintained by any federal, state or local agency.
(f) No lien has been attached or filed against Surg or the Surg Real
Property in favor of any governmental or private entity for (i) any liability or
imposition of costs under or violation of any applicable Environmental Law; or
(ii) any Release of Hazardous Materials.
4.23 DISCLOSURE. The representations and warranties of Surg contained
in this Agreement are true and correct in all material respects, and such
representations and warranties do not omit any material fact necessary to make
the statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to Surg which has not been
disclosed to Chiral Quest pursuant to this Agreement, the Schedules hereto and
the Surg 10-K Reports, the Surg 10-Q Reports, and the Surg 8-K Reports, all
taken together as a whole, which has had or could reasonably be expected to have
a Material Adverse Effect on Surg or materially adversely affect the ability of
Surg to consummate in a timely manner the transactions contemplated hereby.
4.24 REORGANIZATION. Neither Surg nor Merger Sub nor, to the Knowledge
of Surg or Merger Sub, any of their respective affiliates, has through the date
of this Agreement taken or agreed to take any action that would prevent the
Merger from qualifying as a reorganization under Section 368(a) of the Code.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
5.1 CONDUCT OF BUSINESS BY SURG AND MERGER SUB. Unless Chiral Quest
shall otherwise agree in writing and except as expressly contemplated by this
Agreement, during the period from the date of this Agreement to the Effective
Time, (i) Surg shall conduct, and it shall cause its subsidiaries to conduct,
its or their businesses in the ordinary course and consistent with past
practice, and (ii) without limiting the generality of the foregoing, neither
Surg nor any of its subsidiaries will:
(a) amend or propose to amend its Articles of Incorporation or Bylaws
(or comparable governing instruments) in any material respect;
(b) authorize for issuance, issue, grant, sell, pledge, dispose of or
propose to issue, grant, sell, pledge or dispose of any shares of, or any
options, warrants, commitments, subscriptions or rights of any kind to acquire
or sell any shares of, the capital stock or other securities of Surg or any of
its subsidiaries including, but not limited to, any securities convertible into
or exchangeable for shares of stock of any class of Surg or any of its
subsidiaries, except for the issuance of Surg Common Stock pursuant to the
exercise of stock options and warrants outstanding on the date of this Agreement
in accordance with their present terms;
(c) split, combine or reclassify any shares of its capital stock or
declare, pay or set aside any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
other than dividends or distributions to Surg or a subsidiary of Surg, or
directly or indirectly redeem, purchase or otherwise acquire or offer to acquire
any shares of its capital stock or other securities;
(d) (i) create, incur or assume any debt, except refinancing of
existing obligations on terms that are no less favorable to Surg or its
subsidiaries than the existing terms; (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, indirectly,
contingently or otherwise) for the obligations of any Person; (iii) other than
in the ordinary course of business consistent with past practice, make any
capital expenditures or make any loans, advances or capital contributions to, or
investments in, any other Person (other than to a Surg subsidiary and customary
travel, relocation or business advances to employees); (iv) acquire the stock or
assets of, or merge or
consolidate with, any other Person; (v) voluntarily incur any material liability
or obligation (absolute, accrued, contingent or otherwise); or (vi) sell,
transfer, mortgage, pledge or otherwise dispose of, or encumber, or agree to
sell, transfer, mortgage, pledge or otherwise dispose of or encumber, any assets
or properties, real, personal or mixed material to Surg and its subsidiaries
taken as a whole;
(e) increase in any manner the compensation of any of its officers or
enter into, establish, amend or terminate any employment, noncompete,
consulting, retention, change in control, collective bargaining, bonus or other
incentive compensation, profit sharing, health or other welfare, stock option or
other equity, pension, retirement, vacation, severance, deferred compensation or
other compensation or benefit plan, policy, agreement, trust, fund or
arrangement with, for or in respect of, any shareholder, officer, director,
other employee, agent, consultant or affiliate other than as required pursuant
to the terms of agreements in effect on the date of this Agreement; or, except
in the ordinary course of business consistent with past practices, increase the
compensation of the Surg's employees who are not officers; or
(f) take or cause to be taken any action, whether before or after the
Effective Time, which would disqualify the Merger as "reorganization" within the
meaning of Section 368(a) of the Code.
5.2 CONDUCT OF BUSINESS BY CHIRAL QUEST. Unless Surg shall otherwise
agree in writing and except as expressly contemplated by this Agreement, during
the period from the date of this Agreement to the Effective Time, (i) Chiral
Quest shall conduct, and it shall cause its subsidiaries to conduct, its or
their businesses in the ordinary course and consistent with past practice, and
Chiral Quest shall use its reasonable commercial efforts to preserve intact its
business organization, to keep available the services of its officers and
employees and to maintain satisfactory relationships with all persons with whom
it does business and (ii) without limiting the generality of the foregoing,
Chiral Quest will not:
(a) amend or propose to amend its Certificate of Organization or
Operating Agreement in any material respect;
(b) authorize for issuance, issue, grant, sell, pledge, dispose of or
propose to issue, grant, sell, pledge or dispose of any shares of, or any
options, warrants, commitments, subscriptions or rights of any kind to acquire
or sell any Chiral Quest Membership Units, including, but not limited to, any
securities convertible into or exchangeable for Chiral Quest Membership Units,
except for the issuance of Chiral Quest Membership Units pursuant to the
exercise of options, warrants or other convertible securities outstanding on the
date of this Agreement in accordance with their present terms;
(c) split, combine or reclassify any units of its membership interests
or declare, pay or set aside any dividend or other distribution (whether in
cash, membership interests or property or any combination thereof) in respect of
its membership interests, or directly or indirectly redeem, purchase or
otherwise acquire or offer to acquire any Chiral Quest Membership Units or other
securities;
(d) (i) create, incur or assume any debt, except refinancing of
existing obligations on terms that are no less favorable to Chiral Quest than
the existing terms; (ii) assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, indirectly, contingently or otherwise) for the
obligations of any Person; (iii) other than in the ordinary course of business
consistent with past practice, make any capital expenditures or make any loans,
advances or capital contributions to, or investments in, any other Person (other
than customary travel, relocation or business advances to employees); (iv)
acquire the stock or assets of, or merge or consolidate with, any other Person;
(v)
voluntarily incur any material liability or obligation (absolute, accrued,
contingent or otherwise); or (vi) sell, transfer, mortgage, pledge or otherwise
dispose of, or encumber, or agree to sell, transfer, mortgage, pledge or
otherwise dispose of or encumber, any assets or properties, real, personal or
mixed material to Chiral Quest;
(e) increase in any manner the compensation of any of its officers or
enter into, establish, amend or terminate any employment, non-compete,
consulting, retention, change in control, collective bargaining, bonus or other
incentive compensation, profit sharing, health or other welfare, stock option or
other equity, pension, retirement, vacation, severance, deferred compensation or
other compensation or benefit plan, policy, agreement, trust, fund or
arrangement with, for or in respect of, any shareholder, officer, director,
other employee, agent, consultant or affiliate other than as required pursuant
to the terms of agreements in effect on the date of this Agreement; or, except
in the ordinary course of business consistent with past practices, increase the
compensation of Chiral Quest's employees who are not officers; or
(f) take or cause to be taken any action, whether before or after the
Effective Time, which would disqualify the Merger as "reorganization" within the
meaning of Section 368(a) of the Code.
ARTICLE VI
ADDITIONAL COVENANTS AND AGREEMENTS
6.1 GOVERNMENTAL FILINGS. Each party will use all reasonable efforts
and will cooperate with the other party in the preparation and filing, as soon
as practicable, of all filings, applications or other documents required under
applicable laws, including, but not limited to, the Exchange Act, to consummate
the transactions contemplated by this Agreement. Prior to submitting each
filing, application, registration statement or other document with the
applicable regulatory authority, each party will, to the extent practicable,
provide the other party with an opportunity to review and comment on each such
application, registration statement or other document to the extent permitted by
applicable law. Each party will use all reasonable efforts and will cooperate
with the other party in taking any other actions necessary to obtain such
regulatory or other approvals and consents at the earliest practicable time,
including participating in any required hearings or proceedings. Subject to the
terms and conditions herein provided, each party will use all reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement.
6.2 EXPENSES. Except as otherwise provided in this Agreement, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
6.3 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) For the purpose of verifying the accuracy of the representations
and warranties contained herein, between the date hereof and the date of mailing
the Proxy Statement to the shareholders of Surg, Chiral Quest, Surg and Merger
Sub shall continue to afford to the other party and their authorized
representatives full access, on reasonable notice and at reasonable hours, to
its properties and shall disclose and make available (together with the right to
copy) to each other and its officers, employees, attorneys, accountants and
other representatives, all books, papers and records
relating to the assets, stock, properties, operations, obligations and
liabilities of such party and its subsidiaries, including, without limitation,
all books of account (including, without limitation, the general ledger), tax
records, minute books of directors' and shareholders' meetings, organizational
documents, bylaws, contracts and agreements, filings with any regulatory
authority, accountants' work papers, litigation files (including, without
limitation, legal research memoranda), attorney's audit response letters,
documents relating to assets and title thereto (including, without limitation,
abstracts, title insurance policies, surveys, environmental reports, opinions of
title and other information relating to the real and personal property), plans
affecting employees, securities transfer records and shareholder lists, and any
books, papers and records relating to other assets or business activities in
which such party may have a reasonable interest, and otherwise provide such
assistance as is reasonably requested in order that each party may have a full
opportunity to make such investigation and evaluation as it shall reasonably
desire to make of the business and affairs of the other party; provided,
however, that the foregoing rights granted to each party shall, whether or not
and regardless of the extent to which the same are exercised, in no way affect
the nature or scope of the representations, warranties and covenants of the
respective party set forth herein. In addition, each party and its respective
officers and directors shall cooperate fully (including providing introductions,
where necessary) with such other party to enable the party to contact third
parties, including customers, prospective customers, specified agencies or
others as the party deems reasonably necessary to complete its due diligence;
provided that such party agrees not to initiate such contacts without the prior
approval of the other party, which approval will not be unreasonably withheld.
(b) Prior to Closing and if, for any reason, the transactions
contemplated by this Agreement are not consummated, neither Surg, Merger Sub nor
Chiral Quest nor any of their respective officers, directors, managers,
shareholders, members, employees, attorneys, accountants and other
representatives, shall disclose to third parties or otherwise use any
confidential information received from the other party in the course of
investigating, negotiating, and performing the transactions contemplated by this
Agreement; provided, however, that nothing shall be deemed to be confidential
information which:
(i) is known to the party receiving the information at the
time of disclosure;
(ii) becomes publicly known or available without the
disclosure thereof by the party receiving the information in violation of this
Agreement; or
(iii) is rightfully received by the party receiving the
information from a third party.
This provision shall not prohibit the disclosure of information required to be
made under federal or state securities laws. If any disclosure is so required,
the party making such disclosure shall consult with the other party prior to
making such disclosure, and the parties shall use all reasonable efforts, acting
in good faith, to agree upon a text for such disclosure which is satisfactory to
both parties.
6.4 SURG SHAREHOLDER MEETING; PROXY STATEMENT.
(a) For the purpose of obtaining the approval of Surg's shareholders to
amend its Articles to (i) increase its authorized capital stock to 50,000,000
shares (the "Required Surg Proposal"), and (ii) change its name in accordance
with ARTICLE II hereof (collectively with the Required Surg Proposal, the "Surg
Proposals"), Surg shall call a meeting of its shareholders as soon as
practicable following the date hereof (the "Surg Shareholder Meeting"). The
Board of Directors of Surg shall recommend approval of the Surg Proposals to the
Surg shareholders and use all reasonable efforts (including,
without limitation, soliciting proxies for such approvals) to obtain approvals
thereof from its shareholders. In connection with the solicitation of proxies
for the Surg Shareholder Meeting, the parties hereto shall cooperate in the
preparation of an appropriate proxy statement (such proxy statement, together
with any and all amendments or supplements thereto, being herein referred to as
the "Proxy Statement").
(b) Chiral Quest shall furnish such information concerning Chiral
Quest as is necessary in order to cause the Proxy Statement, insofar as it
relates to Chiral Quest, to be prepared in accordance with SECTION 6.4(A).
Chiral Quest shall also furnish to Surg, for purposes of its preparation of the
Proxy Statement in accordance with SECTION 6.4(A), any required information
regarding any holders of Chiral Quest Membership Units or their Affiliates or
any Chiral Quest nominees to Surg's board of directors. That information must be
true and correct in all material respects and must not omit any material fact
necessary to make that information not misleading. Chiral Quest agrees promptly
to advise Surg if at any time prior to the Surg Shareholder Meeting any
information provided by Chiral Quest in the Proxy Statement becomes incorrect or
incomplete in any material respect, and to provide Surg the information needed
to correct such inaccuracy or omission.
(c) Subject to the prior approval of this Agreement and the Plan of
Merger by the Members, Surg shall use all reasonable efforts to promptly prepare
and submit the Proxy Statement to the SEC. Surg shall use reasonable efforts to
file the definitive Proxy Statement at the earliest practicable date. Surg
agrees to provide Chiral Quest and its counsel with reasonable opportunity to
review and comment on the Proxy Statement and any amendment thereto before
filing with the SEC or any other governmental entity and agrees not to make such
filing if Chiral Quest and its counsel reasonably object to the completeness or
accuracy of any information contained therein. Chiral Quest authorizes Surg to
utilize in the Proxy Statement the information under SECTION 6.4(B) provided to
Surg for the purpose of inclusion in the Proxy Statement. Surg shall advise
Chiral Quest promptly when the definitive Proxy Statement has been filed and
shall furnish Chiral Quest with copies of all such documents.
(d) At the time the Proxy Statement is mailed to the shareholders of
Surg in order to obtain the Requisite Surg Shareholder Vote and at all times
subsequent to such mailing until the Requisite Surg Shareholder Vote has been
obtained, the Proxy Statement (including any amendments or supplements thereto),
with respect to all information set forth therein relating to Surg and its
stockholders, this Agreement, the Plan of Merger, the Minnesota Articles of
Merger, the Pennsylvania Certificate of Merger, and all other transactions
contemplated hereby, will (i) comply in all material respects with applicable
provisions of the Exchange Act, including the rules and regulations promulgated
thereunder, and (ii) not contain any untrue statement of material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they are
made, not misleading, except that, in each case, no such representations shall
apply to any information, including financial statements, of or provided or
confirmed by Chiral Quest in writing for such Proxy Statement.
(e) Surg shall bear all printing and mailing costs in connection with
the preparation and mailing of the Proxy Statement to Surg shareholders. Chiral
Quest and Surg shall each bear their own legal and accounting expenses in
connection with the Proxy Statement.
6.5 TAX TREATMENT. Neither Surg nor Merger Sub nor Chiral Quest, nor
Surviving Company after the Effective Date, shall knowingly take any action
which would disqualify the Merger as a "reorganization" that would be tax free
to the shareholders of Surg and Chiral Quest pursuant to Section 368(a) of the
Code.
6.6 PRESS RELEASES. Chiral Quest and Surg shall agree with each other
as to the form and substance of any press release or public announcement related
to this Agreement or the transactions contemplated hereby; provided, however,
that nothing contained herein shall prohibit either party, following
notification to the other party, from making any disclosure which is required by
law or regulation. If any such press release or public announcement is so
required, the party making such disclosure shall consult with the other party
prior to making such disclosure, and the parties shall use all reasonable
efforts, acting in good faith, to agree upon a text for such disclosure which is
satisfactory to both parties.
6.7 SECURITIES REPORTS. Surg agrees to provide to Chiral Quest copies
of all reports and other documents filed under the Securities Act or Exchange
Act with the SEC by it between the date hereof and the Effective Date within two
(2) days after the date such reports or other documents are filed with the SEC.
6.8 STOCK LISTING. Surg and Chiral Quest shall use its best efforts to
maintain listing of Surg Common Stock on the Over-the-Counter Bulletin Board,
including, without limitation, the Merger Consideration.
6.9 MEETING OF CHIRAL QUEST MEMBERS. Within six (6) days of the date of
this Agreement, Chiral Quest shall use all reasonable efforts to obtain from its
Members approval of this Agreement, the Plan of Merger and the transactions
contemplated hereby and thereby, in accordance with the requirements of the LLCL
and the Operating Agreement. The Board of Directors of Chiral Quest shall
recommend approval of this Agreement and the Plan of Merger.
6.10 NO SOLICITATION.
(a) Unless and until this Agreement shall have been terminated pursuant
to SECTION 8.1, neither Surg nor its officers, directors or agents shall,
directly or indirectly, encourage, solicit or initiate discussions or
negotiations with, or engage in negotiations or discussions with, or provide
non-public information to, any corporation, partnership, Person or other entity
or groups concerning any merger, sale of capital stock, sale of substantial
assets or other business combination.
(b) Unless and until this Agreement shall have been terminated pursuant
to SECTION 8.1, neither Chiral Quest nor its officers, directors or agents (or
their equivalents) shall, directly or indirectly, encourage, solicit or initiate
discussions or negotiations with, or engage in negotiations or discussions with,
or provide non-public information to, any corporation, partnership, Person or
other entity or groups concerning any merger, sale of capital stock, sale of
substantial assets or other business combination.
6.11 FAILURE TO FULFILL CONDITIONS. In the event that either of the
parties hereto determines that a condition to its respective obligations to
consummate the transactions contemplated hereby cannot be fulfilled on or prior
to the termination of this Agreement, it will promptly notify the other party.
6.12 TAX OPINION. Chiral Quest and Surg shall reasonably cooperate with
each other in obtaining a federal tax opinion as contemplated by SECTION 7.1(C).
6.13 RESIGNATIONS AND ELECTION OF DIRECTORS. At the Effective Time,
Surg shall deliver the voluntary resignations of each officer of Surg and each
director of Surg who is not designated to be a director of Surg in accordance
with SECTION 2.6, and the continuing Surg directors shall appoint the persons
identified in SCHEDULE 2.6 to be directors of Surg upon the consummation of the
Merger.
6.14 NOTIFICATION OF CERTAIN MATTERS. On or prior to the Effective
Date, each party shall give prompt notice to the other party of (i) the
occurrence or failure to occur of any event or the discovery of any information,
which occurrence, failure or discovery would be likely to cause any
representation or warranty on its part contained in this Agreement to be untrue,
inaccurate or incomplete after the date hereof in any material respect or, in
the case of any representation or warranty given as of a specific date, would be
likely to cause any such representation or warranty on its part contained in
this Agreement to be untrue, inaccurate or incomplete in any material respect as
of such specific date, and (ii) any material failure of such party to comply
with or satisfy any covenant or agreement to be complied with or satisfied by it
hereunder.
6.15 INTRODUCTION FEE. The parties agree that, upon the successful
consummation of the Merger, Surg will issue to Key West Associates, LLC and
other Persons designated by Key West Associates, LLC a 5-year warrant (the "KEY
WEST WARRANT") to purchase 550,000 shares of Surg Common Stock at a price of
$1.25 per share. Such issuance shall be made in accordance with an exemption
from the registration requirements of the Securities Act and applicable state
securities laws.
ARTICLE VII
CONDITIONS
7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations
of each party to effect the transactions contemplated hereby shall be subject to
the fulfillment or waiver at or prior to the Effective Date of the following
conditions:
(a) Shareholder/member Approvals. The Required Surg Proposals shall
have been approved by the Requisite Surg Shareholder Vote. This Agreement shall
have been approved and the Plan of Merger shall have been adopted by the
Requisite Chiral Quest Member Vote.
(b) No Injunction. No injunction or other order entered by a state or
federal court of competent jurisdiction shall have been issued and remain in
effect which would prohibit or make illegal the consummation of the transactions
contemplated hereby.
(c) No Prohibitive Change of Law. There shall have been no law,
statute, rule or regulation, domestic or foreign, enacted or promulgated which
would prohibit or make illegal the consummation of the transactions contemplated
hereby.
(d) Federal Tax Opinion. Chiral Quest and Surg shall have received a
tax opinion from Xxxxxx Xxxxxxx Xxxxxx & Brand, LLP addressed to each of Chiral
Quest and Surg, which opinion may be based on customary reliance and subject to
customary qualifications, to the effect that for federal income tax purposes:
(i) The Merger will qualify as a reorganization under Section
368(a) of the Code. Surg, Merger Sub and Chiral Quest will each be a
party to the reorganization within the meaning of Section 368(b) of the
Code; and
(ii) No gain or loss will be recognized by the Members of
Chiral Quest, or the shareholders Surg or Merger Sub or upon the
receipt by the Members of the Merger Consideration pursuant to Section
356(a)(1)(B) of the Code.
(e) Consents and Approvals. All consents and approvals necessary to
consummate the transactions contemplated by this Agreement shall have been
obtained, including, but not limited to, those set forth on SCHEDULES 3.2 AND
4.2 in order that the transactions contemplated herein not constitute a breach
or violation of, or result in a right of termination or acceleration of, or
creation of any encumbrance on any of Chiral Quest's assets pursuant to the
provisions of, any agreement arrangement or undertaking of or affecting Chiral
Quest or any license, franchise or permit of or affecting Chiral Quest.
(f) Adverse Proceedings. There shall not be threatened, instituted or
pending any action or proceeding before any court or governmental authority or
agency, domestic or foreign, (i) challenging or seeking to make illegal, or to
delay or otherwise directly or indirectly to restrain or prohibit, the
consummation of the transactions contemplated hereby or seeking to obtain
material damages in connection with the transactions contemplated hereby, (ii)
seeking to prohibit direct or indirect ownership or operation by Surg of all or
a material portion of the business and assets of Chiral Quest or to Surg or to
Chiral Quest to dispose of or to hold separately all or a material portion of
the business or assets of Surg or Chiral Quest, as a result of the transactions
contemplated hereby, (iii) seeking to invalidate or render unenforceable any
material provision of this Agreement, the Minnesota Articles of Merger, the
Pennsylvania Certificate of Merger or any of the other agreements attached as
exhibits hereto, or (iv) otherwise relating to and materially adversely
affecting the transactions contemplated hereby.
(g) Governmental Action. There shall not be any action taken, or any
statute, rule, regulation, judgment, order or injunction proposed, enacted,
entered, enforced, promulgated, issued or deemed applicable to the transactions
contemplated hereby by any federal, state or other court, government or
governmental authority or agency, which could reasonably be expected to result,
directly or indirectly, in any of the consequences referred to in SECTION
7.1(E).
(h) Market Condition. There shall not have occurred any general
suspension of trading on the New York Stock Exchange, the NASDAQ National Market
System or the NASDAQ Small Cap Market System, or any suspension of trading in
Surg Common Stock, or any general bank moratorium or closing or any war,
national emergency or other event affecting the economy or securities trading
markets generally that would make completion of the Merger impossible.
7.2 ADDITIONAL CONDITIONS TO OBLIGATION OF SURG. The obligation of Surg
to consummate the transactions contemplated hereby in accordance with the terms
of this Agreement is also subject to the fulfillment or waiver of the following
conditions:
(a) Capitalization of Chiral Quest. Immediately prior to the Effective
Time of the Merger, the number of outstanding Chiral Quest Membership Units
shall be 11,500,000, plus outstanding securities or rights exercisable,
exchangeable or convertible into no more than 1,210,000 Chiral Quest
Membership Units, including options and warrants, or any agreement or other
instrument which may require Chiral Quest to issue Chiral Quest Membership
Units.
(b) Representations and Compliance. The representations and warranties
of Chiral Quest set forth in ARTICLE III shall have been true and correct as of
the date hereof, and, except to the extent such representations and warranties
are made as of a specified date, shall be true and correct as of the Effective
Date as if made at and as of the Effective Date, except where the failure to be
true and correct would not have, or would not reasonably be expected to have, a
Material Adverse Effect on Chiral Quest. Chiral Quest shall in all material
respects have performed each obligation and agreement and complied with each
covenant to be performed and complied with by it hereunder at or prior to the
Effective Date.
(c) Officers' Certificate. Chiral Quest shall have furnished to Surg a
certificate of the Chief Executive Officer and the Chief Financial Officer of
Chiral Quest, dated as of the Effective Date, in which such officers shall
certify that, to their best Knowledge, the conditions set forth in SECTION
7.2(B) have been fulfilled.
(d) Secretary's Certificate. Chiral Quest shall have furnished to Surg
(i) copies of the text of the resolutions by which the corporate action on the
part of Chiral Quest necessary to approve this Agreement, the Certificate of
Merger and the transactions contemplated hereby and thereby were taken, (ii) a
certificate dated as of the Effective Date executed on behalf of Chiral Quest by
its corporate secretary or one of its assistant corporate secretaries certifying
to Surg that such copies are true, correct and complete copies of such
resolutions and that such resolutions were duly adopted and have not been
amended or rescinded, and (iii) a copy of the Certificate of Organization of
Chiral Quest, certified by the Secretary of State of Pennsylvania, and a
certificate from the Secretary of State of Pennsylvania evidencing the good
standing of Chiral Quest in such jurisdiction.
(e) Shareholder Approval. The Required Surg Proposals shall have been
approved by the Requisite Surg Shareholder Vote.
(f) Legal Opinion. Surg shall have received a legal opinion from Xxxxxx
Xxxxxxx Xxxxxx & Brand, LLP, which opinion may be based on customary reliance
and subject to customary qualifications, to the effect that that the issuance of
the Merger Consideration is exempt from the registration requirements of the
Securities Act.
7.3 ADDITIONAL CONDITIONS TO OBLIGATION OF CHIRAL QUEST. The obligation
of Chiral Quest to consummate the transactions contemplated hereby in accordance
with the terms of this Agreement is also subject to the fulfillment or waiver of
the following conditions:
(a) Capitalization of Surg. Immediately prior to the Effective Time of
the Merger, the number of shares of authorized capital stock of Surg shall be
50,000,000, of which there shall be no more than 4,348,720 shares of Surg Common
Stock issued and outstanding. Except as set forth on SCHEDULE 4.3(a), there
shall be no outstanding securities exercisable, exchangeable or convertible into
Surg Common Stock, including options, warrants and preferred stock, or any
agreement or other instrument which may require Surg to issue Surg Common Stock,
or securities exercisable, exchangeable or convertible into Surg Common Stock.
(b) Cash Assets of Surg. Immediately prior to the Effective Time, Surg
shall have cash of at least $3,000,000 and no liabilities, except to the extent
the fees of attorneys, accountants and others engaged by Surg in connection with
the Merger exceed $200,000.
(c) OTCBB Listing. The parties shall not have received any notice that,
following the Effective Time, the Surg Common Stock will be de-listed from the
Over-the-Counter Bulletin Board.
(d) Representations And Compliance. The representations and warranties
of Surg set forth in ARTICLE IV shall have been true and correct as of the date
hereof, and, except to the extent such representations and warranties are made
as of a specified date, shall be true and correct as of the Effective Date as if
made at and as of the Effective Date, except where the failure to be true and
correct would not have, or would not reasonably be expected to have, a Material
Adverse Effect on Surg. Surg shall in all material respects have performed each
obligation and agreement and complied with each covenant to be performed and
complied with by it hereunder at or prior to the Effective Date.
(e) Officers' Certificate. Surg shall have furnished to Chiral Quest a
certificate of the Chief Executive Officer and the Chief Financial Officer of
Surg, dated as of the Effective Date, in which such officers shall certify that,
to their best Knowledge, the conditions set forth in SECTION 7.3(D) have been
fulfilled.
(f) Secretary's Certificate of Merger Sub. Merger Sub shall have
furnished to Chiral Quest (i) copies of the text of the resolutions by which the
corporate action on the part of Merger Sub necessary to approve this Agreement,
the Plan of Merger and the other transactions contemplated hereby were taken,
which shall be accompanied by a certificate of the corporate secretary or
assistant corporation secretary of Merger Sub dated as of the Effective Date
certifying to Chiral Quest that such copies are true, correct and complete
copies of such resolutions and that such resolutions were duly adopted and have
not been amended or rescinded, and (ii) a copy of the Articles of Incorporation
of Merger Sub (as then in effect), certified by the Secretary of State of
Minnesota, and a certificate from the Secretary of State of Minnesota evidencing
the good standing of Merger Sub in such jurisdiction.
(g) Secretary's Certificate of Surg. Surg shall have furnished to
Chiral Quest (i) copies of the text of the resolutions by which the corporate
action on the part of Surg necessary to approve this Agreement, the appointment
of the directors of Surg to serve following the Effective Time and the other
transactions contemplated hereby were taken, which shall be accompanied by a
certificate of the corporate secretary or assistant corporation secretary of
Surg dated as of the Effective Date certifying to Chiral Quest that such copies
are true, correct and complete copies of such resolutions and that such
resolutions were duly adopted and have not been amended or rescinded, and (ii) a
copy of the Articles of Incorporation of Surg (as then in effect), certified by
the Secretary of State of Minnesota, and a certificate from the Secretary of
State of Minnesota evidencing the good standing of Surg in such jurisdiction
(h) Other Agreements And Resignations. Each of the officers and
non-continuing directors of Surg immediately prior to the Effective Time shall
deliver duly executed resignations from their positions with Surg effective
immediately upon the Effective Time.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1. TERMINATION. This Agreement may be terminated:
(a) prior to the Effective Date by mutual consent of Chiral Quest and
Surg, if the Board of Directors of each so determines by vote of a majority of
the members of its entire board;
(b) by either Chiral Quest or Surg, if prior to and continuing up to
the Effective Date there has been a material misrepresentation, breach of
warranty or breach of covenant on the part of the other in the representations,
warranties and covenants set forth in this Agreement, or if any of the
conditions to such party's obligation to consummate the transactions
contemplated in this Agreement shall have become impossible to satisfy as a
result of no negligent or willful action by such party; or
(c) by either Chiral Quest or Surg, if the amendments to the Articles
of Incorporation of Surg increasing its authorized capital stock, as
contemplated by SECTION 6.4(A), or if the Merger and this Agreement is not duly
approved by the Members, including if a Member or shareholder meeting is not
held as contemplated by the first sentence of SECTION 6.9;
Any party desiring to terminate this Agreement shall give prior written
notice of such termination and the reasons therefor to the other party.
8.2 AMENDMENT. This Agreement may not be amended or modified except by
an instrument in writing approved by the parties to this Agreement and signed on
behalf of each of the parties hereto.
8.3 WAIVER. At any time prior to the Effective Date, any party hereto
may (a) extend the time for the performance of any of the obligations or other
acts of the other party hereto or (b) waive compliance with any of the
agreements of the other party or with any conditions to its own obligations, in
each case only to the extent such obligations, agreements and conditions are
intended for its benefit. Any such extension or waiver shall only be effective
if made in writing and duly executed by the party giving such extension or
waiver.
8.4 NOTICE OF UNFULFILLED CONDITIONS. If either party shall determine
prior to the Closing that it intends to refuse to consummate the Merger or any
of the other transactions contemplated hereby because of any unfulfilled or
unperformed condition set forth in this Agreement that is required to be
performed or fulfilled by the other party, Surg or Chiral Quest, as the case may
be, shall immediately notify the other of its intention to refuse to consummate
such transactions in order to allow the other the right and opportunity to take
such steps, at its own expense, as may be necessary for the purpose of
fulfilling or performing such condition with a reasonable period of time, but in
no case later than fifteen (15) days from such notice, unless a longer period of
time is granted in writing.
ARTICLE IX
GENERAL PROVISIONS
9.1 NOTICES. All notices and other communications hereunder shall be in
writing and shall be sufficiently given if made by hand delivery, by fax, by
telecopier, by overnight delivery service, or by registered or certified mail
(postage prepaid and return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by it by
like notice):
If to Chiral Quest: x/x Xxxxxxxxx Xxxxxxx Xxxxxxxxxxx, LLC
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxxxx
With copies to: Xxxxxx Xxxxxxx Xxxxxx & Brand, LLP
3300 Xxxxx Fargo Center
00 Xxxxx 0xx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
If to Surg or Merger Sub: Surg II, Inc.
000 Xxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxx
With copies to: Felhaber, Xxxxxx & Xxxx
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxx, Esq.
All such notices and other communications shall be deemed to have been
duly given as follows: when delivered by hand, if personally delivered, when
received; if delivered by registered or certified mail (postage prepaid and
return receipt requested), when receipt acknowledged; if faxed or telecopied, on
the first business day following the date of receipt, and the next day delivery
after being timely delivered to a recognized overnight delivery service.
9.2 INTERPRETATION. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections and Articles refer to
Sections and Articles of this Agreement unless otherwise stated. Words such as
"herein," "hereinafter," "hereof," "hereto," "hereby" and "hereunder," and words
of like import, unless the context requires otherwise, refer to this Agreement
(including the Exhibits and Schedules hereto). As used in this Agreement, the
masculine, feminine and neuter genders shall be deemed to include the others if
the context requires.
9.3 SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties shall negotiate
in good faith to modify this Agreement and to preserve each party's anticipated
benefits under this Agreement.
9.4 MISCELLANEOUS. This Agreement (together with all other documents
and instruments referred to herein): (a) constitutes the entire agreement, and
supersedes all other prior agreements and undertakings, both written and oral,
among the parties, with respect to the subject matter hereof, except for that
certain Standstill/Confidentiality Agreement by and between Surg and Chiral
Quest dated July
12, 2002, the provisions of which shall remain in full force and effect; and (b)
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, but shall not be assignable by either party
hereto without the prior written consent of the other party hereto.
9.5 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of the parties set forth herein shall not survive
the consummation of the Merger, but covenants that specifically relate to
periods, activities or obligations subsequent to the Merger shall survive the
Merger. In addition, if this Agreement is terminated pursuant to SECTION 8.1,
the covenants contained in SECTIONS 6.2 AND 6.3(b) shall survive such
termination.
9.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
9.7 THIRD PARTY BENEFICIARIES. Except as provided in the next following
sentence, each party hereto intends that this Agreement shall not benefit or
create any right or cause of action in or on behalf of any Person other than the
parties hereto. The provisions of SECTION 6.14 are intended for the benefit of
Affiliates of Surg and Chiral Quest.
9.8 GOVERNING LAW. This Agreement shall be governed by, and construed
and enforced in accordance with the internal laws of the State of Minnesota,
without giving effect to the principles of conflicts of laws thereof.
[Remainder of Page Left Intentionally Blank -- Signature Page to Follow]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Merger to be executed on the date first written above by their
respective officers.
SURG II, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxx
President and Chief Executive Officer
CHIRAL QUEST, LLC
By: /s/ Xxxx Xxxx
--------------------------------
Name: Xxxx Xxxx
Title: President and Chief Executive
Officer
CQ ACQUISITION, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
Attachments:
Exhibit A -- Plan of Merger
Exhibit B -- Minnesota Articles of Merger
Exhibit C -- Pennsylvania Certificate of Merger
Disclosure Schedules of Chiral Quest
Schedule 2.5 -- Directors of Surviving Company
Schedule 2.6 -- Directors of Surg
Schedule 3.2 -- Authority Relative to Agreement; Non-Contravention
Schedule 3.3 -- Capitalization
Schedule 3.5 -- Litigation
Schedule 3.6 -- Brokers or Finders
Schedule 3.7 -- Absence of Undisclosed Liabilities
Schedule 3.9 -- Leased Premises
Schedule 3.10 -- Tax Matters
Schedule 3.11 -- Contract and Commitments
Schedule 3.12 -- Intellectual Property Rights
Schedule 3.13 -- Employees
Schedule 3.14 -- Employee Benefit Plans
Schedule 3.15 -- Insurance
Schedule 3.16 -- Affiliate Transactions
Schedule 3.18 -- Environmental Matters
Schedule 3.19 -- Absence of Certain Developments
Schedule 3.23 - Members
Disclosure Schedules of Surg and Merger Sub
Schedule 4.2 -- Authority Relative to this Agreement
Schedule 4.3(a) -- Capitalization
Schedule 4.6 -- Absence of Certain Developments
Schedule 4.7 -- Absence of Undisclosed Liabilities
Schedule 4.10 -- Broker or Finders
Schedule 4.13 -- Leased Premises
Schedule 4.15 -- Contracts and Commitments
Schedule 4.16 -- Intellectual Property Rights
Schedule 4.22 -- Environmental Matters
[Exhibits and schedules have been intentionally omitted, however, the Registrant
agrees to furnish supplementally any omitted attachment upon request of the
Commission.]
