STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated as of November 13, 1997 (the
"Agreement"), among MEDIQ Incorporated, a Delaware corporation ("MEDIQ"), MEDIQ
Investment Services, Inc., a Delaware corporation ("MIS" and together with
MEDIQ, collectively the "Seller"), and InnoServ Technologies, Inc., a California
corporation (the "Company").
WITNESSETH:
WHEREAS, Seller owns 2,026,438 shares (the "Issuer Shares") of the
common stock of the Company (the "Common Stock") and warrants to purchase
325,000 shares of Common Stock (the "Warrants"); and
WHEREAS, the Seller and the Company had previously entered into an
agreement pursuant to which Seller would be required to distribute the Issuer
Shares to its stockholders upon demand by the Company; and
WHEREAS, by letter dated September 26, 1997 (the "Distribution
Request"), the Company has requested that Seller distribute the Issuer Shares to
its stockholders, such distribution to be completed no later than 60 days from
the date of such letter; and
WHEREAS, the Seller requested that the Company consider alternative
arrangements with respect to the Issuer Shares, and the respective Boards of
Directors of the Company and the Seller have considered such alternative
arrangements; and
WHEREAS the Seller and the Company desire that in lieu of distribution
that Seller will sell and transfer such shares to Company in accordance with the
terms and conditions hereof; and
NOW, THEREFORE, in consideration of the mutual premises and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties, the parties hereto
agree as follows:
1. SALE OF THE SHARES
1.1 Sale. Simultaneously with the execution and delivery hereof, the
Seller shall transfer, assign, sell and deliver to the Company, and the Company
shall purchase from the Seller all of the Issuer Shares and Warrants in
consideration of the agreements and waivers of the parties contained herein (the
"Purchase Price"). The closing (the "Closing") of the sale and purchase and
delivery of all of the Issuer Shares and Warrants shall be held on the date
hereof. At the Closing Seller shall deliver the certificates for the Issuer
Shares and the Warrants duly endorsed or accompanied by stock powers or other
appropriate instruments of transfer duly executed in blank.
1.2 Change in Control.
(a) Before April 1, 1998, the Company shall not enter into or
consummate a change in control (as defined below) unless the other party or
parties thereto agree, as a condition precedent to such transaction, to pay
Seller the amount (subject to the last sentence of this paragraph) that would
have been received by the Seller in connection with the change of control
transaction if all of the Issuer Shares were outstanding and held by the Seller
at the effective time of such change in control transaction. From and after
April 1, 1998 and through September 30, 1998, the Company shall not enter into
or consummate a change of control unless the other party or parties thereto
agree, as a condition precedent to such transaction, to pay Seller 50% of the
amount (subject to the last sentence of this paragraph) that would have been
received by the Seller in connection with the change of control transaction if
all of the Issuer Shares were outstanding and held by the Seller at the
effective time of such change in control transaction. Any amounts owed to Seller
pursuant to this Section 1.3 shall be paid simultaneously with the payment to
the Company's shareholders in connection with the consummation of any
transaction that constitutes a change in control of the Company. The Company
shall not enter into any change in control transaction or cooperate with any
third party with respect to a possible change in control transaction unless the
other party (or parties) thereto agree to make adequate provision for the
payment to Seller of all amounts provided herein. If the Company's shareholders
are entitled to receive Marketable Consideration (as defined below) and other
consideration in respect of a share of Common Stock, the amount that is due to
Seller shall be determined only with respect to the portion that is Marketable
Consideration.
(b) For purposes of this Agreement, the parties intend that a
"change in control" means a transaction or series of transactions in which the
holders of a majority of the outstanding Common Stock receive (or have the right
to receive) Marketable Consideration, in respect of their shares of Common Stock
(whether by merger, sale, tender, dissolution or otherwise). For the purposes of
this Agreement, Marketable Consideration means cash, debt or publicly traded
equity securities of a company that had been a public company before such
transaction (including preferred stock or any right to acquire such publicly
traded equity security) ("Marketable Consideration"). By way of illustration, a
change in control shall include: (i) the consolidation or merger of the Company
pursuant to which the outstanding shares of Common Stock are converted into the
right to receive Marketable Consideration or (ii) the sale of all or
substantially all of the assets of the Company for Marketable Consideration or
(iii) any other transaction involving an exchange or sale of 50% or more of the
outstanding Common Stock, including a tender offer, for Marketable
Consideration, but excluding all other transactions, including where the holders
of the outstanding Common Stock receive only securities of the Company or of
another entity of which the Company's assets or business constitute a
substantial portion, or reincorporation of the Company in a jurisdiction other
than California.
(c) For purposes of determining the amount which Seller would have
received with respect to the Issuer Shares following a change in control, (1) in
any transaction involving a sale or exchange of any shares of Common Stock, it
shall be presumed that all of the Issuer Shares were sold at the highest average
price paid to any affiliate of the Issuer for any shares in such transaction,
(2) in any transaction involving a merger or consolidation of the Company, it
shall be presumed that the Seller (as a shareholder) voted in favor of such
transaction, (3) in any transaction involving the sale of all or substantially
all of the assets of the Company, it shall be presumed that the Company was
dissolved and its net assets distributed to its shareholders immediately after
such transaction and (4) in any other change in control transaction in which a
majority of the Company's shareholders which are not affiliates of the Company
receive any consideration in respect of their shares of Common Stock, the Seller
shall be presumed to have the right to receive an equivalent amount.
Furthermore, in the event of a tender or exchange offer for less than all of the
outstanding Common Stock, the Seller shall be treated as if it had tendered
(which tender had been accepted) a percentage of the Issuer Shares equal to the
highest percentage of shares of Common Stock owned by any shareholder of the
Company which are accepted by the party making such offer; and in addition the
Seller shall be entitled to receive an equivalent amount of any securities of
the Company retained by such shareholder.
(d) The Seller acknowledges that neither the Company nor any of its
affiliates (i) has any fiduciary duty to Seller, any of Seller's affiliates or
any of Seller's stockholders (the "Seller Group") by reason of this Agreement,
(ii) is under any duty or obligation to the Seller Group to initiate,
investigate, consider, respond or otherwise take any action with respect to a
proposal that may result in a change of control by reason of this Agreement, any
such potential transaction as with respect to the Seller Group being within the
sole discretion of the Company, and (iii) any such potential transaction will be
considered by the Company in light of the duties owed to the holders of the
Common Stock outstanding at such time. Notwithstanding the above, if any third
party approaches the Company or any of its affiliates or representatives
regarding a possible change in control, the Company shall in good faith not
delay or defer such consideration, evaluation or negotiation with the intent to
reduce any amounts payable to Seller hereunder.
(e) Subject to the last sentence of Section 1.2(a), any payment due
to Seller under this Section 1.2 shall, unless Seller otherwise agrees, be paid
in cash or in property of the kind and in the same proportion received by the
shareholders of the Company in connection with the change in control
transaction.
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2. CERTAIN REPRESENTATIONS AND WARRANTIES
2.1 Certain Representations and Warranties by the Seller. The Seller
represents and warrants to the Company that:
(a) Organization and Good Standing. Each Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all necessary corporate power and authority to carry
on its business and to own and lease the assets which it owns and leases.
(b) Power and Authorization. Each Seller has full legal right, power
and authority to enter into and perform its obligations under this Agreement and
the other agreements and documents required to be delivered by it hereunder. The
execution, delivery and performance by each Seller of this Agreement and such
other agreements and documents have been duly authorized by all necessary
corporate action on the part of Seller. This Agreement has been duly and validly
executed and delivered by each Seller and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms. When
executed and delivered by such Seller as contemplated herein, each of such other
agreements and documents shall constitute the legal, valid and binding
obligation of each Seller, enforceable against it in accordance with its terms.
(c) No Conflicts. (i) Neither the execution of this Agreement nor
the consummation by each Seller of the transactions contemplated hereby will
constitute a violation of or default under, or conflict with, any statute or
regulation, contract, commitment, agreement, understanding, arrangement or
restriction of any kind to which such Seller is a party or by which it or any of
its properties are bound (which, in relation to a contract, commitment,
agreement, understanding, arrangement or restriction would have a material
adverse effect on the Seller or prohibit or delay the transactions contemplated
herein) and (ii) no consent, approval, order or authorization of any court,
administrative agency, other governmental entity or any other person is required
(as opposed to voluntary) by or with respect to such Seller in connection with
the execution and delivery of this Agreement by such Seller.
(d) Ownership of Shares. (i) Upon transfer and delivery of the
Issuer Shares and Warrants by the Seller hereunder to the Company, as provided
herein, Company shall acquire good and marketable title to such shares and
Warrants, free and clear of all claims, liens, charges, proxies, encumbrances
and security interests (other than as are imposed by applicable securities laws)
and (ii) the Seller does not own beneficially (as hereinafter defined) or of
record any shares of Common Stock or any right to acquire Common Stock of the
Company other than the Issuer Shares and Warrants.
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(e) No Broker. Neither Seller nor any director, officer, employee of
Seller has incurred or will incur on behalf of the Company any brokerage,
finder's or similar fee in connection with the transactions contemplated by this
Agreement.
(f) Board Members. Xxxxxx Xxxxxxx and Xxxxxxx Xxxxxxx or other
designees of the Seller have served on the Board of Directors of the Company by
designation of the Seller at all times since the consummation of the
transactions contemplated by the Merger Agreement (as defined in Section 6.3).
All documents, records, plans and books pertaining to the Company have been made
available to such designees. The Seller has made such examinations relating to
the terms, merits and risks of the transactions contemplated hereby as it deems
necessary, including the opportunity to ask questions of and receive answers
from the officers of the Company and the Company's auditors and consultants and
all such questions have been answered to the full satisfaction of the Seller. In
making the decision to enter into the transactions contemplated hereby, the
Seller is relying solely on the investigations made by the Seller and the
Company's representations and warranties made herein.
1.2 Certain Representations and Warranties by the Company. The Company
represents and warrants to the Seller that:
(a) Organization and Good Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California and has all necessary corporate power and authority to carry
on its business and to own and lease the assets which it owns and leases.
(b) Power and Authorization. The Company has full legal right, power
and authority to enter into and perform its obligations under this Agreement and
the other agreements and documents required to be delivered by it hereunder. The
execution, delivery and performance by the Company of this Agreement and such
other agreements and documents have been duly authorized by all necessary
corporate action on the part of the Company. The transactions contemplated by
this Agreement have been approved by a special committee of the board of
directors composed entirely of directors who are not present or former
directors, officers, employees, or consultants of Seller. This Agreement has
been duly and validly executed and delivered by the Company and constitutes its
legal, valid and binding obligation, enforceable against it in accordance with
its terms. When executed and delivered as contemplated herein, each of such
other agreements and documents shall constitute the legal, valid and binding
obligation of the Company enforceable against it in accordance with its terms.
(c) No Conflicts. (i) Neither the execution of this Agreement nor
the consummation by the Company of the transactions contemplated hereby will
constitute a violation of or default under, or conflict with, any statute or
regulation, contract, commitment, agreement, understanding, arrangement, or
restriction of any kind to which the Company is a party or by which it or any of
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its properties is bound (which in relation to a contract, commitment, agreement,
understanding, arrangement or restriction would have a material adverse effect
on the Company or prohibit or delay the transactions considered herein) and (ii)
no consent, approval, order or authorization of or by the stockholders of the
Company or of any court, administrative agency, other governmental entity or any
other person (other than that which has already been obtained) is required (as
opposed to voluntary) by or with respect to the Company in connection with the
execution and delivery of this Agreement by it.
(d) Change in Control. Except as previously disclosed to Seller or
its designees serving as the Company's board of directors, there are no offers,
options, rights, agreements or commitments of any kind (contingent or otherwise)
relating to any possible change in control of the Company.
(e) No Brokers. Neither the Company nor any director, officer or
employee of the Company has incurred or will incur on behalf of the Company, any
brokerage, finder's or similar fee in connection with the transactions
contemplated by this Agreement.
2. CLOSING DELIVERIES
2.1 Seller's Deliveries. At the Closing, Seller shall deliver, or shall
cause to be delivered to the Company the following:
(a) certificates for all of the Issuer Shares and Warrants, duly
endorsed or accompanied by stock powers and other appropriate instruments of
transfer duly executed in blank;
(b) copies of the resolutions of the Board of Directors of each
Seller authorizing the execution, delivery and performance of this Agreement and
the other agreements and instruments referred to herein, certified as of the
Closing by the Secretary or an Assistant Secretary of Seller; and
(c) The resignation of Xxxxxx X. Xxxxxxx from the Company's Board of
Directors; and
(d) such other documents and instruments as the Company may
reasonably request to effectuate or evidence the transactions contemplated by
this Agreement.
2.2 The Company's Deliveries. At the Closing, the Company shall
deliver, or shall cause to be delivered to Seller a copy of the resolutions of
the Board of Directors of the Company (and each committee thereof, if any)
authorizing the execution, delivery and performance by the Company of this
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Agreement and the other agreements and instruments referred to herein, certified
as of the Closing by the Secretary or an Assistant Secretary of the Company.
3. INDEMNIFICATION
3.1 Indemnification by Seller. Seller shall indemnify and hold the
Company and its officers, directors and shareholders harmless from and against
and in respect of any and all losses, costs, expenses, claims, damages,
obligations and liabilities, including interest, costs of investigation,
penalties and reasonable attorneys' fees and disbursements ("Damages") which the
Company or any such person may suffer, incur or become subject to arising out
of, based upon or otherwise in respect of any inaccuracy in or breach of (i) any
representation or warranty of Seller made in or pursuant to this Agreement or
any agreement or document required to be delivered pursuant to this Agreement,
(ii) or any breach or nonfulfillment of any covenant or obligation of Seller
contained in this Agreement or such other agreements and documents, or (iii) any
action, suit, proceeding or claim by a stockholder of the Seller (in such
capacity) challenging the transactions contemplated by this Agreement.
3.2 Indemnification by the Company. The Company shall indemnify and
hold Seller and its officers, directors and shareholders harmless from and
against and in respect of any and all Damages which Seller or any such person
may suffer, incur or become subject to arising out of, based upon or otherwise
in respect of (i) any inaccuracy in or breach of any representation or warranty
of the Company made in or pursuant to this Agreement or any agreement or
document required to be delivered pursuant to this Agreement, (ii) any breach or
nonfulfillment of any covenant or obligation of the Company contained in this
Agreement or such other agreements and documents or (iii) any action, suit,
proceeding or claim by a stockholder of the Company (in such capacity)
challenging the transactions contemplated by this Agreement.
3.3 Third Party Claims.
(a) Each party shall promptly notify the other of the assertion by
any third party of any claim with respect to which the indemnification set forth
in this Section relates. The indemnifying party shall have the right, upon
notice to the indemnified party within ten (10) business days after the receipt
of any such notice, to undertake the defense of or, with the consent of the
indemnified party (which consent shall not unreasonably be withheld) to settle
or compromise such claim. The failure of the indemnifying party to give such
notice and to undertake the defense of or to settle or compromise such a claim
shall constitute a waiver of the indemnifying party's rights under this Section
5.3(a) and in the absence of gross negligence or willful misconduct on the part
of the indemnified party shall preclude the indemnifying party from disputing
the manner in which the indemnified party may conduct the defense of such claim
or the reasonableness of any amount paid by the indemnified party in
satisfaction of such claim.
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(b) The election by the indemnifying party, pursuant to Section
4.3(a), to undertake the defense of a third party claim shall not preclude the
party against which such claim has been made also from participating or
continuing to participate in such defense, so long as such party bears its own
legal fees and expenses for so doing.
4. MISCELLANEOUS
4.1 Best Efforts. Each of the parties shall use its best reasonable
efforts to take all action and do all things necessary, proper or advisable to
consummate the transaction contemplated by this Agreement.
4.2 Amendment; Assignment. This Agreement may be amended only by
written instrument duly executed by the parties hereto. No party may waive any
term, provision, covenant or restriction of this Agreement except by duly signed
writing referring to the specific provision to be waived. Neither of the parties
to this Agreement may assign any of its rights or obligations under this
Agreement without the prior written consent of the other party hereto. Subject
to the foregoing, this Agreement shall be binding upon, inure to the benefit of
and be enforceable by the parties hereto and their respective successors and
permitted assigns. The parties expressly intend and agree that no provision of
this Agreement shall create any third party beneficiary rights in any person.
4.3 Termination of Prior Obligations. This Agreement sets forth the
entire understanding between the Seller and the Company and supersedes all prior
agreements, arrangements and understandings by and among the parties with
respect to the transactions contemplated hereby. All unperformed agreements,
arrangements and understandings under or entered into pursuant or relating to
the Agreement of Merger and Plan of Reorganization among MMI Medical, Inc. (now
the Company), MMI Acquisition Subsidiary, Inc., MEDIQ Incorporated and MEDIQ
Equipment and Maintenance Services, Inc. dated May 18, 1994, as amended (the
"Merger Agreement"), (including without limitation such Merger Agreement),
except as further provided herein, are hereby terminated without further
liability or obligation on the part of any party. Notwithstanding the foregoing,
the agreements set forth in Article X of the Merger Agreement shall continue in
full force and effect to the extent provided therein. Seller and the Company
each acknowledge that they have no claims against each other and hereby
irrevocably releases each other from and against, and irrevocably waives, any
and all claims, liabilities, obligations, covenants, agreements, damages and
causes of action, which each may have against the other arising out of events
occurring prior to the date hereof, provided that the foregoing shall not
include (i) Article X of the Merger Agreement, and (ii) shall not inlude, and
the parties shall use their best reasonable efforts to resolve within the next
180 days, all issues relating to the receipt of receivables, which are estimated
to be less than $50,000.
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4.4 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be delivered personally
or transmitted by telex, fax or telegram, to the respective parties as follows:
(a) If to the Seller, to it at:
MEDIQ Incorporated
Xxx XXXXX Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, President
Telecopier: (000) 000-0000
with a copy to:
Drinker Xxxxxx & Xxxxx LLP
Philadelphia National Bank Building
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: F. Xxxxxxx Xxxxxxx, III, Esquire
Telecopier: (000) 000-0000
(b) If to the Company, to it at:
InnoServ Technologies, Inc.
000 Xxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxx
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telecopier: (000) 000-0000
or to such other address as any party may have furnished to
the others in writing.
4.5 Governing Law. This Agreement will be governed by and construed in
accordance with the internal laws of the State of California.
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4.6 Survival. All representations, warranties, covenants and agreements
of the parties hereto shall survive indefinitely the Closing.
4.7 Counterparts; Headings. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same document. The article and
section headings contained herein are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.
4.8 Expenses. Each of the parties hereto shall pay the fees and
expenses it incurs in connection with this Agreement, other than as a result of
the breach hereof by the other party hereto.
4.9 Certain Definitions. For purposes of the Agreement:
(a) "beneficially owned" shall have the meaning set forth in Rule
13d-3 promulgated under the Exchange Act, as such Rule is in effect on the date
hereof.
(b) "business day" means any day which is neither a Saturday or
Sunday nor a legal holiday on which banks are authorized or required to be
closed in New York, New York.
4.10 Stock Splits, etc. The amount of any payments under Section 1.2
shall be appropriately adjusted for any stock split, reverse stock split, stock
dividend or any similar event occurring after the date hereof and prior to the
consummation of a change in control.
4.11 Public Announcements. Seller and the Company shall consult with
each other before issuing any press release or public statement with respect to
the transactions contemplated by this Agreement, and shall not issue any such
press release or make any such public statement with respect to the transactions
contemplated by this Agreement without the prior consent of the other party,
which shall not be unreasonably withheld or delayed; provided, however, that a
party may, without the prior consent of the other party, issue such press
release or make such public statement as may upon the advice of counsel be
required by law or the rules and regulations of the AMEX or NASD.
4.12 Specific Performance. Each of the parties acknowledges and agrees
that the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the parties agrees that
the other party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof (including without limitation the
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Seller's rights under Section 1.2) in any action instituted in any court of the
United States or any state thereof having jurisdiction over the parties and the
matter, in addition to any other remedy to which they may be entitled, at law or
in equity, subject to Section 5.13.
4.13 Arbitration. Any controversy involving a claim as to the existence
of a "change in control" or the amount due in respect thereof shall be finally
settled by arbitration in Los Angeles, California, in accordance with the
then-current Commercial Arbitration Rules of the American Arbitration
Association, and judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. Such arbitration shall be
conducted by an arbitrator chosen by mutual agreement of Seller and Company.
Failing such agreement, the arbitration shall be conducted by three independent
arbitrators, none of whom shall have any competitive interest with Seller or
Company; Seller shall choose one such arbitrator, Company shall choose one such
arbitrator, and such two arbitrators shall mutually select a third arbitrator.
Any decision of two such arbitrators shall be binding on Seller and Company.
There shall be limited discovery prior to the arbitration hearing, subject to
the discretion of the arbitrators, as follows: (a) exchange of witness lists and
copies of documentary evidence and documents related to or arising out of the
issues to be arbitrated, (b) depositions of all party witnesses, and (c) such
other depositions as may be allowed by the arbitrator upon a showing of good
cause. Depositions shall be conducted in accordance with the California Code of
Civil Procedure. Each party shall pay its own costs and expenses (including
counsel fees) of any such arbitration except that the arbitrator can compel one
party to pay all or a portion of the other party's costs and expenses. The
parties recognize that time is of the essence, and agree to submit to
arbitration any such claim within 20 business days of a controversy having
arisen.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written.
MEDIQ INCORPORATED
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
MEDIQ INVESTMENT SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
INNOSERV TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxx
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