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EXHIBIT 2.2
PLAN OF MERGER AND ACQUISITION AGREEMENT
among
LIFEQUEST MEDICAL, INC.
a Delaware corporation
▇▇▇▇▇ MEDICAL, INC.,
a Nevada corporation
and
MISHBUCHA, INC., a Texas corporation
d/b/a MEDEX SURGICAL
▇▇▇▇▇▇ ▇▇▇▇▇,
an individual
▇▇▇▇▇▇ ▇▇▇▇▇,
an individual
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THIS PLAN OF MERGER AND ACQUISITION AGREEMENT ("Agreement") is
executed effective the 30th day of September, 1997, by and among Mishbucha,
Inc, a Texas corporation, d/b/a Medex Surgical ("Medex"), ▇▇▇▇▇▇ ▇▇▇▇▇, an
individual ("▇▇▇▇▇▇"), ▇▇▇▇▇▇ ▇▇▇▇▇, an individual ("▇▇▇▇▇▇") as the only
shareholders of Medex (referred to as the "Shareholders," or individually as a
"Shareholder"), LIFEQUEST MEDICAL, INC., a Delaware corporation ("LifeQuest"),
and ▇▇▇▇▇ MEDICAL, INC., a Nevada corporation ("Purchaser," and together with
LifeQuest, the "LifeQuest Parties").
W I T N E S S E T H:
WHEREAS, LifeQuest is primarily in the business of developing and
commercializing minimally invasive surgery devices; and
WHEREAS, LifeQuest owns all of the issued and outstanding stock of
Purchaser; and
WHEREAS, Medex is in the business of selling minimally invasive
orthopaedic surgical products in Northern Texas.
WHEREAS, the Shareholders are individuals constituting the only
shareholders of Medex; collectively holding 100% of the issued and outstanding
stock of Medex; and
WHEREAS, the respective boards of directors of Purchaser and Medex
have approved the merger of Medex with and into Purchaser (the "Merger")
pursuant to the terms and subject to the conditions of this Agreement; and
WHEREAS, this Agreement is intended to qualify under Section 368 of
the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the parties hereto agree that Medex shall be merged with and into
Purchaser and that the terms and conditions of the Merger, the method of
carrying the Merger into effect and certain other provisions relating thereto
shall be as hereinafter set forth and as set forth:
ARTICLE 1
DEFINITIONS
Defined Terms. As used herein, the terms below shall have the
following meanings herein specified applicable to both the singular and plural
forms of any of the terms.
1.1 "Affiliate" shall mean, with respect to a Person, any Person
that, directly or indirectly, controls or is controlled by or is under common
control with the Person.
1.2 "Assets" shall mean the assets, properties and rights of Medex
of every nature, kind and description, wherever located, tangible and
intangible, real, personal and mixed, whether or not reflected in the books and
records of Medex necessary or
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desirable to permit the business of Medex to be carried on in the manner as is
presently conducted.
1.3 "Benefit Plans" shall mean bonus, deferred compensation,
severance, pension, profit sharing, retirement, stock purchase, stock option,
medical, hospitalization, accident insurance or any other employee benefit
plan, arrangement or practice, whether written or unwritten, which covers
employees of Medex.
1.4 "Certificate" shall mean each stock certificate representing
shares of Medex Stock.
1.5 "Closing" shall mean the meeting held on the Closing Date.
1.6 "Closing Date" shall have the meaning assigned to it in
Article 7.
1.7 "Effective Time" shall mean the time at which a properly
executed certificate of merger in substantially the form attached to this
agreement as Exhibit A (together with other documents required by law to effect
the Merger) shall have been filed with the Secretary of State of Nevada, and in
any other jurisdiction where such a certificate of merger is required.
1.8 "Environmental Conditions" shall mean material conditions with
respect to soil, surface waters, ground waters, stream sediments, underground
tanks, asbestos and similar conditions on-site and off-site of properties
owned, occupied or used by Medex, as the case may be, related to the presence
or Release of Hazardous Substances, which conditions could require remedial
action or may result in claims, demands and liabilities against, upon or,
respectively, by third parties, including, without limitation, governmental
entities, adjacent property owners and any individuals suffering property
damage or personal injury.
1.9 "Environmental Laws" shall mean all federal, state and local
laws, rules, regulations, codes, judgments and decrees concerning pollution or
protection of the environment.
1.10 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
1.11 "Financial Statements" shall mean the balance sheets,
statements of income and retained earnings and changes in cash flows of Medex
since the creation and organization of Medex.
1.12 "Former Medex Shareholder" shall mean each Person who was,
immediately before the Effective Time, a holder of issued and outstanding
shares of Medex Stock.
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1.13 "Hazardous Substances" shall include any dangerous substances,
toxic substances, hazardous materials or hazardous substances as defined in or
pursuant to the Resource Conservation and Recovery Act (42 U.S.C. Section 6901,
et seq.), as amended, the Comprehensive Environmental Response, Compensation
and Liability Act (42 U.S.C. Section 9601, et seq.) ("CERCLA"), as amended, or
any other Environmental Law.
1.14 "Intellectual Property" shall have the meaning assigned to it
in Section 3.8.
1.15 "IRS" shall mean the Internal Revenue Service.
1.16 "LifeQuest SEC Documents" shall mean each report, schedule,
registration statement and definitive proxy statement filed by LifeQuest with
the SEC since January 1, 1997.
1.17 "LifeQuest Stock" shall mean the common stock, $.001 par value
of LifeQuest.
1.18 "Losses" shall mean all damages, losses, obligations,
liabilities, claims, encumbrances, deficiencies, costs and expenses including,
without limitation, reasonable attorneys' fees and other costs and expenses
incident to any suit, action, investigation, claim or proceeding.
1.19 "Market Price" shall mean the average of the closing bid and
asked prices of a share of LifeQuest Stock for the 10 consecutive trading days
immediately prior to the third trading day prior to the Closing Date, as
reported in the over-the-counter market as reported by the National Association
of Securities Dealers Automated Quotation System.
1.20 "Merger Consideration" shall have the meaning assigned to it
in Section 2.6.
1.21 "Medex Stock" shall mean the common stock, $0.10 par value, of
Medex.
1.22 "Medex's Contracts" shall mean (a) the contracts described on
Schedule 3.12, (b) purchase orders from customers accepted in the ordinary
course of business, and (c) employment contracts terminable on not more than 30
days' notice.
1.23 "Notice" shall mean any summons, citation, directive, order,
claim, litigation, proceeding, judgment, letter or other communication, written
or oral, actual or threatened, from the United States Environmental Protection
Agency or other federal, state or local agency or authority or any other entity
or any individual concerning any intentional or unintentional act or omission
which has resulted or may result in the Release of Hazardous Substances into
waters, or into the "environment" as such term is defined in CERCLA, from or on
property owned, occupied or used by Medex, and shall include the imposition of
any lien on property occupied or used by Medex, pursuant to any violation of
any Environmental Law, or any knowledge, after due inquiry and investigation,
of any acts that could give rise to any of the above.
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1.24 "Person" shall mean an individual, corporation, partnership,
joint venture, trust or unincorporated organization, or a government or any
agency or political subdivision thereof.
1.25 "Purchaser Stock" shall mean the common stock, $.01 par value
of Purchaser.
1.26 "Release" shall mean releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, disposing or
dumping.
1.27 "SEC" shall mean the United States Securities and Exchange
Commission.
1.28 "Securities Act" shall mean the Securities Act of 1933, as
amended.
1.29 "Subsidiary" shall mean, with respect to any Person (the
"parent"), (i) any corporation, association, joint venture, partnership or
other business entity of which securities or other ownership interests
representing more than 50% of the ordinary voting power or beneficial interest
are, at the time as of which any determination is being made, owned or
controlled by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent and (ii) any joint venture or
partnership of which the parent or any Subsidiary of the parent is a general
partner or has responsibility for its management (provided, however, that the
term "Subsidiary" shall not include joint operating agreements).
1.30 "Surviving Corporation" shall mean the corporation existing at
and after the Effective Time as a result of the Merger.
ARTICLE 2
MERGER
2.1 The Merger. Subject to the terms and conditions of this
agreement, Medex shall be merged with and into Purchaser in accordance with all
applicable laws, with Purchaser being the Surviving Corporation. Purchaser and
Medex shall cause a certificate of merger to be filed with the Secretary of
State of Nevada, and in any other jurisdiction where such a certificate of
merger is required, on the Closing Date, unless legally prohibited from doing
so. The Merger shall be effective at the Effective Time.
2.2 Surviving Corporation. From and after the Effective Time, the
Surviving Corporation shall have the name "▇▇▇▇▇ Medical, Inc." and shall
possess all assets and property of every description, and every interest in the
assets and property, wherever located, and the rights, privileges, immunities,
powers, franchises and authority, of a public as well as of a private nature,
of each of Medex and Purchaser, and all debts and all other things in action or
belonging or due to each of Medex and Purchaser, all of which shall be vested
in the Surviving Corporation without further act or deed, and title to any real
estate or any interest in the real estate vested in either Medex or Purchaser
shall not revert or in any way be impaired.
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2.3 Liabilities. The Surviving Corporation shall be liable for
all the debts, liabilities and duties of each of Medex and Purchaser; any
action or proceeding pending, by or against either Medex or Purchaser, may be
prosecuted to judgment, with right of appeal, as if the Merger had not taken
place, or the Surviving Corporation may be substituted in its place, and all
the rights of creditors of each of Medex and Purchaser shall be preserved
unimpaired, and all liens upon the property of each of Medex and Purchaser
shall be preserved unimpaired, on only the property affected by the liens
immediately prior to the Effective Time.
2.4 Certificate of Incorporation and Bylaws. The certificate of
incorporation and bylaws of Purchaser in effect immediately prior to the
Effective Time shall be the certificate of incorporation and bylaws of the
Surviving Corporation following the Merger until otherwise amended or repealed.
2.5 Directors and Officers. The directors and officers of
Purchaser immediately prior to the Effective Time shall be the directors and
officers of the Surviving Corporation until their successors are duly elected
or appointed and qualified in the manner provided in the bylaws of the
Surviving Corporation, or as otherwise provided by law.
2.6 Conversion or Cancellation of Stock Upon Merger. In
consideration for the Merger and the non-competition agreement in Section 12
hereof, as of the Effective Time, by virtue of the Merger and without any
action on the part of the holders of any shares of Medex Stock, or the holder
of the shares of Purchaser Stock, (a) the Medex Stock outstanding immediately
before the Effective Time shall be converted into the right to receive, subject
to Section 2.7 below, an aggregate number of shares of LifeQuest Stock, equal
to the quotient of $420,000 divided by the Market Price of a share of LifeQuest
Stock (the "Merger Consideration") and (b) each share of Purchaser Stock
outstanding immediately before the Effective Time shall be converted into one
share of common stock of the Surviving Corporation.
2.7 Fractional Shares. Notwithstanding Section 2.6, no
certificates or scrip representing fractional shares of LifeQuest Stock shall
be issued upon the surrender for exchange of certificates that prior to the
Effective Time represented shares of Medex Stock, no dividend or distribution
of LifeQuest shall relate to any fractional share interest and no fractional
share interest shall entitle the owner thereof to vote or to exercise any
rights of a shareholder of LifeQuest. In the event that any Former Medex
Shareholder shall be entitled to any fractional share interest then any
fractional amount shall be rounded up to the nearest whole share.
2.8 Exchange Requirements. After the Effective Time, (a) each
outstanding Certificate shall, until duly surrendered to Purchaser, be deemed
to represent only the right to receive the Merger Consideration, (b) there
shall be no further transfer on the records of Medex of Certificates, and (c)
each share of Medex Stock presented or surrendered to Purchaser shall be
canceled in exchange for the Merger Consideration as contemplated by Section
2.6. In no event shall Purchaser be obligated to deliver Merger Consideration
to any holder of a Certificate until such holder surrenders such Certificate as
provided herein.
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2.9 Interim Dividends. No dividends or other distributions
declared after the Effective Time on LifeQuest Stock issuable pursuant to the
Merger and payable to any Former Medex Shareholder after the Effective Time
shall be paid to the holder of any unsurrendered certificates formerly
representing shares of Medex Stock until the certificates shall be surrendered
as provided herein, provided, however, that (a) upon surrender there shall be
paid to the shareholder in whose name the certificates representing the shares
of LifeQuest Stock shall be issued the amount of unpaid dividends with respect
to the holder's shares of LifeQuest Stock and (b) at the appropriate payment
date, or as soon as practicable thereafter, there shall be paid to the
shareholder the amount of dividends declared with respect to whole shares of
LifeQuest Stock with a record date on or after the Effective Time but before
surrender and a payment date subsequent to surrender, subject in any case to
any applicable escheat laws. No interest shall be payable with respect to the
payment of dividends or other distributions on surrender of outstanding
certificates.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders each represent and warrant to the LifeQuest Parties
as follows:
3.1 Corporate Organization. Medex is a corporation duly
organized, validly existing and in good standing under the laws of Texas, and
has full power and authority to own its properties and to carry on its business
as and in the places where such properties are now owned or such business is
now being conducted. Complete and correct copies of the Articles of
Incorporation of Medex and all amendments thereto, certified in each case by
the Secretary of State of the State of Texas, and of the Bylaws of Medex and
all amendments thereto, certified by the Secretary of Medex, heretofore have
been delivered to LifeQuest. Medex is duly qualified to do business and is in
good standing in all jurisdictions (each such jurisdiction is set forth on
Schedule 3.1 attached hereto and made a part hereof) in which such
qualification is necessary because of the character of the properties owned,
leased or operated by it or the nature of its activities. Medex has not
knowingly taken any action, or failed to take any action which action or
failure will preclude or prevent Medex's business from being conducted in
substantially the same manner in which Medex has heretofore conducted the same.
3.2 Subsidiaries. Medex has no subsidiaries.
3.3 Capitalization. Medex's authorized capital stock consists of
10,000 shares of Medex Stock, of which 10,000 shares are issued and outstanding
and are collectively owned of record and beneficially by the Shareholders free
and clear of all liens, encumbrances or other obligations and issued without
violation of the preemptive, subscriptive or other similar rights of any person
or entity. There are no outstanding subscriptions, options, warrants, rights
or other agreements obligating Medex to issue any additional shares of Medex
Stock, except as set forth on Schedule 3.3 attached hereto and made a part
hereof.
3.4 Authorization. Medex has full power and authority, corporate
and otherwise, to enter into this Agreement and to assume and perform its
obligations
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hereunder. The execution and delivery of this Agreement and the performance by
Medex of its obligations hereunder have been duly authorized by the Board of
Directors and the shareholders of Medex and no further action or approval,
corporate or otherwise, by Medex is required in order to constitute this
Agreement as a binding and enforceable obligation of Medex. The execution and
delivery of this Agreement and the performance by Medex of its obligations
hereunder do not and will not violate any provisions of the Articles of
Incorporation or Bylaws of Medex and do not and will not conflict with or
result in any breach of any condition or provisions of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any of the Assets by reason of the terms of any contract,
mortgage, lien, lease, agreement, indenture, instrument or judgment to which
Medex is a party, or which is or purports to be binding upon Medex or which
affects or purports to affect any of the Assets.
3.5 Approvals and Consents. No action, approval, consent or
authorization, including, but not limited to, any action, approval, consent or
authorization by any governmental or quasi-governmental agency, commission,
board, bureau, or instrumentality is necessary as to Medex or either of the
Shareholders in order to constitute this Agreement as a valid, binding and
enforceable obligation of Medex and each of the Shareholders in accordance with
its terms.
3.6 Permits, Licenses, Etc. Medex has all permits, licenses,
orders and approvals, exclusive of those required under Environmental Laws, of
all federal, state, or local governmental or regulatory bodies required for it
to conduct its business as presently conducted. All such permits, licenses,
orders and approvals are in full force and effect and no suspension or
cancellation of any of them is threatened. Medex is operating in compliance
with all such permits, licenses, orders and approvals, and none of such
permits, licenses, orders or approvals will be adversely affected by the
consummation of the transactions contemplated by this Agreement. Medex is in
compliance in all material respects with each law, rule and regulation other
than Environmental Laws applicable to its business including, without
limitation, laws, rules and regulations respecting occupational safety and
employment practices. The conduct of the business of Medex and all assets and
properties utilized by Medex therein are in conformance with the requirements
and regulations of the Occupational Safety and Health Administration ("OSHA").
3.7 Environmental Laws. Medex has all permits, licenses, orders
and approvals of, and has made all required filings with, all federal, state or
local governmental or regulatory bodies relating to, arising under or required
by the Environmental Laws. All such permits, licenses, orders and approvals
are in full force and effect and no suspension or cancellation of any of them
is pending or threatened. None of such permits, licenses, orders or approvals
will be adversely affected by the consummation of the transactions contemplated
by this Agreement. Medex is in compliance with all such permits, licenses,
orders and approvals and with all limitations, conditions, standards and
requirements contained in Environmental Laws applicable to it and the business
conducted by it. Schedule 3.7 attached hereto and made a part hereof contains
a description of each summons, citation, order, letter or other written
communication received by Medex from any federal, state or local
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governmental or regulatory body under any of the Environmental Laws during the
five-year period ending on the date hereof.
There are no currently existing Environmental Conditions with respect
to properties owned, occupied or used by Medex. Medex has received no Notice
with respect to any Environmental Condition at any time prior to the date
hereof.
3.8 Intellectual Property and Other Intangible Assets. Schedule
3.8 sets forth a description of all intellectual property owned, licensed or
claimed by Medex. Medex (a) owns or has the right to use all inventions,
discoveries, patents, copyrights, trademarks, trade names, service marks,
corporate names, licenses, trade secrets and know how and all other
intellectual property rights with respect to the foregoing, used in or
necessary for the conduct of its business as now conducted or as proposed to be
conducted without infringing upon or otherwise acting adversely to the right or
claimed right of any Person under or with respect to any of the foregoing (such
inventions, discoveries, patents, copyrights, trademarks, trade names, service
marks, corporate names, licenses, trade secrets and know how and all other
intellectual property rights with respect thereto being herein referred to as
the "Intellectual Property") and (b) is not obligated or under any liability or
claim whatsoever to make any payments by way of royalties, fees or otherwise to
any owner or licensee of, or other claimant to, any inventions, discoveries,
patents, copyrights, trademarks, trade names, service marks, corporate names,
licenses, trade secrets and know how and all other intellectual property
rights, with respect to the use thereof or in connection with the conduct of
its business or otherwise. A list of all such Intellectual Property and a
statement whether such Intellectual Property is owned or licensed is set forth
in Schedule 3.8 hereto. Except as specifically set forth in Schedule 3.8
hereto, the Intellectual Property has been duly registered or patented or
sought to be registered or patented with appropriate state, federal and foreign
jurisdictions and Medex is the sole and exclusive owner or has the sole and
exclusive right to use the Intellectual Property.
3.9 Financial Statements. Attached hereto as Schedule 3.9 and
made a part hereof are the Financial Statements, prepared in accordance with
U.S. generally accepted accounting principles consistently applied throughout
the periods indicated. The Financial Statements (a) are true, correct and
complete, (b) fairly, completely and accurately present the financial position
of Medex at the dates specified and the results of its operations for the
period covered, and (c) reflect expenses and liabilities of Medex in a
consistent manner throughout the periods to which the Financial Statements
relate. At the date of the Financial Statements, Medex had no liabilities or
obligations of any kind or nature, fixed or contingent, matured or unmatured or
otherwise, which are not fully reflected or reserved against on the Financial
Statements; nor does Medex have any liability or obligation of any kind or
nature arising since that date other than those incurred in the ordinary course
of business consistent with past practices, none of which are material. Medex
owns outright and has good and indefeasible title to all of the Assets,
including, without limitation, all of the assets and properties reflected on
the Financial Statements or acquired thereafter, free and clear of any
mortgage, lien, pledge, charge, claim, conditional sales or other agreement,
lease, right or encumbrance of any sort except: (x) to the extent stated or
reserved against on the Financial Statements and for changes occurring in the
ordinary course of business after the date thereof, none of which changes is
adverse, and (y) as set forth on Schedule 3.9A
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attached hereto and made a part hereof. Each such asset and item has been
fully operational in the ordinary course of business for at least the six
months immediately preceding the date hereof. The Assets include all assets
and properties (real, personal and mixed, tangible and intangible) and all
rights necessary or desirable to permit Seller's business to be carried on as
presently conducted by Seller, and Medex has complete and unrestricted power
and the unqualified right to transfer, convey and assign the Assets.
3.10 Material Adverse Changes Since the Date of the Financial
Statements. Since June 30, 1997, except as set forth on Schedule 3.10, there
has been no material adverse change in the financial condition, assets,
liabilities, properties or business of Medex. Since June 30, 1997, Medex has
not:
(a) issued or sold any stock, notes, bonds or other
securities, or any option to purchase the same, or entered into any agreement
with respect thereto;
(b) declared, set aside or made any dividend or other
distribution on its capital stock or redeemed, purchased or acquired any shares
thereof or entered into any agreement in respect of the foregoing;
(c) incurred any damage, destruction or similar loss, whether
or not covered by insurance, materially affecting its business or properties;
(d) other than in the ordinary course of business, sold,
assigned or transferred any of its tangible assets or any trade name,
franchise, design, or other intangible assets or property;
(e) other than in the ordinary course of business, mortgaged,
pledged or granted or suffered to exist any lien or other encumbrance or charge
on any of its assets or properties, tangible or intangible;
(f) other than in the ordinary course of business, waived any
rights of material value or canceled or modified any material debts or claims;
(g) incurred any liability or obligation for borrowed money
to any shareholder of Medex or any Affiliate of Medex;
(h) incurred any obligation or liability (absolute or
contingent) except current liabilities and obligations incurred in the ordinary
course of its business or paid any liability or obligation (absolute or
contingent) other than current liabilities and obligations incurred in the
ordinary course of business, none of which were material;
(i) entered into any transaction other than in the ordinary
course of business;
(j) became obligated to make any payment to any shareholder
or any Affiliate of Medex in any capacity, or entered into any transaction of
any nature with any shareholder or any Affiliate of Medex in any capacity,
except in respect of the
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foregoing for compensation to shareholders or Affiliates who are employees of
Medex in their capacity as such;
(k) except for increases in the ordinary course and customary
in the business of Medex, which increases did not inure to officers, directors
or shareholders of Medex or to consultants to Medex, increased the compensation
payable to any employee of Medex or became obligated to increase any such
compensation, or their capacities as such; or
(l) entered into any transaction with any Affiliate of Medex,
except in respect of the foregoing for compensation to Affiliates who are
employees of Medex in their capacity as such.
3.11 Tax Returns. Medex has duly filed all federal, state, county
and local income, excise, sales and other tax returns and reports required to
have been filed by it to the date hereof, after giving effect to any extensions
of time to file duly obtained by Medex. Each such return and report is true
and correct and Medex has paid all taxes, interest and penalties shown on such
returns or reports to be due or claimed to be due prior to the date hereof to
any federal, state, county, local or other taxing authority. Medex has no
liability for any taxes, assessments, amounts, interest or penalties of any
nature whatsoever other than as shown on the Financial Statements and there is
no basis for any additional claim or assessment. The IRS has not examined the
federal income tax returns of Medex. No waiver of the statute of limitations
has been given with respect to any taxable year of Medex. No government or
governmental authority is now asserting or threatening to assert any deficiency
or assessment for additional taxes or any interest, penalties or fines with
respect to Medex.
3.12 Contracts. Except for commissions payable to ▇▇▇▇▇▇ and
▇▇▇▇▇▇ as set forth in the Financial Statements, Medex is not a party to nor
has any contract or commitment of any kind or nature whatsoever, written or
oral, including, without limitation, any lease, license, franchise, employment,
consultant or commission agreement, pension, profit sharing, bonus, stock
purchase, retirement, hospitalization, insurance or other plan or arrangement
involving employee benefits, contract with any labor union or contract for
services, materials, supplies or equipment or for the sale or purchase of any
of its products or assets. Except as set forth therein, each of the Medex's
Contracts referred to on Schedule 3.12 is valid and existing, in full force and
effect and enforceable in accordance with its terms and no party thereto is in
default and no claim of default by any party has been made or is now pending
and there does not exist any event that with notice or the passing of time or
both would constitute a default or would excuse performance by any party
thereto. None of Medex's Contracts, except as expressly set forth therein,
requires any consents or approvals by any party to such contract to prevent a
breach or to protect and preserve the rights of the Surviving Corporation
thereunder subsequent to the consummation of the Merger. Medex has heretofore
delivered to LifeQuest complete and correct copies of each of Medex's
Contracts.
3.13 Tangible Personal Property. Schedule 3.13 attached hereto and
made a part hereof is a true and complete list of all tangible personal
property owned by Medex
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having a book value at the date of the Financial Statements. Medex owns and
has good and indefeasible title in fee to all of its assets and properties
including, without limitation, all of the assets and properties reflected in
the Financial Statements and those identified on Schedule 3.13, free and clear
of any mortgage, lien, pledge, charge, claim, conditional sales or other
agreement, lease, right or encumbrance except (a) to the extent stated or
reserved against in the Financial Statements, (b) vendors' or other statutory
liens which may have resulted in the ordinary course of business, (c) minor
imperfections of title, liens and encumbrances which do not materially detract
from the value or the utility of the property subject thereto or materially
impair the operations of the owner thereof, and (d) as set forth in Schedule
3.13 attached hereto and made a part hereof.
3.14 Real Property. Medex owns no real property. Except as set
forth on Schedule 3.14, Medex leases no real property. All leases of property
under which Medex purports to be a lessee are valid, binding and in full force
and effect, and Medex is not in default thereunder and there is no event or
fact which upon the passage of time or the giving of notice, or both, could
constitute a default by Medex under such lease.
3.15 Insurance. Schedule 3.15 attached hereto and made a part
hereof, is a true and complete list and brief description of all policies of
fire, liability and other forms of insurance owned or held by Medex. All of
such policies are valid and binding and in full force and effect as of the date
hereof and are in such amounts and cover such risks as are customarily carried
by other businesses similar to those conducted by Medex.
3.16 Banking. Schedule 3.16 attached hereto and made a part hereof
is a true and complete list setting forth the names and locations of all banks
at which Medex has an account or safe deposit box, the numbers of the accounts
and the names of all persons authorized to draw thereon.
3.17 Litigation. There are no actions, suits, proceedings or
investigations pending or threatened against or affecting the assets or the
business, operations or financial condition of Medex, at law or in equity, in
any court or before any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, nor is there
any basis for any such action, suit, proceeding or investigation. There are no
judgments outstanding against Medex and Medex is not in default in respect of
any judgment, order, writ, injunction, or decree of any court or any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality.
3.18 Labor. There are no threats of strikes, work stoppages or
demands for collective bargaining by any union or labor organization against or
including Medex, no grievances, disputes or controversies with any union or any
other organization of the employees of Medex, and no pending or threatened
arbitration proceedings involving an employment grievance, dispute or
controversy.
3.19 Employee Benefit Plans. Except as set forth on Schedule 3.19
attached hereto and made a part hereof, Medex has no Benefit Plans, including,
without
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limitation, any "employee pension benefit plan" or "employee welfare benefit
plan" within the meaning of the Employee Retirement Income Security Act of
1974, as amended (29 U.S.C. Section 1001, et seq.) ("ERISA"), and the final
regulations thereunder. True and complete copies of each written Benefit Plan
sponsored by Medex have heretofore been delivered to LifeQuest. Medex has no
commitment, written or oral, and whether legally binding or not, to create any
Benefit Plans in addition to those shown on Schedule 3.19. Medex has no
benefit plan that is a defined benefit plan within the meaning of ERISA Section
3(35) maintained or contributed to by Medex and that covers employees of Medex.
Medex has no liability on account of any Benefit Plans, including but not
limited to liability for (a) additional contributions accruing under such
Benefit Plans with respect to periods commencing on or prior to the Closing
Date; (b) fiduciary breaches by Medex, the trustees under the trust created
under any of such plans, or any other persons under ERISA, or any other
applicable statute, regulation or rule; or (c) income taxes by reason of
non-qualification of such Benefit Plans. There are no pending claims against
any Benefit Plan (other than for benefits in accordance with its terms), nor
has any claim been threatened in writing by any participant thereof or
beneficiary thereunder. Without limiting the generality of the foregoing, all
Benefit Plans are in full compliance with all applicable reporting, disclosure,
filing and other administrative requirements pertaining to employee benefit
plans set forth in the Code and ERISA and rules and regulations promulgated
under either.
3.20 Inventory. Inventory reflected on the Financial Statements as
of the date thereof was determined in accordance with generally accepted
accounting principles consistently applied, stated, on an aggregate basis, at
the lower of cost (based on the first-in, first-out method) or market value and
consists solely of merchandise usable or saleable in the ordinary course of
business at not less than gross cost. The inventory conforms to customary
trade standards for marketable goods. Since the date of the Financial
Statements, there have been no changes in the inventory reflected on the
Financial Statements except in the ordinary course of business, none of which
have been material.
3.21 Accounts Receivable. Each account receivable reflected on the
Financial Statements constitutes a bona fide receivable resulting from a bona
fide sale to a customer in the ordinary course of business, the amount of which
was actually due on the date thereof and has been or will be collected in the
ordinary course of business, net of the allowance for doubtful accounts
reflected on the Financial Statements. There are no defenses, claims of
disabilities, counterclaims, offsets, refusals to pay or other rights of
set-off against any accounts receivable and there is no threatened, intended or
proposed defense, claim of disability, counterclaim, offset, refusal to pay or
other right of set-off with respect thereto. Each account receivable, each
document and instrument and each transaction underlying or relating thereto
conforms, including, without limitation, in respect of interest rates charged,
notices given and disclosures made, to the requirements and provisions of each
applicable law, rule, regulation or other relating to credit, consumer credit,
credit practices, credit advertising, credit reporting, retail installment
sales, credit cards, collections, usury, interest rates and truth-in-lending,
including, without limitation, the Federal Truth in Lending Act, as amended,
and Regulation Z issued by the Board of Governors of the Federal Reserve System
thereunder. Such reserves and allowances have been established on the basis of
historical experience in accordance with U.S. generally accepted accounting
principles
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consistently applied. Purchaser hereby agrees to use its best efforts to
collect the accounts receivable reflected in the Financial Statements. All
payments received by Purchaser for accounts receivable will be applied to the
outstanding accounts receivable in accordance with the normal and customary
practice of Purchaser.
3.22 Employee and Other Compensation. Schedule 3.22 attached
hereto and made a part hereof is a complete and correct list of the names and
current annual salary, bonus, commission and perquisite arrangements, written
or unwritten, for each director, officer and employee of Medex, including those
whose compensation was paid in whole or in part by persons or entities other
than Medex. No current or former shareholder, director, officer, employee or
Affiliate of Medex, nor any relative, associate or agent of such shareholder,
director, officer, employee or Affiliate, has any interest in any property of
Medex except as a shareholder, or is a party, directly or indirectly, to any
contract for employment or otherwise or any lease or has entered into any
transaction with Medex including, without limitation, any contract for the
furnishing of services by, or rental of real or personal property from or to,
or requiring payments to, any such stockholder, director, officer, employee,
Affiliate, relative, associate or agent. To the best knowledge of Medex and
each of the Shareholders, no employee listed thereon intends to terminate his
employment relationship with Medex and Medex has no contract for the future
employment of any officer or employee not listed on Schedule 3.22.
3.23 Customers and Suppliers. Schedule 3.23 attached hereto and
made a part hereof is a complete and correct list of the names and addresses of
the 10 largest customers and suppliers, respectively, of Medex during the last
fiscal year, and the total sales to or purchases from such customers and
suppliers made by Medex during the last fiscal year. No supplier or customer
of Medex representing in excess of 5% of Medex's purchases or sales during the
last fiscal year has advised Medex, formally or informally, that it intends to
terminate, discontinue or substantially reduce its business with Medex by
reason of the transactions contemplated by this Agreement or otherwise.
3.24 No Breach of Other Agreements. The entering into, execution
and performance of this Agreement and the other Agreements contemplated herein
and the performance of the terms, conditions, provisions, duties and
obligations contained herein and referred to and contemplated herein shall not
cause or result in any of Medex, ▇▇▇▇▇▇ or ▇▇▇▇▇▇ breaching any term or
provision of any other agreement, written or otherwise.
3.25 No Omission of Material Fact. No representation or warranty
by either of the Shareholders in this Agreement or under any documents,
instruments, certificates or schedules furnished pursuant hereto or in
connection with the transactions contemplated hereby, contains any untrue
statement of a material fact, or omits to state a material fact necessary to
make the statements or facts contained herein or therein not misleading.
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3.26 Closing Date Effect. All of the representations and
warranties of each of the Shareholders are true and correct as of the date
hereof and shall be true and correct on and as of the Closing Date, with the
same force and effect as if such representations and warranties were made by
each of the Shareholders to the LifeQuest Parties on the Closing Date.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE LIFEQUEST PARTIES
The LifeQuest Parties represent and warrant to the Shareholders as
follows:
4.1 LifeQuest Corporate Organization. LifeQuest is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has full power and authority to own its properties and to
carry on its business as and in the places where such properties are now owned
or such businesses are now being conducted.
4.2 Purchaser Corporate Organization. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada and has full power and authority to own its properties and to
carry on its business as and in the places where such properties are now owned
or such businesses are now being conducted.
4.3 Authorization. The LifeQuest Parties have full power and
authority, corporate and otherwise, to enter into this Agreement and to assume
and perform their respective obligations hereunder. The execution and delivery
of this Agreement and the performance by the LifeQuest Parties of their
respective obligations hereunder have been or will be duly authorized by the
Boards of Directors of the LifeQuest Parties and no further action or approval,
corporate or otherwise, by the LifeQuest Parties is or will be required in
order to constitute this Agreement as a binding and enforceable obligation of
the LifeQuest Parties.
ARTICLE 5
LIFEQUEST STOCK AND LIFEQUEST SEC DOCUMENTS
5.1 LifeQuest SEC Documents. LifeQuest has furnished each of the
Shareholders with a true and complete copy of the LifeQuest SEC Documents. As
of its filing date (and, with respect to any registration statement, the date
on which it was declared effective), each LifeQuest SEC Document was in
compliance, in all material respects, with the requirements of its form,
contained no untrue statement of a material fact and did not omit any statement
of a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of LifeQuest included in the
LifeQuest SEC Documents complied, at the time of filing with the SEC (and, with
respect to any registration statement, the date on which it was declared
effective), as to form, in all material respects, with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted accounting
principles applied on a consistent basis
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during the periods involved (subject, in the case of unaudited statements, to
the omission of certain footnotes) and fairly present, in all material respects
(subject, in the case of the unaudited statements, to normal, recurring
year-end audit adjustments) the consolidated financial position of LifeQuest as
at the dates thereof and the consolidated results of their operations and
changes in financial position for the periods then ended. The consolidated
financial statements of LifeQuest as of June 30, 1997, included in the
LifeQuest SEC Documents disclose all liabilities of LifeQuest required to be
disclosed therein and contained adequate reserves for taxes and all other
material accrued liabilities. Since June 30, 1997, there has not been any
change in the business, assets, properties, condition (financial or otherwise),
results of operations or prospects of LifeQuest, and no condition exists, which
in any case would have or be a material adverse effect on, or with respect to,
LifeQuest.
5.2 No Omission of Material Fact. No representation or warranty
by the LifeQuest Parties in this Agreement or under any documents, instruments,
certificates or schedules furnished pursuant hereto or in connection with the
transactions contemplated hereby, contains any untrue statement of a material
fact, or omits to state a material fact necessary to make the statements or
facts contained herein or therein not misleading.
5.3 Closing Date Effect. All of the representations and
warranties of the LifeQuest Parties are true and correct as of the date hereof
and shall be true and correct on and as of the Closing Date with the same force
and effect as if such representations and warranties were made by the LifeQuest
Parties to Medex on the Closing Date.
ARTICLE 6
AGREEMENT AND PLAN OF REORGANIZATION
6.1 Tax Treatment. Medex and the Shareholders, LifeQuest and
Purchaser intend that the transactions contemplated hereunder constitute a
tax-free reorganization (a "Reorganization") under Section 368 of the Code, and
agree to treat and report the transactions hereunder as a Reorganization. This
Agreement shall be construed in a manner to result in treatment of the
transactions hereunder as a Reorganization.
ARTICLE 7
CLOSING
7.1 The closing of the transactions contemplated hereby shall take
place on the Closing Date, September 30, 1997, at the offices of LifeQuest
Medical, Inc., ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or at
such other place and on such other date as the parties shall agree. The date
of closing so determined is herein sometimes called the "closing" or the
"Closing Date."
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ARTICLE 8
CONDITIONS OF CLOSING
8.1 LifeQuest Parties. The obligation of the LifeQuest Parties to
close hereunder shall be subject to the satisfaction of the following
conditions or the written waiver thereof by the LifeQuest Parties:
(a) Each of the agreements and covenants of Medex and each of
the Shareholders to be performed under this Agreement at or prior to the
Closing shall have been duly performed in all material respects.
(b) The representations and warranties of Medex and each of
the Shareholders in this Agreement shall be true and correct in all material
respects on and as of the Closing Date.
(c) No injunction or restraining order shall be in effect to
forbid or enjoin the consummation of the transactions contemplated by this
Agreement and no Federal, state, local or foreign statute, rule or regulation
shall have been enacted which prohibits, restricts or delays the consummation
hereof.
(d) All consents, authorizations, orders or approvals of, and
filings or negotiations with, any Federal, state, local or foreign governmental
agency, commission, board or other regulatory body which are required for or in
connection with the execution, delivery and performance of this Agreement by
Medex and each of the Shareholders and the consummation of the transactions
contemplated hereby, and in order to permit or enable the Surviving
Corporation, after the closing to operate a business substantially similar to
Medex's business as conducted by Medex as of the date hereof, shall have been
duly obtained or made, including, but not limited to, any approvals required
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvement Act.
(e) LifeQuest shall have received a certified copy of
resolutions duly adopted by the Board of Directors and shareholders of Medex
authorizing and approving the execution and delivery of this Agreement and
performance by Medex of its obligations hereunder.
(f) ▇▇▇▇▇▇ ▇▇▇▇▇ shall have executed and delivered to the
Company an Employment Agreement and a Non- Qualified Stock Option Agreement in
the forms attached hereto as Exhibit B and Exhibit C, respectively.
(g) ▇▇▇▇▇▇ ▇▇▇▇▇ shall have executed and delivered to the
Company an Employment Agreement and a Non- Qualified Stock Option Agreement in
the forms attached hereto as Exhibit D and Exhibit E, respectively.
(h) LifeQuest shall have received such further certificates
and documents as shall have been reasonably requested by the LifeQuest Parties,
including consents of all requisite third parties.
(i) The LifeQuest Parties shall have completed their
diligence activities to their satisfaction.
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8.2 The Shareholders and Medex. The obligation of the
Shareholders and Medex to close hereunder shall be subject to the satisfaction
of the following conditions or the written waiver thereof by the Shareholders
and Medex:
(a) Each of the agreements and covenants of the LifeQuest
Parties to be performed under this Agreement at or prior to the Closing shall
have been duly performed in all material respects.
(b) The representations and warranties of the LifeQuest
Parties in this Agreement shall be true and correct in all material respects on
and as of the Closing Date.
(c) No injunction or restraining order shall be in effect to
forbid or enjoin the consummation of the transactions contemplated by this
Agreement and no Federal, state, local or foreign statute, rule or regulation
shall have been enacted which prohibits, restricts or delays the consummation
hereof.
(d) The Shareholders shall have received the Merger
Consideration.
(e) The Shareholders shall have received such further
certificates and documents as the Shareholders shall have reasonably requested.
ARTICLE 9
REMEDIES FOR BREACH
9.1 Arbitration. The Company and each of the Shareholders agree
that any dispute or controversy arising out of or in connection with this
Agreement or any alleged breach hereof shall be settled by arbitration in San
Antonio, Texas pursuant to the rules of the American Arbitration Association.
If the parties thereto cannot jointly select a single arbitrator to determine
the matter, one arbitrator shall be chosen by each party (or, if a party fails
to make a choice, by the American Arbitration Association on behalf of such
party) and the two arbitrators so chosen will select a third. The decisions of
the single arbitrator jointly selected by the parties, or, if three arbitrators
are selected, the decision of any two of them, will be final and binding upon
the parties and the judgment of a court of competent jurisdiction may be
entered thereon. Fees of the arbitrators and costs of arbitration shall be
borne by the parties in such manner as shall be determined by the arbitrator or
arbitrators.
9.2 Survival of Representations, Warranties and Agreements. All
of the representations, warranties, covenants and agreements made by the
parties to this Agreement shall survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereunder.
ARTICLE 10
INDEMNIFICATION
10.1 Indemnification. The Shareholders shall jointly and severally
defend and indemnify the LifeQuest Parties and save and hold them harmless
from, against, for and in respect of, and pay any and all Losses suffered,
sustained, incurred or required
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to be paid by the LifeQuest Parties by reason of any breach or failure of
observance or performance of any representation, warranty, covenant, agreement
or commitment made by Medex or either if the Shareholders hereunder or relating
to or as a result of any such representation, warranty, covenant, agreement or
commitment being untrue or incorrect, or, as to products currently manufactured
or sold by Medex, any action for infringement upon or use adverse to the right
or claimed right of any Person to use all inventions, discoveries, patents,
copyrights, trademarks, trade names, service marks, corporate names, licenses,
trade secrets and know how and all other intellectual property rights with
respect to the foregoing; provided, however, the Shareholders shall have no
liability under this Article 10 unless on or before December 31, 1999, any of
the LifeQuest Parties notify the Shareholders of a claim specifying the factual
basis of such claim in reasonable detail to the extent known by such party.
10.2 Procedure for Indemnification. In the event that either of
the Shareholders shall be obligated to the LifeQuest Parties pursuant to this
Article, or in the event that a suit, action, investigation, claim or
proceeding is begun, made or instituted as a result of which either Shareholder
may become obligated to the LifeQuest Parties hereunder, the LifeQuest Parties
shall give prompt written notice to such Shareholder of the occurrence of such
event. Each Shareholder agrees to defend, contest or otherwise protect against
any such suit, action, investigation, claim or proceeding at such Shareholder's
own cost and expense. The LifeQuest Parties shall have the right, but not the
obligation, to participate, at its own expense, in the defense thereof by
counsel of its own choice. In the event that a Shareholder fails timely to
defend, contest or otherwise protect against any such suit, action,
investigation, claim or proceeding, the LifeQuest Parties shall have the right
to defend, contest or otherwise protect against the same, and, upon 10 days'
written notice to such Shareholder, make any compromise or settlement thereof
and recover the entire cost thereof from such Shareholder, including, without
limitation, reasonable attorneys' fees, disbursements and all amounts paid as a
result of such suit, action, investigation, claim or proceeding or compromise
or settlement thereof.
ARTICLE 11
REQUIREMENTS OF SECURITIES LAWS
11.1 Shareholders' Representations and Warranties. Each
Shareholder recognizes that the Merger Consideration is not being registered
under the Securities Act in reliance upon an exemption from the Securities Act
which is predicated, in part, on the representations and agreements of each of
the Shareholders set forth in this Agreement. ▇▇▇▇▇▇ represents and warrants
to the LifeQuest Parties that he, along with his purchaser representative, as
that term is defined in Rule 501(h) of the Securities Act (the "Purchaser
Representative"), has such knowledge and experience in financial and business
matters that he is capable of evaluating the merits and risks of the
transactions contemplated and contained herein, and that the Merger
Consideration is being acquired solely for his own account for investment and
not with a view to, or for offer or resale in connection with, a distribution
thereof within the meaning of the Securities Act. ▇▇▇▇▇▇ represents and
warrants to the LifeQuest Parties that he is an accredited investor, as that
term is defined in Rule 501(a) of the Securities Act and has such knowledge and
experience in financial and business matters that he is capable of evaluating
the merits and risks of the transactions contemplated and contained herein,
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and that the Merger Consideration is being acquired solely for his own account
for investment and not with a view to, or for offer or resale in connection
with, a distribution thereof within the meaning of the Securities Act. Each
Shareholder understands that the effect of such representation and warranty is
that the Merger Consideration must be held indefinitely unless subsequently
registered under the Securities Act or an exemption from such registration is
available at the time for any proposed sale or other transfer thereof. Each
Shareholder also understands that LifeQuest is under no obligation to file a
registration statement under the Securities Act covering the Merger
Consideration or to take any other action to enable a Shareholder to transfer
or otherwise dispose of the Merger Consideration. Each Shareholder represents
that he has consulted with his counsel in regard to the Securities Act and that
he is fully familiar with the circumstances under which he is required to hold
the Merger Consideration and the limitations upon the transfer or other
disposition thereof. Each Shareholder acknowledges that the LifeQuest Parties
are relying upon the truth and accuracy of the foregoing representations and
warranties in issuing the Merger Consideration under the Securities Act. The
Shareholders agree to jointly and severally indemnify and hold the LifeQuest
Parties harmless against all liabilities, costs and expenses, including
reasonable attorneys' fees, incurred by the LifeQuest Parties as a result of
any sale, transfer or other disposition by either Shareholder of all or any
part of the Merger Consideration in violation of the Securities Act.
11.2 Legend. The Merger Consideration shall bear the following
legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
AN EXEMPTION THEREFROM UNDER SAID ACT."
11.3 SEC Documents. Each Shareholder acknowledges that he has been
furnished by the LifeQuest Parties with (a) a copy of the Annual Report to
Stockholders of Lifequest for the year ended December 31, 1996, (b) a copy of
the Annual Report on Form 10-KSB of LifeQuest for the fiscal year ended
December 31, 1996, in the form filed with the SEC, and (c) copies of all
filings since December 31, 1996, by LifeQuest with the SEC in compliance with
Section 13 or 14 of the Exchange Act. Each Shareholder represents that he, or
his Purchaser Representative, has reviewed the foregoing documents and
acknowledges that they have been afforded the opportunity to obtain any
additional information necessary to verify the accuracy of the information
contained in the foregoing documents, including the opportunity to ask
questions of, and receive answers from, officers and representatives of
LifeQuest concerning the LifeQuest Parties and the terms and conditions of the
transactions contemplated by this Agreement. Each Shareholder acknowledges
that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, III, P.C., attorneys at law, have advised him during the
course of the negotiation of this Agreement, and that he has consulted ▇▇▇▇▇▇▇
▇▇▇▇▇▇, III, P.C., attorneys at law, with respect to the transactions
contemplated by this Agreement.
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11.4 Incidental Registration. If, at any time between the
Effective Time and the one-year anniversary of the Effective Time, LifeQuest
proposes to register any of the LifeQuest Stock (whether unissued, yet to be
authorized or held by any person) under the Securities Act, LifeQuest shall, at
least 30 days prior to the filing under the Securities Act of the registration
statement relating thereto, give written notice to the Shareholders of its
intention to do so, and, upon the written request of a Shareholder given within
10 days after the giving of any such notice (which request shall state the
proposed method of distribution), LifeQuest shall include or cause to be
included in any such registration statement, up to 20% of the Merger
Consideration; provided, however, that LifeQuest may at any time withdraw or
cease proceeding with any such registration if it shall at the time withdraw or
cease proceeding with the registration of such LifeQuest Stock originally
proposed to be registered; and provided further, that if the registration
proposed by LifeQuest relates to an underwritten offering, a Shareholder shall
not have any right to sell the Merger Consideration in any manner or through
any underwriter other than in the manner and through the managing underwriter
or underwriters being used by LifeQuest.
(a) Notwithstanding any other provision of this Section
11.4, if a registration pursuant to this Section 11.4 involves a firm
commitment, underwritten offering of the securities so being registered and if
the managing underwriter of such offering informs LifeQuest and the
Shareholders by letter of its belief that marketing factors require a
limitation of the number of shares to be underwritten, LifeQuest may limit the
amount of Merger Consideration to be included in the registration and
underwriting; provided that no such reduction shall reduce the securities being
offered by LifeQuest for its own account; and provided that those shares which
are excluded from the underwritten offering shall be withheld from the market
by the holders thereof for a period, not to exceed 180 days, which the managing
underwriter reasonably determines as necessary in order to effect the
underwritten offering.
(b) Registration Procedures and Expenses. If and
whenever LifeQuest is required to include a portion of the Merger Consideration
in a registration statement under the Securities Act, as provided in Section
11.4 hereof, LifeQuest shall, as expeditiously as is reasonably practicable, do
each of the following:
(i) prepare and file with the SEC a registration
statement with respect to the Merger Consideration and, subject to the
limitations under Section 11.4 hereof, use its best efforts to cause
such registration statement to become effective;
(ii) cooperate with the Shareholders and any underwriter
who shall sell the Merger Consideration in connection with their
review of LifeQuest made in connection with such registration;
(iii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for 120 days from the date of its effectiveness,
and to comply with the provisions of the Securities Act and the
Exchange Act with respect to the disposition of all the Merger
Consideration covered by such registration statement for such period;
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(iv) furnish to the Shareholders such number of copies of
the prospectus forming a part of such registration statement
(including each preliminary prospectus), in conformity with the
requirements of the Securities Act, and such other documents as the
Shareholders may reasonably request in order to facilitate the
disposition of the Merger Consideration; and
(v) LifeQuest shall (a) notify the Shareholders at any time
when a prospectus relating to the Merger Consideration is required to
be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus forming a part of such
registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then
existing, and (b) at the request of a Shareholder, prepare and furnish
to such Shareholder a reasonable number of copies of any supplement to
or any amendment of such prospectus that may be necessary so that, as
thereafter delivered to the purchasers of the Merger Consideration,
such prospectus shall not include any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light
of the circumstances then existing.
(c) Agreement by each Shareholder. In the event that a
Shareholder participates, pursuant to this Section 11.4, in the offering of the
Merger Consideration, such Shareholder shall;
(i) furnish LifeQuest all material information reasonably
requested by LifeQuest concerning such Shareholder and the proposed
method of sale or other disposition of the Merger Consideration and
such other information and undertakings as shall be reasonably
required in connection with the preparation and filing of the
registration statement covering the Merger Consideration in order to
ensure full compliance with the Securities Act and the rules and
regulations of the SEC thereunder;
(ii) cooperate in good faith with LifeQuest and its
underwriters, if any, in connection with such registration, including
placing the Merger Consideration in escrow or custody to facilitate
the sale and distribution thereof provided that such escrow or custody
arrangement shall be no more restrictive upon the Shareholders than
upon any other holder of LifeQuest Stock for the benefit of whom such
registration is undertaken; and
(iii) make no further sales or other dispositions, or offers
therefor, of the Merger Consideration under such registration
statement if, during the effectiveness of such registration statement,
an intervening event should occur which, in the opinion of counsel to
LifeQuest, makes the prospectus included in such registration
statement no longer comply with the Securities Act, so long as written
notice containing the facts and legal conclusions relied upon by
LifeQuest in this regard has been received by such Shareholder from
LifeQuest, until such time as such Shareholder has received from
LifeQuest copies of a new, amended or supplemented prospectus
complying with the Securities Act, which prospectus
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shall be delivered to such Shareholder by LifeQuest as soon as
practicable after such notice.
(d) Allocation of Expenses. If and whenever LifeQuest is
required by the provisions of this Section 11.4 to use its best efforts to
effect the registration of the Merger Consideration under the Securities Act,
LifeQuest shall pay the costs and expenses in connection therewith; provided,
however, that the Shareholders shall pay, in all events, all underwriting
discounts, selling commissions and stock transfer taxes attributable to the
Merger Consideration under such registration statement.
(e) Indemnification. In the event of any registration of
any of the Merger Consideration under the Securities Act pursuant to this
Section 11.4, the Shareholders shall jointly and severally indemnify and hold
harmless, LifeQuest, each director of LifeQuest, each officer of LifeQuest who
shall sign such registration statement, each underwriter and any person who
controls LifeQuest or such underwriter within the meaning of the Securities
Act, with respect to any statement in or omission from such registration
statement, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, if such statement or omission was made in
reliance upon and in conformity with written information furnished to LifeQuest
or its underwriter through an instrument duly executed by a Shareholder
specifically for use in the preparation of such registration statement,
preliminary prospectus, final prospectus or amendment or supplement.
11.5 Rule 144 Stock. Notwithstanding the foregoing provisions of
this Article 11, LifeQuest shall not be obligated to effect a registration
pursuant to Section 11.4(a) with respect to the Merger Consideration which
could then be sold pursuant to Rule 144 under the Securities Act.
ARTICLE 12
NON-COMPETITION AGREEMENT
12.1 Customer Lists; Non-Solicitation. Each Shareholder hereby
further covenants and agrees that a Shareholder shall not, commencing on the
Closing Date and ending on the first anniversary date of the Closing Date,
directly or indirectly, (a) use or make known to any person or entity the names
or addresses of any clients or customers of Medex or the LifeQuest Parties or
any other information pertaining to them, (b) call on, solicit, take away or
attempt to call on, solicit or take away any clients or customers of Medex or
the LifeQuest Parties, nor (c) solicit for employment, recruit, hire or attempt
to recruit or hire any employees of Medex or the LifeQuest Parties.
12.2 Covenants Independent. The covenants of each Shareholder
contained in Section 12.1 of this Agreement will be construed as independent of
any other provision in this Agreement; and the existence of any claim or cause
of action by a Shareholder against the LifeQuest Parties will not constitute a
defense to the enforcement by the LifeQuest Parties of said provisions. Each
Shareholder understands that the provisions contained in Section 12.1 are
essential elements of the transactions contemplated by this Agreement and, but
for the agreement of each Shareholder to the terms and provisions of Section
12.1, the LifeQuest Parties would not have agreed to enter into
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this Agreement and the transactions contemplated herein. Each Shareholder has
been advised to consult with counsel in order to be informed in all respects
concerning the reasonableness and propriety of Section 12.1 with specific
regard to the nature of the business conducted by Medex and the LifeQuest
Parties and each Shareholder acknowledges that Section 12.1 is reasonable in
all respects.
12.3 Remedies. In the event of a breach or a threatened breach by
a Shareholder of any of the provisions contained in Sections 12.1 or 12.2 of
this Agreement, each Shareholder acknowledges that the LifeQuest Parties will
suffer irreparable injury not fully compensable by money damages and,
therefore, will not have an adequate remedy available at law. Accordingly, the
LifeQuest Parties shall be entitled to obtain such injunctive relief or other
equitable remedy from any court of competent jurisdiction as may be necessary
or appropriate to prevent or curtail any such breach, threatened or actual.
The foregoing shall be in addition to and without prejudice to any other rights
that the LifeQuest Parties may have under this Agreement, at law or in equity,
including, without limitation, the right to ▇▇▇ for damages.
ARTICLE 13
CONFIDENTIALITY
13.1 Nondisclosure. No Shareholder shall, without the prior
written consent of the Board of Directors of LifeQuest, disclose or use for any
purpose confidential information or proprietary data of Medex, Purchaser or
LifeQuest (or any of their respective subsidiaries), except as required by
applicable law or legal process; provided, however, that confidential
information shall not include any information known generally to the public or
ascertainable from public or published information (other than as a result of
unauthorized disclosure by a Shareholder) or any information of a type not
otherwise considered confidential by persons engaged in the same business or a
business similar to that conducted by Medex or LifeQuest (or any of their
respective subsidiaries).
ARTICLE 14
GENERAL PROVISIONS
14.1 Expenses. Each of the parties hereto shall pay all expenses
incurred by it incident to preparing for, entering into and carrying into
effect this Agreement.
14.2 Notices. Any notice, report, demand or payment required,
permitted or desired to be given pursuant to any of the provisions of this
Agreement shall be deemed to have been sufficiently given or served for all
purposes if hand delivered or delivered by responsible overnight courier or
sent by certified or registered air mail, return receipt requested, and postage
prepaid as follows:
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If to the LifeQuest Parties:
LifeQuest Medical, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
with a copy to: Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇▇ ▇▇▇▇▇: ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ III, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
If to ▇▇▇▇▇▇ ▇▇▇▇▇: ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ III, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Any of the foregoing parties may at any time and from time to time
change the address to which notice shall be sent hereunder, by notice to the
other parties given under this subsection. The date of the giving of such
notice delivered by hand or by responsible overnight courier shall be the date
of its delivery, and the date of the giving of such notice by certified or
registered mail shall be the date three days after the posting of the mail.
14.3 Finders. Each of the parties covenants and represents to the
other that there are no claims for brokerage commissions or finder's fees in
connection with the
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negotiation of this Agreement and the performance of the transactions
contemplated hereunder resulting from any action taken by it. Each of the
parties agrees to indemnify and hold harmless the other in respect of any and
all Losses sustained by the other as a result of any liability to any broker or
finder on the basis of any arrangement, agreement or acts made by or on behalf
of such party with any other person or persons whatsoever.
14.4 Complete Agreement. The representations, warranties,
covenants and agreements set forth in this Agreement and in any financial
statement, schedule or exhibit delivered pursuant hereto, constitute all of the
representations, warranties, covenants and agreements among the parties hereto
and upon which the parties have relied, and, except as may be specifically
provided herein, no change, modification, addition or termination of the
Agreement or any part thereof shall be valid unless in writing and signed by or
on behalf of the party to be charged therewith.
14.5 Prior Agreements. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes prior agreements relating thereto.
14.6 No Waiver. No waiver of the provisions hereof shall be
effective unless in writing and signed by the party to be charged with such
waiver. No waiver shall be deemed a continuing waiver or waiver in respect of
any subsequent breach or default, either of similar or different nature unless
expressly so stated in writing.
14.7 Headings. The headings or captions under Sections of this
Agreement are for convenience and reference only, and do not form a part
hereof, and do not in any way modify, interpret or construe the intent of the
parties or affect any of the provisions of this Agreement.
14.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
NON-EXCLUSIVE VENUE FOR ANY ACTION PERMITTED HEREUNDER SHALL BE PROPER IN SAN
ANTONIO, BEXAR COUNTY, TEXAS, AND EMPLOYEE CONSENTS TO SUCH VENUE.
14.9 Assignment. Neither this Agreement nor the rights of the
parties hereto shall be assignable, unless otherwise specifically provided.
14.10 Severability. If any term or provision of this Agreement
shall be held to be invalid or unenforceable for any reason, such term or
provision shall be ineffective to the extent of such invalidity or
unenforceability without invalidating the remaining terms and provisions
hereof, and this Agreement shall be construed as if such invalid or
unenforceable term or provision had not been contained herein. Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be held to be prohibited by or invalid under applicable law,
such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
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14.11 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. This Agreement
shall be binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of the parties reflected hereon as
signatories.
14.12 Telecopy Execution and Delivery. A facsimile, telecopy or
other reproduction of this Agreement may be executed by one or more parties
hereto, and an executed copy of this Agreement may be delivered by one or more
parties hereto by facsimile or similar instantaneous electronic transmission
device pursuant to which the signature of or on behalf of such party can be
seen, and such execution and delivery shall be considered valid, binding and
effective for all purposes. At the request of any party hereto, all parties
hereto agree to execute an original of this Agreement as well as any facsimile,
telecopy or other reproduction hereof.
[signatures on following page]
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IN WITNESS WHEREOF, the parties hereto have caused this Plan of Merger
and Acquisition Agreement to be signed on the date and year first above
written.
LIFEQUEST MEDICAL, INC.
By:
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
President and Chief Executive Officer
▇▇▇▇▇ MEDICAL, INC.
By:
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Chief Executive Officer
MISHBUCHA, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
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SCHEDULES
Schedule 3.1 Corporate Organization
Schedule 3.3 Capitalization/List of Shareholder
Schedule 3.7 Environmental
Schedule 3.8 Intellectual Property and Other Tangible Assets
Schedule 3.9 Financial Statements
Schedule 3.9A Exceptions to Financial Statements
Schedule 3.10 Material Adverse Changes
Schedule 3.12 Contracts
Schedule 3.13 Tangible Personal Property
Schedule 3.14 Real Property
Schedule 3.15 Insurance
Schedule 3.16 Banking
Schedule 3.19 Employee Benefit Plans
Schedule 3.22 Employee and Other Compensation
Schedule 3.23 Customers and Suppliers
30
SCHEDULE 3.1
TEXAS
31
SCHEDULE 3.3
CAPITALIZATION/LIST OF SHAREHOLDERS
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
32
SCHEDULE 3.7
ENVIRONMENTAL
NONE
33
SCHEDULE 3.8
INTELLECTUAL PROPERTY AND OTHER TANGIBLE ASSETS
NONE
34
SCHEDULE 3.9
FINANCIAL STATEMENTS
35
SCHEDULE 3.9A
EXCEPTIONS TO FINANCIAL STATEMENTS
NONE
36
SCHEDULE 3.10
MATERIAL ADVERSE CHANGES
NONE
37
SCHEDULE 3.13
TANGIBLE PERSONAL PROPERTY
NONE
38
SCHEDULE 3.14
REAL PROPERTY
NONE
39
SCHEDULE 3.15
INSURANCE
NONE
40
SCHEDULE 3.19
EMPLOYEE BENEFIT PLANS
NONE
41
LIST OF EXHIBITS
Exhibit A - Certificate of Merger
Exhibit B - Employment Agreement of ▇▇▇▇▇▇ ▇▇▇▇▇
Exhibit C - Non-Qualified Stock Option Agreement of ▇▇▇▇▇▇ ▇▇▇▇▇
Exhibit D - Employment Agreement of ▇▇▇▇▇▇ ▇▇▇▇▇
Exhibit E - Non-Qualified Stock Option Agreement of ▇▇▇▇▇▇ ▇▇▇▇▇
42
Exhibit A
43
Exhibit B
44
Exhibit C
45
Exhibit D
46
Exhibit E