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EXHIBIT 2.1
PLAN OF MERGER AND ACQUISITION AGREEMENT
DATED EFFECTIVE DECEMBER 18, 1998
BETWEEN
LIFEQUEST MEDICAL, INC.
AND
DEXTERITY INCORPORATED
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TABLE OF CONTENTS
1. GENERAL DEFINITIONS....................................................................................A-1
1.1 "Accounts Receivable".........................................................................A-1
1.2 "Affiliate"...................................................................................A-1
1.3 "Article".....................................................................................A-1
1.4 "Assets"......................................................................................A-1
1.5 "Authorization"...............................................................................A-2
1.6 "Balance Sheet Date"..........................................................................A-2
1.7 "Best Knowledge"..............................................................................A-2
1.8 "Brokerage Fee"...............................................................................A-2
1.9 "Business Combination"........................................................................A-2
1.10 "Business Day"................................................................................A-2
1.11 "CERCLA"......................................................................................A-2
1.12 "Certificate".................................................................................A-2
1.13 "Closing".....................................................................................A-2
1.14 "Closing Date"................................................................................A-2
1.15 "Code"........................................................................................A-2
1.16 "Contracts"...................................................................................A-2
1.17 "Control".....................................................................................A-3
1.18 "Damages".....................................................................................A-3
1.19 "Deposits"....................................................................................A-3
1.20 "Effective Time"..............................................................................A-3
1.21 "Encumbrance".................................................................................A-3
1.22 "Environmental Laws"..........................................................................A-3
1.23 "Exchange Act"................................................................................A-3
1.24 "Financial Statements"........................................................................A-3
1.25 "Governmental Authority"......................................................................A-3
1.26 "Governmental Requirement"....................................................................A-4
1.27 "Intellectual Property".......................................................................A-4
1.28 "LifeQuest Stock".............................................................................A-4
1.29 "Merger"......................................................................................A-4
1.30 "Material Adverse Effect".....................................................................A-5
1.31 "Merger Consideration"........................................................................A-5
1.32 "Parties "....................................................................................A-5
1.33 "Permitted Encumbrances"......................................................................A-5
1.34 "Person"......................................................................................A-5
1.35 "Reference Balance Sheet".....................................................................A-5
1.36 "Reorganization"..............................................................................A-5
1.37 "Representations and Warranties of LifeQuest".................................................A-5
1.38 "Representations and Warranties of Seller"....................................................A-5
1.39 "Royalty Agreement"...........................................................................A-5
1.40 "Schedule"....................................................................................A-5
1.41 "SEC" or "Commission".........................................................................A-5
1.42 "SEC Documents"...............................................................................A-5
1.43 "Section".....................................................................................A-6
1.44 "Securities Act"..............................................................................A-6
1.45 "Seller Stock"................................................................................A-6
1.46 "Shareholders"................................................................................A-6
1.47 "Subsidiary"..................................................................................A-6
1.48 "Surviving Corporation".......................................................................A-6
1.49 "Taxes".......................................................................................A-6
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1.50 "Tax Returns".................................................................................A-6
1.51 "Teleflex"....................................................................................A-6
1.52 "Waste Materials".............................................................................A-6
2. MERGER.................................................................................................A-6
2.1 The Merger....................................................................................A-6
2.2 Surviving Corporation.........................................................................A-7
2.3 Liabilities...................................................................................A-7
2.4 Certificate of Incorporation and Bylaws.......................................................A-7
2.5 Directors and Officers........................................................................A-7
2.6 Conversion or Cancellation of Stock Upon Merger...............................................A-7
2.7 Fractional Shares.............................................................................A-8
2.8 Exchange Procedures...........................................................................A-9
2.9 Interim Dividends.............................................................................A-9
2.10 Further Assurances............................................................................A-9
3. CLOSING; CLOSING DATE..................................................................................A-9
4. REPRESENTATIONS AND WARRANTIES OF SELLER..............................................................A-10
4.1 Incorporation................................................................................A-10
4.2 Share Capital................................................................................A-10
4.3 Financial Statements.........................................................................A-10
4.4 Events Since the Balance Sheet Date..........................................................A-11
4.5 Taxes........................................................................................A-11
4.6 Employee Matters.............................................................................A-12
4.7 Contracts and Agreements.....................................................................A-12
4.8 Effect of Agreement..........................................................................A-14
4.9 Properties, Assets and Leasehold Estates.....................................................A-15
4.10 Intellectual Property........................................................................A-15
4.11 Suits, Actions and Claims....................................................................A-15
4.12 Licenses and Permits; Compliance With Governmental Requirements..............................A-16
4.13 Authorization................................................................................A-16
4.14 Records......................................................................................A-16
4.15 Environmental Protection Laws................................................................A-16
4.16 Accounts Receivable..........................................................................A-17
4.17 Brokers and Finders..........................................................................A-18
4.18 Deposits.....................................................................................A-18
4.19 Work Orders..................................................................................A-18
4.20 Customer List; Supplier List.................................................................A-18
4.21 No Royalties.................................................................................A-18
4.22 Bank Accounts................................................................................A-18
4.23 Working Capital..............................................................................A-18
4.24 Shareholder Approval.........................................................................A-19
4.25 No Untrue Statements.........................................................................A-19
5. REPRESENTATIONS AND WARRANTIES OF LIFEQUEST...........................................................A-19
5.1 LifeQuest Incorporation......................................................................A-19
5.2 Authorization................................................................................A-19
5.3 Brokers and Finders..........................................................................A-19
5.4 Authorization for Stock Consideration........................................................A-19
5.5 SEC Documents................................................................................A-19
6. NATURE OF STATEMENTS AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES...................................A-20
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7. TAX TREATMENT.........................................................................................A-20
8. PRE-CLOSING COVENANTS.................................................................................A-20
8.1 General......................................................................................A-20
8.2 Notices and Consents.........................................................................A-21
8.3 Operation of Business........................................................................A-21
8.4 Full Access..................................................................................A-23
8.5 Notice of Developments.......................................................................A-23
8.6 Exclusivity..................................................................................A-23
9. CONDITIONS TO OBLIGATION TO CLOSE.....................................................................A-24
9.1 Conditions to Obligation of LifeQuest........................................................A-24
9.2 Conditions to Obligation of Seller...........................................................A-25
10. SPECIAL CLOSING AND POST-CLOSING COVENANTS............................................................A-26
10.1 General......................................................................................A-26
10.2 Litigation Support...........................................................................A-26
10.3 Transition...................................................................................A-27
10.4 Intellectual Property Assignment.............................................................A-27
10.5 Tax-Free Reorganization......................................................................A-27
10.6 Teleflex Debt................................................................................A-27
10.7 Board Representation.........................................................................A-27
11. NOTICES...............................................................................................A-27
12. TERMINATION...........................................................................................A-28
12.1 Termination of Agreement.....................................................................A-28
12.2 Effect of Termination........................................................................A-29
13. GENERAL PROVISIONS....................................................................................A-29
13.1 Governing Law; Interpretation; Section Headings..............................................A-29
13.2 Severability.................................................................................A-29
13.3 Entire Agreement.............................................................................A-30
13.4 Binding Effect...............................................................................A-30
13.5 Assignment...................................................................................A-30
13.6 Amendment; Waiver............................................................................A-30
13.7 Gender; Numbers..............................................................................A-30
13.8 Counterparts.................................................................................A-30
13.9 Telecopy Execution and Delivery..............................................................A-30
13.10 Expenses.....................................................................................A-31
13.11 Effect of Due Diligence......................................................................A-31
13.12 Press Releases and Public Announcements......................................................A-31
13.13 No Third Party Beneficiaries.................................................................A-31
13.14 Construction.................................................................................A-31
13.15 Incorporation of Exhibits, and Schedules.....................................................A-31
13.16 Specific Performance.........................................................................A-31
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Exhibits
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1.20 Form of Certificate of Merger
2.6(a) Form of Warrant
2.6(b) Form of Promissory Note
2.6(c) Royalty Agreement
9.1(e)1 Form of Opinion of Seller's General Counsel
9.1(e)2 Form of Opinion of Seller's Intellectual Property Counsel
9.1(f) Form of Non-Competition Agreements
9.1(g) Form of Indemnity Agreement
9.2(e) Form of Consulting Agreement
9.2(g) Form of Registration Rights Agreement
9.2(i) Form of Opinion of LifeQuest's Counsel
10.4 Intellectual Property Assignment
Schedules
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4.2 Capitalization of Dexterity
4.3 Financial Statements
4.7 Material Contracts
4.8 Required Consents
4.9 Personal Property
4.10 Intellectual Property
4.11 Suits, Actions and Claims
4.12 Licenses and Permits
4.17 Brokers and Finders
4.20 Customers and Suppliers
4.21 Royalties
4.22 Bank Accounts
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PLAN OF MERGER AND ACQUISITION AGREEMENT
THIS PLAN OF MERGER AND ACQUISITION AGREEMENT (this "Agreement") is
made and entered into this 18th day of December 1998, between LifeQuest Medical,
Inc., a Delaware corporation ("LifeQuest") and Dexterity Incorporated, a
Delaware corporation ("Seller").
W I T N E S S E T H :
WHEREAS, LifeQuest is primarily in the business of distributing
minimally invasive surgical equipment and supplies; and
WHEREAS, Seller is in the business of distributing Dexterity(R)
products, including the pneumosleeve and protractor medical devices and surgical
instruments designed for use in handoscopic surgery (the "Business"); and
WHEREAS, the Shareholders own and hold all of the issued and
outstanding shares of capital stock of Seller not owned by LifeQuest; and
WHEREAS, the respective boards of directors of LifeQuest and Seller
have voted to approve the merger of Seller with and into LifeQuest (the
"Merger") pursuant to the terms and subject to the conditions of this Agreement;
and
WHEREAS, the transaction provided for in this Agreement is intended to
qualify as a corporate reorganization 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 Seller shall be merged with and into
LifeQuest 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:
1. GENERAL DEFINITIONS. For purposes of this Agreement, the following
terms shall have the respective meanings set forth below:
1.1 "Accounts Receivable" shall have the meaning assigned to it in
Section 4.16.
1.2 "Affiliate" of any Person shall mean any Person Controlling,
Controlled by or under common Control with such Person.
1.3 "Article" shall mean an Article of this Agreement unless otherwise
stated.
1.4 "Assets" shall mean the assets, properties and rights of Seller of
every nature, kind and description, wherever located, tangible and intangible,
real, personal and mixed, whether or not
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reflected in the books and records of Seller necessary or desirable to permit
the Business to be carried on in the manner as is presently conducted.
1.5 "Authorization" shall mean any consent, approval or authorization
of, expiration or termination of any waiting period requirement (including
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended) by, or filing, registration, qualification, declaration or designation
with, any Governmental Authority.
1.6 "Balance Sheet Date" shall have the meaning assigned to it in
Section 4.3.
1.7 "Best Knowledge" shall mean what a Person actually knew. When used
with respect to Seller, the term "Best Knowledge" shall mean Best Knowledge of
any of John J. Sickler, Christopher K. Black or Frederick C. Feiler.
1.8 "Brokerage Fee" shall mean the fee payable by Seller to Cleary &
Oxford Associates upon consummation of the transactions contemplated herein,
pursuant to the agreement referred to at Item 23 of Schedule 4.7.
1.9 "Business Combination" shall mean (i) any merger or consolidation
of, or share exchange involving, the Seller with or into any Person, (ii) any
sale, lease, exchange, transfer or other disposition (whether in one transaction
or a series of related transactions) or more than ten percent of the Seller's
consolidated assets (iii) the adoption of any plan or proposal for the
liquidation or dissolution of the Seller, (iv) any issuance, sale, purchase or
redemption of equity securities, any reclassification or equity securities of
recapitalization of the Seller, and (v) any transaction having an effect similar
to those described above.
1.10 "Business Day" shall mean any day other than Saturday, Sunday or
other day on which federally chartered commercial banks in San Antonio, Texas
are authorized or required by law to close.
1.11 "CERCLA" shall mean the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980, as amended.
1.12 "Certificate" shall mean each stock certificate representing
shares of Seller Stock.
1.13 "Closing" shall have the meaning assigned to it in Article 3.
1.14 "Closing Date" shall have the meaning assigned to it in Article 3.
1.15 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.16 "Contracts" shall have the meaning assigned to it in Section 4.7.
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1.17 "Control" and all derivations thereof shall mean the ability to
either (a) vote (or direct the vote of) 50% or more of the voting interests in
any Person or (b) direct the affairs of another, whether through voting power,
contract or otherwise.
1.18 "Damages" shall mean any and all liabilities, losses, damages,
demands, assessments, punitive damages, loss of profits, refund obligations
(including, without limitation, interest and penalties thereon) claims of any
and every kind whatsoever, costs and expenses (including interest, awards,
judgments, penalties, settlements, fines, costs of remediation, diminutions in
value, costs and expenses incurred in connection with investigating, prosecuting
and defending any claims or causes of action (including, without limitation,
reasonable attorneys' fees and reasonable expenses and all reasonable fees and
reasonable expenses of consultants and other professionals)).
1.19 "Deposits" shall have the meaning assigned to it in Section 4.18.
1.20 "Effective Time" shall mean the time at which a properly executed
certificate of merger in substantially the form attached to this Agreement as
Exhibit 1.20 (together with other documents required by law to effect the
Merger) shall have been filed with the Secretary of State of Delaware.
1.21 "Encumbrance" shall mean any security interest, mortgage, pledge,
trust, claim, lien, charge, option, defect, restriction, encumbrance or other
right or interest of any third Person of any nature whatsoever.
1.22 "Environmental Laws" shall mean any and all applicable laws,
statutes, ordinances, rules, regulations, orders, or determinations of any
Governmental Authority pertaining to the environment heretofore or currently in
effect in any and all jurisdictions in which Seller is conducting or at any time
has conducted business, or where any of the Assets are located, or where any
hazardous substances generated by or disposed of by Seller are located.
"Environmental Laws" shall include, but not be limited to, the Clean Air Act, as
amended, CERCLA, the Federal Water Pollution Control Act, as amended, RCRA, the
Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as
amended, and all other applicable laws, statutes, ordinances, rules,
regulations, orders and determinations of any Governmental Authority relating to
(a) the control of any potential pollutant or protection of the air, water or
land, (b) solid, gaseous or liquid waste generation, handling, treatment,
storage, disposal or transportation and (c) exposure to hazardous, toxic or
other substances alleged to be harmful. The terms "hazardous substance,"
"release" and "threatened release" shall have the meanings specified in CERCLA,
and the terms "solid waste" and "disposal" (or "disposed") have the meanings
specified in RCRA.
1.23 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.24 "Financial Statements" shall have the meaning assigned to it in
Section 4.3.
1.25 "Governmental Authority" shall mean any and all foreign, federal,
state or local governments, governmental institutions, public authorities and
governmental entities of any nature whatsoever, and any subdivisions or
instrumentalities thereof, including, but not limited to,
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departments, boards, bureaus, commissions, agencies, courts, administrations and
panels, and any divisions or instrumentalities thereof, whether permanent or ad
hoc and whether now or hereafter constituted or existing.
1.26 "Governmental Requirement" shall mean any and all applicable laws
(including, but not limited to, applicable common law principles), statutes,
ordinances, codes, rules, regulations, interpretations, guidelines, directions,
orders, judgments, writs, injunctions, decrees, decisions or similar items or
pronouncements, promulgated, issued, passed or set forth by any Governmental
Authority in effect as of the Effective Time.
1.27 "Intellectual Property" shall mean:
(a) all of Seller's patents and applications therefor, further
including, but not limited to, all divisions, reissues, substitutions,
reexaminations, continuations, continuations-in-part and extensions thereof; and
(b) all of Seller's inventions, whether or not patentable,
further including, but not limited to, all new developments and inventions, as
well as all improvements on prior inventions regardless of prior inventorship;
and
(c) all of Seller's know-how and work product, regardless of
form and whether tangible or intangible, further including, but not limited to,
invention and laboratory notebooks, source code and object code, system design,
system specifications, flow charts, test data, records and journals; blueprints,
drawings and photographs; research and engineering reports, including any models
or other hardware; licensing, marketing or development analysis; and customer or
prospective customer lists; and
(d) all of Seller's copyright interests regardless of actual
or potential registrability, and including moral rights, rights of publication
and rights of attribution and integrity; and
(e) all of Seller's trademark or service mark interests,
together with all of the goodwill of the business associated therewith and
represented thereby; and
(f) all of Seller's trade secrets; and
(g) all of Seller's other intellectual property and other
proprietary interests, whether or not identifiable as of the date of execution
hereof, relating to, or used in connection with, the Business or Assets now or
at any time in the future.
1.28 "LifeQuest Stock" shall mean the common stock, $.001 par value, of
LifeQuest.
1.29 "Merger" shall have the meaning assigned to it in Section 2.1.
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1.30 "Material Adverse Effect" shall mean a material adverse effect on
the Business, Assets, properties, operations, condition (financial or otherwise)
or results of operations of Seller, or LifeQuest and its Subsidiaries taken as a
whole, as applicable.
1.31 "Merger Consideration" shall have the meaning assigned to it in
Section 2.6.
1.32 "Parties" or "parties" shall mean collectively LifeQuest and
Seller.
1.33 "Permitted Encumbrances" shall mean (a) Encumbrances for current
taxes and assessments not yet past due or which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves are
reflected in the Financial Statements, (b) mechanics and materialmen
Encumbrances for construction in progress to the extent not perfected by filing,
recording, giving of notice or other appropriate action in the relevant
jurisdiction, (c) workmen, repairmen, warehousemen, carriers, lessors and
operators Encumbrances arising in the ordinary course of business to the extent
not perfected by filing, recording, giving of notice or other appropriate action
in the relevant jurisdiction and (d) easements, including agreements and deeds
of easement, and other minor imperfections of title which would not have a
Material Adverse Effect.
1.34 "Person" shall mean any natural person, any Governmental Authority
and any entity, the separate existence of which is recognized by any
Governmental Authority or Governmental Requirement, including, but not limited
to, corporations, partnerships, joint ventures, joint stock companies, trusts,
estates, companies and associations, whether organized for profit or otherwise.
1.35 "Reference Balance Sheet" shall have the meaning assigned to it in
Section 4.3.
1.36 "Reorganization" shall have the meaning assigned to it in Article
7.
1.37 "Representations and Warranties of LifeQuest" shall have the
meaning assigned to it in Section 6.2.
1.38 "Representations and Warranties of Seller" shall have the meaning
assigned to it in Section 6.1.
1.39 "Royalty Agreement" shall mean the Royalty Agreement referred to
in the penultimate sentence of Section 2.6.
1.40 "Schedule" shall mean a Schedule to this Agreement unless
otherwise stated. The Schedules to this Agreement may be attached to this
Agreement or may be set forth in a separate document denoted as the Schedules to
this Agreement, or both.
1.41 "SEC" or "Commission" shall mean the United States Securities and
Exchange Commission.
1.42 "SEC Documents" shall have the meaning assigned to it in Section
5.5.
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1.43 "Section" shall mean a Section of this Agreement unless otherwise
stated.
1.44 "Securities Act" shall mean the Securities Act of 1933, as
amended.
1.45 "Seller Stock" shall mean the common stock, par value $1.00, of
Seller.
1.46 "Shareholders" shall mean the record owners, other that LifeQuest,
of the Seller Stock on the Closing Date.
1.47 "Subsidiary" shall mean, with respect to any Person (the
"parent"), (a) 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 (b) 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.
1.48 "Surviving Corporation" shall mean the corporation existing at and
after the Effective Time as a result of the Merger.
1.49 "Taxes" shall mean any foreign, federal, state or local tax,
assessment, levy, impost, duty, withholding, estimated payment or other similar
governmental charge, together with any penalties, additions to tax, fines,
interest and similar charges thereon or related thereto.
1.50 "Tax Returns" shall mean all Tax returns and reports (including,
without limitation, income, franchise, sales and use, unemployment compensation,
excise, severance, property, gross receipts, profits, payroll and withholding
Tax returns and information returns).
1.51 "Teleflex" means Teleflex Incorporated, a Delaware corporation.
1.52 "Waste Materials" shall mean any toxic or hazardous materials or
substances, or solid wastes, including asbestos, buried contaminants, chemicals,
flammable or explosive materials, radioactive materials, petroleum and petroleum
products, and any other chemical, pollutant, contaminant, substance or waste
that is regulated by any Governmental Authority under any Environmental Law.
2. MERGER.
2.1 The Merger. Subject to the terms and conditions of this Agreement,
Seller shall be merged with and into LifeQuest in accordance with all applicable
laws (the "Merger"), with LifeQuest being the Surviving Corporation. LifeQuest
and Seller shall cause a certificate of merger to be filed with the Secretary of
State of Delaware on the Closing Date (as hereinafter defined). The Merger shall
be effective at the Effective Time.
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2.2 Surviving Corporation. From and after the Effective Time, the
Surviving Corporation shall have the name "Dexerity Surgical, 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 Seller and LifeQuest, and all debts and all other things in action or
belonging or due to each of Seller and LifeQuest, 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 Seller or LifeQuest
shall not revert or in any way be impaired.
2.3 Liabilities. The Surviving Corporation shall be liable for all the
debts, liabilities and duties of each of Seller and LifeQuest; any action or
proceeding pending, by or against either Seller or LifeQuest, 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 Seller and LifeQuest shall be preserved unimpaired, and all
liens upon the property of each of Seller and LifeQuest 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 LifeQuest 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. Subject to the provisions of Section 10.7
hereof, the directors and officers of LifeQuest immediately prior to the
Effective Time shall be the directors and officers of the Surviving Corporation
until their successors are duly elected or appointed and qualified in the manner
provided in the bylaws of the Surviving Corporation, or as otherwise provided by
law.
2.6 Conversion or Cancellation of Stock Upon Merger. In consideration
for the Merger and the non-competition agreements and indemnity agreements
described in Section 9.1 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 Seller
Stock, or the holder of the shares of LifeQuest Stock:
(a) each share of Seller Stock outstanding immediately before the
Effective Time and held by the Shareholders shall be converted into the
right to receive, subject to Section 2.7,
(i) the numbers of shares of LifeQuest Stock equal to the
quotient of (1) 3,000,000 divided by (2) the number
of shares of Seller Stock held by the Shareholders
immediately before the Effective Time (the "Stock
Consideration");
(ii) the quotient of (1) $1,500,000, less 50% of Brokerage
Fee divided by (2) the number of shares of Seller
Stock held by the Shareholders immediately before the
Effective Time (the "Cash Consideration");
(iii) a warrant dated the Closing Date substantially in the
form attached hereto as Exhibit 2.6(a) to purchase
such number of shares of LifeQuest Stock equal to
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the quotient of (1) 1,500,000 divided by (2) the
number of shares of Seller Stock held by the
Shareholders immediately before the Effective Time,
all at an exercise price of $2.00 per share (the
"Warrants");
(iv) a promissory note dated the Closing Date
substantially in the form attached hereto as Exhibit
2.6(b) in a principal amount equal to the quotient of
(1) $1,000,000 divided by (2) the number of shares of
Seller Stock held by the Shareholders immediately
before the Effective Time, payable within one year
from the date of Closing and accruing interest at the
rate of 12% per annum (the "Promissory Notes" and,
together with Stock Consideration, the Cash
Consideration and the Warrants, the "Merger
Consideration"); and
(v) an undivided fractional interest in the Royalty
Agreement equal to one over the number of shares of
Seller Stock held by the Shareholders immediately
before the Effective Time.
(b) each share of Seller Stock outstanding immediately before the
Effective Time and held by LifeQuest shall be converted into the right
to receive one (1) share of common stock of the Surviving Corporation;
and
(c) each share of LifeQuest Stock outstanding immediately before the
Effective Time shall be converted into one share of Common Stock of the
Surviving Corporation.
At the Closing, LifeQuest shall (i) issue and deliver to the Shareholders
certificates representing the Stock Consideration, (ii) pay the Cash
Consideration, (iii) issue and deliver the Warrants and the Promissory Notes to
the Shareholders, (iv) execute and deliver to TFX Equities, as agent for the
Shareholders, a Royalty Agreement, dated the Closing Date, in substantially the
form of Exhibit 2.6(c) and (v) execute and deliver to the proper Persons an
assumption of the assignment of those contracts and agreements of Seller listed
on Schedule 4.7 which require an express assumption of the liabilities of Seller
as contained in such contracts or agreements. At the Closing, Seller shall
execute and deliver to LifeQuest the intellectual property assignment as
contemplated by Section 10.4.
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 Seller 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
stockholder of LifeQuest. In the event that any Former Seller Shareholder shall
be entitled to any fractional share interest then any fractional amount shall be
rounded down to the nearest whole share.
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2.8 Exchange Procedures.
(a) After the Effective Time, each outstanding Certificate
shall, until duly surrendered to LifeQuest as contemplated by this Section 2.8,
be deemed to represent only the right to receive the Merger Consideration.
(b) After the Effective Time, there shall be no further
transfer on the records of Seller of Certificates, and each share of Seller
Stock presented or surrendered to LifeQuest shall be canceled in exchange for
the Merger Consideration as contemplated by Section 2.6. LifeQuest shall not be
obligated to deliver Merger Consideration to any holder of a Certificate until
such holder surrenders such Certificate as provided herein.
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 a Former Seller Shareholder after the Effective Time shall be paid to
the holder of any unsurrendered certificates formerly representing shares of
Seller 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.
2.10 Further Assurances. If at any time after the Effective Time the
Surviving Corporation shall consider or be advised that any further assignments
or assurances in law or otherwise are necessary or desirable to vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation, all rights, title
and interests in all the Assets and all privileges, powers and franchises of
Seller, the Surviving Corporation and its proper officers and directors, in the
name and on behalf of Seller, shall execute and deliver all such proper deeds,
assignments and assurances in law and do all things necessary and proper to
vest, perfect or confirm title to such property or rights in the Surviving
Corporation and otherwise to carry out the purpose of this Agreement, and the
proper officers and directors of the Surviving Corporation are fully authorized
in the name of Seller or otherwise to take any and all such action.
3. CLOSING; CLOSING DATE.
As soon as practicable after satisfaction or waiver of all conditions
to the Merger, including the approval by the stockholders of LifeQuest of the
Merger and the issuance of the Stock Consideration, the consummation of the
transactions referenced above shall take place (the "Closing") at 10:00 a.m.,
E.S.T., at the offices of Saul, Ewing, Remick & Saul, LLP, Centre Square West,
1500 Market Street, 38th Floor, Philadelphia, Pennsylvania or at such other
time, date and place as LifeQuest and Seller shall in writing designate. The
date of the Closing is referred to herein as the "Closing Date".
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4. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents
and warrants to the LifeQuest as follows:
4.1 Incorporation. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and is
qualified and in good standing as a foreign corporation in Pennsylvania. Seller
is not required to qualify or otherwise be authorized to do business as a
foreign corporation in any other jurisdiction in order to carry on any of its
businesses as now conducted or to own, lease or operate the Assets except for
such jurisdictions where the failure to so qualify will not have a Material
Adverse Effect. Complete and correct copies of the Certificate of Incorporation
of Seller and all amendments thereto, certified in each case by the Secretary of
State of the State of Delaware, and of the Bylaws of Seller and all amendments
thereto, certified by the Secretary of Seller, heretofore have been delivered to
LifeQuest. The minute books of Seller previously made available to LifeQuest are
complete and accurately reflect all action taken prior to the date of this
Agreement by its board of directors and shareholders, in their capacities as
such. Seller has no Subsidiaries. Seller is not engaged in any business or
operations other than the Business.
4.2 Share Capital
(a) The authorized capital stock of Seller consists of 4,000
shares of Seller Stock, of which 1,263 shares are outstanding as of the date
hereof, and 1,000 shares of preferred stock of Seller, of which none shares are
outstanding as of the date hereof. All of the outstanding Seller Stock is held
of record by the Persons identified as such owners on Schedule 4.2. All
outstanding Seller Stock is duly authorized and issued in compliance with all
federal, state and foreign securities laws. True and correct copies of the stock
records of Seller, showing all issuances and transfers of shares of capital
stock of Seller since inception, have previously been provided to LifeQuest.
(b) On the Closing Date there will be outstanding no rights of
first refusal, preemptive rights, conversion rights, options, warrants or other
rights to acquire, directly or indirectly, capital stock from Seller. Set forth
in Schedule 4.2 is the number of options outstanding on the date hereof, the
grant dates and exercise prices thereof (in each case, as applicable).
(c) Seller is not a party or subject to any agreement or
understanding, and to the Best Knowledge of Seller there is no agreement or
understanding between any Persons, that affects or relates to the voting or
giving of written consents with respect to any securities of Seller or the
voting by any director of Seller. No Shareholder nor any Affiliate thereof is
indebted to Seller. Seller is not indebted to any Shareholder or any Affiliate
thereof other than Teleflex Incorporated ("Teleflex").
4.3 Financial Statements. Seller has delivered to LifeQuest copies of
the following financial statements for Seller, all of which financial statements
are included in Schedule 4.3 (collectively, the "Financial Statements"):
Unaudited Balance Sheet of Seller (the "Reference Balance Sheet") as of October
31, 1998 (the "Balance Sheet Date") and Unaudited Income Statement of Seller for
the ten-month period ended on the Balance Sheet Date. The Financial Statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent
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basis throughout the periods indicated, and present fairly the financial
condition of Seller as of the dates and for the periods indicated thereon,
except that such financial statements do not include footnote disclosures which
are required by generally accepted accounting principles. However, all material
matters which would have been disclosed in such footnotes are disclosed in this
Agreement and the Schedules hereto or in the documents referred to in this
Agreement or such Schedules.
4.4 Events Since the Balance Sheet Date. Since the Balance Sheet Date,
there has not been:
(a) any change in the condition (financial or otherwise) or in
the properties, assets, liabilities, business or prospects of the Business,
except changes in the ordinary course of business, all of which in the aggregate
have not been materially adverse; (b) any breach or default by Seller or, to the
Best Knowledge of Seller, by any other party, under any agreement or obligation
included in the Assets or by which any of the Assets are bound; (c) any damage,
destruction or loss (whether or not covered by insurance) materially adversely
affecting the Assets or the Business; (d) any material change in the types,
nature, composition or quality of the services of the Business, any material
adverse change in the contributions of any of the service lines of the Business
to the revenues or net income of such Business, or any adverse change in the
sales, revenue or net income of the Business; (e) any transaction related to or
affecting the Assets or the Business other than transactions in the ordinary
course of business of Seller; (f) any declaration, setting aside or payment of
any dividend (whether in cash, stock or property) with respect to any of
Seller's capital stock except as permitted by Section 8.3; (g) (i) any granting
by Seller to any executive officer of Seller of any increase in compensation
payable after the Closing Date, (ii) any granting by Seller to any executive
officer of any increase in severance or termination pay payable after the
Closing Date, or (iii) any entry by Seller into any employment, severance or
termination agreement with any executive officer; (h) any change in accounting
methods, principles or practices by Seller materially affecting its assets,
liabilities or business, except insofar as may have been required by a change in
tax-basis or generally accepted accounting principles, and except as required by
LifeQuest; (i) any condition, event or occurrence through the date hereof which,
in the aggregate, could reasonably be expected to prevent, hinder or delay in
any material respect the ability of Seller to consummate the transactions
contemplated by this Agreement; or (j) any agreement, in writing or otherwise,
by Seller or any corporate action by Seller with respect to the foregoing.
4.5 Taxes.
(a) All Tax Returns of or relating to any Taxes that are
required to be filed on or before the Effective Time, subject to any allowable
extension periods, for, by, on behalf of or with respect to Seller, including,
but not limited to, those relating to the income, business, operations or
property of Seller (whether on a separate, consolidated, affiliated, combined,
unitary or any other basis), have been or will prior to the Effective Time be
timely filed with the appropriate foreign, federal, state and local authorities,
and all Taxes shown to be due and payable on such Tax Returns have been or will
prior to the Effective Time be paid in full on or before the Effective Time,
except Taxes which have not yet become due, before the Effective Time, liability
for which is or will prior to the Effective Time be reflected on the Seller's
books of account;
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(b) all Taxes assessed and due and owing from or against
Seller on or before the Effective Time have been or will be timely paid in full
on or before the Effective Time; and
(c) all withholding Tax, Tax deposit and estimated Tax payment
requirements imposed on Seller for any and all periods ending on or before the
Effective Time, or through and including the Effective Time for periods that
have not ended on or before the Effective Time, have been or will be satisfied
in full on or before the Effective Time or reserves adequate for the payment of
such withholding, deposit and estimated Taxes have been or will be established
in the books of account of Seller on or before the Effective Time.
4.6 Employee Matters. Seller has no employees and has not at any time
in the past had any employees.
4.7 Contracts and Agreements. (a) Except for the contracts or
arrangements referred to in Schedule 4.7, Seller is not a party to or bound by:
(i) any contract, agreement or commitment in respect of the
sale or distribution of products or services or the purchase of raw materials,
supplies or other products or utilities other than pending orders given or
received in the ordinary course of business consistent with past practice;
(ii) any offer, tender or the like outstanding and capable of
being converted into an obligation of Seller by the passage of time or by an
acceptance or other act of some other person or entity or both, except for those
incurred in the ordinary course of Seller's business, none of which have had a
Material Adverse Effect;
(iii) any sale, agency, distributorship agreement, franchise
agreement or legally enforceable commitment or obligation with respect thereto;
(iv) any collective bargaining agreement, union agreement,
employment agreement, consulting agreement, management service agreement,
agreement providing for the services of an independent contractor or any other
similar type of contract or agreement;
(v) any profit-sharing, pension, stock option, severance pay,
retirement, bonus, deferred compensation, group life and health insurance or
other employee benefit plan, agreement, arrangement or commitment of a similar
nature or any agreement with any present or former officer, director or
shareholder of Seller;
(vi) any loan or credit agreement, indenture, guarantee (other
than endorsements made for collection), mortgage, pledge, conditional sale or
other title retention agreement, any equipment financing obligation, lease and
lease-purchase agreement;
(vii) any lease related to the Assets or the Business, and any
other contract, agreement or legally enforceable commitment relating to or
affecting the Assets or the Business;
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(viii) any performance bond, bid bond, surety bond and the
like, any contract and bid covered by such bond, and any letter of credit and
guaranty;
(ix) any consent decree and other judgment, decree or order,
settlement agreement and agreement relating to competitive activities, requiring
or prohibiting any future action;
(x) any contract, commitment or agreement of any nature with a
Shareholder, or Affiliate of a Shareholder;
(xi) any contracts, commitments and agreements entered into
outside the ordinary course of the operation of the Business;
(xii) any agreement, indenture or other instrument which
contains restrictions with respect to the payment of dividends or any other
distribution in respect of its capital stock or the purchase, redemption or
other acquisition of capital stock;
(xiii) other than expenditures regularly made in the ordinary
course of business of Seller for items that are not property, plant or
equipment, any agreement, contract or commitment relating to any expenditure or
a series of related expenditures in excess of $10,000;
(xiv) any outstanding loan or advance by Seller to, or
investment by Seller in, any Person, or any agreement, contract, commitment or
understanding relating to the making of any such loan, advance or investment
(excluding trade receivables);
(xv) any contract, agreement, indenture, note or other
instrument relating to (A) the borrowing of money by Seller or the granting of
any Encumbrance or (B) any guarantee or other contingent liability (identifying
the primary contract or agreement to which such guarantee or contingent
liability relates or the agreement pursuant to which such guarantee was
delivered) in respect of any indebtedness, commitment, liability or obligation
of any Person (other than the endorsement of negotiable instruments for deposit
or collection in the ordinary course of business);
(xvi) any agreement, contract or commitment limiting the
freedom of Seller or any Affiliate of Seller to engage in any line of business,
to own, operate, sell, transfer, pledge or otherwise dispose of or encumber any
Asset or to compete with any Person or to engage in any business or activity in
any geographic area;
(xvii) any agreement, lease, contract or commitment or series
of related agreements, leases, contracts or commitments not entered into in the
ordinary course of business that is not cancelable under the terms of such
agreement, lease, contract or commitment without penalty to Seller within 30
days;
(xviii) any agreement, contract or commitment requiring (A)
the payment for goods or services whether or not such goods or services are
actually provided or (B) the furnishing of goods or services at a price less
than Seller's cost of producing such goods or providing such services;
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(xix) any agreement or contract obligating Seller or that
would obligate or require any subsequent owner of the business currently
conducted by Seller or any of the Assets to provide for indemnification or
contribution with respect to any matter (other than customary indemnification
provisions in leases of property leased by Seller);
(xx) any license, royalty or similar agreement; or
(xxi) any agreement, contract or commitment that Seller
expects to have a Material Adverse Effect on Seller and/or LifeQuest subsequent
to Closing.
(b) All of such contracts, agreements, leases, licenses,
plans, arrangements, commitments and documents specified in Schedule 4.7
(collectively, the "Contracts") are to the Best Knowledge of Seller valid,
binding and in full force and effect. To the Best Knowledge of Seller there are
no facts or documents rendering any Contract unenforceable by Seller or
otherwise invalid. There is no existing default thereunder or breach thereof by
Seller, or, to the Best Knowledge of Seller, by any other party to a Contract,
or any conditions which, with the passage of time or the giving of notice or
both, would constitute such a default by Seller, or, to the Best Knowledge of
Seller, by any other party to a Contract, and none of the Contracts will be
breached by or give any other party a right of termination as a result of the
transactions contemplated by this Agreement. There are no pending or, to the
Best Knowledge of Seller, threatened disputes with respect to the Contracts.
There are no obligations, including payment of money, past due by either party
to any Contract. There are no disclosed or undisclosed breaches of warranty,
whether or not within a time period to cure, pertaining to any Contract. There
is no condition existing that has or will trigger a right to terminate any
Contract. There is no requirement in any Contract requiring a third party to be
a signatory to this Agreement. Copies of all of the Contracts (or in the case of
oral commitments, descriptions of the material terms thereof) have been
delivered by Seller to LifeQuest, and such copies and/or descriptions are true,
complete and accurate and include all amendments, supplements or modifications
thereto. All of the contracts are assignable to and assumable by LifeQuest as
set forth herein so as to give LifeQuest exactly the same rights and/or
obligations thereunder enjoyed by Seller, without the requirement of obtaining
any consent or approval, giving any prior or subsequent notice, paying any
further royalty or fee to any party thereto or to any other third party, or
performing any duty that has not already been fully performed by Seller. All of
the Contracts will be fully vested in LifeQuest as of the Effective Time of the
Merger, without the approval or consent of any Person.
4.8 Effect of Agreement. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will not (a)
violate any provision of the Articles of Incorporation or other charter
documents or bylaws of Seller; (b) result in any violation of any Governmental
Requirement applicable to Seller, the Assets or the Business; (c) conflict with,
or result in any breach of, or default or loss of any right under (or an event
or circumstance that, with notice or the lapse of time, or both, would result in
a default), or the creation of an Encumbrance pursuant to, or cause or permit
the acceleration prior to maturity or "put" right with respect to, any
obligation under, any contract, indenture, mortgage, deed of trust, lease, loan
agreement or other agreement or instrument to which Seller is a party or to
which any of the Assets or Business are subject; or (d) require notice to or the
consent, authorization, approval, clearance, waiver or order of any Person
(except as specified in Schedule 4.8). The execution, delivery and performance
of this
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Agreement by Seller will not result in the loss of any governmental license,
franchise or permit possessed by Seller.
4.9 Properties, Assets and Leasehold Estates.
(a) Set forth on Schedule 4.9 is a description of each item of
personal property, excluding inventory, owned by Seller that had a book value as
of the Balance Sheet Date greater than $10,000. For purposes of this Section
4.9, "personal property" excludes Intellectual Property. Seller owns all of such
personal property free and clear of all Encumbrances, except for Permitted
Encumbrances and those Encumbrances set forth on Schedule 4.9.
(b) Seller leases no personal property.
(c) Seller owns no real property.
(d) Seller leases no real property.
4.10 Intellectual Property.
(a) Schedule 4.10 is a complete list of Intellectual Property
in which Seller either has an ownership interest or rights/obligations pursuant
to agreements.
(b) Except as set forth in agreements itemized on, or
otherwise disclosed in, Schedule 4.10, (i) there is no contract obligation of
Seller concerning, or any license or encumbrance affecting Seller's interest in
or title to, such Intellectual Property; (ii) Seller has received no notice that
the manufacture or sale by Seller of any of the products offered for sale by
Seller infringes the patent or trademark rights of any other Person nor, to the
Best Knowledge of Seller, is there any valid basis for any such claim; and (iii)
to the Best Knowledge of Seller no product presently offered for sale by any
Person infringes the patent rights of Seller. To the Best Knowledge of Seller,
Seller's use of the Intellectual Property does not infringe on any third party
proprietary interest, including (without limitation) any third party patent,
copyright, trademark, or trade secret interest. To the Best Knowledge of Seller,
Seller's right to the exclusive use of the Intellectual Property is not being
infringed by any third party proprietary interest, including (without
limitation) any third party patent, copyright, trademark, or trade secret
interest. To the Best Knowledge of Seller, except for agreements itemized on
Schedule 4.10, no agreements or arrangements are in effect with respect to the
development, nondisclosure, marketing, distribution, licensing, or promotion of
the Intellectual Property by any independent contractor, salesperson,
distributor, sublicensor, or other remarketer or sales organization.
4.11 Suits, Actions and Claims. Except as set forth in Schedule 4.11,
(a) there are no suits, actions, claims, or to the Best Knowledge of Seller,
investigations by any Person, or any legal, administrative or arbitration
proceedings in which Seller is engaged, which are pending or, to the Best
Knowledge of Seller, threatened, against or affecting Seller or any of its
properties, assets or business, or to which Seller is or might become a party,
or which question the validity or legality of the transactions contemplated
hereby, (b) to the Best Knowledge of Seller, no reasonable basis or
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reasonable grounds for any such suit, action, claim, investigation or proceeding
exists, and (c) there is no outstanding order, writ, injunction or decree of any
Governmental Authority against or affecting Seller or any of its properties,
assets or business.
4.12 Licenses and Permits; Compliance With Governmental Requirements.
No federal, state, local or foreign governmental license or permit is necessary
for the conduct by Seller of the operation of its business as currently
conducted, except for the licenses, permits and approvals required to be
obtained by Medical Creative Technologies, Inc. referred to in Schedule 4.12.
Seller has not received and is not aware of any reports of inspections under the
United States Occupational Safety and Health Act, or under any other applicable
federal, state or local health and safety laws and regulations relating to
Seller, the Assets or the operation of Seller's business. There are no safety,
health, anti-competitive or discrimination claims that have been made or are
pending or, to the Best Knowledge of Seller, that are threatened relating to the
business or employment practices of Seller. Seller has complied with all
Governmental Requirements applicable to its business and all Governmental
Requirements with respect to the distribution and sale of products and services
by it.
4.13 Authorization. Seller has full legal right, power, and authority
to enter into and deliver this Agreement, to consummate the transactions set
forth herein and to perform all the terms and conditions hereof to be performed
by it. The execution and delivery of this Agreement by Seller and the
performance by it of the transactions contemplated herein have been duly and
validly authorized by all requisite corporate actions of Seller, and this
Agreement has been duly and validly executed and delivered by Seller and is the
legal, valid and binding obligation of Seller, enforceable against Seller in
accordance with the terms of the Agreement, except as limited by applicable
bankruptcy, moratorium, insolvency or other similar laws affecting generally the
rights of creditors or by principles of equity.
4.14 Records. The books, records and minutes kept by Seller with
respect to the Assets and the Business, including, but not limited to, all
customer files, service agreements, correspondence and historic revenue of
Seller, have been kept properly and contain records of all matters required to
be included therein by any Governmental Requirement or by generally accepted
accounting principles, and such books, records and minutes are true, accurate
and complete in all material respects.
4.15 Environmental Protection Laws.
(a) Seller has at all times operated in compliance with all
applicable limitations, restrictions, conditions, standards, prohibitions,
requirements and obligations of Environmental Laws and related orders of any
court or other Governmental Authority.
(b) There are no existing, pending or, to the Best Knowledge
of Seller, threatened actions, suits, claims, investigations or proceedings by
or before any court or any other Governmental Authority directed against Seller
or its Assets or the Business which pertain or relate to (i) any remedial
obligations under any applicable Environmental Law, (ii) violations of any
Environmental Law, (iii) personal injury or property damage claims relating to
the release of chemicals or Waste Materials or (iv) response, removal or
remedial costs under CERCLA or any similar state law.
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(c) All notices, permits, licenses or similar authorizations
required to be obtained or filed by Seller under all applicable Environmental
Laws in connection with its current and previous operation or use of the Assets,
any other assets or properties currently or previously leased or owned by Seller
or the current and previous conduct of its business have been duly obtained or
filed and are in full force and effect.
(d) Seller has not received notice that any permit, license or
similar authorization referred to in subparagraph (a) above, is to be revoked or
suspended by any Governmental Authority.
(e) Seller does not own or operate any underground storage
tanks.
(f) No portion of the Assets or any other assets or properties
currently or previously leased or owned by Seller is part of a Superfund site
under CERCLA or any similar ranking or listing under any similar state law.
(g) All Waste Materials generated by Seller have been
transported, stored, treated and disposed of by carriers, storage, treatment and
disposal facilities authorized and maintaining valid permits under all
applicable Environmental Laws.
(h) No Person has disposed or released any Waste Materials on
or under the Assets or any other asset or property currently or previously
leased or owned by Seller and Seller has not disposed or released Waste
Materials on or under the Assets or any other asset or property currently or
previously leased or owned by Seller, except in compliance with all
Environmental Laws.
(i) No facts or circumstances exist which could reasonably be
expected to result in any liability of Seller to any Person with respect to the
current or past business and operations of Seller, the Assets or any other
assets or properties currently or previously leased or owned by Seller in
connection with (i) any release, transportation or disposal of any Waste
Materials, hazardous substance or solid waste or (ii) action taken or omitted
that was not in full compliance with or was in violation of, any applicable
Environmental Law.
4.16 Accounts Receivable. All notes and accounts receivable of Seller
that are reflected on the Reference Balance Sheet or that have arisen since the
Balance Sheet Date ("Accounts Receivable") have arisen in the ordinary course of
business. All Accounts Receivable either (a) have been collected or (b) are
collectible on the respective due dates thereof, or, if no due date is stated
with respect thereto, within 150 days of their creation in the ordinary course
of business, in each case in the aggregate recorded amounts thereof, less the
applicable reserves with respect thereto reflected on the Reference Balance
Sheet. Seller has not factored or discounted or agreed to factor or discount any
Account Receivable. The values at which the Accounts Receivable are carried on
the Reference Balance Sheet reflect the accounts receivable valuation policy of
Seller which is consistent with Seller's past practice and in accordance with
generally accepted accounting principles consistently applied. No Accounts
Receivable have been written off by Seller, in whole or in part, as
uncollectible during the two years preceding the date hereof.
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4.17 Brokers and Finders. Except as set forth in Schedule 4.17, no
broker or finder has acted for Seller or, to the Best Knowledge of Seller, any
Shareholder in connection with this Agreement or the transactions contemplated
by this Agreement and no broker or finder is entitled to any brokerage or
finder's fee or to any commission in respect thereof based in any way on
agreements, arrangements or understandings made by or on behalf of Seller or
any, to the Best Knowledge of Seller, Shareholder.
4.18 Deposits. Seller does not now hold any deposits or prepayments
(except prepayments for goods ordered in the aggregate not exceeding $10,000) by
third parties with respect to any of the Assets or the Business ("Deposits").
4.19 Work Orders. There are no outstanding work orders or contracts
relating to any portion of the Assets from or required by any policy of
insurance, fire department, sanitation department, health authority or other
Governmental Authority nor is there any matter under discussion with any such
parties or authorities relating to work orders or contracts.
4.20 Customer List; Supplier List.
(a) Schedule 4.20 sets forth a true, correct and complete list of all
customers of the Business to which Seller has sold or provided products or
services since inception. This list provides an accurate statement of the gross
revenues received from each such customer by the Business during the ten-month
period ended October 31, 1998.
(b) Schedule 4.20 sets forth a true, correct and complete list of all
suppliers of the Business from which Seller has purchased or otherwise received
more than $10,000 worth of products or services since inception. This list
provides an accurate statement of the gross payments to each such supplier by
the Business during the ten-month period ended October 31, 1998.
4.21 No Royalties. Except as set forth on Schedule 4.21, no royalty or
similar item or amount is being paid or is owing by Seller, nor is any such item
accruing, with respect to the operation, ownership or use of the Business or the
Assets.
4.22 Bank Accounts. Schedule 4.22 sets forth a true and complete list
of all bank or financial accounts and safe deposit boxes of Seller and of the
credit and debit balances of such bank and financial accounts as of the most
recent practicable date. Except as set forth in Schedule 4.22, since the date of
the balances set forth on such list, there have been no payments out of or
drafts against any of the accounts included therein other than routine payments
and drafts in the ordinary course of business, and the balances in such accounts
as of the date hereof are not materially different from those reflected in such
list. Schedule 4.22 also lists all persons having signatory authority over or
access to such bank and financial accounts and safe deposit boxes.
4.23 Working Capital. On the Closing Date, the current assets of Seller
will exceed the current liabilities of Seller, as determined in accordance with
generally accepted accounting principles.
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4.24 Shareholder Approval. This Agreement and transactions contemplated
herein have been approved by the Shareholders of Seller, and such approval
cannot be revoked unless this Agreement is terminated pursuant to provisions of
Article 12 hereof.
4.25 No Untrue Statements. The Representations and Warranties of Seller
set forth in this Agreement do not include any untrue statement of a material
fact or omit to state any material fact necessary to make such Representations
and Warranties made not misleading.
5. REPRESENTATIONS AND WARRANTIES OF LIFEQUEST. LifeQuest represents
and warrants to Seller as follows:
5.1 LifeQuest Incorporation. LifeQuest is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
5.2 Authorization. LifeQuest has have full legal right, power and
authority, corporate and otherwise, to enter into this Agreement and to
consummate the transactions set forth herein and to perform all the terms and
conditions hereof to be performed by them. The execution and delivery of this
Agreement and the performance by LifeQuest of the transactions contemplated
herein have been duly authorized by all requisite corporate action of LifeQuest
and is the legal, valid and binding obligation of LifeQuest, enforceable against
LifeQuest in accordance with its terms, except as limited by applicable
bankruptcy, moratorium, insolvency or similar laws affecting generally the
rights of creditors or by principles of equity.
5.3 Brokers and Finders. No broker or finder has acted for LifeQuest in
connection with this Agreement or the transactions contemplated by this
Agreement and no broker or finder is entitled to any brokerage or finder's fee
or to any commission in respect thereof based in any way on agreements,
arrangements or understandings made by or on behalf of LifeQuest.
5.4 Authorization for Stock Consideration. LifeQuest has taken all
necessary action to permit it to issue the number of shares of Stock
Consideration required to be issued pursuant to the terms of this Agreement. The
shares of Stock Consideration issued pursuant to the terms of this Agreement
will, when issued, be validly issued, fully paid and nonassessable and not
subject to preemptive rights. The Stock Consideration issuable pursuant to this
Agreement will, when issued, be listed on the NASDAQ SmallCap Market.
5.5 SEC Documents. LifeQuest has provided to Seller and each
Shareholder its Form S-3 dated October 30, 1998, its Annual Report on Form
10-KSB/A for the year ended December 31, 1997, its Quarterly Reports on Form
10-QSB for the quarters ended March 31, 1998, June 30, 1998, and September 30,
1998 and its proxy statement with respect to the Annual Meeting of Stockholders
held on May 19, 1998 (such documents collectively referred to herein as the "SEC
Documents"). As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder applicable to such SEC
Documents, and none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were
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made, not misleading. The consolidated financial statements of LifeQuest
included in the SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the Commission with respect thereto, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of LifeQuest and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (except in the
case of interim period financial information for normal year-end adjustments).
6. NATURE OF STATEMENTS AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
6.1 "Representations and Warranties of Seller" means all of
the representations and warranties of Seller set forth in Article 4, including
the statements in the Schedules referred to in Article 4, and the statements of
Seller set forth in the certificate delivered by Seller at Closing pursuant to
Section 9.1(d). All Representations and Warranties of Seller shall survive the
Effective Time regardless of any investigation at any time made by or on behalf
of LifeQuest. The covenants and agreements made by Seller herein, shall continue
until all obligations with respect thereto shall have been performed or
satisfied or shall have been terminated in accordance with their respective
terms.
6.2 "Representations and Warranties of LifeQuest" means all of
the representations and warranties of LifeQuest set forth in Article 5,
including the statements of LifeQuest set forth in the certificate delivered by
LifeQuest at Closing pursuant to Section 9.2(d). All Representations and
Warranties of LifeQuest shall survive the Effective Time regardless of any
investigation at any time made by or on behalf of Seller. The covenants and
agreements made by LifeQuest herein, shall continue until all obligations with
respect thereto shall have been performed or satisfied or shall have been
terminated in accordance with their respective terms.
7. TAX TREATMENT.
Seller and LifeQuest intend that the transactions contemplated
hereunder constitute a tax-free reorganization (a "Reorganization") for federal
income tax purposes under Sections 368(a)(1) and 368(a)(2)(D) of the Code, and
agree to treat and report for federal income tax purposes 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 for
federal income tax purposes.
8. PRE-CLOSING COVENANTS.
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing:
8.1 General. Each of the Parties will use his or its best
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make
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effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in
Article 9).
8.2 Notices and Consents. Each of the Parties, as promptly as
practicable, (i) will make, or cause to be made, all filings and
submissions required under laws, rules and regulations applicable to
it, or to its Subsidiaries and Affiliates, as may be required for it to
consummate the transactions contemplated hereby; (ii) will use their
best efforts to obtain, or cause to be obtained, all authorizations,
approvals, consents and waivers from all Persons and Governmental
Authorities necessary to be obtained by each of them, or any of their
respective Subsidiaries or Affiliates, in order for each of them,
respectively, so to consummate such transactions; and (iii) will use
their respective best efforts to take, or cause to be taken, all other
actions necessary, proper or advisable in order for each of them to
fulfill their respective obligations hereunder.
8.3 Operation of Business. Except as contemplated by this
Agreement or as set forth in the Schedules, during the period from the
date of this Agreement to the Effective Time, (a) Seller will conduct
its operations according to its ordinary course of business and
consistent with past practice, (b) Seller will not enter into any
transaction other than in the ordinary course of business and
consistent with past practice, (c) Seller will deliver to LifeQuest on
or before the 15th day of each month true and correct unaudited monthly
balance sheets and statements of income for the Business for the
immediately preceding month, and (d) to the extent consistent with the
foregoing, using best efforts and with no less diligence and effort
than would be applied in the absence of this Agreement, Seller will
seek to preserve intact its current business organizations, keep
available the services of its current officers and consultants and
preserve its relationships with customers, suppliers and others having
business dealings with it with the objective that their goodwill and
ongoing businesses shall be unimpaired at the Effective Time; provided
that nothing in this Agreement shall be deemed to limit the right of
Seller to declare and pay dividends in cash to its shareholders
(including the declaration of dividends to its shareholders payable
after the Effective Time) so long as no such declaration or payment
shall result in a breach of the warranty set forth in Section 4.23. For
purposes of this Agreement any such permitted declaration of cash
dividends payable after the Effective Time shall be treated as a
liability of Seller which shall be assumed by the Surviving Corporation
pursuant to Article 2. Without limiting the generality of the
foregoing, and except as otherwise permitted in this Agreement, prior
to the Effective Time, Seller will not, without the prior written
consent of LifeQuest:
(a) except for Seller Stock issued upon exercise of options
outstanding as of the date hereof, issue, deliver, sell, dispose of,
pledge or otherwise encumber, or authorize or propose the issuance,
delivery, sale, disposition or pledge or other Encumbrance of (i) any
additional shares of its capital stock of any class (including the
Seller Stock), or any securities or rights convertible into,
exchangeable for or evidencing the right to subscribe for any shares of
its capital stock, or any rights, warrants, options, calls, commitments
or any other agreements of any character to purchase or acquire any
shares of its capital stock or any securities or rights convertible
into, exchangeable for or evidencing the right to subscribe for
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any shares of its capital stock, or (ii) any other securities in
respect of, in lieu of or in substitution for Seller Stock outstanding
on the date hereof;
(b) redeem, purchase or otherwise acquire, or propose to
redeem, purchase or otherwise acquire, any of its outstanding
securities (including the Seller Stock);
(c) (i) grant any increases in the compensation of any of its
directors, officers or key employees, (ii) pay or agree to pay any
pension, retirement allowance or other employee benefit hereof to any
such director, officer or key employee, whether past or present, (iii)
enter into any new, or amend any existing, employment agreement with
any such director, officer or key employee, (iv) enter into any new, or
amend any existing, severance agreement with any such director, officer
or key employee, or (v) except as may be required to comply with
applicable law, amend any existing, or become obligated under any new
employee benefit plan;
(d) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of Seller (other than the Merger);
(e) make any acquisition, by means of merger, consolidation or
otherwise, of (i) any direct or indirect ownership interest in or
assets comprising any business enterprise or operation or (ii) any
other assets in excess of $10,000;
(f) adopt any amendments to its Certificate of Incorporation
or Bylaws;
(g) incur any long-term indebtedness for borrowed money or
guarantee any such indebtedness or make any loans, advances or capital
contributions to, or investments in, any other Person;
(h) amend any Contract;
(i) enter into or amend or assume any mortgage, pledge,
conditional sale or other title retention agreement, lien, encumbrance
or charge of any kind upon any of the Assets, or selling, leasing,
abandoning or otherwise disposing of any of the Assets, including, but
not limited to, real property, machinery, equipment or other operating
properties;
(j) increasing the compensation of any officer or employee of
Seller associated with the Business;
(k) engage in the conduct of any business the nature of which
is different then the business Seller is currently engaged in;
(l) enter into or assume any oral or written agreement
providing for acceleration of payment or performance or other
consequence as a result of a change of control of Seller or its
Subsidiaries;
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(m) except for purchases of inventory pursuant to existing
contracts or arrangements, enter into or assume any oral or written
contract, arrangement or understanding requiring the purchase of
equipment, materials, supplies or services for the expenditure of
greater than $10,000;
(n) incur any liabilities other than in the ordinary course of
business;
(o) hire any employee; or
(p) authorize or announce an intention to do any of the
foregoing, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing.
8.4 Full Access. Seller will, and cause each Shareholder to,
permit representatives of LifeQuest and its financing parties to have
full access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of the Seller to all
premises, properties, personnel, books, records (including Tax records
and the workpapers of the independent accountants for the Seller),
contracts and documents of or pertaining to the Seller .
8.5 Notice of Developments. Each Party will give prompt
written notice to the others of any material adverse development which
has caused a breach of any of its own representations and warranties in
Articles 4 or 5 above and not been cured within five days and Seller
will give proper notice to LifeQuest of any development which has
caused a breach of its covenants contained in Section 8.3 above and not
cured within five days. No disclosure by any Party pursuant to this
Section 8.5, however, shall be deemed to amend or supplement the
Schedules hereto or to prevent or cure any misrepresentation, breach of
warranty or breach of covenant.
8.6 Exclusivity.
(a) Unless and until this Agreement has been terminated
pursuant to Section 12.1, Seller will not, and will not cause or permit
any of the Shareholders to, (i) solicit, initiate or encourage the
submission of any proposal or offer from any Person relating to a
Business Combination or (ii) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist
or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek a Business Combination. Seller
will, and cause each Shareholder with such knowledge to, notify
LifeQuest immediately if any Person makes any proposal, offer, inquiry,
or contact with respect to any of the foregoing.
(b) The Parties hereto recognize and acknowledge that a breach
by Seller of this Section 8.6 will cause irreparable and material loss
and damage to LifeQuest as to which it will not have an adequate remedy
at law or in damages. Accordingly, each Party acknowledges and agrees
that the issuance of an injunction or other equitable remedy is an
appropriate remedy for any such breach. In addition, in the event of
any breach of the foregoing which results in Business Combination with
a Person other than LifeQuest, Seller
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shall be liable for and promptly reimburse LifeQuest for the reasonable
expenses incurred by LifeQuest in connection with the transactions
contemplated by this Agreement.
9. CONDITIONS TO OBLIGATION TO CLOSE
9.1 Conditions to Obligation of LifeQuest. The obligation of
LifeQuest to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(a) All Seller's Representations and Warranties
contained in this Agreement (except for the Representations
and Warranties contained in Sections 4.10(b) and 4.11 to the
extent that such Representations and Warranties relate to
claims, demands or notices, or knowledge acquired after the
date of this Agreement) all written information delivered to
LifeQuest by Seller on or prior to the Closing Date pursuant
to this Agreement, (i) that are qualified as to materiality
shall be true in all respects on and as of the Closing Date
and (ii) that are not qualified as to materiality shall be
true in all material respects on and as of the Closing Date
with the same force and affect as though such representations
and warranties were made, and such written information was
delivered, on and as of the Closing Date;
(b) Seller shall have performed and complied with all
of its covenants hereunder in all material respects through
the Closing;
(c) no action, suit or proceeding shall be pending or
threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling or charge would
(i) prevent consummation of any of the transactions
contemplated by this Agreement, (ii) cause any of the
transactions contemplated by this Agreement to be rescinded
following consummation, (iii) affect adversely the right of
LifeQuest to control the Seller, (iv) affect adversely the
right of the Seller to own its assets and to operate its
businesses, or (v) require or could reasonably be expected to
require any divestiture by the Seller of a portion of its
business that LifeQuest in its reasonable judgment believes
will have a material adverse effect on the Seller (and no such
injunction, judgment, order, decree, ruling or charge shall be
in effect);
(d) Seller shall have delivered to LifeQuest a
certificate to the effect that each of the conditions
specified above in Section 9.1(a), (b) and (c) is satisfied in
all respects;
(e) LifeQuest shall have received from counsel to
Seller opinions in substantially in the form attached hereto
as Exhibits 9.1(e)(1) and 9.1(e)(2), addressed to LifeQuest,
and dated as of the Closing Date;
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(f) Christopher K. Black, Surgical Visions I, Inc.,
TFX Equities, Inc. and Teleflex shall have executed and
delivered Non-Competition Agreements in the form of Exhibit
9.1(f) hereto;
(g) Christopher K. Black, TFX Equities Incorporated,
Teleflex and Surgical Visions I, Inc. shall have executed and
delivered Indemnity Agreements in the form of Exhibit 9.1(g)
hereto;
(h) The oral agreements between Seller and Teleflex
listed as items 11 and 12 on Schedule 4.7 hereto shall have
been terminated; and
(i) The stockholders of LifeQuest shall have approved
this Agreement and the consummation by LifeQuest of the
transactions contemplated hereby, including but not limited to
the issuance of the Stock Consideration.
LifeQuest may waive any condition specified in this Section 9.1 if it
executes a writing so stating at or prior to the Closing.
9.2 Conditions to Obligation of Seller. The obligation of
Seller to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(a) all Representations and Warranties of LifeQuest
contained in this Agreement, and all written information
delivered to Seller by LifeQuest on or prior to the Closing
Date pursuant to this Agreement, (i) that are qualified as to
materiality shall be true in all respects on and as of the
Closing Date and (ii) that are not qualified as to materiality
shall be true in all material respects on and as of the
Closing Date, with the same force and effect as though such
representations and warranties were made, and such written
information was delivered, on and as of the Closing Date;
(b) LifeQuest shall have performed and complied with
all of its covenants hereunder in all material respects
through the Closing;
(c) no action, suit, or proceeding shall be pending
or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local or foreign
jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling or charge would
(A) prevent consummation of any of the transactions
contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded
following consummation (and no such injunction, judgment,
order, decree, ruling or charge shall be in effect);
(d) LifeQuest shall have delivered to Seller a
certificate to the effect that each of the conditions
specified above in Section 9.2(a), (b) and (c) is satisfied in
all respects;
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(e) LifeQuest shall have executed and delivered a
Consulting Agreement between LifeQuest and Christopher K.
Black in the form of Exhibit 9.2(e) hereto; and
(f) LifeQuest shall have executed and delivered the
Indemnity Agreement in the form of Exhibit 9.1(g) attached
hereto;
(g) LifeQuest shall have executed and delivered the
Registration Rights Agreement in the form attached hereto as
Exhibit 9.2(g);
(h) LifeQuest shall have executed and delivered the
Royalty Agreement with TFX Equities Incorporated as agent for
the Shareholders in the form attached hereto as Exhibit
2.6(c);
(i) Seller and the Shareholders shall have received
from counsel to LifeQuest an opinion substantially in the form
attached hereto as Exhibit 9.2(i) addressed to Seller, and
dated as of the Closing Date; and
(j) all actions to be taken by LifeQuest in
connection with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments and other
documents required to effect the transactions contemplated
hereby will be reasonably satisfactory in form and substance
to Seller.
Seller may waive any condition specified in this Section 9.2 if it
executes a writing so stating at or prior to the Closing.
10. SPECIAL CLOSING AND POST-CLOSING COVENANTS.
The Parties agree as follows with respect to the period following the Closing:
10.1 General. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each of
the Parties will take such further action (including the execution and delivery
of such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor pursuant to the terms
of the Indemnity Agreement. Seller acknowledges and agrees that from and after
the Closing LifeQuest will be entitled to possession of all documents, books,
records (including Tax records), agreements, and financial data of any sort
relating to the Seller.
10.2 Litigation Support. In the event and for so long as any Party or
Teleflex or any of its Affiliates actively is contesting or defending against
any action, suit, proceeding, hearing, investigation, charge, complaint, claim
or demand in connection with (i) any transaction contemplated under this
Agreement or (ii) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act or
transaction on or prior to the Closing Date involving the Seller, Seller will
cooperate with LifeQuest and its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as
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shall be necessary in connection with the contest or defense, all at the sole
cost and expense of the contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefor pursuant to the terms of
the Indemnity Agreement.
10.3 Transition. Seller will not take any action that is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
supplier or other business associate of the Seller from maintaining the same
business relationships with the Surviving Corporation after the Closing as it
maintained with the Seller prior to the Closing.
10.4 Intellectual Property Assignment. Although acknowledged by all
parties as also fully enabled by the Merger memorialized by this Agreement,
Seller shall also execute a separate assignment to LifeQuest of all of Seller's
right, title and interest in and to the Intellectual Property. This separate
assignment shall be in form reasonably satisfactory to Seller and LifeQuest, and
recordation thereof shall be at the sole discretion of LifeQuest.
10.5 Tax-Free Reorganization. Seller shall not, nor permit any
Shareholder to, nor shall LifeQuest, take any action which would disqualify the
transactions contemplated by this Agreement from treatment as a tax-free
reorganization of the Seller, to the extent that such treatment is otherwise
available to the Shareholders.
10.6 Teleflex Debt. Promptly following the Effective Time, LifeQuest
shall pay all amounts due from Seller to Teleflex.
10.7 Board Representation. At or prior to the Closing, LifeQuest's
Board of Directors shall elect Christopher K. Black and Lewis E. Hatch, Jr. to
serve as directors of LifeQuest effective as of the Effective Time. LifeQuest
shall take all requisite action to amend its Bylaws, if necessary, to increase
the size of its Board of Directors in order to effect the appointments
contemplated by this Section 10.7. For so long as Teleflex and its Affiliates
together shall hold in the aggregate more than 50% of the aggregate number of
shares of LifeQuest Stock acquired by Teleflex and its Affiliates pursuant
hereto, LifeQuest will cause each of two persons nominated by Teleflex and
acceptable to LifeQuest's Board of Directors to be nominated for election of
directors at LifeQuest's annual meetings of stockholders.
10.8 Exchange Act Filing; Cooperation. After the Closing Date, Seller
shall, and cause its Affiliates to, reasonably cooperate with and provide
information to LifeQuest as is necessary for LifeQuest to comply with its
reporting obligations under the Exchange Act, including, but not limited to, all
financial and other information, which shall include audited balance sheets,
income statements and statements of cash flow for two years prior to Closing,
and access to Seller's affiliates' personnel required in order for Seller to
comply with its reporting obligations under the Exchange Act.
11. NOTICES. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally, given by prepaid telex
or telegram or by facsimile or other similar instantaneous electronic
transmission device or mailed first class, postage prepaid, certified United
States mail, return receipt requested, as follows:
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(a) If to Purchaser or LifeQuest, at:
LifeQuest Medical, Inc.
12961 Park Central, Suite 1300
San Antonio, Texas 78216
Attention: Randall K. Boatright
Facsimile No.: (210) 495-4441
With a copy to:
Fulbright & Jaworski L.L.P.
300 Convent Street, Suite 2200
San Antonio, Texas 78205
Attention: Phillip M. Renfro
Facsimile No.: (210) 270-7205
(b) If to Seller, at:
Dexterity Incorporated
1787 Sentry Parkway West, Bldg. Sixteen, Suite 220
Blue Bell Pennsylvania 19422
Attention: Christopher K. Black, President
Facsimile No.: (215) 641-9465
With a copy to:
Saul, Ewing, Remick & Saul, LLP
Centre Square West
1500 Market Street, 38th Floor
Philadelphia, PA 19102-2186
Attention: Donald Beckman
Facsimile No.: (215) 972-1821
provided that any party may change its address for notice by giving to the other
party written notice of such change. Any notice given under this Article 11
shall be effective (x) when delivered, if delivered personally, (y) 24 hours
after sending, if sent by telex or telegram or by facsimile or other similar
instantaneous electronic transmission device, and (z) 48 hours after mailing, if
mailed.
12. TERMINATION.
12.1 Termination of Agreement. Each of the Parties may terminate this
Agreement as provided below:
(a) LifeQuest and Seller may terminate this Agreement
by mutual written consent at any time prior to the Closing;
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(b) LifeQuest may terminate this Agreement by giving
written notice to Seller at any time prior to the Closing (i)
in the event the Seller has breached any Representation,
Warranty of Seller or covenant of Seller contained in this
Agreement in any material respect, LifeQuest has notified
Seller of the breach, and the breach has continued without
cure for a period of 15 days after the notice of breach or
(ii) if the Closing shall not have occurred on or before March
2, 1999, by reason of the failure of any condition precedent
under Section 9.1 hereof (unless the failure results primarily
from LifeQuest itself breaching any Representation, Warranty
or covenant of LifeQuest contained in this Agreement); and
(c) Seller may terminate this Agreement by giving
written notice to LifeQuest at any time prior to the Closing
(i) in the event LifeQuest has breached any representation,
warranty or covenant contained in this Agreement in any
material respect, Seller has notified LifeQuest of the breach,
and the breach has continued without cure for a period of 15
days after the notice of breach or (ii) if the Closing shall
not have occurred on or before March 2, 1999, by reason of the
failure of any condition precedent under Section 9.2 hereof
(unless the failure results primarily from Seller itself
breaching any Representation, Warranty or covenant of Seller
contained in this Agreement).
12.2 Effect of Termination. If any Party terminates this Agreement
pursuant to Section 12.1 herein, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach of its covenants
hereunder).
13. GENERAL PROVISIONS.
13.1 Governing Law; Interpretation; Section Headings. This Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of New York without regard to conflict-of-laws rules as applied in New
York. The section headings contained herein are for purposes of convenience only
and shall not be deemed to constitute a part of this Agreement or to affect the
meaning or interpretation of this Agreement in any way.
13.2 Severability. Should any provision of this Agreement be held
unenforceable or invalid under the laws of the United States of America or the
State of New York, or under any other applicable laws of any other jurisdiction,
then the parties hereto agree that such provision shall be deemed modified for
purposes of performance of this Agreement in such jurisdiction to the extent
necessary to render it lawful and enforceable, or if such a modification is not
possible without materially altering the intention of the parties hereto, then
such provision shall be severed herefrom for purposes of performance of this
Agreement in such jurisdiction. The validity of the remaining provisions of this
Agreement shall not be affected by any such modification or severance, except
that if any severance materially alters the intentions of the parties hereto as
expressed herein (a modification being permitted only if there is no material
alteration), then the parties hereto shall use commercially reasonable efforts
to agree to appropriate equitable amendments to this Agreement in light of such
severance.
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13.3 Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties hereto with respect to the transactions
contemplated hereby and supersedes all prior agreements, arrangements and
understandings related to the subject matter hereof. No representation, promise,
inducement or statement of intention has been made by any party hereto which is
not embodied or referenced in this Agreement and no party hereto shall be bound
by or liable for any alleged representation, promise, inducement or statement of
intention not so set forth.
13.4 Binding Effect. All the terms, provisions, covenants and
conditions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and their respective heirs, executors,
administrators, representatives, successors and assigns.
13.5 Assignment. This Agreement and the rights of the parties may be
assigned by any party hereto without the prior written consent of the other
parties hereto, provided that no such assignment shall relieve any party from
its obligations under this Agreement.
13.6 Amendment; Waiver. This Agreement may be amended, modified,
superseded or canceled, and any of the terms, provisions, representations,
warranties, covenants or conditions hereof may be waived, only by a written
instrument executed by all parties hereto, or, in the case of a waiver, by the
party waiving compliance. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect the right
to enforce the same. No waiver by any party of any condition contained in this
Agreement, or of the breach of any term, provision, representation, warranty or
covenant contained in this Agreement, in any one or more instances, shall be
deemed to be or construed as a further or continuing waiver of any such
condition or breach, or as a waiver of any other condition or of the breach of
any other term, provision, representation, warranty or covenant.
13.7 Gender; Numbers. All references in this Agreement to the
masculine, feminine or neuter genders shall, where appropriate, be deemed to
include all other genders. All plurals used in this Agreement shall, where
appropriate, be deemed to be singular, and vice versa.
13.8 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.
13.9 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.
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13.10 Expenses. In the event the transactions contemplated hereby are
not consummated, each of the parties will pay all costs and expenses of its or
his performance of and compliance with this Agreement.
13.11 Effect of Due Diligence. No investigation by or on behalf of
LifeQuest into the business, operations, prospects, assets or condition
(financial or otherwise) of the Seller shall diminish in any way the effect of
any representations or warranties made by Seller in this Agreement or shall
relieve Seller of any of its obligations under this Agreement.
13.12 Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of
LifeQuest and Seller; provided, however, that any Party may make any public
disclosure it believes in good faith is required by applicable law (in which
case the disclosing Party will use its reasonable best efforts to advise the
other Parties prior to making the disclosure).
13.13 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
13.14 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty and covenant contained herein shall have
independent significance. If any Party has breached any representation, warranty
or covenant contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty or covenant.
13.15 Incorporation of Exhibits, and Schedules. The Exhibits, and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
13.16 Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties 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 Parties 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 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.
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IN WITNESS WHEREOF, the parties have executed this Plan of Merger and
Acquisition Agreement as of the date first above written.
LIFEQUEST:
LIFEQUEST MEDICAL, INC.
By:
--------------------------------------------
Richard A. Woodfield
President and Chief Executive Officer
SELLER:
DEXTERITY INCORPORATED
By:
--------------------------------------------
Christopher K. Black, President
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EXHIBIT 2.6(a)
STOCK WARRANT
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT AND SUCH LAWS, WHICH, IN THE OPINION
OF COUNSEL FOR THE HOLDER, WHICH COUNSEL AND OPINION ARE
REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION, IS
AVAILABLE.
WARRANT TO PURCHASE SHARES OF COMMON STOCK
OF LIFEQUEST MEDICAL, INC.
Warrant Certificate No. 1999-1 Date: ___________________ ("Effective Date")
This certifies that, for value received, LifeQuest Medical, Inc., a
Delaware corporation (the "COMPANY"), hereby grants to
______________________________, or registered assigns (the "HOLDER") the right
to purchase, subject to adjustment and the other terms and conditions set forth
herein, ___________ shares of common stock, par value $.001 per share (the
"Stock"), at the exercise price of $2.00 per share (the "Warrant Exercise
Price"), subject to adjustment as set forth in SECTION 3 hereof, at any time or
from time to time after the date hereof and prior to 5:00 P.M. (Eastern Time)
on _____[ten years]______ (the "WARRANT EXPIRATION DATE").
This Warrant and all warrants hereafter issued in exchange or
substitution of this Warrant, are hereinafter referred to as the "WARRANTS."
THIS WARRANT, TO THE EXTENT NOT EXERCISED IN THE MANNER SET FORTH HEREIN, SHALL
TERMINATE AND BECOME NULL AND VOID AT 5:00 P.M. (EASTERN TIME) ON THE WARRANT
EXPIRATION DATE.
This Warrant is subject to the following terms and conditions.
1. Exercise; Issuance of Certificates; Payment of Shares.
(a) This Warrant may be exercised, at the option of the
Holder, in whole or in part as follows: (i) one-fifth (1/5), of the Stock on
the first anniversary of the Effective Date, (ii) one-fifth (1/5) of the Stock
39
on the second anniversary of the Effective Date, (iii) one-fifth (1/5) of the
Stock on the third anniversary of the Effective Date, (iv) one-fifth (1/5) of
the Stock on the fourth anniversary of the Effective Date, and (v) one-fifth
(1/5) of the Stock on the fifth anniversary of the Effective Date, at any time
prior to 5:00 P.M. (Eastern Time) on the Warrant Expiration Date, by surrender
to the Company of this Warrant Certificate properly endorsed together with the
Form of Subscription attached hereto duly filled in, signed and with proper
payment of the Warrant Exercise Price multiplied by the number of shares of
Stock for which the Warrant is being exercised. Payment shall be in cash,
certified check or official bank check or check, subject to collection, payable
to the order of the Company.
(b) The Company agrees that the shares of Stock purchased on
the exercise of each Warrant shall be deemed to be issued as of the close of
business on the date on which this Warrant Certificate shall have been
surrendered and payment made for such shares of Stock. Issuance of the shares
of Stock shall be subject to compliance with all provisions of the Securities
Act of 1933, as amended (the "SECURITIES ACT"), the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), and any relevant state securities law.
Subject to the provisions of Section 2 hereof, certificates for the largest
whole number of shares of Stock so purchased, together with any other
securities or property to which the Holder is entitled upon such exercise,
shall be delivered to the Holder by the Company within five business days after
this Warrant has been exercised. No fractional shares of Stock shall be issued
upon exercise of this Warrant. Each Stock Certificate so delivered, in
accordance with the provisions of Section 8 hereof, shall be registered in the
name of the Holder or such other name as shall be designated by the Holder,
subject to the provisions of Section 6 hereof. If prior to the Warrant
Expiration Date, this Warrant is exercised in part, one or more new Warrants
substantially in the form of, and on the terms contained in, this Warrant
Certificate will be issued for the remaining number of shares of Stock in
respect of which this Warrant has not been exercised.
2. Shares to be Fully Paid; Reservation of Shares. The Company
covenants and agrees that all shares of Stock which may be issued upon the
exercise of this Warrant will, upon issuance, be duly authorized, validly
issued, fully paid and nonassessable. The Company further covenants and agrees
that during the period within which this Warrant may be exercised, the Company
will at all times have authorized and reserved, and will keep available solely
for issuance upon exercise of this Warrant, a sufficient number of shares of
Stock or other securities and properties as from time to time shall be
receivable upon the exercise of this Warrant. The Company shall provide that
any successor corporation will reserve a sufficient number of shares of
authorized but unissued stock or other securities or set aside sufficient other
property, as the case may be, as provided for in this Section 2.
3. Adjustment of Warrant Exercise Price and Number of Shares; Events
Requiring Notice; Changes in Stock.
3.1 Method of Adjustment. The Warrant Exercise Price and the
number of shares of Stock purchasable upon the exercise of this Warrant shall
be subject to adjustment from time to time upon the occurrence of the events
described in Section 3.2. Upon each adjustment of the
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40
Warrant Exercise Price, the Holder shall thereafter be entitled to purchase, at
the Warrant Exercise Price resulting from such adjustment, the number of shares
of Stock obtained by multiplying the Warrant Exercise price in effect
immediately prior to such adjustment by the number of shares of Stock
purchasable pursuant hereto immediately prior to such adjustment, and dividing
the product thereof by the Warrant Exercise Price resulting from such
adjustment.
3.2 Subdivision or Combination of Stock and Stock Dividend.
In case the Company shall at any time subdivide its outstanding shares of Stock
into a greater number of shares of Stock or declare a dividend upon its Stock
payable in shares of Stock, the Warrant Exercise Price in effect immediately
prior to such subdivision or dividend shall be proportionately reduced, and
conversely, in case the outstanding shares of Stock of the Company shall be
combined into a smaller number of shares of Stock, the Warrant Exercise Price
in effect immediately prior to such combination shall be proportionately
increased.
3.3 Notice of Adjustment. Upon any adjustment of the Warrant
Exercise Price and any increase or decrease in the number of shares of Stock
purchasable upon the exercise of this Warrant, the Company promptly shall give
written notice thereof to the Holder, which shall state the Warrant Exercise
Price resulting from such adjustment and increase or decrease, if any, in the
number of shares of Stock purchasable at such price upon the exercise of this
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
3.4 Consolidation, Merger or Similar Transaction. In case of
any consolidation or merger of the Company with or into any corporation or the
merger of any corporation into the Company or any sale, lease or other
conveyance to another person of all or any substantial part of the property of
the Company, the Holder shall have the right to exercise this Warrant
thereafter (but not after the Warrant Expiration Date) in the same manner as it
might have been exercised to purchase shares of Stock immediately prior to such
event and, upon any such exercise shall receive the kind and amount of shares
and other securities and property receivable upon such consolidation, merger,
sale or conveyance by a holder of the number of shares of Stock which might
have been purchased by the Holder had this Warrant been exercised immediately
prior to such consolidation, merger, sale, lease or other conveyance. The
Company shall take such action in connection with such consolidation, merger or
other transaction involving the sale, lease or other conveyance of its property
to assure that the provisions hereof shall thereafter be applicable, as nearly
as reasonably may be, in relation to any securities or property thereafter
purchasable upon the exercise of this Warrant, and the Company shall cause the
surviving corporation (if other than the Company) of such consolidation or
merger to assume the obligations of the Company hereunder.
3.5 Reclassification of Shares. In case the Company shall, at
any time after the Effective Date, change as a whole the outstanding shares of
its Stock into a different number or class of shares (by subdivision,
consolidation, reclassification of shares or otherwise), the term "Stock"
herein shall thereafter refer to such different number and class of shares, and
the Purchase Price in effect immediately prior to such event be proportionately
adjusted.
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3.6 Other Notices. If at any time:
(a) the Company shall declare a dividend upon its Stock
payable in securities or property other than Stock;
(b) there shall be any consolidation or merger of the
Company with another corporation, or a sale of all or substantially all of the
Company's assets to another corporation; or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in any one or more of said cases, the Company shall give the Holder (i)
at least thirty (30) days' prior written notice of the date on which the books
of the Company shall close or a record date shall occur for such dividend or
distribution or for determining rights to vote in respect of any such
consolidation, merger, sale, dissolution, liquidation or winding-up and (ii) in
the case of any such consolidation, merger, sale, dissolution, liquidation or
winding-up, at least twelve (12) calendar days' written notice of the date when
the same shall take place. Any notice given in accordance with clause (i) above
shall also specify, in the case of any such dividend or distribution, the date
on which the holders of Stock shall be entitled to the receipt thereof. Any
notice given in accordance with clause (ii) above shall also specify the date
on which the holders of Stock shall be entitled to exchange their Stock for
securities or other property deliverable upon such consolidation, merger, sale,
dissolution, liquidation or winding-up, as the case may be. In the event of an
occurrence of any event described in clauses (a) through (c) above, then the
vesting schedule set forth in Section 1(a) hereof shall be accelerated such
that this Warrant may be exercised in whole or in part, from and after the date
of the received notice given in accordance with clause (i) above.
4. Issue Tax. The issuance of certificates for shares of Stock upon
the exercise of this Warrant shall be made without charge to the Holder for any
issue tax in respect thereof; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than
that of the Holder.
5. No Voting or Dividend Rights. This Warrant does not confer upon the
Holder the right to vote or to consent or to receive notice as a stockholder of
the Company, in respect of meetings of stockholders for the election of
directors of the Company or any other matters or any rights whatsoever as a
stockholder of the Company prior to the exercise hereof. No cash dividends
shall be payable or accrued in respect of this Warrant or the shares of Stock
purchasable hereunder until, and only to the extent that, this Warrant shall
have been exercised.
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6. Restrictions on Transferability of Securities; Compliance with
Securities Act.
6.1 Restrictions on Transferability. The Holder may transfer
or assign this Warrant, except that the Company shall not be obligated to
effect any transfer of this Warrant unless a registration statement is in
effect with respect thereto under applicable state and Federal securities laws
or the Company has received an opinion in substance reasonably satisfactory to
it from counsel reasonably satisfactory to it that such registration is not
required and this Warrant is surrendered to the Company at its principal office
together with the Assignment Form annexed hereto, duly completed and executed,
and sufficient funds to pay any transfer tax.
6.2 Ownership. The Company and any agent of the Company may
treat the person in whose name this Warrant Certificate is registered on the
register which the Company shall cause to be maintained for such purpose as the
owner and holder thereof for all purposes. This Warrant Certificate, if
properly assigned, may be exercised by a new holder without first having a new
Warrant Certificate issued.
6.3 Legend. A legend setting forth or referring to the above
restrictions shall be placed on this Warrant, any replacement hereof or any
certificate representing the Stock, and a stop transfer restriction or order
shall be placed on the books of the Company and with any transfer agent until
such securities may be legally sold or otherwise transferred.
7. Modification and Waiver. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the Party against which enforcement of the same is sought.
8. Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder or the Company shall be
personally delivered or shall be sent by certified or registered mail, postage
prepaid, if to the Holder at ______________________________, or if to the
Company at its principal office at 12961 Park Central, Suite 1300, San Antonio,
Texas 78216. Any notice, request or other document shall be deemed to have been
given upon receipt if personally delivered, or on the seventh day after being
mailed if mailed, registered or certified mail. Each party shall notify the
other party in writing of any change of address of the Company within a
reasonable time following such change of address.
9. Descriptive Headings and Governing Law. The descriptive headings of
the several sections and paragraphs of this Warrant Certificate are inserted
for convenience only and do not constitute a part of this Warrant Certificate.
This Warrant Certificate shall be construed and enforced in accordance with,
and the rights of the Parties shall be governed by, the laws of the State of
Delaware.
10. Lost Warrant Certificates or Stock Certificates. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft,
destruction, or mutilation of this Warrant Certificate
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or any stock certificate deliverable upon the exercise hereof and, in the case
of any such loss, theft or destruction, upon receipt of an indemnity and, if
requested, bond reasonably satisfactory to the Company, or in the case of any
such mutilation upon surrender and cancellation of this Warrant Certificate or
such stock certificate, the Company at its expense shall make and deliver a new
Warrant Certificate or stock certificate, of like tenor, in lieu of the lost,
stolen, destroyed or mutilated Warrant Certificate or stock certificate.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be executed by its officer, thereunder duly authorized as of the ___th day of
_______________, ____.
LIFEQUEST MEDICAL, INC.
---------------------------------------
Richard A. Woodfield, President
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FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
TO: LIFEQUEST MEDICAL, INC.
The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise this Warrant for, and to purchase thereunder,
_______________ shares of Common Stock of LIFEQUEST MEDICAL, INC., and herewith
makes payment of $____________ therefore and requests that the certificates for
such shares be issued in the name of, and delivered to,________________________
_____________________________________________________, whose address is
.
Dated: ______________, _____
-----------------------------------
(Signature must conform to name of
Holder as specified on the face of
the Warrant)
-----------------------------------
-----------------------------------
(Address)
45
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant in
accordance with the provisions of Section 6 of the
Warrant Certificate)
For value received, the undersigned hereby sells, assigns,
and transfers unto _____________________ the right represented by the written
Warrant to purchase shares of Common Stock of LIFEQUEST MEDICAL, INC., to which
the within Warrant relates and appoints Attorney to transfer such rights on the
books of LIFEQUEST MEDICAL, INC., with full power of substitution in the
premises.
Dated: _____________, _____
-----------------------------------
(Signature must conform to name of
Holder as specified on the face of
the Warrant)
46
EXHIBIT 2.6(b)
PROMISSORY NOTE
$__________ San Antonio, Texas ______________, 1998
On _______________, _________ (one year from Closing) for value
received, LifeQuest Medical, Inc., a Delaware corporation, ("Maker"), promises
to pay to the order of _________________________ (the "Payee"), at (address of
Payee) in lawful money of the United States of America, the principal amount of
_____________________ _____________________ AND __/100 DOLLARS ($____________)
together with interest on the principal balance from time to time remaining
unpaid from the date of this Note until maturity at a rate of interest equal to
the lessor of (a) twelve (12% per annum or (b) the Maximum Rate (as defined
below) from time to time in effect. The Maker agrees to pay interest at twelve
percent (12%) on all past due principal and interest on this Note from the
maturity thereof until paid. This Note may be prepaid in whole or in part at
any time without notice or prepayment penalty. All payments on this Note shall
be applied first to accrued interest and the balance, if any, to principal.
Maker shall pay all accrued and unpaid interest on this Note on each March 31,
June 30, September 30 and December 31 during any period in which amounts remain
outstanding under this Note.
"Maximum Rate" means the lesser of (a) eighteen percent (18%) per
annum or (b) the maximum lawful non-usurious rate of interest (if any) which
under Applicable Law the Payee is permitted to charge the Maker on this Note
from time to time.
"Applicable Law" means that law in effect from time to time and
applicable to this Note which lawfully permits the charging and collection of
the highest permissible lawful non-usurious rate of interest on this Note,
including laws of the Commonwealth of Pennsylvania and laws of the United
States of America.
In no event shall the aggregate of the interest on this Note, plus any
other amounts paid in connection with the loan evidenced by this Note which
would under Applicable Law be deemed "interest," ever exceed the maximum amount
of interest which, under Applicable Law, could be lawfully charged on this
Note. The Payee and the Maker specifically intend and agree to limit
contractually the interest payable on this Note to not more than an amount
determined at the Maximum Rate. Therefore, none of the terms of this Note or
any other instruments pertaining to or securing this Note shall ever be
construed to create a contract to pay interest at a rate in excess of the
Maximum Rate, and neither the Maker nor any other party liable herefor shall
ever be liable for interest in excess of that determined at the Maximum Rate,
and the provisions of this paragraph shall control over all provisions of this
Note or of any other instruments pertaining to or securing this Note. If any
amount of interest taken or received by the Payee shall be in excess of the
maximum amount of interest which, under Applicable Law, could lawfully have
been collected on this Note, then the excess shall be deemed to have been the
result of a mathematical error by the parties hereto and shall be refunded
promptly to the Maker. All amounts paid or agreed to be paid in connection with
the indebtedness evidenced by this Note which would under Applicable Law be
deemed "interest" shall, to the extent permitted by Applicable Law, be
amortized, prorated, allocated, and spread throughout the full term of this
Note.
Upon the occurrence of any one or more of the following events (each
of which will constitute an Event of Default) or at any time thereafter while
such default remains uncured, the Payee (or other holder of this Note) may
declare the entire unpaid balance of principal of and interest on this Note to
be immediately due and payable.
47
(a) The failure by the Maker to pay any interest on this Note
within ten (10) days after the same becomes due;
(b) The entry of an order for relief against the Maker in an
involuntary case under the Federal Bankruptcy Code, or the entry of an order
adjudicating the Maker a bankrupt or insolvent under any similar bankruptcy or
insolvency law, or the entry of an order appointing a receiver or trustee for
the Maker or any of its property or approving a petition seeking
reorganization, dissolution, liquidation or other similar relief under the
bankruptcy or other similar laws of the United States or any state or other
jurisdiction, or the filing by the Maker of a petition commencing a voluntary
proceeding under any such law or a petition, answer or other document seeking
or consenting to any of the foregoing.
The Maker will pay all reasonable expenses of the Payee (or other
holder of this Note), including attorneys' fees, incurred by such holder in
enforcing its rights and remedies hereunder together with interest thereon at
the rate provided above. If such holder brings suit (or files any claim in any
bankruptcy, reorganization, insolvency or other proceeding) to enforce any of
its rights hereunder and shall be entitled to judgment (or other recovery) in
such action (or other proceeding) then such holder may recover, in addition to
all other amounts payable hereunder, its reasonable expenses in connection
therewith, including attorneys' fees, and the amount of such expenses shall be
included in such judgment (or other form of award).
No delay or omission on the part of the Payee (or other holder of this
Note) to exercise any right upon the occurrence of any Event of Default will
impair any such right or will be construed to be a waiver of any such default
or any acquiescence therein. No waiver of any default hereunder will affect any
later default or will impair any of the Payee's (or other holder of this Note)
rights hereunder. No single, partial or other exercise of any right by such
holder will preclude any further or other exercise thereof.
The Maker waives demand, presentment for payment, notice of
nonpayment, protest, notice of protest, notice of acceleration, notice of
intent to accelerate and all other notice, except as otherwise expressly set
forth herein, filing of suit and diligence in collecting this Note. The Payee
may transfer this Note, and the rights and privileges of the Payee under this
Note shall inure to the benefit of the Payee's successors or assigns.
LIFEQUEST MEDICAL, INC.
------------------------------------
Richard A. Woodfield
President and Chief Executive Officer