1
EXHIBIT 2.1
REORGANIZATION AGREEMENT
among
ROBERT A. KUSHER
CRAIG LOWY
MINIMED INC.
and
MINIMED DISTRIBUTION CORP.
Dated as of October 19, 1997
2
TABLE OF CONTENTS
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 - THE TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Agreement to Purchase and Sell Shares . . . . . . . . . . . . . . . . . 1
1.2 Corporation Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4.2 Taxes and Charges . . . . . . . . . . . . . . . . . . . . . . . . 4
1.5 Deliveries at Closing . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.5.1 Deliveries by Targets to Acquiror . . . . . . . . . . . . . . . . 4
1.5.2 Deliveries by Acquiror to Targets . . . . . . . . . . . . . . . . 5
1.6 Allocation of Consideration . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF EACH TARGET . . . . . . . . . . . . . . . . 5
2.1 Qualification; No Interest in Other Entities . . . . . . . . . . . . . . 5
2.2 Authorization and Enforceability . . . . . . . . . . . . . . . . . . . . 5
2.3 No Violation of Laws or Agreements . . . . . . . . . . . . . . . . . . . 6
2.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 No Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.6 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.7 Permits and Compliance With Laws Generally . . . . . . . . . . . . . . . 9
2.8 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.9 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.10 Title to Personal Property . . . . . . . . . . . . . . . . . . . . . . . 12
2.11 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.13 Patents and Intellectual Property Rights . . . . . . . . . . . . . . . . 15
2.14 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.15 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.16 Employees and Labor Relations . . . . . . . . . . . . . . . . . . . . . 16
2.16.1 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.16.2 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . 16
2.16.3 Labor Claims . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.17 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.18 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . 17
2.19 No Pending Litigation or Proceedings . . . . . . . . . . . . . . . . . . 17
2.20 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.21 Condition of Corporation Assets . . . . . . . . . . . . . . . . . . . . 18
2.22 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-i-
3
2.23 Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.24 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.25 Certificate of Incorporation and Bylaws . . . . . . . . . . . . . . . . 19
2.26 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.27 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.28 Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.29 Purchase for Own Account . . . . . . . . . . . . . . . . . . . . . . . . 20
2.30 Accredited Investor . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.31 Transaction Representations . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MINIMED . . . . . . . . . . . 22
3.1 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . 22
3.2 Corporate Power and Authority . . . . . . . . . . . . . . . . . . . . . 22
3.3 Authorization and Enforceability . . . . . . . . . . . . . . . . . . . . 22
3.4 No Violation of Laws or Agreements . . . . . . . . . . . . . . . . . . . 22
3.5 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.6 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.7 Stock Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.8 Transaction Representations . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 4 - COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.2 Access, Information and Documents . . . . . . . . . . . . . . . . . . . 25
4.3 Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.4 Supplements to Disclosure Schedules . . . . . . . . . . . . . . . . . . 26
4.5 Mutual Covenants and Assurances . . . . . . . . . . . . . . . . . . . . 26
4.6 Public Announcement . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.7 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.7.1 Designated Employees . . . . . . . . . . . . . . . . . . . . . . 27
4.7.2 Termination of Employees . . . . . . . . . . . . . . . . . . . . 27
4.8 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.9 Pay-off of Liabilities of the Corporations . . . . . . . . . . . . . . 28
4.10 Tax and Accounting Treatment . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 5 - CONDITIONS PRECEDENT; TERMINATION . . . . . . . . . . . . . . . . . . . . . . 28
5.1 Conditions Precedent to Obligations of Acquiror . . . . . . . . . . . . 28
5.1.1 Performance of Agreements; Representations and Warranties . . . . 28
5.1.2 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . 29
5.1.3 Required Consents; Notice . . . . . . . . . . . . . . . . . . . . 29
5.1.4 Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . 29
5.1.5 Completion of Due Diligence . . . . . . . . . . . . . . . . . . . 29
5.1.6 Review of Schedules . . . . . . . . . . . . . . . . . . . . . . . 29
-ii-
4
5.1.7 Accuracy and Approval of Schedules . . . . . . . . . . . . . . . 30
5.1.8 Injunction; Litigation . . . . . . . . . . . . . . . . . . . . . 30
5.1.9 Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.1.10 Pooling Opinion . . . . . . . . . . . . . . . . . . . . . . . . 30
5.1.11 Condition of Corporation Assets . . . . . . . . . . . . . . . . 30
5.1.12 Corporate Approval . . . . . . . . . . . . . . . . . . . . . . . 31
5.2 Conditions Precedent to Obligations of Targets . . . . . . . . . . . . . 31
5.2.1 Performance of Agreements; Representations and Warranties . . . . 31
5.2.2 Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.2.3 Required Consents; Notice . . . . . . . . . . . . . . . . . . . . 31
5.2.4 Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.2.5 Accuracy and Approval of Schedules . . . . . . . . . . . . . . . 32
5.2.6 Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.3 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.4 Right to Proceed . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.5 Effect of Investigation . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 6 - CERTAIN ADDITIONAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 34
6.1 Certain Taxes and Expenses . . . . . . . . . . . . . . . . . . . . . . . 34
6.2 Maintenance of Books and Records . . . . . . . . . . . . . . . . . . . . 34
6.3 Employment Security Laws . . . . . . . . . . . . . . . . . . . . . . . . 35
6.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.4.1 Mutual Indemnification . . . . . . . . . . . . . . . . . . . . . 35
6.4.2 Indemnification of Acquiror and MiniMed . . . . . . . . . . . . . 35
6.4.3 Indemnification of Targets . . . . . . . . . . . . . . . . . . . 36
6.4.4 Payment of Indemnification . . . . . . . . . . . . . . . . . . . 36
6.4.5 Indemnification Procedures . . . . . . . . . . . . . . . . . . . 36
6.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 7 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.1 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.2 Nature and Survival of Covenants and Representations . . . . . . . . . . 38
7.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.4 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.5 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.7 Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . 40
7.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.9 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . 40
7.10 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.11 Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.13 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
-iii-
5
REORGANIZATION AGREEMENT
THIS REORGANIZATION AGREEMENT (this "Agreement"), is entered
into as of October 19, 1997, by and among Robert Kusher, an individual
("Kusher"), Craig Lowy, an individual ("Lowy")(Lowy and Kusher are referred to
herein individually as "Target" and collectively as "Targets"), MiniMed
Distribution Corp., a Delaware corporation ("Acquiror") and MiniMed Inc., a
Delaware corporation ("MiniMed").
RECITALS
WHEREAS, the corporations listed on Exhibit A to this
Agreement (each such entity is referred to herein individually as a
"Corporation" and collectively as the "Corporations") own and operate a
business that sells and/or distributes medical devices, including medical
devices manufactured by MiniMed, medications, pharmaceuticals and related
supplies for the treatment, monitoring and/or management of medical conditions
and disease (including diabetes) (collectively, the "Business"); and
WHEREAS, the Corporations maintain various facilities and
assets for the purpose of the conduct of the Business, mainly in the
Southeastern United States; and
WHEREAS, Targets are the owners of record of all of the issued
and outstanding capital stock of the Corporations (collectively, the "Shares");
and
WHEREAS, Targets desire to sell the Shares to Acquiror, and
Acquiror desires to purchase the shares from Targets, for the consideration and
upon the terms and conditions contained in this Agreement; and
WHEREAS, the parties desire to accomplish the foregoing (a)
for accounting purposes as a pooling of interests and (b) for Federal income
tax purposes as a "tax-free" reorganization as described in Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and intending to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE 1
THE TRANSACTION
1.1 Agreement to Purchase and Sell Shares. On the basis
of the representations and warranties of the parties and subject to the terms
and conditions set forth in this Agreement, Targets hereby agree to sell,
transfer and deliver to Acquiror,
-1-
6
and Acquiror agrees to purchase from Targets, the Shares on the Closing Date
(as hereinafter defined) and for the consideration hereinafter provided. The
Shares which are subject to purchase hereunder by Acquiror shall consist of the
number of issued and outstanding shares of the common stock of each Corporation
set forth next to each Corporation's name in Exhibit A to this Agreement, which
Shares in the aggregate shall constitute all of the issued and outstanding
capital stock of each Corporation. Each Target is the owner of record of the
respective number of Shares of each class of capital stock of each Corporation
set forth in Exhibit A to this Agreement. On the Closing Date, Targets shall
deliver to Acquiror all certificates representing the Shares, duly endorsed in
blank for transfer, or with appropriate duly endorsed stock assignments
separate from certificates and with all appropriate tax stamps affixed, if
required.
1.2 Corporation Assets. The term "Corporation Assets" is
defined in this Agreement to mean any and all of the tangible and intangible
assets of the Corporations of every kind, nature and description, wherever
located, including all assets, properties, rights and claims acquired for, used
in, held for use in, relating to or arising from the conduct of the Business,
including, but not limited to, the assets of the Corporations identified in
this Section 1.2:
(a) All accounts receivable;
(b) All inventories of finished goods, materials and
supplies, whether located at or in transit to or from, each Corporation's
facilities, held on consignment, or at customer locations or otherwise
("Inventory");
(c) All prepaid expenses, including advances,
deposits, property taxes, long term lease fees, and prepaid insurance;
(d) All interests (whether fee or leasehold) in real
property, including those described in Schedule 1.2(d) and including all
improvements, fixtures contained therein and appurtenances thereto (such fee
interest is referred to herein as the "Owned Real Estate", such leasehold
interest being referred to herein as the "Leased Real Estate" and the Owned
Real Estate and Leased Real Estate being collectively referred to herein as the
"Real Estate");
(e) All personal property not constituting Inventory
including but not limited to machinery, equipment, spare parts, office
furniture, and equipment (including computer equipment and software used
thereon) and capital assets-work in process, including the property more
particularly described in
-2-
7
each Corporation's fixed asset ledger, copies of which are set forth in
Schedule 1.2(e) attached to this Agreement;
(f) All cash, securities and cash equivalents on
hand or on deposit;
(g) All of the Corporations' rights and interests in
the Contracts (as defined in Section 2.6(a) of this Agreement) and the Permits
(as defined in Section 2.7(a) of this Agreement)(including any Environmental
Permits, as defined in Section 2.8 of this Agreement);
(h) All customer and vendor lists, catalogs,
brochures, handbooks and any other marketing or advertising materials;
(i) All of the Corporations' rights under any third
party warranties relating to the foregoing property;
(j) The originals or, if not available, copies of
all books, records, files, contracts, plans, notebooks, inventory and sales
data, and other data, whether or not located at any principal place of business
of any Corporation and whether or not in tangible form or in the form of
intangible computer storage media such as optical disks, magnetic disks, tapes,
CD ROM and similar storage media; and
(k) All other assets, properties, rights and claims
located at or related to the operation by the Corporations of the Business
which arise in or from the conduct thereto.
1.3 Closing. Subject to the terms and conditions of this
Agreement, the closing of the sale and purchase of the Shares (the "Closing")
shall commence at 8 a.m., California time, on January 2, 1998 at the offices of
Acquiror in Sylmar, California, provided that the conditions to closing set
forth in Sections 5.1 and 5.2 hereof have been satisfied (or waived) on such
date, or on such other date and at such other time or place as may be mutually
agreed upon by the parties hereto. The execution and exchange of documents,
including without limitation, the delivery of the Stock Consideration (as such
term is defined below) to Targets, shall take place at the Closing on such day
(the "Closing Date"). All documents shall be deemed delivered on the Closing
Date. The closing of the transaction shall be deemed to be effective as
between the parties as of 12:01 a.m. on the Closing Date.
1.4 Purchase Price.
1.4.1 Purchase Price. Subject to the terms and
conditions of this Agreement, the aggregate purchase price to be paid by
Acquiror for the purchase of the Shares from Targets (the
-3-
8
"Purchase Price") shall be an amount of common stock of MiniMed, par value $.01
per share (the "Common Stock"), the number of shares of which shall be equal to
(A) the average closing price of the Common Stock on the NASDAQ National Market
for a period of ten (10) consecutive business days ending two (2) days prior to
the Closing Date (the "Acquiror Trading Price"), divided into (B) Sixteen
Million Dollars ($16,000,000), rounded down to the nearest whole number (the
"Stock Consideration"); provided, however, that the Acquiror Trading Price
shall in no event exceed one hundred fifteen percent (115%) of the closing
price of the Common Stock on October 17, 1997 (the "Effective Date Trading
Price") or be less than eighty-five percent (85%) of the Effective Date Trading
Price, as the case may be.
1.4.2 Taxes and Charges. Notwithstanding that the
transaction contemplated by this Agreement is intended to be a "tax-free"
reorganization for Federal income tax purposes, each Target shall be
individually responsible for all federal, state and local taxes, if any,
attributable to or arising out of the sale of each Target's Shares to Acquiror,
and the arrangements in connection with the Closing of such sale. Other than
such taxes, Acquiror and MiniMed shall be responsible for all transfer agent
fees and other direct costs, if any, attributable to or arising out of the
issuance of the Stock Consideration to Targets.
1.5 Deliveries at Closing. Subject to the terms and
conditions of this Agreement, at the Closing, the parties shall have the
respective obligations set forth in this Section 1.5.
1.5.1 Deliveries by Targets to Acquiror. At the
Closing, Targets will execute and/or deliver or cause to be delivered to
Acquiror:
(a) Stock certificates representing all of
the Shares in accordance with Exhibit A duly endorsed in blank for transfer, or
with appropriate duly endorsed stock assignments separate from the
certificates;
(b) the certificates, opinions and other
documents required to be delivered by Targets pursuant to Section 5.1 hereof;
and
(c) all such other certificates, consents,
documents or instruments of conveyance as shall, in the reasonable opinion of
Acquiror and its counsel, be necessary to vest in Acquiror good title to the
Shares.
-4-
9
1.5.2 Deliveries by Acquiror to Targets. At the
Closing, Acquiror will deliver or cause to be delivered to Targets:
(a) the certificates, opinions and other
documents required to be delivered by Acquiror or MiniMed pursuant to Section
5.2 hereof;
(b) the Stock Consideration; and
(c) such other instruments, certificates,
consents or other documents as shall, in the reasonable opinion of Targets and
its counsel, be necessary to vest in Targets good title to the Stock
Consideration, to carry out the transactions contemplated by this Agreement and
to comply with the terms hereof.
1.6 Allocation of Consideration. The Purchase Price paid
by Acquiror to Targets at the Closing shall be allocated between the
Corporations as set forth in Schedule 1.6 attached to this Agreement. Schedule
1.6 also sets forth the allocation of the Purchase Price between Kusher and
Lowy in their capacity as the recipients thereof.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF EACH TARGET
Each Target represents and warrants to Acquiror and MiniMed,
as of the date hereof, as follows:
2.1 Qualification; No Interest in Other Entities.
2.1.1 Each Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its domicile and has all requisite corporate power and authority to own, lease
and operate the Corporation Assets and conduct its respective business as and
where presently being operated. Targets beneficially and of record own all of
the issued and outstanding shares of capital stock of each Corporation.
2.1.2 No shares or other ownership or investment
interest, either of record or beneficially, in any corporation or other Person
are included in the Corporation Assets. For purposes of this Agreement, the
term "Person" means an individual, a corporation, a partnership, an
association, any governmental authority, a trust or other entity or
organization.
2.2 Authorization and Enforceability. Each Target has
the requisite power and authority to make, execute, deliver and perform this
Agreement and all other agreements and instruments to be executed by each
Target in connection herewith (such other
-5-
10
agreements and instruments, with this Agreement, being hereinafter referred to
collectively as the "Transaction Documents"). This Agreement has been, and as
of the Closing Date the other Transaction Documents will be, duly executed and
delivered by each Target. This Agreement is, and upon execution and delivery
at the Closing the other Transaction Documents will be, legal, valid and
binding obligations of each Target enforceable against each Target in
accordance with the terms thereof, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights in general and subject to general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
2.3 No Violation of Laws or Agreements. The execution,
delivery, and performance of the Transaction Documents do not, and the
consummation of the transactions contemplated by the Transaction Documents,
will not (a) contravene any provision of the Certificate of Incorporation or
Bylaws of any Corporation; or (b) except as disclosed in Schedule 2.3 hereto
and subject to receipt of the consents identified in Schedule 2.9, violate,
conflict with, result in a breach of, or constitute a default (or an event
which might, with the passage of time or the giving of notice, or both,
constitute a default) under, or result in or permit the termination,
modification, acceleration, or cancellation of, or result in the creation or
imposition of any lien of any nature whatsoever upon any Corporation or any
Corporation Asset or property or give to others any interests or rights therein
under, (i) any agreement or commitment, oral or written, including, without
limitation, any Contract, to which any Target is a party or by which any
Corporation or any of the Corporation Assets may be bound or affected, or (ii)
any judgment, injunction, writ, award, decree, restriction, ruling, or order of
any court, arbitrator or governmental authority (domestic or foreign) or any
applicable constitution, law, ordinance, rule or regulation.
2.4 Financial Statements. Except as disclosed in
Schedule 2.4 hereto, the balance sheet(s) attached as Schedule 2.4 to this
Agreement (the "Balance Sheets") were prepared from the books and records of
each Corporation in accordance with GAAP, are true and correct with respect to
each item, and are true, complete and correct in all material respects and
fairly and accurately present the financial position and the results of
operations of the Business by each Corporation as of the dates thereof and for
the periods covered thereby. The Balance Sheets were prepared on a basis
consistent with the financial statements previously supplied by Targets to
Acquiror.
-6-
11
2.5 No Changes. Since June 30, 1997 (the "Balance Sheet
Date"), the Business has been operated only in the ordinary course of business,
consistent with past practice. Without limiting the foregoing, since the
Balance Sheet Date, except as disclosed in Schedule 2.5 hereto, there has not
been:
(a) any change in the salaries or other compensation
payable or to become payable to, or any advance (excluding advances for
ordinary business expenses) or loan to, any Employee (as defined in Section
2.16.1, below);
(b) any hiring of any employee other than in the
ordinary course of business;
(c) any act by any Target or any Corporation which
would jeopardize the relationship of any Corporation with any supplier,
customer, sales representative, health care provider, third party payor and
others having business relations with them;
(d) any disposition of, or failure to keep in
effect, any rights in, to or for the use of any Permit;
(e) any modification, amendment or termination of
any Contract or any waiver of any rights of any Corporation in respect of any
Contract or other Corporation Asset;
(f) any execution, modification, amendment or
termination of any employment contract, change in control agreement or
severance agreement;
(g) any damage, destruction or loss affecting the
Corporation Assets in excess of $5,000, whether or not covered by insurance;
(h) any change by any Corporation in its method of
accounting or keeping its books of account or accounting practices;
(i) any sale, transfer or other disposition of any
assets, properties or rights of the kind included in the Corporation Assets,
except sales of inventory in the ordinary course of business consistent with
past practice and sales of other assets at fair market value with an aggregate
value of less than $25,000;
(j) any commitments or agreements for capital
expenditures or capital additions or betterments by any Corporation exceeding
in the aggregate $10,000;
-7-
12
(k) any major investments exceeding in the aggregate
$10,000;
(l) any conduct of any Corporation's business in
violation of any applicable laws, rules, regulations, ordinances, codes,
judgments and orders.
(m) any outstanding preemptive, conversion or other
rights, options, warrants or agreements granted or issued by or binding upon
any Corporation for the purchase or acquisition of any shares of any
Corporation's capital stock or any securities convertible or exchangeable for
shares of capital stock;
(n) any change in any policy of insurance owned or
held by or covering the Business and/or the Corporations;
(o) any incurrence of any liability (whether or not
pursuant to written contract) requiring an ongoing financial commitment
exceeding $5,000; provided, however, that this Section 2.5(o) shall not apply
to commitments or agreements for capital expenditures or capital additions or
betterments by any Corporation;
(p) any assumption, guarantee or incurrence of debt;
(q) any event or circumstance that has or could
reasonably be expected to have a Material Adverse Effect;
(r) any distribution or declaration of dividends by
the Corporations;
(s) any change in the number of authorized, issued
and outstanding shares of any Corporation;
(t) any amendment of any Corporation's Certificate
of Incorporation or Bylaws;
(u) any actions, suits, investigations or
proceedings pending against or, to Targets' knowledge, threatened against or
affecting, any of the Corporations or Corporation Assets before any court or
arbitrator or governmental authority;
(v) any mortgage, pledge or subjection to lien of
the Corporation Assets, or
(w) any agreement, in writing or otherwise, to do
any of the foregoing.
-8-
13
2.6 Contracts. Schedule 2.6 hereto contains a list of
the following:
(a) the contracts which are part of the Corporation
Assets (the "Contracts"); and
(b) any agreement otherwise material to the
Corporation Assets or under which the consequences of a default or termination
could have a Material Adverse Effect. For the purposes of this Agreement, the
term "Material Adverse Effect" means a material adverse effect upon the use,
occupancy, operation or condition of the Business, any Corporation, or the
Corporation Assets.
Targets have delivered to Acquiror or made available to the Acquiror for review
a correct and complete copy of each written agreement listed in Schedule 2.6
and a written summary setting forth the terms and conditions of each material
oral agreement referred to therein. With respect to each Contract: (i) the
agreement is legal, valid, binding, and enforceable against, and for the
benefit of, a Corporation, and in full force and effect; (ii) subject to
receipt of the consents identified in Schedule 2.9, except as otherwise
identified on Schedule 2.6 and subject to the terms and conditions of such
agreement, the agreement will continue to be in full force and effect following
the consummation of the transactions contemplated hereby; (iii) none of the
Targets, the Corporations nor, to Targets' knowledge, any other party thereto,
are in material breach or default, and no event has occurred which with notice
or lapse of time would constitute a material breach or default, or permit
termination, modification, or acceleration, under any Contract; and (iv) to
Targets' knowledge (without inquiry), no party has repudiated or threatened to
repudiate any provision of any Contract.
2.7 Permits and Compliance With Laws Generally.
(a) Except as may be otherwise disclosed on Schedule
2.7, the Corporations, the Corporations' employees in such employees'
individual capacity and the Corporations' agents, as applicable, possess and
are in compliance in all material respects with all permits, licenses or other
governmental requirements required to operate, own, lease or otherwise hold the
Corporation Assets and conduct the Business under all applicable laws, rules,
and regulations, except for any failure to possess any permits that would not,
individually or in the aggregate, have a Material Adverse Effect. Except as
may be otherwise disclosed on Schedule 2.7, the Corporations, the Corporations'
employees in such employees' individual capacity and the Corporations' agents,
as applicable, have operated their facilities, have conducted their business
and are now doing so in material compliance with all applicable laws (including
the
-9-
14
Occupational Safety and Health Act and the rules and regulations thereunder
("OSHA"), zoning, building and similar laws), rules, regulations, ordinances,
codes, judgments and orders. All material permits possessed by the
Corporations, the Corporations' employees in such employees' individual
capacity and the Corporations' agents (other than Environmental Permits set
forth on Schedule 2.8(a)) are listed on Schedule 2.7 hereto (collectively, the
"Permits"). All of the Permits are in full force and effect and there are no
proceedings pending or, to Targets' knowledge (without inquiry), threatened
that seek the revocation, cancellation, suspension or any adverse modification
of such Permits. Each Corporation, its employees in such employees' individual
capacity and its agents, as applicable, have made timely application for
renewals of all Permits that will expire, or otherwise require application for
renewal to be made, prior to January 1, 1998.
(b) Except as may be otherwise disclosed on Schedule
2.7, no notice, citation, summons, order, complaint, correspondence or oral
communication has been received by any Target or any Corporation and no
investigation or review is pending or threatened, by any governmental authority
or other entity, with respect to (i) any alleged violation by any Corporation
or any employee or agent of any Corporation relating to any law, ordinance,
rule, regulation, code or order of any governmental authority; (ii) any alleged
failure by any Corporation or any employee or agent of any Corporation to have
any permit relating to the Business, or any of the Corporation Assets; or (iii)
any act or omission by any Corporation or any employee or agent of any
Corporation which is not described in Sections 2.7(b)(i) and 2.7(b)(ii) above.
Except as may be otherwise disclosed on Schedule 2.7, there are no such
violations, failures or acts or omissions that would individually or in the
aggregate have a Material Adverse Effect. Except as may be otherwise disclosed
on Schedule 2.7, (i) there is no proceeding pending or threatened which is
reasonably likely to materially and adversely affect any Corporation, the
Business, or use or possession of the Corporation Assets in the manner in which
the Corporations currently own and operate the Business and uses and possesses
the Corporation Assets, and (ii) no zoning, building or similar law,
regulation, ordinance or order applicable to the Corporations or any of the
Corporation Assets is violated in any material respect.
(c) Except as may be otherwise disclosed on Schedule
2.7, to Targets' knowledge, no notice, citation, summons, order, complaint,
correspondence or oral communication has been received by any employee or agent
of any Corporation in his individual capacity and no investigation or review is
pending or threatened, by any governmental authority or other entity, with
respect to (i) any alleged violation by any employee or
-10-
15
agent of any Corporation in his individual capacity relating to any law,
ordinance, rule, regulation, code or order of any governmental authority; (ii)
any alleged failure by any employee or agent of any Corporation in his
individual capacity to have any permit relating to the Business; or (iii) any
act or omission by any employee or agent of any Corporation in his individual
capacity which is not described in Sections 2.7(c)(i) and 2.7(c)(ii) above.
Except as may be otherwise disclosed on Schedule 2.7, to Targets' knowledge,
there are no such violations, failures or acts or omissions that would
individually or in the aggregate have a Material Adverse Effect.
2.8 Environmental Matters. The Corporations possess and
are in compliance with all environmental permits, certificates, licenses,
approvals, registrations and authorizations required under all applicable laws,
rules and regulations in connection with the Corporations, the Business and the
Corporation Assets. All such material permits are listed on Schedule 2.8(a)
(the "Environmental Permits"). All of the Environmental Permits are in full
force and effect. Each Corporation has complied with, and is not in violation
of any Environmental Laws. For purposes of this Agreement, "Environmental
Laws" mean any federal, state, and local laws, ordinances, regulations,
requirements, orders, directives, guidelines, or permit conditions,
promulgated, issued or adopted, regulating or relating to Hazardous Materials,
including, without limitation, those relating to industrial hygiene, health or
environmental protection or the use, analysis, generation, manufacture,
storage, discharge, release, disposal, transportation, investigation or
remediation of Hazardous Materials. For purposes of this Agreement, "Hazardous
Materials" means any chemical, substance, material, object, condition, waste or
combination thereof which is or may be hazardous to human health or safety or
to the environment, due to its harmful or potentially harmful properties or
effects, including those listed, defined, or regulated under any Environmental
Laws, including, without limitation, petroleum and petroleum by-products, PCBs,
medical waste, and all chemicals, substances, materials, or wastes that are now
or hereafter may be listed, defined, or regulated as hazardous by any federal,
state, or local government agency or entity, or under any federal, state, or
local law, regulation, ordinance, rule, policy or procedure.
2.8.1 Each Corporation has made timely application
for renewals of all Environmental Permits that will expire, or otherwise
require application for renewal to be made, prior to January 1, 1998.
-11-
16
2.8.2 In connection with the Business, except as
disclosed in Schedule 2.8.2 to this Agreement:
(a) No notice, citation, summons, order or
complaint has been received by any Target or any Corporation and no
investigation or review is pending or threatened by any governmental authority
or other entity: (A) with respect to any alleged violation of any
Environmental Law; or (B) with respect to any alleged failure to have any
environmental permit required; or (C) with respect to any use, possession,
generation, treatment, storage, recycling, transportation or disposal
(collectively "Management") of any Hazardous Materials.
(b) Neither of the Targets nor any
Corporation have received any request for information, notice of claim, demand
or notification that it is or may be potentially responsible with respect to
any investigation or clean-up of any threatened or actual release of any
Hazardous Material.
(c) No oral or written notification of a
release or threat of release of a Hazardous Material has been filed by or on
behalf of any Target or any Corporation or in relation to any property now
owned, operated or leased by any Target or any Corporation. No such property
is listed or proposed for listing on the National Priority List promulgated
pursuant to the Federal Comprehensive Environmental Response, Compensation and
Liability Action ("CERCLA"), or on any similar state list of sites requiring
investigation or clean-up.
(d) There are no environmental liens on any
properties owned or leased by any Corporation, and no government actions have
been taken or are in process or pending which could subject any of such
properties to such liens.
(e) Except as listed in Schedule 2.8.2,
there have been no environmental inspections, investigations, studies, audits,
tests, reviews or other analyses conducted in relation to any Corporation, the
Business or the Corporation Assets or, to any Target's knowledge, conducted by
third parties in relation to any Corporation, the Business or the Corporation
Assets.
2.9 Consents. Except as specified in Schedule 2.9, no
consent, approval or authorization of, or registration or filing with, any
Person is required in connection with the execution, delivery and performance
of the Transaction Documents, or the consummation of the transactions
contemplated thereby by Targets.
2.10 Title to Personal Property. The Corporations have
good title to all of the Corporation Assets constituting personal property.
-12-
17
2.11 Real Estate.
(a) Except as set forth in Schedule 2.11(a)-1, the
Corporations have good, clear, indefeasible, insurable and marketable title in
fee simple to (and full, undivided ownership interest in) the Owned Real Estate
and a good, clear, insurable and marketable leasehold interest in all of the
Leased Real Estate, which ownership and leasehold interests, as of the Closing
Date, will be free and clear of any and all mortgages, deeds of trust, security
interests, mechanics or liens or encumbrances, subject only to the permitted
exceptions approved by Acquiror and listed on Schedule 2.11(a)-2. Except as
set forth in Schedule 2.11(a)-1, there are no purchase contracts, options or
other agreements of any kind whereby any person or entity will have acquired or
will have any basis to assert any right, title or interest in, or right to the
possession, use, enjoyment or proceeds of, any part or all of the Real Estate.
(b) Except as set forth in Schedule 2.11(b), the Real Estate
is zoned to permit the uses for which is it presently used and/or intended to
be used. Except as set forth in Schedule 2.11(b), the Real Estate is in
compliance with all applicable building, zoning, and other land use and similar
laws, codes, ordinances, rules, regulations and orders, including, without
limitation, the Americans With Disabilities Act (collectively, "Real Property
Laws"), except for any noncompliance that would not have a material adverse
effect upon the Corporation Assets or the use of the Corporation Assets for
their current use, and neither Targets nor any Corporation have received any
notice of violation or claimed violation of any Real Property Law that would
materially affect the use, occupancy, operation or marketability of the Real
Estate. The continued use, occupancy and operation of the Real Estate as
currently used, occupied and operated does not constitute a nonconforming use
under any Real Property Law and the continued existence, use, occupancy and
operation of the Real Estate, and the right and ability to repair and/or
rebuild any unit of the Real Estate in the event of casualty, is not dependent
on any special permit, exception, approval or variance.
(c) The Owned Real Estate, and, to the extent necessary
for its operation, the Leased Real Estate, constitute valid subdivided parcels
in accordance with all applicable subdivision laws, statutes, ordinances and
codes presently in effect. The Corporations have all easements, servitudes,
and rights-of-way necessary for access to the Real Estate, and there exists
reasonably unrestricted access to a public street from each unit of the Real
Estate at and over existing passageways, driveways, and accessways. All
utilities serving the Real Estate are, and shall be at the Closing Date,
adequate to operate the Business in the manner currently operated. No
improvements
-13-
18
forming part of the Real Estate: (i) encroach onto adjacent property; (ii)
violate set-back, building or side lines; or (iii) encroach onto any easements
or servitudes located on the Real Estate. Except as set forth in Schedule
2.11(c) hereto, no portion of the Real Estate is located within a flood or
lakeshore erosion hazard area or in an area classified as a protected wetland.
(d) Neither the whole nor any portion of the Real Estate has
been condemned, requisitioned or otherwise taken by any public authority. None
of the Targets nor any Corporation have received a notice of any pending
condemnation, expropriation, eminent domain or similar proceeding affecting any
portion of the Real Estate and, to Targets' knowledge, no such proceeding is
contemplated. Targets have no knowledge of any public improvements which have
been ordered to be made and/or which have not heretofore been assessed, and
there are no special, general or other assessments pending, threatened against
or affecting the Real Estate.
(e) Except as set forth in Schedule 2.11(e) hereto, none
of the Targets nor any Corporation have received notices, oral or written, from
any governmental authority that the assessed value of the Real Estate has been
determined to be greater than that upon which any tax was paid for the most
recent tax year applicable to each such tax, or from any insurance carrier of
any Corporation regarding fire hazards with respect to the Real Estate.
(f) To Targets' knowledge (without inquiry), there are no
conditions that would adversely affect the ownership, possession, use or
occupancy of the Real Estate ("Adverse Conditions") relating to the physical
condition of the Real Estate or any portion thereof, including, without
limitation, Adverse Conditions relating to soil conditions, sinkholes or
geologic faults.
(g) All materials, documents, and information delivered by or
on behalf of Targets relating or pertaining in any way to the Real Estate,
including but not limited to all material or information as to the ownership,
rights, use, or occupancy thereof, all title information thereto (including but
not limited to, all title insurance policies, commitments, deeds, covenants,
conditions, restrictions, leases, licenses, occupancy agreements, easements and
other items of record), all environmental studies, reports and information, all
property use and operational material, plans and specifications, contracts,
site plans, plats, surveys, zoning material, correspondence with landlords or
governmental authorities, and governmental material, information and notices
regarding or relating in any way to any
-14-
19
of such Real Estate are accurate and complete copies of such information and
documents.
2.12 Taxes. Except as set forth in Schedule 2.12 hereto,
all federal, state and other tax returns of the Corporations required by law to
be filed have been timely filed (the "Tax Returns"), and the Corporations have
paid all Taxes (as defined below) that have become due pursuant to the Tax
Returns or pursuant to any assessment. Except as set forth in Schedule 2.12
hereto, (a) no Corporation or Target has requested and/or obtained an extension
to file any such tax returns, (b) no Corporation or Target has ever been in a
dispute with any governmental authority with respect to any Corporation's
Taxes, (c) there are no pending claims or disputes with respect to any
Corporation's Taxes and (d) no Corporation or Target has ever entered into any
agreement or other commitment with any governmental authority with respect to
any Corporation's Taxes. The Corporations have substantial authority (as such
term is used in Section 6662 of the Code) for the tax treatment of all items on
the Tax Returns. There are no liens for Taxes on any of the Corporation Assets
or the Shares, except liens for current real estate Taxes, personal property
Taxes, assessments, and bonds not yet delinquent. For purposes of this
Agreement, "Taxes" means any federal, state, local or foreign income, payroll,
withholding, excise, sales, use, property, use and occupancy, business and
occupation, mercantile, or other tax of any kind whatsoever, including any
interest, penalty or addition thereto, whether disputed or not.
2.13 Patents and Intellectual Property Rights. None of
the Corporations own or have any interest in any patents, patent applications,
patent disclosures, trademarks, trademark applications or trademark
registrations, other than such trademark and other common law rights arising
with respect to Corporation Assets actually used by Targets or the
Corporations.
2.14 Inventory. On the Closing Date, the Inventory will
have been acquired in the ordinary course of business and at prices prevailing
at the time of acquisition, and will be in amounts sufficient to satisfy the
ordinary and usual needs of the Business. The Inventory has been valued on the
Balance Sheets at cost or at market, whichever is lower, in accordance with
GAAP, using the FIFO method of accounting. All unmarketable, rejected, damaged
or obsolete Inventory has been written off.
2.15 Accounts Receivable. The accounts receivable of the
Corporations as set forth on the Balance Sheets reflect amounts which, if
collected in the ordinary course of business by the Corporation in a manner
consistent with historical practices, will generally be collectable within 90
days after billing at the
-15-
20
full recorded amounts thereof, less any allowance for collection losses
reflected on the Balance Sheets.
2.16 Employees and Labor Relations.
2.16.1 Employees. Schedule 2.16.1 lists the name,
job title (for salaried employees), current salary or wage, date of hire,
social security number and assigned location of all salaried, hourly or
commissioned employees actively employed (as of the date of this Agreement) by
each Corporation. Targets shall provide an updated Schedule 2.16.1 at the
Closing. All employees listed on Schedule 2.16.1 as updated at the Closing are
referred to for purposes of this Agreement as the "Employees."
2.16.2 Labor Relations. Except as disclosed on
Schedule 2.16.2 hereto: (i) no Employee is represented by any union or other
labor organization; (ii) there is no unfair labor practice charge pending or,
to the knowledge of Targets (without inquiry), threatened; (iii) there are no
negotiations or strikes, disputes, slowdowns or stoppages relating to any of
the Employees pending or, to the knowledge of Targets (without inquiry),
threatened; (iv) no labor grievance relating to any Employee or former
employees is pending which would have a Material Adverse Effect; and (v) none
of the Corporations have in the past three years experienced any work stoppage
or other labor difficulty or organizational activity relating to any of the
Employees or the Business.
2.16.3 Labor Claims. There are no pending claims
against the Corporations (whether under federal or state law, employment
agreements or otherwise) asserted by any Employee or former employee, which
would have a Material Adverse Effect. To Targets' knowledge (without inquiry),
there are no circumstances which may lead to such a claim which, as of yet, has
not been asserted.
2.17 Employee Benefit Plans.
2.17.1 Schedule 2.17 contains a list of (i) each
pension, profit sharing, bonus, deferred compensation, or other retirement plan
or arrangement of each Corporation, whether oral or written, which constitutes
an "employee pension benefit plan" as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), (ii) each
medical, health, disability, insurance or other plan or arrangement of each
Corporation, whether oral or written, which constitutes an "employee welfare
benefit plan" as defined in Section 3(1) of ERISA, and (iii) each other
employee benefit or perquisite provided by each Corporation, in which any
Employee participates in his capacity as such (separately, a "Corporation
Plan," and collectively, the "Corporations' Plans"). True and correct
-16-
21
copies of the summary plan descriptions and brochures with respect to the
Corporations' Plans have been furnished to Acquiror.
2.17.2 With respect to each Corporation Plan,
Corporations have no direct or indirect, actual or contingent liability, other
than to make payments for contributions, premiums or benefits when due in the
ordinary course, all of which payments that are due having been made.
2.17.3 All of the Corporations' Plans have been
administered in material compliance with ERISA and the applicable provisions of
the Code. There are no "accumulated funding deficiencies" within the meaning
of ERISA or the Code or any federal excise tax or other liability on account of
any deficient fundings in respect of the Target Plans. No reportable event(s)
(within the meaning of ERISA) or prohibited transaction(s) (within the meaning
of the Code), has occurred in respect of any of the Corporations' Plans. There
are not pending or, to Targets' knowledge, threatened any claims by or on
behalf of the Corporations' Plans or by any Employee alleging a breach or
breaches of fiduciary duties or violations of any law, regulation or directive
put forth by any local, state or federal governmental authority (a "Law") which
could result in liability on the part of the Corporations or any of the Target
Plans. None of the Corporations' Plans discriminates in operation in favor of
Employees who are officers or who are highly compensated, except as permitted
under the Code and ERISA. All returns, reports, disclosure statements and
premium payments required to be made under ERISA and the Code with respect to
any of the Corporations' Plans have been timely filed or delivered. None of
the Corporations' Plans have been audited or investigated by either the
Internal Revenue Service, the Department of Labor or the Pension Benefit
Guaranty Corporation within the last five (5) years, and there are no
outstanding issues with reference to any of the Corporations' Plans pending
before such governmental agencies.
2.18 Absence of Undisclosed Liabilities. The Corporations
have no liability or obligation of any nature (contingent, absolute, direct,
indirect, matured, unmatured, accrued or otherwise) except (i) liabilities
which are fully reflected or reserved against (which reserves, if any, are
appropriate and reasonable) in the Balance Sheets; (ii) liabilities incurred in
the ordinary course of business consistent with past practice since the Balance
Sheet Date; and (iii) liabilities set forth in Schedule 2.18.
2.19 No Pending Litigation or Proceedings. Except as
disclosed in Schedule 2.19 hereto, there are no actions, suits, investigations
or proceedings pending against or, to Targets'
-17-
22
knowledge, threatened against or affecting, any of the Corporations or
Corporation Assets before any court or arbitrator or governmental authority.
Except as disclosed in Schedule 2.19 hereto, there are no outstanding
judgments, decrees or orders of any court or governmental authority against any
Corporation or any Target which relate to the ownership, condition or operation
of the Corporations, the Corporation Assets or the Business.
2.20 Insurance. Schedule 2.20 is a complete and accurate
description of all material policies of insurance owned or held by or covering
the Business and/or the Corporations. Such policies are (i) in full force and
effect, (ii) are sufficient for compliance with all requirements of Law, and
(iii) reflect amounts of coverage that are reasonable and customary in light of
the nature and extent of the Business and prevailing standards in the industry.
To Targets' knowledge, no event has occurred which would jeopardize the
Corporations' continued coverage under such policies from the date hereof until
the Closing Date.
2.21 Condition of Corporation Assets. Except as disclosed
in Schedule 2.21, the Corporation Assets are adequate and in suitable condition
in all material respects to permit continued operation of the Business in
accordance with current operating levels.
2.22 Brokerage. None of the Corporations or Targets have
made any agreement or taken any other action which might cause any Person to
become entitled to a broker's or finder's fee or commission as a result of the
transactions contemplated hereunder, which could result in liability to
Acquiror or its Affiliates. For purposes of this Agreement, the term
"Affiliate" of any Person means any Person directly or indirectly controlling,
controlled by or under common control with such Person.
2.23 Disclosures. No representation or warranty made by
Targets in this Agreement contains any intentional or knowingly untrue
statement of a material fact or intentionally or knowingly omits to state any
material fact necessary to make the statements contained herein under the
circumstances in which they are being made not misleading. No facts or
circumstances exist, nor are any facts or circumstances likely to occur which
might reasonably be expected to materially and adversely affect the present
condition of the Corporations, the Business or the Corporation Assets or the
business, profitability or prospects of the Corporations or Acquiror's ability
to operate the Corporations substantially as they have been operated prior to
the date of this Agreement.
-18-
23
2.24 Capitalization. The capital stock of each
Corporation consists of the number of shares of common stock of each
Corporation that are authorized, issued and outstanding on the date hereof as
set forth on Exhibit A attached hereto. As of the date hereof, all of the
issued and outstanding shares of each Corporation's capital stock have been
duly authorized and validly issued, are fully paid and nonassessable, and have
been offered, issued, sold and delivered by each Corporation, free of
preemptive rights or rights of first refusal and in compliance with all
applicable federal and state securities laws. There are no outstanding
preemptive, conversion or other rights, options, warrants or agreements granted
or issued by or binding upon any Corporation for the purchase or acquisition of
any shares of any Corporation's capital stock or any securities convertible or
exchangeable for shares of capital stock. No agreements or understandings
exist with respect to the voting or sale of such stock other than the
agreements disclosed in Schedule 2.24, attached hereto.
Except as set forth in Schedule 2.24, Targets are the owners,
free and clear of any encumbrances, of the Shares being sold hereunder and have
the right and power to enter into this Agreement and to perform the same, and
are not party to or obligated under or restricted by any contract or other
provision which might be violated by making and performing this Agreement. At
the Closing, Acquiror will acquire good and marketable title to the Shares free
and clear of all liens, claims, agreements, restrictions and encumbrances of
any kind.
2.25 Certificate of Incorporation and Bylaws. Copies of
the Certificate of Incorporation and the Bylaws of each Corporation certified
by the Secretary of Corporation as being the Certificate of Incorporation and
Bylaws currently in effect as well as copies of the minute book and stock
record of each Corporation heretofore delivered to Acquiror are true and
complete copies of such instruments as amended to the date of this Agreement
and are in full force and effect on the date hereof.
2.26 Dividends. Except as set forth in Schedule 2.26, no
distributions or dividends have been declared or paid by the Corporations to
any Target from the Balance Sheet Date through the date hereof.
2.27 Solvency. Except as set forth in Schedule 2.27, none
of the Targets or Corporations are insolvent. The Corporations, when taken
into account on a consolidated basis, are not insolvent. For purposes hereof,
the term "solvency" means that: (i) the fair salable value of a Target's or
Corporation's tangible and intangible assets (other than goodwill or going
concern value) is in excess of the total amount of its
-19-
24
liabilities (including for purposes of this definition all liabilities, whether
or not reflected on a balance sheet prepared in accordance with generally
accepted accounting principles, and whether direct or indirect, fixed or
contingent, secured or unsecured, and disputed or undisputed); (ii) such Target
or Corporation is able to pay its debts or obligations in the ordinary course
as they mature; and (iii) such Target or Corporation has capital sufficient to
carry on its businesses and all businesses in which it is about to engage.
2.28 Accounting Matters. Neither Targets nor Corporations
have taken or agreed to take any action that (without giving effect to any
action taken or agreed to be taken by Acquiror or any of its Affiliates) would
prevent Acquiror from accounting for the transaction contemplated by this
Agreement as a pooling of interests.
2.29 Purchase for Own Account. The Stock Consideration is
being or will be acquired for each Target's own account and with no intention
of distributing or reselling such securities or any part thereof in any
transaction that would be in violation of the Securities Act of 1933, as
amended (the "Securities Act") or the securities law of any state. Each Target
understands that the Stock Consideration has not been registered under the
Securities Act and may not be sold, transferred or otherwise disposed of other
than in compliance with federal and state securities laws, including any
applicable exemption thereto. Each Target agrees not to make any disposition
of any Stock Consideration unless and until there is an effective registration
under the Securities Act and applicable state securities laws with respect to
such Stock Consideration or such Target shall have provided MiniMed a written
opinion of counsel in form and substance reasonably satisfactory to MiniMed
that an exemption from such registration is available under the Securities Act
and such state securities law. Each Target agrees to the imprinting, so long
as required by law, of a legend on certificates representing the Stock
Consideration to the following effect:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS."
Each Target acknowledges that any transfer or other disposition of the Stock
Consideration in contravention of this Section 2.29 shall be null and void and
MiniMed shall not be required (a) to transfer on its books any such Stock
Consideration or (b) to treat as the owner of such Stock Consideration or
otherwise to
-20-
25
accord voting or dividend rights to any purported transferee with respect
thereto.
2.30 Accredited Investor. Each Target is an "accredited
investor" (as such term is defined in Rule 501(a) of Regulation D promulgated
under the Securities Act). Each Target has received sufficient information
about MiniMed to reach an informed and knowledgeable decision to acquire the
Stock Consideration. Each Target has such knowledge and experience in
financial and business matters as to make him capable of utilizing such
information to evaluate the risks of the prospective investment and to make an
informed investment decision with respect thereto. Each Target is able to bear
the economic risk of his investment in the Stock Consideration.
2.31 Transaction Representations. The fair market value
of the Stock Consideration to be received by the Targets is approximately equal
to the fair market value of the Shares. Neither Target has any plan or
intention to sell, exchange or otherwise dispose of a number of shares of the
Stock Consideration that would reduce each Target's ownership of Common Stock
to a number of shares having a value, as of the Closing Date, of less than one
hundred percent (100%) of the value of all of the Shares as of the Closing
Date. Each Corporation has on the date hereof, and will have on the Closing
Date, no plan or intention to issue additional shares of stock that would
result in Acquiror losing control of any Corporation within the meaning of
Section 368(c)(1) of the Code. Except as otherwise provided in this Agreement,
the Corporations have paid, and will continue to pay, the Target and
Corporation expenses in connection with the transaction contemplated by this
Agreement. Targets are selling the Shares solely in exchange for the Stock
Consideration and Targets are not receiving any cash or other consideration in
connection therewith. Prior to the Closing Date, none of the compensation
received by any Target from any Corporation was separate consideration for, or
allocable to, any of Target's shares in any of the Corporations. None of the
Shares was separate consideration for, or allocable to, any employment
agreement and any compensation paid by any Corporation to any Target was for
services actually rendered and was commensurate with amounts paid to third
parties bargaining at arms-length for similar services.
-21-
26
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MINIMED
Acquiror and MiniMed, as applicable, represent and warrant to
Targets, as of the date hereof, as follows:
3.1 Organization and Good Standing. Acquiror and MiniMed
are corporations duly organized, validly existing and in good standing under
the laws of the State of Delaware.
3.2 Corporate Power and Authority. Each of Acquiror and
MiniMed has full corporate power and corporate authority to make, execute,
deliver and perform the Transaction Documents to which each is a party.
3.3 Authorization and Enforceability. The execution,
delivery and performance by each of Acquiror and MiniMed of the Transaction
Documents to which each is a party have been duly authorized by all necessary
corporate action on the part of Acquiror and MiniMed respectively. This
Agreement has been duly executed and delivered by Acquiror and MiniMed and
constitutes, and all other Transaction Documents to be executed and delivered
by Acquiror and/or MiniMed in connection herewith, will constitute, the legal,
valid and binding obligations of Acquiror and MiniMed respectively, enforceable
against Acquiror and MiniMed respectively in accordance with the terms thereof,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights in general
and subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
3.4 No Violation of Laws or Agreements. The execution,
delivery and performance of the Transaction Documents to which Acquiror and/or
MiniMed is a party do not, and the consummation of the transactions
contemplated thereby will not (a) contravene any provision of the Certificate
of Incorporation or Bylaws of Acquiror or MiniMed; (b) violate or result in a
breach of any judgment, injunction, writ, award, decree, restriction, ruling or
order of any court arbitrator or governmental authority (domestic or foreign),
any applicable constitution law, rule or regulation, or any agreement to which
Acquiror or MiniMed is a party.
3.5 Consents. No consent, approval or authorization of,
or registration or filing with, any Person is required in connection with the
execution, delivery and performance of the Transaction Documents to which
Acquiror and/or MiniMed is a party or the consummation of the transactions
contemplated hereby or thereby by Acquiror and/or MiniMed.
-22-
27
3.6 Brokerage. Acquiror and its Affiliates have not made
any agreement or taken any other action which might cause any Person to become
entitled to a broker's or finder's fee or commission as a result of the
transactions contemplated hereunder, which could result in liability to Targets
or their Affiliates.
3.7 Stock Consideration. The Common Stock issued to
Targets as Stock Consideration will, when issued and paid for in accordance
with this Agreement, be validly issued, fully paid and non-assessable.
3.8 Transaction Representations. Neither Acquiror nor
MiniMed has any plan or intention to (a) liquidate any of the Corporations, (b)
merge any of the Corporations into another corporation, (c) cause any of the
Corporations to sell or otherwise dispose of any of their assets (except for
dispositions made in the ordinary course of business), (d) sell or otherwise
dispose of any of the Shares, other than to Affiliates of MiniMed or Acquiror,
or (e) reacquire any of the Stock Consideration. Except as otherwise provided
in this Agreement, MiniMed and Acquiror each paid its own expenses in
connection with the transaction contemplated by this Agreement. Acquiror is
acquiring the Shares solely in exchange for the Stock Consideration and
Acquiror is not providing any cash or other consideration in order to obtain
the Shares. Acquiror and MiniMed are not assuming, and will not assume at
Closing, any liabilities of any of the Corporations, which liabilities shall
remain the obligation of the respective Corporations. During the five (5)
years prior to the date hereof (and prior to the Closing Date), neither
Acquiror nor MiniMed owned, directly or indirectly, any stock of any of the
Corporations. On and after the Closing Date, the Corporations will continue
their historic business and will continue to use a significant portion of the
Corporations' historic business assets in an ongoing business. Neither
Acquiror nor MiniMed is an investment company as defined in Section
368(a)(2)(F)(iii) and 368(a)(2)(F)(iv) of the Code.
ARTICLE 4
COVENANTS
4.1 Conduct of Business. From the date of this Agreement
to the Closing Date:
4.1.1 Targets shall cause the Corporations to (i)
operate the Business in the ordinary course and consistent with prior
practices, (ii) preserve intact the Business and the Corporations' marketing
organization, (iii) retain in their employ all key employees, (iv) preserve
relationships with suppliers, customers, sales representatives, health care
providers, third party payors and others having business
-23-
28
relations with them, (v) use their best efforts to fully comply and maintain
compliance with any and all applicable laws, rules, regulations, ordinances,
codes, judgments and orders of any governmental authority in connection with
the operation of the Business, including without limitation bringing into
compliance any items reflected on Schedule 2.7 of this Agreement and (vi)
maintain all of the Corporation Assets in good operating condition and repair.
Without limiting the generality of the foregoing, Targets shall not cause or
permit the Corporations to make or permit (A) any transaction not in the
ordinary course of business, (B) any change in accounting methods, accounting
practices or keeping books of account, (C) any sale, transfer or other
disposition of any assets, properties or rights of the kind included in the
Corporation Assets, except sales of inventory in the ordinary course of
business consistent with past practice and sales of other assets at fair market
value with an aggregate value of less than $25,000, (D) any cancellation of any
debts, claims or contracts, except in the ordinary course of business and
consistent with past practices, (E) any trade promotions, except in the
ordinary course of business and, in no case, at levels of expenditure
materially greater than those incurred in prior years, (F) any other event or
condition which may adversely affect any of the Corporation Assets, (G) any
disposition of, or failure to keep in effect, any rights in, to or for the use
of any Permit, (H) except as set forth in Schedule 4.1.1, any incurrence of
indebtedness (including any incurrence of any liability (whether or not
pursuant to written contract) requiring an ongoing financial commitment
exceeding $5,000), any mortgage, pledge or subjection to lien of the
Corporation Assets, (I) any amendment of any Corporation's Certificate of
Incorporation or Bylaws, (J) any major investments exceeding in the aggregate
$10,000, (K) any conduct of any Corporation's business in violation of any
applicable laws, rules, regulations, ordinances, codes, judgments and orders,
(L) any outstanding preemptive, conversion or other rights, options, warrants
or agreements to be granted or issued by or binding upon any Corporation for
the purchase or acquisition of any shares of any Corporation's capital stock or
any securities convertible or exchangeable for shares of capital stock, (M) any
change in any policy of insurance owned or held by or covering the Business
and/or the Corporations, (N) any assumption or guarantee of debt, (O) any
distribution or declaration of dividends, (P) any change in the number of
authorized, issued and outstanding shares of any Corporation, or (Q) any
agreement, in writing or otherwise, to do any of the foregoing.
4.1.2 From the date hereof through the Closing Date,
Targets shall promptly inform Acquiror in writing of any event or circumstance
that has or could reasonably be expected to have a Material Adverse Effect.
-24-
29
4.1.3 From the date hereof through the Closing Date,
Targets shall not and shall cause the Corporations to not, without the prior
written consent of Acquiror, take or omit to take any action which if taken or
omitted prior to the date hereof would constitute a breach of any
representations or warranties set forth in this Agreement, or which would
result in any of the occurrences or events set forth in Section 2.5 hereof.
4.1.4 From the date hereof through the Closing Date,
Targets shall not cause or permit the Corporations to make any commitments or
agreements for capital expenditures or capital additions or betterments by any
Corporation exceeding in the aggregate $10,000.
4.1.5 From the date hereof through the Closing Date,
Targets shall not, without the prior written consent of Acquiror, cause or
permit the Corporations to renew, extend, modify, amend or terminate any
contract to which any of the Corporations are a party, to waive any rights of
any Corporation in respect of any Contract or other Corporation Asset, enter
into or become a party to any employment contract, change in control agreement
or severance agreement, enter into or become a party to any contract under
which the reasonably anticipated costs and expenses will exceed the reasonably
anticipated revenues or benefit thereof or which would have a Material Adverse
Effect, or do any act or omit to do an act that would cause a breach of or
violation or default under any Contract;
4.1.6 From the date hereof through the Closing Date,
Targets shall not cause or permit the Corporations to (a) except as set forth
in Schedule 4.1.6, change the salaries or other compensation payable or to
become payable to, or any advance (excluding advances for ordinary business
expenses) or loan to, any Employee, officer or agent of any Corporation, or
make any bonus payment or similar arrangement with any such person, or (b) hire
any employee other than in the ordinary course of business.
4.2 Access, Information and Documents. Targets shall
cause the Corporations to give Acquiror, MiniMed and their representatives
(including Acquiror's and MiniMed's agents, accountants, counsel and
employees), upon reasonable notice and during normal business hours, full
access to the properties, Real Estate, Employees, Contracts, books, records and
affairs of Targets and the Corporations relating to the Business, and shall
cause each Corporation's officers and employees to furnish to Acquiror and
MiniMed all documents, records and information concerning the Business and
other affairs of each Corporation as Acquiror or MiniMed may reasonably
request. All access provided to, and information reviewed by, Acquiror or
MiniMed (including copies of documents provided by Targets or the Corporations)
-25-
30
shall be subject to the provisions of that certain Non-Disclosure Agreement
between MiniMed and Home Medical Supply, Inc., effective as of March 27, 1997.
4.3 Negotiations. Following the execution of this
Agreement, neither Target nor any of its Affiliates, employees (including the
Employees), officers, shareholders, agents or any of the Corporations, shall
solicit, initiate, furnish information relating to or participate in
negotiations with respect to, any offer for any purchase or sale of the
Business, the Shares or the Corporation Assets, other than sales of Inventory
in the ordinary course of business.
4.4 Supplements to Disclosure Schedules. Targets will
promptly provide Acquiror with a supplement or amendment to its Disclosure
Schedules with respect to any matter, condition or occurrence hereafter arising
which, if existing or occurring on the date of this Agreement, would have been
required to be set forth or described in such Disclosure Schedules. In
addition, Targets shall promptly inform Acquiror, and Acquiror will promptly
inform Targets, of any fact or event which comes to their attention, the
existence of which constitutes or likely will constitute a breach of any
representation or warranty in this Agreement. Notwithstanding the foregoing,
Targets shall provide Acquiror with supplements or amendments to the Disclosure
Schedules contemplated by Sections 2.5, 2.11(e), 2.27, 4.1.1 and 4.1.6 no later
than the date which is ten (10) calendar days after the date hereof. Acquiror
shall provide Targets a supplement or amendment to Schedule 4.9 within five (5)
business days after receipt of all of the Schedules contemplated by the
preceding sentence.
4.5 Mutual Covenants and Assurances.
4.5.1 The parties mutually covenant to cooperate
with each other, and use all reasonable efforts, to do all things necessary or
appropriate to consummate the transactions contemplated by this Agreement,
including without limitation, (a) cooperating with each other in determining
whether filings are required to be made or consents are required to be obtained
in any jurisdiction in connection with the consummation of the transactions
contemplated by this Agreement and in making or causing to be made any such
filings promptly and in seeking to obtain timely any such consents, (b) using
all reasonable efforts to obtain promptly the satisfaction (but not waiver) of
the conditions to the Closing of the transactions contemplated herein (each
party hereto shall furnish to the other and to the other's counsel all such
information as may be reasonably required in order to effectuate the foregoing
action), and (c) advising the other party promptly if such party determines
that any condition precedent to its obligations hereunder will not be satisfied
in a timely manner.
-26-
31
4.5.2 After the Closing, Targets will execute,
acknowledge and deliver, whenever reasonable and advisable, to Acquiror or
MiniMed such other instruments of conveyance and transfer and will take such
other actions and execute such other documents as Acquiror or MiniMed may
require in connection with the transactions contemplated by this Agreement.
4.6 Public Announcement. No party hereto shall make or
issue, or cause to be made or issued, any public announcement or written
statement concerning this Agreement or the transactions contemplated hereby
(except confidential and non-public communications to the directors and
officers of MiniMed) without the prior written consent of the other party
(which will not be unreasonably withheld or delayed), unless counsel to such
party advises that such announcement or statement may be required by law or, in
the case of MiniMed, listing agreement with a securities exchange. The parties
acknowledge that (a) on the date hereof, MiniMed will issue a press release
concerning this Agreement or the transactions contemplated hereby and (b) on or
after the date hereof, either party may make or issue a written statement to
its employees or customers concerning this Agreement or the transactions
contemplated hereby.
4.7 Employees.
4.7.1 Designated Employees. Prior to the Closing,
Acquiror shall designate in writing to Targets those of the Employees that it
desires to retain as employees of the Corporations after the Closing (the
"Designated Employees"). Targets agree to use their best efforts to encourage
the Designated Employees to remain employed with the Corporations after the
Closing. Any Designated Employee that remains employed after the Closing shall
be referred to as a "Retained Employee" for purposes of this Agreement. No
employee of the Business or of any of the Corporations shall be deemed to be a
third party beneficiary of any portion of this Agreement.
4.7.2 Termination of Employees. Concurrently with
the Closing, Targets shall cause the Corporations to terminate all of the
Employees other than the Designated Employees and shall cause the Corporations
to pay to each such employee any amounts owing through the Closing Date.
Targets shall provide notice, if any, required under the Workers Adjustment and
Retraining Notification Act and any state law notice requirements.
4.8 Employee Benefit Plans. Targets shall cause the
Corporations to terminate all of the Corporations' Plans effective as of the
Closing, except with respect to the Corporations' Plans listed, and/or to the
extent specifically described, on Schedule 4.8. Targets shall cause such
participants in the Corporations' Plans to have full rights to
-27-
32
all distribution alternatives available to terminated employees and shall
effect such distribution in accordance with the terms of such Plans. In
particular, the rights of the Employees with respect to their accounts in the
Home Medical Supply, Inc. 401(k) Plan (the "401(k) Plan") shall be governed by
the provisions of such plan which are applicable to termination of employment.
Retained Employees may elect to transfer the vested amounts of such accounts
(which shall be valued in accordance with the terms of the 401(k) Plan) to such
existing or newly created 401(k) profit sharing plans or 401(a) defined
contribution plans of Acquiror as Acquiror shall designate with respect to such
accounts consistent with the ERISA and other Code requirements applicable to
such transfers.
4.9 Pay-off of Liabilities of the Corporations.
Concurrently with the Closing, Targets shall cause the Corporations to pay off,
discharge, satisfy or otherwise relieve the Corporations of, the liabilities
and other obligations of the Corporations listed on Schedule 4.9 to this
Agreement. Targets shall also cause the Corporations to remove or have
released on or prior to the Closing Date any and all security interests on the
Corporation Assets associated with such liabilities.
4.10 Tax and Accounting Treatment. None of the parties
hereto shall take or cause to be taken any action, whether on, before or after
the Closing Date, that would disqualify the transaction contemplated by this
Agreement as a "reorganization" within the meaning of Section 368 of the Code.
The parties hereto shall not take any action or fail to take any action, on,
before or after the Closing Date, that would prevent the transaction
contemplated by this Agreement from being eligible for treatment as a pooling
of interests transaction under generally accepted accounting principles.
ARTICLE 5
CONDITIONS PRECEDENT; TERMINATION
5.1 Conditions Precedent to Obligations of Acquiror. The
obligations of Acquiror to purchase the Shares are subject to the satisfaction,
on or prior to the Closing Date, of each of the following conditions (any one
or more of which may be waived in writing in whole or in part by Acquiror in
its sole discretion):
5.1.1 Performance of Agreements; Representations and
Warranties. Each Target shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by it at or prior to the Closing, and the
representations and warranties set forth in this Agreement made by each Target
shall be true and correct in all material respects on and as of the Closing
Date (irrespective of any notice or certificate delivered to Acquiror after the
date hereof) with the same force and effect as though
-28-
33
such representations and warranties had been made on, as of and with reference
to the Closing Date. Acquiror shall have been furnished with a certificate
from each Target, dated the Closing Date, certifying to the foregoing.
5.1.2 Opinion of Counsel. Acquiror shall have
received from Salver & Mussman, P.A., counsel to Targets, an opinion dated the
Closing Date, in form and substance reasonably satisfactory to Acquiror and
MiniMed, the form of which shall be agreed upon in writing by the parties
hereto within thirty (30) days after the date hereof.
5.1.3 Required Consents; Notice. All statutory and
regulatory consents and approvals required to be obtained shall have been
obtained (including but not limited to all applicable written consents relating
to all Environmental Permits). All other necessary and material consents and
approvals of third parties or Targets to the transactions contemplated hereby
shall have been obtained.
5.1.4 Licenses and Permits. The Permits set forth
in Schedule 2.7 shall have been renewed or be in effect.
5.1.5 Completion of Due Diligence. Acquiror and
MiniMed shall have completed their investigation of the Business, including its
investigation of environmental matters, and of the Corporations and Corporation
Assets, which Acquiror and MiniMed, in their sole discretion, consider
necessary. The results of such investigation must be acceptable to Acquiror
and MiniMed in their sole discretion. Such investigation shall be completed
prior to the expiration of forty-five (45) days following the date of this
Agreement (for purposes of this Agreement, such period is referred to as the
"Due Diligence Period"). The condition set forth in this Section 5.1.5 shall
be deemed satisfied or waived by Acquiror and MiniMed if no objection is made
by Acquiror and MiniMed prior to expiration of the Due Diligence Period.
5.1.6 Review of Schedules. Acquiror and MiniMed
shall have completed their review of the form and content of the Schedules
prepared by Targets and/or its counsel that are attached to this Agreement on
the date hereof. The results of such review must be acceptable to Acquiror and
MiniMed in their sole discretion. Such investigation shall be completed prior
to the expiration of ten (10) calendar days following the date of this
Agreement (for purposes of this Agreement, such period is referred to as the
"Schedule Review Period"). The condition set forth in this Section 5.1.6 shall
be deemed satisfied or waived by Acquiror and MiniMed if no objection is made
by Acquiror and MiniMed prior to expiration of the Schedule Review Period.
-29-
34
5.1.7 Accuracy and Approval of Schedules. Acquiror,
MiniMed and its counsel shall have received updated versions, complete and
accurate in all material respects as of the Closing Date, of all Schedules
referenced herein and attached hereto, which Schedules are to be provided by
Targets at least two business days in advance of the Closing and Acquiror,
MiniMed and its counsel shall have reviewed such Schedules and found them
satisfactory. Notwithstanding the foregoing, the condition set forth in this
Section 5.1.7 shall be deemed satisfied or waived by Acquiror and MiniMed
unless the updated Schedules provided by Targets as of the Closing Date
disclose information having a Material Adverse Effect, provided, however, that
this sentence shall not apply to (a) the Schedules contemplated by Sections
2.5, 2.11(e), 2.27, 4.1.1 and 4.1.6 (which such Schedules shall be subject to
Acquiror's and MiniMed's reasonable satisfaction) and (b) any amendment or
update of any Schedule disapproved by Acquiror and MiniMed during the Schedule
Review Period (which such Schedules shall also be subject to Acquiror's and
MiniMed's reasonable satisfaction).
5.1.8 Injunction; Litigation. (i) No statute, rule,
regulation or order of any court or governmental authority shall be in effect
which restrains or prohibits the transactions contemplated by this Agreement or
which could reasonably be expected to limit or adversely affect Acquiror's
ownership of the Shares, nor (ii) shall there be pending or threatened any
litigation, suit, action or proceeding by any party which could reasonably be
expected to limit or adversely affect Acquiror's ownership of the Shares.
5.1.9 Documents. Targets shall have delivered all
of the certificates, instruments, contracts and other documents specified to be
delivered by it hereunder (including applicable Transaction Documents and all
other documents necessary to transfer the Shares to Acquiror).
5.1.10 Pooling Opinion. Acquiror and MiniMed shall
have received an opinion letter from Deloitte & Touche, dated the Closing Date,
addressed to Acquiror and MiniMed, in form and substance reasonably
satisfactory to Acquiror and MiniMed, stating that the transaction contemplated
by this Agreement qualifies as a pooling of interests transaction under
generally accepted accounting principles.
5.1.11 Condition of Corporation Assets. The
Corporation Assets shall not have been materially or adversely affected in any
way as a result of fire, accident, flood, storm earthquake or other casualty,
labor or civil disturbance, or act of God or a public enemy.
-30-
35
5.1.12 Corporate Approval. The board of directors
of Acquiror and MiniMed and the sole shareholder of Acquiror shall have
approved the transactions contemplated by this Agreement.
5.2 Conditions Precedent to Obligations of Targets. The
obligations of Targets to sell the Shares are subject to the satisfaction, on
or prior to the Closing Date, of each of the following conditions (any one or
more of which may be waived in writing in whole or in part by Targets in its
sole discretion):
5.2.1 Performance of Agreements; Representations and
Warranties. Acquiror and MiniMed, as applicable, shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by them at or prior to the
Closing, and the representations and warranties set forth in this Agreement
made by Acquiror and MiniMed, as applicable, shall be true and correct in all
material respects on and as of the Closing Date (irrespective of any notice or
certificate delivered to any Target after the date hereof) with the same force
and effect as though such representations and warranties had been made on, as
of and with reference to the Closing Date. Targets shall have been furnished
with a certificate of the President or Vice President of Acquiror and MiniMed,
dated the Closing Date, certifying to the foregoing.
5.2.2 Injunction. No statute, rule, regulation or
order of any court or governmental authority shall be in effect which restrains
or prohibits the transactions contemplated by this Agreement.
5.2.3 Required Consents; Notice. All statutory and
regulatory consents and approvals which are required under the laws or
regulations of the United States and other governmental authorities shall have
been obtained (including but not limited to all applicable written consents
relating to all Environmental Permits).
5.2.4 Tax Opinion. Targets shall have received a
favorable opinion, addressed to them and dated the Closing Date, of Deloitte &
Touche, reasonably satisfactory in substance and form to Targets, the cost of
which shall be borne by Acquiror, to the effect that, under the provisions of
the Code, for federal income tax purposes: (i) the transaction contemplated by
this Agreement will constitute a reorganization within the meaning of Section
368 of the Code; and (ii) no gain or loss will be recognized by Targets as to
the extent the Shares are exchanged for the Stock Consideration.
-31-
36
5.2.5 Accuracy and Approval of Schedules. Targets
and its counsel shall have received updated versions, complete and accurate in
all material respects as of the Closing Date, of all Schedules referenced
herein and attached hereto, which Schedules are to be provided by Acquiror and
MiniMed at least two business days in advance of the Closing and Targets and
its counsel shall have reviewed such Schedules and found them satisfactory.
Notwithstanding the foregoing, the condition set forth in this Section 5.2.5
shall be deemed satisfied or waived by Targets unless the updated Schedules
provided by Acquiror and MiniMed as of the Closing Date disclose information
having a Material Adverse Effect, provided, however, that this sentence shall
not apply to Schedule 4.9 (which such Schedule shall be subject to Targets'
reasonable satisfaction).
5.2.6 Documents. Acquiror shall have delivered all
consideration and all the certificates, instruments, contracts and other
documents specified to be delivered by it hereunder (including applicable
Transaction Documents).
5.3 Termination.
5.3.1 Anything contained herein to the contrary
notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned:
(a) by mutual written consent of Targets,
Acquiror and MiniMed;
(b) by Targets at any time if the
representations and warranties of Acquiror or MiniMed, as applicable, in this
Agreement were incorrect in any material respect when made or at any time
thereafter, or Acquiror or MiniMed, as applicable, are in breach in any
material respect of any of its respective covenants or agreements in this
Agreement (collectively, an "Acquiror Breach"), and such Acquiror Breach
continues uncured for ten (10) days after written notice thereof by Targets;
(c) by Acquiror or MiniMed at any time if
the representations and warranties of any Target in this Agreement were
incorrect in any material respect when made or at any time thereafter, or any
Target is in breach in any material respect of any of its covenants or
agreements in this Agreement (collectively, a "Target's Breach"), and such
Target's Breach continues uncured for ten (10) days after written notice
thereof by Acquiror;
(d) by any party hereto, if there shall
exist any statute, rule, regulation or order of any court or governmental
authority which permanently (without right of appeal
-32-
37
or reconsideration) restrains or prohibits the transactions contemplated
hereby;
(e) by any party hereto, if the Closing does
not occur on or prior to March 15, 1998 (provided that the terminating party
shall not have prevented the Closing to occur as a result of a willful breach
by it of this Agreement); or
(f) by Acquiror or MiniMed, if, prior to the
end of the Due Diligence Period, Acquiror or MiniMed determines in its sole
discretion that the results of its investigation of the Business are
unacceptable.
5.3.2 If this Agreement is terminated and the
transactions contemplated hereby are abandoned as described in this Section
5.3, this Agreement shall become void and of no further force and effect,
except for the provisions of Section 4.6 relating to publicity, Section 6.1
relating to expenses, Section 2.22 and Section 3.6 relating to brokerage, and
Section 4.2 relating to confidentiality. Nothing in this Section 5.3 shall be
deemed to release either party from any liability for any willful breach by
such party of the terms and provisions of this Agreement.
5.4 Right to Proceed. If any of the conditions specified
in Section 5.1 have not been satisfied (provided that such conditions are
specified in the certificates delivered pursuant to Section 5.5), Acquiror
shall have the right to proceed with the Closing, but if the Closing occurs,
Acquiror shall be deemed to have waived its rights hereunder (including all
indemnification rights) with respect to such failed conditions (including
rights with respect to any specified breaches of any Target's representations
and warranties). If any of the conditions specified in Section 5.2 have not
been satisfied (provided that such conditions are specified in the certificates
delivered pursuant to Section 5.5), Targets shall have the right to proceed
with the Closing, but if the Closing occurs, Targets shall be deemed to have
waived their rights hereunder (including all indemnification rights) with
respect to such failed conditions (including rights with respect to any
specified breaches of Acquiror's and/or MiniMed's representations and
warranties).
5.5 Effect of Investigation. Any inspection, audit or
investigation conducted by or on behalf of any party shall in no way limit,
affect or impair the ability of such party to rely upon the representations,
warranties, covenants and agreements of the other party set forth in this
Agreement. Notwithstanding the foregoing sentence, (a) each Target shall
deliver to Acquiror at Closing a certificate which identifies with specificity
(i) any breaches (or events which with notice, lapse of time or both would
become breaches) of the representations, warranties,
-33-
38
covenants or agreements of each Target, Acquiror or MiniMed and (ii) any of the
conditions specified in Sections 5.1 or 5.2 which have not been satisfied, and
(b) Acquiror shall deliver to Targets at Closing a certificate which identifies
with specificity (i) any breaches (or events which with notice, lapse of time
or both would become breaches) of the representations, warranties, covenants or
agreements of each Target, Acquiror or MiniMed and (ii) any of the conditions
specified in Sections 5.1 or 5.2 which have not been satisfied. Such
certificates shall set forth all material facts related to such breaches,
conditions or events. If the parties proceed with the Closing following the
receipt of such certificates, then, each party shall be deemed to have waived
their rights hereunder (including indemnification rights) with respect to such
breaches, conditions and events.
ARTICLE 6
CERTAIN ADDITIONAL COVENANTS
6.1 Certain Taxes and Expenses. Notwithstanding that the
transaction contemplated by this Agreement is intended to be a "tax-free"
reorganization for Federal income tax purposes, Targets shall be solely
responsible for all state and local sales, use, transfer, real property
transfer, documentary stamp, recording and other similar taxes arising from and
with respect to the sale and purchase of the Shares. Whether or not the
transactions contemplated by this Agreement are consummated, except as
otherwise expressly provided herein or otherwise agreed to in writing by the
parties, Targets, Acquiror and MiniMed shall each bear its respective
accounting, legal and other expenses incurred in connection with the
transactions contemplated by this Agreement.
6.2 Maintenance of Books and Records. Targets and
Acquiror shall cooperate fully with each other after the Closing so that
(subject to any limitations that are reasonably required to preserve any
applicable attorney-client privilege) each party has access to the business
records, contracts and other information existing at the Closing Date relating
in any manner to the Corporations and the Shares, as reasonably required by
such party for any lawful purpose. No files, books or records existing at the
Closing Date relating in any manner to the Corporations and Shares shall be
destroyed by any party after the Closing Date without giving the other party at
least 30 days prior written notice, during which time such other party shall
have the right (subject to the provisions hereof) to examine and to remove any
such files, books and records prior to their destruction. The access to files,
books and records contemplated by this Section 6.2 shall be during normal
business hours and upon not less than two days prior written request, shall be
subject to such reasonable limitations as the party having custody or control
thereof may impose to preserve the confidentiality of information contained
therein, and shall not
-34-
39
extend to material subject to a claim of privilege unless expressly waived by
the party entitled to claim the same.
6.3 Employment Security Laws. Each party will execute
and deliver all appropriate documents and, at its expense, attend, testify and
cooperate at any hearing under any workers compensation law with respect to any
claim relating to the Business.
6.4 Indemnification. Subject to Sections 5.4 (Right to
Proceed) and 5.5 (Effect of Investigation), Targets, MiniMed and Acquiror agree
as follows:
6.4.1 Mutual Indemnification. Each party shall
defend, indemnify and hold harmless the other from and against any and all
loss, damage, expense (including court costs, amounts paid in settlement,
judgments, reasonable attorneys' fees or other expenses for investigating and
defending), suit, action, claim, deficiency, liability or obligation
(collectively, "Damages") related to, caused by or arising from any
misrepresentation, breach of warranty or failure to fulfill any covenant or
agreement contained herein or in any other agreement, instrument or other
document delivered pursuant hereto, and any and all claims made based upon
facts alleged that, if true, would have constituted any such misrepresentation,
breach or failure, together with interest from the Closing Date to the date of
payment at the Prime Rate.
6.4.2 Indemnification of Acquiror and MiniMed. Each
Target (jointly and severally) shall defend, indemnify and hold harmless
Acquiror and MiniMed from and against any and all Damages related to, caused by
or arising from (a) any and all claims by any Employee arising out of the
business operations of any Corporation on or prior to the Closing Date other
than those claims contemplated by Section 6.4.3 hereto, (b) any claim arising
or relating to any act, conduct or omission of any Target or any Corporation
that occurred at any time on or prior to the Closing Date, including, without
limitation, (i) any claim arising or relating to the transactions contemplated
herein and (ii) any liability for Taxes of any Corporation relating or arising
with respect to any taxable period prior to the Closing Date (only pursuant to
IRS audit adjustments), including any partial periods prior to the Closing
Date; provided, however, that the indemnification under this Section
6.4.2(b)(ii) shall be limited to the difference between Taxes accrued on the
books of any Corporation and the accrual for Taxes which such Corporation
should have made in accordance with generally accepted accounting principles,
as verified by Deloitte & Touche (only for partial periods prior to the Closing
Date), and (c) the presence of Hazardous Materials on, beneath or otherwise
among any Corporation Asset, including the Real Estate, on or prior to the
Closing Date, including, without limitation, any of the following
-35-
40
which relate to any period on or prior to the Closing Date: (i) property damage
or destruction (whether of third persons, any Corporation, Acquiror, MiniMed,
any of MiniMed's Affiliates, or of any of such entities' personnel), (ii)
sickness, disease, death, personal or bodily injury to persons (whether of
third persons or of any personnel of any Corporation, Acquiror, MiniMed or any
of MiniMed's Affiliates), (iii) actual or alleged violation of law including,
but not limited to, Environmental Laws and (iv) removal or remediation costs in
connection with any environmental liabilities of any Corporation.
6.4.3 Indemnification of Targets. MiniMed and
Acquiror (jointly and severally) shall defend, indemnify and hold harmless each
Target from and against any and all Damages related to, caused by or arising
from the termination of all of the Employees other than the Designated
Employees as required by Section 4.7.2 hereof.
6.4.4 Payment of Indemnification. All rights in
this Section 6.4 are cumulative and are in addition to all other rights and
remedies which are otherwise available. All indemnification obligations shall
be deemed made in favor of any party's officers, directors, agents,
representatives, subsidiaries, affiliates, successors and assigns.
6.4.5 Indemnification Procedures.
(a) A party seeking indemnification pursuant to this
Section 6.4 (an "Indemnified Party") shall give prompt notice to the party from
whom such indemnification is sought (the "Indemnifying Party") of the assertion
of any claim, the incurrence of any Damages, or the commencement of any action,
suit or proceeding, of which it has knowledge and in respect of which indemnity
may be sought hereunder, and will give the Indemnifying Party such information
with respect thereto as the Indemnifying Party may reasonably request, but
failure to give such required notice shall relieve the Indemnifying Party of
any liability hereunder only to the extent that the Indemnifying Party has
suffered actual prejudice thereby. The Indemnifying Party shall have the
right, exercisable by written notice to the Indemnified Party within ten (10)
days of receipt of notice from the Indemnified Party of the commencement of or
assertion of any claim or action, suit or proceeding by a third party in
respect of which indemnity may be sought hereunder (a "Third Party Claim"), to
assume the defense of such Third Party Claim which involves (and continues to
involve) solely monetary damages; provided that (A) the Indemnifying Party
expressly agrees in such notice that, as between the Indemnifying Party and the
Indemnified Party, the Indemnifying Party shall be solely obligated to satisfy
and discharge the Third Party Claim; (B) the defense of such Third Party Claim
by the Indemnifying Party will not, in the reasonable judgment of the
Indemnified Party, have
-36-
41
any continuing material adverse effect on the Indemnified Party's business; and
(C) the Indemnifying Party makes reasonably adequate provision to ensure the
Indemnified Party of the ability of the Indemnifying Party to satisfy the full
amount of any adverse monetary judgment that may result (the conditions set
forth in clauses (A), (B) and (C) are collectively referred to as the
"Litigation Conditions").
(b) Within ten (10) days after the Indemnifying
Party has given notice to the Indemnified Party of its intended exercise of its
right to defend a Third Party Claim, the Indemnified Party shall give notice to
the Indemnifying Party of any objection thereto based upon the fact that, in
the Indemnified Party's reasonable judgment, any of the Litigation Conditions
have not been satisfied. If the Indemnified Party so objects, the Indemnified
Party shall continue to defend the Third Party Claim until such time as such
objection is withdrawn. If no such notice is given by the Indemnified Party,
or if any such objection by the Indemnified Party is withdrawn, the
Indemnifying Party shall be entitled to assume and conduct such defense, with
counsel selected by the Indemnifying Party and reasonably acceptable to the
Indemnified Party, until such time as the Indemnified Party shall give notice
that any of the Litigation Conditions, in its reasonable judgment, are no
longer satisfied.
(c) The Indemnifying Party or the Indemnified Party,
as the case may be, shall have the right to participate in (but not control),
at its own expense, the defense of any Third Party Claim which the other party
is defending as provided in this Agreement.
(d) The Indemnifying Party, if it shall have
assumed the defense of any Third Party Claim as provided in this Agreement,
shall not consent to a settlement of, or the entry of any judgment arising
from, any such Third Party Claim without the prior written consent of the
Indemnified Party (which consent shall not be unreasonably withheld or
delayed). The Indemnifying Party shall not, without the prior written consent
of the Indemnified Party, enter into any compromise or settlement which commits
the Indemnified Party to take, or to forbear to take, any action. The
Indemnified Party shall have the right to settle any Third Party Claim, with
the written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed.
(e) Whether or not the Indemnifying Party chooses
to defend or prosecute any claim involving a third party, all the parties
hereto shall cooperate in the defense or prosecution thereof and shall furnish
such records, information and testimony, and attend such conferences, discovery
proceedings, hearings, trials and appeals, as may be reasonably requested in
connection therewith.
-37-
42
6.5 Financial Statements. Targets shall, at the
Corporations' expense, provide Acquiror, within thirty (30) days after
Acquiror's written request therefor, with such information, financial or
otherwise, relating to the Shares as may be required under Rule 3-05, Article
11 of Regulation S-X or other rule or regulation promulgated under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, in connection with the preparation and filing of any registration
statement or periodic report of Acquiror or its Affiliates pursuant to such
laws.
ARTICLE 7
MISCELLANEOUS
7.1 Construction. Acquiror, MiniMed and Targets have
participated jointly in the negotiation and drafting of the Transaction
Documents, including this Agreement. 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. Nothing in the Disclosure Schedules hereto
shall be deemed adequate to disclose an exception to a representation or
warranty made herein unless the exception is described on the Disclosure
Schedule or in the documents referred to on the Disclosure Schedule with
reasonable particularity. All references to Targets herein shall refer
concurrently to each individual Target and to all Targets jointly and
severally.
7.2 Nature and Survival of Covenants and Representations.
With respect to the several covenants, agreements, representations and
warranties of the parties hereto in the Transaction Documents: (a) the
covenants and agreements shall survive the Closing until the date which is five
(5) years after the Closing Date; and (b) the representations and warranties
shall survive until the date which is two (2) years after the Closing Date;
provided, however, that the representations and warranties contained in Section
2.8 shall survive until the date which is five (5) years after the Closing
Date. All rights to indemnification contained in this Agreement shall not
terminate or expire but shall continue indefinitely, subject to the terms
hereof.
7.3 Notices. Any notice, request, demand, waiver,
consent, approval or other communication which is required or permitted to be
given to any party hereunder shall be in writing and shall be deemed given only
if delivered to the party personally or sent to the party by telecopy, telegram
or by registered or certified mail (return receipt requested) with postage and
registration or certification fees thereon prepaid, addressed to the party at
its address set forth below:
-38-
43
If to Acquiror or MiniMed:
MiniMed Inc.
12744 San Fernando Road
Sylmar, CA 91342
Fax: (818) 367-1460
Attention: General Counsel
with a copy to:
McDermott, Will and Emery
2049 Century Park East, 34th Floor
Los Angeles, CA 90067
Fax: (310) 277-4730
Attention: Douglas A. Jaques, Esq.
If to Targets:
Robert A. Kusher
3250 North 29th Avenue
Hollywood, FL 33020
Fax: (954) 925-7267
Craig Lowy
Home Medical Supply, Inc.
3250 North 29th Avenue
Hollywood, FL 33020
Fax: (954) 925-7267
with a copy to:
Salver & Mussman, P.A.
5881 N.W. 151st Street, Suite 101
Miami Lakes, FL 33014
Fax: (305)823-3545
Attention: Jay D. Mussman
7.4 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided, however, that no party
may assign, delegate or otherwise transfer any of its rights or obligations
under this Agreement without the consent of the other party hereto, except that
(a) Acquiror may assign its rights under this Agreement to any Affiliate or
require Targets to transfer the Shares directly to a subsidiary of Acquiror,
(b) Acquiror may assign its rights under this Agreement as collateral security
to any entity providing direct or indirect financing to it or any of its
Affiliates. Without limiting the foregoing, Acquiror shall have the right to
assign after the Closing its rights in whole or in part as to Targets'
covenants, representations and warranties
-39-
44
hereunder to any successor in interest to Acquiror of any of the Shares.
7.5 Exhibits and Schedules. All Exhibits and Disclosure
Schedules annexed hereto or referred to herein are hereby incorporated in and
made a part of this Agreement as if set forth in full herein.
7.6 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of California, without
giving effect to the conflicts of laws principles thereof.
7.7 Consent to Jurisdiction. WITH RESPECT TO ANY
LITIGATION ARISING OUT OF THIS AGREEMENT OR ANY RELATED TRANSACTION, THE
PARTIES EXPRESSLY WAIVE ANY RIGHT TO A JURY TRIAL AND AGREE THAT SUCH
LITIGATION SHALL BE TRIED BY A JUDGE WITHOUT A JURY. Each party agrees to
non-exclusive personal jurisdiction and venue in the United States District
Court for the Central District of California (and any California State court
within that District) and for that purpose, appoints the person set forth in
Schedule 7.7 as its agent for service of process in such jurisdiction.
7.8 Severability. The parties agree that (a) the
provisions of this Agreement shall be severable in the event that any provision
hereof is held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, (b) such invalid, void or otherwise unenforceable
provision shall be automatically replaced by another provision which is as
similar as possible in terms to such invalid, void or otherwise unenforceable
provision but which is valid and enforceable and (c) the remaining provisions
shall remain enforceable to the fullest extent permitted by law.
7.9 No Third Party Beneficiaries. Nothing herein
expressed or implied is intended or should be construed to confer upon or give
to any Person other than the parties hereto and their successors and permitted
assigns any rights or remedies under or by reason of this Agreement.
7.10 Entire Agreement. This Agreement, together with the
Disclosure Schedules and Exhibits hereto, and the other Transaction Documents,
constitutes the entire understanding of the parties with respect to the subject
matter hereof, and supersedes any prior agreements or understandings, written
or oral, between the parties with respect to the subject matter hereof.
7.11 Amendment and Waiver. The parties may, by mutual
agreement, amend this Agreement in any respect in a writing executed by each
party, and any party, as to such party, may
-40-
45
waive any of its rights hereunder. To be effective, any such waiver must be in
writing and be signed by the party providing such waiver. The rights and
remedies herein provided are cumulative and are not exclusive of any rights or
remedies which any party may otherwise have at law or in equity. The waiver by
any party hereto of any breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent breach, whether or not
similar.
7.12 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but which
together shall constitute one and the same instrument.
7.13 Headings. The headings preceding the text of the
sections and subsections hereof are inserted solely for convenience of
reference, and shall not constitute a part of this Agreement nor shall they
affect its meaning, construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day and year first written above.
TARGETS:
"Kusher"
By /s/ Robert A. Kusher
_______________________________
Robert A. Kusher
"Lowy"
By /s/ Craig Lowy
_______________________________
Craig Lowy
ACQUIROR:
MINIMED DISTRIBUTION CORP.
By /s/ Eric S. Kentor
_______________________________
Name: Eric S. Kentor
Title: President
-41-
46
MINIMED:
MINIMED INC.
By /s/ Terrance H. Gregg
_______________________________
Name: Terrance H. Gregg
Title: President and COO
-42-
47
EXHIBIT A
Home Medical Supply, Inc., a Florida corporation
Total Shares Authorized: 100
Total Shares Issued: 100
Kusher Shares: 100
Lowy Shares: 0
Home Medical Supply, Inc., a Georgia corporation
Total Shares Authorized: 1,000
Total Shares Issued: 500
Kusher Shares: 500
Lowy Shares: 0
Home Medical Supply, Inc., a Tennessee corporation
Total Shares Authorized: 2,000
Total Shares Issued: 1,000
Kusher Shares: 1,000
Lowy Shares: 0
Home Medical Supply, Inc., a California corporation
Total Shares Authorized: 1,000
Total Shares Issued: 500
Kusher Shares: 500
Lowy Shares: 0
Home Medical Supply of Michigan, Inc., a Michigan corporation
Total Shares Authorized: 1,000
Total Shares Issued: 500
Kusher Shares: 500
Lowy Shares: 0
HMS, Inc., an Alabama corporation
Total Shares Authorized: 1,000
Total Shares Issued: 500
Kusher Shares: 500
Lowy Shares: 0
Pharmax, Inc., a Florida corporation
Total Shares Authorized: 100
Total Shares Issued: 100
Kusher Shares: 50
Lowy Shares: 50
-43-
48
South Broward Medical Arts Pharmacy, Inc., a Florida corporation
Total Shares Authorized: 5,000
Total Shares Issued: 1,000
Kusher Shares: 500
Lowy Shares: 500
Clark Pharmacy, Inc., a Georgia corporation
Total Shares Authorized: 1,000
Total Shares Issued: 500
Kusher Shares: 250
Lowy Shares: 250
Clark Wholesale Co., a Florida corporation
Total Shares Authorized: 1,000
Total Shares Issued: 500
Kusher Shares: 250
Lowy Shares: 250
Clark Financial Services, a Florida corporation
Total Shares Authorized: 1,000
Total Shares Issued: 500
Kusher Shares: 250
Lowy Shares: 250
Diabetix Depot, Inc., a Florida corporation
Total Shares Authorized: 100
Total Shares Issued: 100
Kusher Shares: 100
Lowy Shares: 0
Dialysis Management Services, Inc., a Florida corporation
Total Shares Authorized: 1,000
Total Shares Issued: 1,000
Kusher Shares: 500
Lowy Shares: 500
Medical Management & Marketing of South Florida, a Florida corporation
Total Shares Authorized: 1,000
Total Shares Issued: 500
Kusher Shares: 500
Lowy Shares: 0
-44-