<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report -- May 18, 1994
(Date of earliest event reported)
MEDIQ INCORPORATED
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 1-8147 51-0219413
(State of incorporation) (Commission file number) (IRS employer
identification number)
</TABLE>
One MEDIQ Plaza, Pennsauken, NJ 08110
(Address of principal executive offices, zip code)
Area Code (609) 665-9300
(Telephone number)
<PAGE>
Item 5. Other Events.
The Registrant announced on May 19, 1994 that it had entered into an
agreement to merge its MEDIQ Equipment & Maintenance Services, Inc. subsidiary
('MEMS') with R Squared Scan System, a subsidiary of MMI Medical, Inc. ('MMI').
Under the terms of the merger agreement, MEDIQ will receive 2,050,000
shares of MMI common stock and warrants to purchase at $6.25 per share an
additional 325,000 shares of MMI common stock. It is anticipated that MEDIQ will
distribute the 2,050,000 shares of MMI common stock to MEDIQ shareholders. The
transaction is subject to approval by the shareholders of MMI. It is
anticipated that the merger will be completed prior to July 31, 1994.
Item 7. Financial Statements and Exhibits.
<TABLE>
<CAPTION>
(c) Exhibits Page
<S> <C>
2 Agreement of Merger and Plan of Reorganization 4
among MMI Medical, Inc., MMI Acquisition Subsidiary,
Inc., MEDIQ Incorporated and MEDIQ Equipment and
Maintenance Services, Inc., dated May 18, 1994.
21 Press Release, dated May 19, 1994. 82
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
__________MEDIQ Incorporated__________
(Registrant)
_______/s/ Michael F. Sandler_______
Michael F. Sandler
Senior Vice President - Finance
& Chief Financial Officer
Date: May 26, 1994
<PAGE>
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
AMONG
MMI MEDICAL, INC.
MMI ACQUISITION SUBSIDIARY, INC.
MEDIQ INCORPORATED
AND
MEDIQ EQUIPMENT AND MAINTENANCE SERVICES, INC.
__________________________________
May 18, 1994
__________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
RECITALS..................................................................................................... 1
AGREEMENT.................................................................................................... 1
ARTICLE I DEFINITIONS...................................................................................... 1
ARTICLE II PLAN OF REORGANIZATION.......................................................................... 5
2.1 Board of Directors' and Shareholders' Approval.................................................. 5
2.2 The Merger...................................................................................... 5
2.3 The Closing..................................................................................... 6
2.4 Effective Time.................................................................................. 6
2.5 Restricted Securities........................................................................... 6
2.6 Reorganization.................................................................................. 7
2.7 Certificate of Incorporation; Bylaws; Directors and Officers of the Surviving Corporation....... 7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF MEDIQ REGARDING MEDIQ AND MEDIQ SUB COMMON STOCK............. 7
3.1 MEDIQ Sub Common Stock.......................................................................... 7
3.2 Organization and Standing....................................................................... 8
3.3 Authority, Approval and Enforceability.......................................................... 8
3.4 Investment Intent............................................................................... 9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MEDIQ AND MEDIQ SUB REGARDING MEDIQ SUB....................... 9
4.1 Organization and Standing....................................................................... 9
4.2 Capitalization.................................................................................. 9
4.3 Subsidiaries.................................................................................... 10
4.4 Authority, Approval and Enforceability.......................................................... 10
4.5 Financial Statements............................................................................ 11
4.6 Absence of Certain Changes to MEDIQ Sub......................................................... 11
4.7 Properties...................................................................................... 13
4.8 Insurance....................................................................................... 13
4.9 Agreements...................................................................................... 13
4.10 Intellectual Property Rights.................................................................... 14
4.11 Employee Benefit Plans; ERISA................................................................... 15
4.12 Employment Matters.............................................................................. 17
4.13 Labor Matters................................................................................... 17
4.14 Environmental and Safety Laws................................................................... 17
4.15 Powers of Attorney.............................................................................. 18
4.16 Compliance with Laws............................................................................ 18
4.17 Litigation; Decrees............................................................................. 19
4.18 No Brokers...................................................................................... 19
4.19 Accuracy of Documents and Information........................................................... 19
4.20 Compliance with Instruments..................................................................... 19
4.21 Accounts Receivable............................................................................. 19
4.22 Accounts Payable................................................................................ 19
4.23 Net Tangible Assets of MEDIQ Sub................................................................ 19
4.24 Inventory....................................................................................... 20
4.25 No Undisclosed Liabilities...................................................................... 20
4.26 Related Party Transactions...................................................................... 20
ARTICLE V REPRESENTATIONS AND WARRANTIES OF MMI AND MMI SUB................................................ 20
5.1 Organization and Standing....................................................................... 21
5.2 MMI Shares and the Warrant...................................................................... 21
5.3 Authority, Approval and Enforceability.......................................................... 21
5.4 SEC Filings..................................................................................... 22
5.5 Financial Statements............................................................................ 23
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
5.6 Capitalization.................................................................................. 23
5.7 Absence of Certain Changes to MMI............................................................... 24
5.8 No Brokers...................................................................................... 24
5.9 Intellectual Property of MMI.................................................................... 24
5.10 Litigation; Decrees of MMI...................................................................... 24
5.11 Environmental Matters of MMI.................................................................... 25
ARTICLE VI MUTUAL COVENANTS OF MMI, MMI SUB, MEDIQ AND MEDIQ SUB........................................... 25
6.1 Cooperation..................................................................................... 25
6.2 Publicity....................................................................................... 25
6.3 Best Efforts.................................................................................... 26
6.4 Warrant Agreement............................................................................... 26
6.5 Further Assurances.............................................................................. 26
6.6 Actions Contrary to Stated Intent............................................................... 26
6.7 Employee Matters................................................................................ 26
6.8 Tax Matters..................................................................................... 27
6.9 Closing Balance Sheet........................................................................... 34
6.10 Preparation of Proxy or Information Statement................................................... 35
6.11 Suppliers and Customers......................................................................... 36
ARTICLE VII COVENANTS OF MEDIQ AND MEDIQ SUB............................................................... 36
7.1 No Solicitation................................................................................. 36
7.2 Absence of Certain Changes to MEDIQ Sub......................................................... 36
7.3 Maintenance of MEDIQ Sub's Business............................................................. 37
7.4 Access to Information........................................................................... 38
7.5 Transfer of MEDIQ Sub Books and Assets.......................................................... 38
7.6 Insurance....................................................................................... 39
7.7 MEDIQ Consents.................................................................................. 39
7.8 Covenant Not to Compete......................................................................... 39
7.9 Commitment to Vote MMI Shares................................................................... 39
7.10 Standstill...................................................................................... 40
7.11 Commitment to Favorable Vote.................................................................... 40
7.12 Commitment to Distribute MMI Shares Free of Encumbrances........................................ 40
7.13 Merger Expenses................................................................................. 40
7.14 Qualifications; Approvals....................................................................... 40
ARTICLE VIII COVENANTS OF MMI.............................................................................. 41
8.1 Nomination of Two Directors to MMI Board........................................................ 41
8.2 Absence of Certain Changes to MMI............................................................... 42
8.3 Material Operating Decisions.................................................................... 42
8.4 Access to Information........................................................................... 42
8.5 Commitment to Favorable Vote.................................................................... 43
8.6 MEDIQ Guarantees................................................................................ 43
8.7 MMI Qualifications.............................................................................. 43
ARTICLE IX CONDITIONS TO OBLIGATIONS OF THE PARTIES........................................................ 43
9.1 Conditions to the Obligations of the MMI Parties and the MEDIQ Parties.......................... 43
9.2 Conditions to the Obligations of the MMI Parties................................................ 44
9.3 Conditions to the Obligations of the MEDIQ Parties.............................................. 46
ARTICLE X INDEMNITY........................................................................................ 48
10.1 Indemnification of MMI and the Surviving Corporation............................................ 48
10.2 Indemnification of MEDIQ........................................................................ 49
10.3 Procedure for Indemnification................................................................... 50
10.4 Arbitration..................................................................................... 51
10.5 Survivability of Representations, Warranties, Covenants and Agreements.......................... 52
10.6 Exclusive Remedy................................................................................ 52
ARTICLE XI REGISTRATION RIGHTS............................................................................. 53
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
11.1 Definitions..................................................................................... 53
11.2 Registration.................................................................................... 53
11.3 Obligations of MMI.............................................................................. 54
11.4 Condition Precedent............................................................................. 55
11.5 Expenses of Registration........................................................................ 55
11.6 Indemnification................................................................................. 55
11.7 Transfer of Registration Rights................................................................. 57
ARTICLE XII TERMINATION.................................................................................... 57
12.1 Termination by Mutual Consent................................................................... 57
12.2 Termination by MMI.............................................................................. 57
12.3 Termination by MEDIQ............................................................................ 57
12.4 Effect of Termination........................................................................... 58
ARTICLE XIII MISCELLANEOUS................................................................................. 58
13.1 Notices......................................................................................... 58
13.2 Entire Agreement; Modifications; Waiver......................................................... 59
13.3 Captions........................................................................................ 60
13.4 Counterparts.................................................................................... 60
13.5 Publicity....................................................................................... 60
13.6 Successors and Assigns.......................................................................... 60
13.7 Governing Law................................................................................... 60
13.8 Further Assurances.............................................................................. 60
13.9 Each Party to Bear Own Costs.................................................................... 60
13.10 Confidentiality and Nondisclosure Agreements.................................................... 61
13.11 Attorneys' Fees................................................................................. 61
13.12 Knowledge....................................................................................... 61
13.13 Third Party Beneficiaries....................................................................... 62
</TABLE>
<PAGE>
EXHIBITS AND SCHEDULES
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Exhibit A Form of Warrant Agreement
Exhibit B Certificate of Incorporation
Exhibit C Bylaws
Exhibit D Confidentiality Agreement
Exhibit E Form of Calculation for Net Tangible Assets of MEDIQ Sub
Exhibit F Form of Noncompetition Agreement
Exhibit G Form of Standstill Agreement
Exhibit H-1 Form of WSGR Opinion
Exhibit H-2 Form of MEDIQ General Counsel Opinion
Exhibit H-3 Form of MEDIQ Sub General Counsel Opinion
Exhibit I Owings Employment Agreement
Exhibit J Form of GD&C Opinion
Exhibit K Form of Voting Agreement
Schedule 3.3(c)(iv) MEDIQ Material Consents
Schedule 4.4(b) MEDIQ Sub Material Conflicts
Schedule 4.4(c)(iv) MEDIQ Sub Material Consents
Schedule 4.6(f) Salary Increases
Schedule 4.6(j) Service Agreements
Schedule 4.8 Insurance
Schedule 4.9 Significant Agreements
Schedule 4.10(a) Intellectual Property and Royalty Obligations
Schedule 4.10(b) Employees/Contractors Not Party to Proprietary Information and Inventions Agreement
Schedule 4.11(a) Plans
Schedule 4.11(f)(i) Severance Benefits
Schedule 4.11(f)(ii) Key Employees
Schedule 4.14(c) Shipment of Hazardous Waste
Schedule 4.17 MEDIQ Sub Litigation
Schedule 4.26 Related Party Transactions
Schedule 5.6 Capitalization of MMI
Schedule 5.7 Absence of Certain Changes to MMI
Schedule 5.8 Brokers of MMI
Schedule 5.10 MMI Litigation
Schedule 5.11(c) MMI Environmental
Schedule 6.8 MEDIQ Sub Tax Matters
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Schedule 6.11(a) Customers of MEDIQ Sub
Schedule 6.11(b) Suppliers of MEDIQ Sub
Schedule 7.6 MEDIQ Sub Insurance Policies
Schedule 9.2(g) Contracts
Schedule 9.3(d) Parties to Voting Agreement
Schedule 13.12 Persons to Whom 'Knowledge' is Attributable
</TABLE>
<PAGE>
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
This Agreement of Merger and Plan of Reorganization (the 'Agreement') is
entered into as of May 18, 1994 by and among MMI Medical, Inc., a California
corporation ('MMI'), MMI Acquisition Subsidiary, Inc., a Delaware corporation
('MMI Sub'), MEDIQ Equipment and Maintenance Services, Inc., a Delaware
corporation ('MEDIQ Sub' or the 'surviving corporation') and MEDIQ Incorporated,
a Delaware corporation and sole shareholder of MEDIQ Sub ('MEDIQ').
RECITALS
A. The parties hereto intend that, subject to the terms and conditions
hereinafter set forth, MMI Sub will be combined with MEDIQ Sub pursuant to one
or more transactions (collectively, the 'Merger') to be completed in accordance
with this Agreement and the applicable provisions of the laws of the State of
Delaware, in connection with which all of the outstanding shares of the common
stock of MEDIQ Sub (the 'MEDIQ Sub Common Stock') will be exchanged for
2,030,000 shares (the 'MMI Shares') of $0.01 par value common stock of MMI (the
'MMI Common Stock') and one warrant (the 'Warrant') to purchase 325,000 shares
of MMI Common Stock (the 'Warrant Shares') pursuant to a Warrant Agreement (the
'Warrant Agreement') substantially in the form attached hereto as Exhibit
A. The MEDIQ Sub Common Stock shall be automatically converted into the MMI
Shares and Warrants, and certificates representing MEDIQ Sub Common Stock will
be exchanged for certificates representing MMI Shares and the Warrant, all as
provided in this Agreement.
B. By executing this Agreement, the parties hereto intend to adopt a plan
of reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the 'Code').
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties hereto, intending to be legally bound, do hereby
agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. For purposes of this Agreement, the following
terms shall have the following meanings:
'1933 Act' means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
'1934 Act' means the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.
'Closing Date' means the date on which the Closing occurs.
'Commercial Rights' means packaged commercially available software programs
generally available to the public through retail dealers in computer software
which are licensed to a Person pursuant to end-user licenses and which are used
in such Person's business but are not a component of such Person's products, and
related trademarks, technology and know-how.
'Encumbrance' means any covenant, condition, restriction, voting trust
arrangement, lien, charge, encumbrance, option and adverse claim or right
whatsoever.
'ERISA Affiliate' means any trade or business under common control with
MEDIQ Sub at the relevant time within the meaning of Sections 414(b), (c) or (m)
of the Code.
'GAAP' means generally accepted accounting principles of the United States
applied on a consistent basis.
'Information Statement' means the information statement (and any amendment
or supplement thereto) distributed to holders of shares of MMI Common Stock as
contemplated in Section 6.10 hereof, and any schedules and exhibits distributed
or required to be filed with the SEC in connection therewith.
'Intellectual Property' means any patent, patent application, trademark,
service mark, tradename, trademark or service mark or tradename registration or
application, copyright or copyright registration or application for copyright
registration, trade secret, proprietary information or process and each license
or licensing agreement for any of the foregoing.
'Lien' means any mortgage, pledge, security interest, encumbrance,
restriction or adverse claim.
'Losses' means all claims, demands, losses, costs, expenses, obligations,
liabilities, damages, remedies and penalties, including interest, penalties and
attorneys' fees and expenses net of any insurance proceeds or tax benefits
received by such Person in respect thereof.
'Material Adverse Effect' means any fact, event or condition, or the
absence of any fact, event or condition, as the context requires, which,
individually or in the aggregate, results in a material adverse effect on the
business, properties, financial condition or results of operations of a Person.
'MEDIQ Control Group' means MEDIQ, Bernard J. Korman and a trust created by
agreement dated November 13, 1983, for the benefit of Bessie G. Rotko.
'MEDIQ Parties' means MEDIQ and MEDIQ Sub, collectively.
'MMI Parties' means MMI and MMI Sub, collectively.
'Net Tangible Assets of MEDIQ Sub' means the amount by which the
shareholders' equity of MEDIQ Sub exceeds the aggregate of goodwill, patents,
copyrights, trademarks and other similar intangible items (other than deferred
taxes), all as determined and computed in accordance with GAAP except that the
expenses and liabilities incurred by MEDIQ Sub explicitly contemplated in
Section 13.9 hereof (as limited by Section 7.13 hereof) shall be disregarded
and excluded from the calculation of Net Tangible Assets.
'Noncompetition Shares' means the 20,000 shares of MMI Common Stock issued
to MEDIQ pursuant to and in accordance with the terms and conditions of the
Noncompetition Agreement.
'Party' and 'Parties' means MMI, MMI Sub, MEDIQ and MEDIQ Sub, individually
and collectively, respectively.
'Person' means any individual, sole proprietorship, partnership, joint
venture, trust incorporated organization, association, corporation, institution,
party, entity or governmental authority.
'Proxy Statement' means the letter to shareholders, the notice of meeting,
proxy statement and form of proxy (and any amendment or supplement thereto)
distributed to holders of shares of MMI Common Stock in connection with a
Special Meeting described in Section 6.10 hereof, and any schedules and exhibits
distributed or required to be filed with the SEC in connection therewith.
'SEC' means the Securities and Exchange Commission.
1.2 Index of Other Defined Terms. In addition to those terms defined
above, the following terms shall have the respective meanings given thereto in
the sections indicated below:
<TABLE>
<CAPTION>
Defined Term Section
<S> <C>
'Advance Account Obligation' Section 4.26
'Affiliate Stockholder' Section 11.2(b)
'Agreement' Preamble
'Audited Financials' Section 4.5(a)
'Certificate of Merger' Section 2.4
'Claim' Section 4.14(f)
'Closing' Section 2.3
'Closing Calculation' Section 6.9
'Code' Recitals
'Displaced Carryback' Section 6.8(e)(iii)
'Effective Time' Section 2.4
'Environmental Law' Section 4.14(f)
'ERISA' Section 4.11(a)
'excess parachute payments' Section 6.8(i)(iii)(18)
'Financials' Section 4.5(b)
'Hazardous Substances' Section 4.14(f)
'IRS' Section 6.8(i)(iii)(2)
'Information Statement' Section 6.10
'Interim Financials' Section 4.5(b)
'key employees' Section 4.11(d)
'know' or 'knowledge' Section 13.12
'MEDIQ' Preamble
'MEDIQ Auditors' Section 6.9
'MEDIQ Designees' Section 8.1(a)
'MEDIQ Sub' Preamble
'MEDIQ Sub Common Stock' Recitals
'MEDIQ Sub Closing Balance Sheet' Section 6.9
'MEDIQ Sub Employees' Section 6.7(a)
'Merger' Preamble
'MMI 10-Ks' Section 5.4(a)
'MMI 10-Qs' Section 5.4(a)
'MMI Auditors' Section 6.9
'MMI Common Stock' Recitals
'MMI Shares' Recitals
'MMI Sub' Preamble
'MMI' Preamble
'Non-Competition Agreement' Section 9.2(f)
'Notice' Section 10.3
'Overlap Period' Section 6.8(b)
'Permitted Liens' Section 4.6(h)
'Plans' Section 4.11(a)
'Proposed Closing Balance Sheet' Section 6.9
'Return' Section 6.8(h)
'Returns' Section 6.8(h)
'SEC Filings' Section 5.4(a)
'safe harbor lease' Section 6.8(i)(iii)(14)
'Selected Firm' Section 6.9
'Subsequent Loss' Section 6.8(d)
'Successor' Section 8.1(b)
'surviving corporation' Preamble
'Tax Affiliates' Section 6.8(i)(i)
'tax-exempt use property' Section 6.8(i)(iii)(16)
'Tax Indemnification Cut-off Date' Section 10.1
'Taxes' Section 6.8(h)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
'Voting Agreement' Section 9.3(d)
'Warrant Agreement' Recitals
'Warrant Shares' Recitals
'Warrant' Recitals
'waters edge election' Section 6.8(i)(iii)(25)
'Workpapers' Section 6.9
</TABLE>
ARTICLE II
PLAN OF REORGANIZATION
2.1 Board of Directors' and Shareholders' Approval. The respective boards
of directors of MMI, MMI Sub, MEDIQ and MEDIQ Sub have duly adopted and approved
this Agreement, and this Agreement shall be submitted to the shareholders of MMI
and MMI Sub for approval and submitted to MEDIQ as the sole shareholder of MEDIQ
Sub for approval.
2.2 The Merger.
(a) Subject to the terms and conditions of this Agreement , MMI Sub
shall be merged with and into MEDIQ Sub pursuant to this Agreement and the
Certificate of Merger, with MEDIQ Sub as the surviving corporation and MMI
Sub shall thereupon cease to exist as a corporate entity.
(b) At the Effective Time of the Merger, all of the issued and
outstanding shares of MEDIQ Sub Common Stock owned by MEDIQ shall be
converted automatically (without further action by the holders thereof)
into and exchanged for (i) the MMI Shares and (ii) the Warrant. All shares
of MEDIQ Sub Common Stock that are owned by MEDIQ Sub shall be canceled,
and no securities of MMI or other consideration shall be delivered in
exchange therefor.
(c) At the Closing, MEDIQ shall surrender the certificate or
certificates representing the MEDIQ Sub Common Stock to MMI and upon such
surrender MEDIQ shall be entitled to receive in exchange (i) a certificate
or certificates representing the MMI Shares into which such shares have
been converted and (ii) the Warrant.
2.3 The Closing. Subject to termination of this Agreement as provided in
Article XII hereof, the closing of the Merger shall take place at the offices of
Gibson, Dunn & Crutcher, 333 South Grand Avenue, Los Angeles, California at 9:00
a.m. as promptly as practicable, but in any event within 5 business days after
satisfaction of the conditions set forth in Article IX hereof, or at such other
place, time and date as MMI and MEDIQ may mutually select (the 'Closing').
2.4 Effective Time. Simultaneously with the Closing, a Certificate of
Merger (the 'Certificate of Merger') shall be filed in the office of the
Secretary of State for the State of Delaware. The Merger shall become effective
immediately upon the filing of the Certificate of Merger and related officers'
certificates with the office of the Secretary of State for the State of Delaware
(the 'Effective Time').
2.5 Restricted Securities. The MMI Shares and the Warrant will be subject
to restrictions imposed by the 1933 Act, applicable state securities laws, this
Agreement and, in the case of the Warrant, the Warrant Agreement, and the
certificates representing MMI Shares and the Warrant will bear the following
legends until such securities are registered pursuant to the 1933 Act at which
time MMI shall remove such legends:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE 'ACT'), OR THE SECURITIES ACT
OF ANY JURISDICTION. SUCH SECURITIES MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO (i)
A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES THAT IS
EFFECTIVE UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAW, OR (ii)
ANY EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR APPLICABLE STATE
SECURITIES LAW RELATING TO THE DISPOSITION OF SECURITIES, INCLUDING
RULE 144, PROVIDED AN OPINION OF COUNSEL IS FURNISHED, REASONABLY
SATISFACTORY IN FORM AND SUBSTANCE TO MMI MEDICAL, INC. (THE
'CORPORATION') THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE ACT AND/OR APPLICABLE STATE SECURITIES LAW IS AVAILABLE.
THE SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
TRANSFER COMPLIES WITH THE PROVISIONS OF THAT CERTAIN AGREEMENT AND
PLAN OF REORGANIZATION DATED APRIL 29, 1994. A COPY OF SUCH AGREEMENT
IS ON FILE AT THE OFFICES OF THE CORPORATION.
Related stop-transfer instructions will be placed on the MMI Shares and the
Warrant by MMI's duly appointed transfer agent and registrar.
2.6 Reorganization. The parties intend to adopt the Agreement as a plan
of reorganization and to consummate the Merger in accordance with Sections
368(a)(1)(A) and 368(a)(2)(E) of the Code.
2.7 Certificate of Incorporation; Bylaws; Directors and Officers of the
Surviving Corporation.
(a) The Certificate of Incorporation as set forth on Exhibit B
attached hereto shall be the Certificate of Incorporation of MEDIQ Sub as
the surviving corporation after the Merger until thereafter amended.
(b) The Bylaws as set forth on Exhibit C attached hereto shall be the
Bylaws of the surviving corporation after the Merger until thereafter
amended.
(c) The directors and officers of MMI Sub shall be the directors and
officers of the surviving corporation after the Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MEDIQ REGARDING MEDIQ AND MEDIQ SUB
COMMON STOCK
As an inducement to MMI and MMI Sub to enter into this Agreement, MEDIQ
represents and warrants to MMI and MMI Sub that:
3.1 MEDIQ Sub Common Stock.
(a) MEDIQ is the record and beneficial owner of all the outstanding
shares of capital stock of MEDIQ Sub, all of which are free and clear of
any and all Encumbrances.
(b) No broker or finder has acted for MEDIQ in connection with this
Agreement or the transactions contemplated hereby, and no broker or finder
is entitled to any brokerage or finder's fees or other commissions in
respect of such transactions based in any way on agreements, arrangements
or understandings made by or on behalf of MEDIQ.
3.2 Organization and Standing.
MEDIQ is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware.
3.3 Authority, Approval and Enforceability.
(a) MEDIQ has full corporate power and authority to execute, deliver
and perform its obligations under this Agreement and all corporate action
on its part necessary for such execution, delivery and performance has been
duly taken. This Agreement has been duly executed and delivered by MEDIQ.
(b) MEDIQ is not a party to, subject to or bound by any agreement or
judgment, order, writ, prohibition, injunction or decree of any court or
other governmental body which would prevent the execution or delivery of
this Agreement or consummation of the transactions contemplated herein by
MEDIQ and the execution and delivery by MEDIQ of this Agreement does not,
and the performance and consummation of the transactions contemplated by
this Agreement will not result in any conflict with, breach or violation of
or default, termination or forfeiture under (or upon the failure to give
notice or the lapse of time, or both, result in any conflict with, breach
or violation of or default, termination or forfeiture under) any terms or
provisions of MEDIQ's Certificate of Incorporation or Bylaws, or any
statute, rule, regulation, judicial, governmental, regulatory or
administrative decree, order or judgment, or any agreement, lease or other
instrument to which MEDIQ is a party or to which any of its assets is
subject, the breach, violation, default, termination or forfeiture of which
would result in a Material Adverse Effect on MEDIQ.
(c) No consent, approval, authorization, order, registration,
qualification or filing of or with any court or any regulatory authority or
any other governmental or administrative body is required on MEDIQ's part
for the consummation by MEDIQ of the transactions contemplated by this
Agreement, except (i) the filing of the Certificate of Merger and related
officers' certificates with the Secretary of State of the State of
Delaware; (ii) registration of the MMI Shares under the 1933 Act and
applicable state securities laws; (iii) such consents, approvals,
authorizations, orders, registrations, qualifications and filings which, if
not obtained or made, would not have a material adverse effect on the
ability of MEDIQ to consummate the transactions contemplated hereunder; and
(iv) all such other consents, approvals, authorizations, orders,
registrations, qualifications and filings which, if not obtained or made,
would have a material adverse effect on the ability of MEDIQ to consummate
the transactions contemplated hereunder, as set forth on Schedule
3.3(c)(iv).
(d) This Agreement is MEDIQ's legal, valid and binding obligation,
enforceable against MEDIQ in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and subject to
general principles of equity.
3.4 Investment Intent. The MMI Shares and the Warrant transferred to
MEDIQ pursuant to this Agreement are being held by MEDIQ for investment only,
for its own account (both of record and beneficially) and not with a view to
'distribution' thereof as that term is used under the 1933 Act until registered
under the 1933 Act, and MEDIQ will not offer to sell or otherwise dispose of the
MMI Shares or the Warrant in violation of any of the registration requirements
of the 1933 Act.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MEDIQ AND MEDIQ SUB REGARDING MEDIQ SUB
As inducement to MMI and MMI Sub to enter this Agreement, MEDIQ and MEDIQ
Sub represent and warrant to MMI and MMI Sub as follows:
4.1 Organization and Standing. MEDIQ Sub is a corporation duly organized,
validly existing and in good standing under the laws of the state of Delaware,
has all requisite corporate power and authority to own, operate and lease its
properties and carry on its business as now conducted, and is duly qualified to
do business and is in good standing and has all required and appropriate
material licenses in each jurisdiction in which the failure to so qualify would
have a Material Adverse Effect on MEDIQ Sub.
4.2 Capitalization.
(a) MEDIQ Sub's capitalization consists solely of 100 authorized
shares of MEDIQ Sub Common Stock of which 100 shares are issued and
outstanding as of the date hereof. MEDIQ Sub does not have in effect any
stock appreciation rights plan and no stock appreciation rights are
currently outstanding.
(b) MEDIQ Sub does not hold any of the issued and outstanding MEDIQ
Sub Common Stock in the treasury of MEDIQ Sub and does not have
outstanding, nor is there any agreement or understanding providing for the
granting of, any preemptive or subscription rights, options, warrants,
rights to convert, capital stock equivalents or other rights to purchase or
otherwise acquire any interest in any shares of MEDIQ Sub Common Stock or
other securities.
(c) All of the issued and outstanding shares of MEDIQ Sub Common Stock
have been duly authorized, validly issued, are fully paid and
non-assessable. None of the issued and outstanding shares of MEDIQ Sub
Common Stock is subject to repurchase.
(d) There is no right of first refusal, co-sale right, right of
participation, right of first offer, option or other restriction on
transfer applicable to any shares of MEDIQ Sub Common Stock.
(e) MEDIQ Sub is not a party or subject to any agreement or
understanding, and there is no agreement or understanding between or among
any Persons that affects or relates to the voting or giving of written
consent with respect to any security of MEDIQ Sub.
4.3 Subsidiaries. MEDIQ Sub does not own or control, directly or
indirectly, any Person.
4.4 Authority, Approval and Enforceability.
(a) MEDIQ Sub has full corporate power and authority to execute,
deliver and perform its obligations under this Agreement, and all corporate
action on MEDIQ Sub's part necessary for such execution, delivery and
performance has been duly taken. This Agreement has been duly executed
and delivered by MEDIQ Sub.
(b) MEDIQ Sub is not a party to, subject to or bound by any agreement
or judgment, order, writ, prohibition, injunction or decree of any court or
other governmental body which would prevent the execution or delivery of
this Agreement or consummation of the transactions contemplated herein by
MEDIQ Sub. The execution and delivery by MEDIQ Sub of this Agreement does
not, and the performance and consummation of the transactions contemplated
by this Agreement will not, result in any conflict with, breach or
violation of or default, termination or forfeiture under (or upon the
failure to give notice or the lapse of time, or both, result in any
conflict with, breach or violation of or default, termination or forfeiture
under) any terms or provisions of (i) MEDIQ Sub's Certificate of
Incorporation or Bylaws, or (ii) except as set forth on Schedule 4.4(b),
any statute, rule, regulation, judicial, governmental, regulatory or
administrative decree, order or judgment, or any agreement, lease or other
instrument to which MEDIQ Sub is a party or to which any of its assets is
subject, the breach, violation, default, termination or forfeiture of
which would result in a Material Adverse Effect on MEDIQ Sub.
(c) No consent, approval, authorization, order, registration,
qualification or filing of or with any court or any regulatory authority or
any other governmental or administrative body is required on MEDIQ Sub's
part for the consummation by MEDIQ Sub of the transactions contemplated by
this Agreement, except (i) the filing of the Certificate of Merger and
related officers' certificates with the Secretary of State of the State of
Delaware; (ii) registration of the MMI Shares under the 1933 Act and
applicable state securities laws; (iii) such consents, approvals,
authorizations, orders, registrations, qualifications and filings which, if
not obtained or made, would not have a Material Adverse Effect on the
ability of MEDIQ Sub to consummate the transaction contemplated hereunder;
and (iv) all such other consents, approvals, authorizations, orders,
registrations, qualifications and filings which, if not obtained or made,
would have a material adverse effect on the ability of MEDIQ Sub to
consummate the transaction contemplated hereunder, as set forth on Schedule
4.4(c)(iv).
(d) This Agreement is MEDIQ Sub's legal, valid and binding obligation,
enforceable against MEDIQ Sub in accordance with the respective terms
hereof, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and subject to general principles of equity.
4.5 Financial Statements.
(a) MEDIQ Sub has delivered to MMI and MMI Sub complete copies of
MEDIQ Sub's balance sheets as at September 30, 1992 and September 30, 1993
and the statements of operations, stockholder's equity and cash flows for
the years ended on each of September 30, 1991, September 30, 1992 and
September 30, 1993 (collectively, the 'Audited Financials') accompanied by
the auditors' report of MEDIQ Sub's independent certified public
accountants. MEDIQ Sub's Audited Financials present fairly MEDIQ Sub's
financial position as of those dates and the results of MEDIQ Sub's
operations and cash flows for the years then ended in conformity with GAAP.
(b) MEDIQ Sub has delivered to MMI and MMI Sub an unaudited balance
sheet as of December 31, 1993 and the related unaudited statements of
operations, shareholders' equity and cash flows for the 3 months then ended
(the 'Interim Financials'). MEDIQ Sub's Interim Financials present fairly
MEDIQ Sub's financial condition as of December 31, 1993 and the results of
MEDIQ Sub's operations and cash flows for the 3 months then ended, in
conformity with GAAP applied on a basis consistent with MEDIQ Sub's Audited
Financials (except for the absence of notes thereto and subject to normal
year-end audit adjustments which are not material). The Audited
Financials and the Interim Financials are hereinafter collectively
referred to as the 'Financials.'
4.6 Absence of Certain Changes to MEDIQ Sub. Since December 31, 1993:
(a) there has not been any change in MEDIQ Sub's financial condition,
results of operations, assets or liabilities, from that reflected in the
Financials, except changes in the ordinary course of business that, in the
aggregate, do not constitute a Material Adverse Effect on MEDIQ Sub;
(b) there has not been any damage, destruction or loss of property or
assets of MEDIQ Sub, whether or not covered by insurance, that would
constitute a Material Adverse Effect on MEDIQ Sub;
(c) there has not been any waiver or compromise by MEDIQ Sub of a debt
owed to or a material right owned by MEDIQ Sub except in the ordinary
course of business;
(d) there has not been any satisfaction or discharge by MEDIQ Sub of
(i) any lien, claim, or encumbrance in favor of MEDIQ Sub or (ii) payment
of any obligation due MEDIQ Sub, except in the ordinary course of business
and that would not constitute a Material Adverse Effect on MEDIQ Sub;
(e) there has not been any amendment to a contract or agreement by
which MEDIQ Sub or any of its assets is bound or subject that would
constitute a Material Adverse Effect on MEDIQ Sub;
(f) there has not been any material change in any compensation
arrangement or agreement with any employee, consultant, officer, director
or other Person with respect to MEDIQ Sub, except as set forth in Schedule
4.6(f);
(g) to MEDIQ's and MEDIQ Sub's knowledge there has not been any loss
of an order or contract cancellation by any of MEDIQ Sub's customers which
loss would constitute a Material Adverse Effect on MEDIQ Sub;
(h) there has been no Lien created on any of MEDIQ Sub's material
properties or assets other than encumbrances consisting of zoning or
planning restrictions, easements, permits and other restrictions or
limitations on the use of real property or irregularities in title thereto
which do not materially detract from the value of such property or
materially impair the use of such property by MEDIQ Sub in the operation of
its business as currently conducted, and liens for current taxes,
assessments or governmental charges or levies on property not yet due and
delinquent (collectively, the 'Permitted Liens');
(i) there have been no dividends, redemptions, share dividends or
other distributions in respect of any shares of MEDIQ Sub's Common Stock
declared, set aside or paid;
(j) there has not been any agreement (oral or written) entered into by
MEDIQ Sub that obligates MEDIQ Sub to provide any services, other than in
the ordinary course of business, except as set forth in Schedule 4.6(j);
(k) there has not been any other event or condition of any character
that would constitute a Material Adverse Effect on MEDIQ Sub; or
(l) there has not been any agreement or commitment by MEDIQ Sub to do
any of the things described in this Section 4.6.
4.7 Properties. MEDIQ Sub owns no real property. The properties and
assets of MEDIQ Sub reflected in the December 31, 1993 balance sheet included in
the Financials and their use conform in all material respects to all applicable
building, zoning, fire, health and other laws, ordinances or
regulations except where the failure to so conform would not
constitute a Material Adverse Effect on MEDIQ Sub and MEDIQ Sub does not know of
any violation with respect thereto. MEDIQ Sub is, or shall be prior to the
Closing, the lessee or licensee named on all real and personal property leases
or licenses, as applicable, covering all or any portion of the real property
used or any personal property required by MEDIQ Sub in the operation of its
business as heretofore operated, on which there are no Liens other than
Permitted Liens and in the case of such leased properties or properties held
under license, MEDIQ Sub has a good and valid leasehold or license interest
therein.
4.8 Insurance. Attached as Schedule 4.8 is a list and brief description
of all insurance policies carried by MEDIQ Sub and all such policies are in full
force and effect. MEDIQ Sub has been continuously and is insured by licensed
insurers unaffiliated with MEDIQ Sub for amounts in excess of $250,000 with
respect to its property and the conduct of its business (including, without
limitation, liability insurance).
4.9 Agreements.
(a) Except as set forth on Schedule 4.9, MEDIQ Sub is not a party to
or subject to any:
(i) agreement or agreements (oral or written) for the purchase or
lease of inventory, supplies, equipment or personal property with a
value of more than $25,000, or the procurement of services involving
payments of more than $5,000;
(ii) joint venture, partnership or other contract or arrangement
involving the sharing of profits;
(iii) agreement (oral or written) relating to the purchase or
acquisition, by merger or otherwise, of a significant portion of MEDIQ
Sub's business, assets or securities by any Person other than as
contemplated herein;
(iv) any agreement (oral or written) containing a covenant or
covenants which purport to limit MEDIQ Sub's ability or right to engage
in any lawful business activity material to MEDIQ Sub or compete with
any Person or entity in a business material to MEDIQ Sub;
(v) agreement (oral or written) for the license by MEDIQ Sub to
third parties of any patent, copyright, trade secret or other
proprietary right or indemnification of proprietary rights;
(vi) agreement (oral or written) involving payments to or
obligations of MEDIQ Sub not otherwise described in this Section 4.9
which individually involve payment obligations of MEDIQ Sub in excess of
$25,000 annually; or
(vii) agreement (oral or written) pursuant to which MEDIQ Sub has
borrowed or loaned any money or issued any note, bond, indenture, or
other evidence of indebtedness or directly or indirectly guaranteed
indebtedness, liabilities or obligations of others or any note, bond,
indenture or other evidence of indebtedness.
(b) MEDIQ Sub has performed all material obligations required to be
performed by MEDIQ Sub on or prior to the date hereof under each contract,
obligation, commitment, agreement, undertaking, arrangement or lease
referred to in this Agreement or any exhibit or schedule hereto, and MEDIQ
Sub is not in default, breach or violation thereunder, and is not aware of
any facts from which MEDIQ Sub should reasonably conclude that MEDIQ Sub
will not be able to perform all obligations required to be performed by
MEDIQ Sub subsequent to the date hereof under each such agreement, except
for such defaults, breaches, or violations under such instruments or
obligations that would not have a Material Adverse Effect on MEDIQ Sub.
4.10 Intellectual Property Rights.
(a) Schedule 4.10(a) sets forth all the Intellectual Property (except
(i) trade secrets, proprietary information or process, if any, and (ii)
Commercial Rights of MEDIQ Sub) necessary for or used in MEDIQ Sub's
business as now conducted and MEDIQ Sub has full title and ownership of or
rights to use all such scheduled items in connection with the conduct of
MEDIQ Sub's business as now conducted without any infringement of the
rights of others. Except with respect to customers in the ordinary course
of business, MEDIQ Sub has not granted any option or license of any kind
nor is it a party to any agreement relating to the foregoing. MEDIQ Sub
has not received any written communication nor does MEDIQ Sub have
knowledge of any Person alleging that MEDIQ Sub has violated or, by
conducting MEDIQ Sub's business as heretofore conducted, would violate any
Intellectual Property rights of any other Person. MEDIQ Sub does not have
knowledge that any of its employees or consultants is obligated under any
contract (including licenses, covenants or commitments of any nature) or
other agreement, or subject to any judgment, decree or order of any court
or administrative agency, that would interfere with their use of the
Intellectual Property of MEDIQ Sub or that would conflict with MEDIQ Sub's
business as heretofore conducted. Schedule 4.10(a) also identifies all
Intellectual Property (other than Commercial Rights) of MEDIQ Sub that
requires a consent or waiver to consummate the transactions contemplated by
this Agreement. Schedule 4.10(a) sets forth (i) all royalty obligations of
MEDIQ Sub recognized by MEDIQ Sub as such, (ii) a description of all claims
for royalties which have been asserted or, to MEDIQ Sub's knowledge, are
currently threatened to be asserted, against MEDIQ Sub and (iii) to the
extent any claim is listed under (ii) above, any similar circumstances of
which MEDIQ Sub has knowledge, that MEDIQ Sub reasonably expects to give
rise to a claim for royalties similar to any claim set forth under clause
(ii). No invention that is owned by any employee or consultant of MEDIQ
Sub is necessary for the conduct of MEDIQ Sub's business except for any
such invention for which MEDIQ Sub has a valid right to use.
(b) MEDIQ Sub is not making use of any confidential information of
third parties in violation of any agreement to which MEDIQ Sub is a party
or by which it is bound or any confidential information in which, to MEDIQ
Sub's knowledge, any of MEDIQ Sub's current or past employees or other
service providers, has claimed a proprietary interest. Except as set forth
on Schedule 4.10(b), (i) all employees and, to MEDIQ Sub's knowledge,
independent contractors used by MEDIQ Sub to develop software have signed a
Confidentiality Agreement substantially in the form of Exhibit D attached
hereto; (ii) MEDIQ Sub has received no written notification and has no
knowledge that any such employee or service provider has claimed any
proprietary interest in any such confidential information; and (iii) MEDIQ
Sub has received no written notification and has no knowledge that any such
agreements have been violated.
4.11 Employee Benefit Plans; ERISA.
(a) Other than as set forth in Schedule 4.11 (such plans, the
'Plans'), MEDIQ Sub does not, and MEDIQ does not for the benefit of any
MEDIQ Sub Employee, maintain any pension, profit sharing, savings,
retirement or other deferred compensation plan, or any bonus (whether
payable in cash or stock) or incentive program, or any group health plan
(whether insured or self-funded), or any disability or group life
insurance plan or other employee welfare benefit plan, nor is MEDIQ Sub a
party to any collective bargaining agreement or other agreement, written
or oral, with any trade or labor union, employees association or similar
organization. MEDIQ Sub has not sponsored, maintained, contributed or
otherwise incurred any obligation under, any 'multiemployer plan' as
defined in Section 3(37) of the Employee Retirement Income Security Act
of 1974, as amended ('ERISA').
With respect to each such Plan, MEDIQ Sub has furnished or made available
to MMI and MMI Sub complete and accurate copies of the plan documents (including
trust documents, insurance policies or contracts, employee booklets, summary
plan descriptions and other authorizing documents, and any material employee
communications). With respect to each of the Plans subject to ERISA as either
an employee pension benefit plan within the meaning of Section 3(2) of ERISA or
an employee welfare benefit plan within the meaning of Section 3(1) of ERISA,
MEDIQ Sub has conformed in all material respects with the reporting and
disclosure requirements of ERISA and the Code applicable to the Plans. Each
such Plan has at all times been operated and administered in all material
respects in accordance with its terms and all applicable laws, including, but
not limited to, ERISA and the Code.
(b) No Plan and no plan maintained by any ERISA Affiliate is subject
to Section 412 of the Code or to Title IV of ERISA.
(c) With respect to any group health plans maintained by MEDIQ Sub and
its ERISA Affiliates, whether or not for the benefit of MEDIQ Sub's
employees, MEDIQ Sub and its ERISA Affiliate have complied in all material
respects with the provisions of Part 6 of Title I of ERISA and 4980B of the
Code. MEDIQ Sub is not obligated to provide health care benefits of any
kind to its retired employees pursuant to any Plan, including without
limitation any group health plan, or pursuant to any agreement or
understanding. For purposes of this subparagraph, 'group health plan'
shall have the meaning set forth under Section 5000(b)(1) of the Code and
any regulations promulgated thereunder.
(d) No 'employee pension benefit plan' as defined in Section 3(2) of
ERISA maintained by or on behalf of MEDIQ Sub has engaged in or been a
party to any 'prohibited transaction' (as defined in ERISA or the Code),
nor has MEDIQ Sub incurred nor is it reasonably expected to incur any
liability for taxes under Code Section 4975, 4976 or 4979 or for penalties
under ERISA Section 502(i) with respect to any Plan. There has been no
breach of fiduciary duties owed to MEDIQ Sub Plan participants pursuant to
the provisions of Part 4 of Title I of ERISA.
(e) There are no pending claims, by any employee or beneficiary
covered under any such Plan, or otherwise involving any such Plan (other
than routine claims for benefits).
(f) MEDIQ Sub has delivered to MMI a full and complete list of all
current directors, officers, key employees, and consultants of MEDIQ Sub as
of December 31, 1993, specifying their names and job title, the total
amount of base salary, whether fixed or commission or a combination
thereof, and any raises since December 31, 1993 for such officers. MEDIQ
Sub does not have any obligation to pay any of its employees any severance
benefits in connection with their termination of employment or service, or
in connection with the Merger except as set forth in Schedule
4.11(f)(i). MEDIQ Sub does not know of any officer or key employee who
intends to terminate their employment with MEDIQ Sub, nor does MEDIQ Sub
have a current intention to terminate the employment of any of the
foregoing. For purposes of the preceding sentence of this Section 4.11,
'key employees' shall mean those persons set forth on Schedule 4.11(f)(ii).
(g) For purposes of this Section 4.11, 'ERISA Affiliate' means any
trade or business under common control with MEDIQ Sub at the relevant time
within the meaning of Sections 414(b)(c), or (m) of the Internal Revenue
Code.
4.12 Employment Matters.
(a) The hours worked by and payments made to MEDIQ Sub's employees
have not been, to MEDIQ Sub's knowledge, in violation of the Fair Labor
Standards Act or any other applicable federal, foreign, state or local laws
dealing with such matters.
(b) MEDIQ Sub does not owe and has not accrued any bonuses or vacation
pay, paid time off, sick time (to the extent entitled immediately prior to
the Effective Time to payment in lieu of sick time), severance pay or
retirement benefits to any employee, consultant or contractor or former
employee, consultant or contractor other than as set forth on the
Financials delivered by MEDIQ Sub to MMI and MMI Sub prior to the Closing
or as incurred or accrued in the ordinary course of business since December
31, 1993.
4.13 Labor Matters. There are no strikes or labor disputes pending or, to
MEDIQ Sub's knowledge, threatened by any MEDIQ Sub employees. MEDIQ Sub has not
received any notice or otherwise been informed that any labor organization is
seeking recognition as the representative of any employees of MEDIQ Sub for
collective bargaining purposes, nor has MEDIQ Sub recognized any labor
organization or entered into any collective bargaining agreement with any labor
organization.
4.14 Environmental and Safety Laws. (a) There are no Hazardous Substances
(as hereinafter defined) at any or all of the facilities owned or used by MEDIQ
Sub, and no spills, releases, discharges or disposals of Hazardous Substances
have occurred or are currently occurring on or under any of such facilities or
on or under any premises previously occupied by MEDIQ Sub during the period in
which such facilities have been owned or used by MEDIQ Sub, except for any of
the foregoing the presence of which does not constitute a violation of any
applicable governmental or regulatory law or regulation or give rise to
liability under any Environmental Law (as hereinafter defined), (b) such
facilities do not now contain, nor did such facilities or any premises
previously occupied by MEDIQ Sub contain, any underground storage tanks for any
Hazardous Substances, (c) MEDIQ Sub has not shipped or arranged shipment of any
Hazardous Substances to any facility for treatment, storage or disposal, except
as set forth in Schedule 4.14(c), and such shipments have not and will not give
rise to any Claim under any Environmental Law, (d) MEDIQ Sub has complied and is
in compliance with all applicable Environmental Laws, (e) MEDIQ Sub has not been
alleged to be in violation of, or been subject to any administrative, judicial
or regulatory proceeding pursuant to, Environmental Laws either now or any time
in the past and (f) no Claims (as hereinafter defined) have been or are
currently asserted against MEDIQ Sub or, to MEDIQ Sub's knowledge, will be
asserted against MEDIQ Sub after the Effective Time based on MEDIQ Sub's acts or
failures to act prior to the Effective Time with respect to Hazardous Substances
or under any Environmental Law. As used herein, 'Environmental Law' means all
applicable statutes, regulations, rules, ordinances, codes, licenses, permits,
orders, decisions, common law, approvals, plans, authorizations, concessions,
franchises and similar items, of the United States, states, or political
subdivisions thereof, or of foreign countries, and all applicable judicial,
administrative and regulatory decrees, judgments and orders, relating to the
protection of human health or the environment. As used herein, 'Hazardous
Substances' shall mean any asbestos, petroleum or any substance or material (x)
that is or becomes defined or designated as hazardous or toxic waste, hazardous
or toxic material, hazardous or toxic substance, or other similar term, by any
Environmental Law, (y) the presence of which requires investigation or
remediation under any federal, state or local statute, regulation, ordinance,
order, action, policy or common law, or (z) the presence of which on the
property involved causes or threatens to cause a nuisance thereon or to adjacent
properties or poses or threatens to pose a hazard to the health or safety of
persons thereon or therabout. As used herein, 'Claim' shall mean any and all
claims, demands, causes of action, suits, proceedings, administrative
proceedings, losses, judgments, decrees, debts, damages, liabilities, court
costs, attorneys' fees, and any other expenses incurred, assessed or sustained.
4.15 Powers of Attorney. No Person holds a power of attorney from MEDIQ
Sub.
4.16 Compliance with Laws. The business and operations of MEDIQ Sub are
in compliance with all foreign, federal, state, local and county laws,
ordinances, regulations, judgments, orders, decrees or rules of any court,
arbitrator or governmental, regulatory or administrative agency or entity
(except Environmental Laws which are covered by Section 4.14 hereof), except
where the failure to so comply would not constitute a Material Adverse Effect on
MEDIQ Sub. MEDIQ Sub has all permits, licenses, orders, authorizations,
registrations, approvals and other analogous instruments (and each is in full
force and effect) and MEDIQ Sub has made all filings and registrations and the
like necessary or required by law to conduct MEDIQ Sub's business, except where
the failure to maintain such permits and other instruments or to make such
filings and registrations would not have a Material Adverse Effect on MEDIQ Sub.
MEDIQ Sub has not received any governmental notice within two years prior to the
date hereof of any material violation by MEDIQ Sub of any laws, rules,
regulation or orders. MEDIQ Sub is not in default or noncompliance under any
permits, consents, or similar instruments, except where such default or
noncompliance would not have a Material Adverse Effect on MEDIQ Sub.
4.17 Litigation; Decrees. Schedule 4.17 sets forth a list of all pending
and, to MEDIQ Sub's knowledge, threatened, lawsuits or claims by or against
MEDIQ Sub or any of its respective properties, assets, operations or businesses
which (a) involve a claim of more than $50,000, (b) seek any material injunctive
relief or (c) relate to the transactions contemplated by this
Agreement. Schedule 4.17 shall also include all actions pending against MEDIQ
Sub and, to MEDIQ Sub's knowledge, threatened against MEDIQ Sub involving the
prior employment of any of MEDIQ Sub's employees, their use in connection with
MEDIQ Sub's business of any information or techniques allegedly proprietary to
any of their former employers, or their obligations under any agreements with
prior employers. MEDIQ Sub is not in default under any material judgment, order
or decree of any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, applicable to it
or any of its respective properties, assets, operations or businesses.
4.18 No Brokers. MEDIQ Sub is not obligated for the payment of fees or
expenses of any broker or finder in connection with the origin, negotiation or
execution of this Agreement or in connection with any transaction contemplated
hereby.
4.19 Accuracy of Documents and Information. The copies of all
instruments, agreements, other documents and written information delivered by
MEDIQ Sub to MMI and MMI Sub or their counsel are and will be complete and
correct in all material respects as of the date of delivery thereof.
4.20 Compliance with Instruments. MEDIQ Sub is not in violation of or
conflict with, breach of or in default under (either with the giving of notice
or the passage of time or both) any term or provision of MEDIQ Sub's Certificate
of Incorporation or Bylaws.
4.21 Accounts Receivable. The values at which accounts receivable are set
forth in the Financials reflect the accounts receivable valuation policy of
MEDIQ Sub which is consistent with GAAP.
4.22 Accounts Payable. All accounts payable and notes payable by MEDIQ
Sub to third parties as of the date hereof have been accrued consistent with
MEDIQ Sub's past practices and in accordance with GAAP.
4.23 Net Tangible Assets of MEDIQ Sub. The Net Tangible Assets of MEDIQ
Sub set forth in the MEDIQ Sub Closing Balance Sheet will not be less than
$7,847,000. Exhibit E sets forth the formula to be used in calculating Net
Tangible Assets of MEDIQ Sub on the MEDIQ Sub Closing Balance Sheet.
4.24 Inventory. MEDIQ Sub has not received written notice and does not
have knowledge that MEDIQ Sub will experience in the foreseeable future any
difficulty in obtaining, in the desired quantity and quality and at a reasonable
price and upon reasonable terms and conditions, the raw materials, supplies or
component products required for the manufacture, assembly or production of MEDIQ
Sub's products. The values at which inventories are carried on the Financials
and reserves reflect the inventory valuation policy of MEDIQ Sub which is
consistent with MEDIQ Sub's past practice and in accordance with GAAP.
4.25 No Undisclosed Liabilities. MEDIQ Sub does not have knowledge of any
outstanding claim, liability or obligation of any nature of MEDIQ Sub, whether
absolute, accrued, contingent or otherwise and whenever incurred or required to
be paid because of the operation of MEDIQ Sub prior to the Effective Date, other
than:
(a) liabilities or obligations that are fully reflected, accrued or
reserved against on the Financials; or
(b) liabilities or obligations (contractual or otherwise) not required
to be disclosed in the Financials prepared in accordance with GAAP.
4.26 Related Party Transactions. Except as set forth on Schedule 4.26, no
employee, officer or director of MEDIQ or MEDIQ Sub or member of his or her
immediate family is indebted to MEDIQ Sub, nor is MEDIQ Sub indebted (or
committed to make loans or extend or guarantee credit) to any of them or MEDIQ,
except that MEDIQ Sub is indebted to MEDIQ in respect of an inter-company
account (the 'Advance Account Obligation'). Except as set forth in Schedule
4.26, to MEDIQ Sub's knowledge, none of such persons has any direct or indirect
ownership interest in any firm or corporation (other than MEDIQ and its
subsidiaries) with which MEDIQ Sub is affiliated or with which MEDIQ Sub has a
business relationship, or any firm or corporation that competes
with MEDIQ Sub, except that the employees, officers or directors
of MEDIQ Sub and members of their immediate families may own stock in publicly
traded companies that may compete with MEDIQ Sub. No member of the immediate
family of any officer or director of MEDIQ Sub is directly interested in any
material contract with MEDIQ Sub.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF MMI AND MMI SUB
As an inducement to MEDIQ and MEDIQ Sub to enter into this Agreement, MMI
and MMI Sub, as the case may be, represent and warrant as follows:
5.1 Organization and Standing.
(a) Each of MMI and MMI Sub is a corporation duly organized, validly
existing and in good standing under the laws of the state of its
incorporation, has all requisite corporate power and authority to own,
operate and lease its properties and carry on its business as now
conducted, and is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction in which the failure to so
qualify would constitute a Material Adverse Effect on either MMI or MMI
Sub.
(b) Each of MMI and MMI Sub has delivered or made available to MEDIQ
complete and accurate copies of its current Articles of Incorporation or
Certificate of Incorporation, as the case may be, and Bylaws and minutes of
all of its directors' and stockholders' meetings.
5.2 MMI Shares and the Warrant.
(a) The MMI Shares and the Warrant which are to be transferred to
MEDIQ by MMI pursuant hereto are free and clear of any and all
Encumbrances;
(b) MMI has the full right, power and authority to issue and
transfer to MEDIQ at the Closing the MMI Shares and the Warrant;
(c) The MMI Shares and the Warrant to be issued to MEDIQ as
contemplated hereunder are duly authorized and, when issued and exchanged
pursuant to the terms of this Agreement, will be duly authorized, validly
issued, fully paid, non-assessable and not subject to any preemptive or
similar rights.
5.3 Authority, Approval and Enforceability.
(a) Each of MMI and MMI Sub has full corporate power and authority to
execute, deliver and, subject to obtaining the required approvals of the
holders of MMI Common Stock, perform its obligations under this Agreement,
and all corporate action on their respective parts necessary for such
execution, delivery and, subject to obtaining the required approvals of the
holders of MMI Common Stock, performance has been duly taken. This
Agreement has been duly executed and delivered by each of MMI and MMI Sub.
(b) Neither MMI nor MMI Sub is a party to, subject to or bound by any
agreement or judgment, order, writ, prohibition, injunction or decree of
any court or other governmental body which would prevent the execution or
delivery of this Agreement or consummation of the transactions contemplated
herein by MMI or MMI Sub. The execution and delivery by each of MMI and
MMI Sub of this Agreement does not, and the performance and consummation of
the transactions contemplated by this Agreement will not, result in any
conflict with, breach or violation of or default, termination or forfeiture
under (or upon the failure to give notice or the lapse of time, or both,
result in any conflict with, breach or violation of or default, termination
or forfeiture under) any terms or provisions of its Articles of
Incorporation or Certificate of Incorporation, as the case may be, or
Bylaws, or any statute, rule, regulation, judicial, governmental,
regulatory or administrative decree, order or judgment, or any agreement,
lease or other instrument to which either is a party or to which any of
their respective assets are subject, the breach, violation, default,
termination or forfeiture of which would constitute a Material Adverse
Effect on either MMI or MMI Sub.
(c) No consent, approval, authorization, order, registration,
qualification or filing of or with any court or any regulatory authority
or any other governmental or administrative body is required on its part
for the consummation by each of MMI and MMI Sub, as the case may be, of
the transactions contemplated by this Agreement, except (i) the filing of
the Certificate of Merger and related officers' certificates with the
Secretary of State of the State of Delaware; (ii) such consents,
approvals, authorizations, orders, registrations, qualifications and
filings which, if not obtained or made, would not have a Material Adverse
Effect on the ability of MMI and MMI Sub to consummate the transactions
contemplated hereunder and (iii) registration of the MMI Shares under the
1933 Act and applicable state securities laws.
(d) This Agreement is the legal, valid and binding obligation of MMI
Sub and, subject to obtaining the required approvals of the holders of MMI
Common Stock, MMI, enforceable against each in accordance with the terms
hereof, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally and subject to general principles of equity and, with respect to
MMI, subject to MMI obtaining the required approval of the holders of MMI
Common Stock.
5.4 SEC Filings.
(a) MMI has filed in a timely manner with the SEC all reports and
registration statements required to be filed by it since May 3, 1991 under
the 1933 Act or the 1934 Act (collectively, the 'SEC Filings'). MMI has
made available or delivered to MEDIQ a true and complete copy of (i) its
annual reports on Form 10-K for the fiscal years ended May 1, 1992 and
April 30, 1993 (the 'MMI 10-Ks'), (ii) its quarterly reports on Form 10-Q
for the fiscal 1994 quarters ended July 30, October 29 and January 28 (the
'MMI 10-Qs'), (iii) its proxy statements relating to meetings of the
stockholders of MMI held since April 30, 1993 and (iv) all of its other
reports, registration statements and amendments and supplements thereto
filed by MMI with the SEC since April 30, 1993 or used in connection with
the offer of securities of MMI since such date.
(b) As of its filing date, each of the SEC Filings complied in all
material respects with applicable federal laws and did not contain any
untrue statement of any material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading except to the
extent corrected by a subsequently filed SEC Filing filed prior to the date
hereof.
5.5 Financial Statements. The audited consolidated financial statements
and unaudited consolidated interim financial statements of MMI included in the
SEC Filings (the 'MMI Financial Statements') comply as to form in all material
respects with all applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto and present fairly, in
conformity with GAAP, the consolidated financial position of MMI and its
consolidated subsidiaries as of the dates thereof and their consolidated results
of operations and cash flows for the periods then ended (subject to normal
year-end adjustments in the case of any unaudited interim financial statements)
Since May 3, 1991 there has been no change in any accounting policy of MMI
except as described as required by GAAP in the notes to the MMI Financial
Statements.
5.6 Capitalization.
(a) MMI's capitalization (common stock, preferred stock, warrants and
options and any other issued or granted security) is as set forth on
Schedule 5.6. MMI does not have in effect any stock appreciation rights
plan and no stock appreciation rights are currently outstanding.
(b) There is not outstanding, nor is there any agreement or
understanding providing for the granting of, any preemptive or subscription
rights, options, warrants, rights to convert, capital stock equivalents or
other rights to purchase or otherwise acquire any of MMI's capital stock or
other securities except pursuant to MMI's (i) 1982 Incentive Stock Option
Plan, (ii) 1992 Stock Option Plan, and (iii) Medical Nonemployee Director
Stock Option Plan.
(c) All of the issued and outstanding shares of MMI's capital stock
have been duly authorized, validly issued, are fully paid and
nonassessable. None of the issued and outstanding shares of MMI capital
stock is subject to repurchase.
(d) MMI is not a party or subject to any agreement or understanding,
and, to MMI's knowledge, there is no agreement or understanding between or
among any Persons that affects or relates to the voting or giving of
written consent with respect to any shares of MMI capital stock.
5.7 Absence of Certain Changes to MMI. Since January 28, 1994, except as
otherwise set forth on Schedule 5.7:
(a) there has not been any change in MMI's financial condition,
results of operations, assets or liabilities, from that reflected in the
balance sheet for the quarter then ended as set forth in MMI's quarterly
report on Form 10-Q for the fiscal quarter ended January 28, 1994, except
changes in the ordinary course of business that, in the aggregate, do not
constitute a Material Adverse Effect on MMI;
(b) there has not been any satisfaction or discharge by MMI of (i) any
lien, claim, or encumbrance in favor of MMI or (ii) payment of any
obligation due MMI, except in the ordinary course of business and that
would not constitute a Material Adverse Effect on MMI;
(c) there has not been any amendment to a contract or agreement by
which MMI or any of its assets is bound or subject that would constitute a
Material Adverse Effect on MMI;
(d) there has not been any written notification of a loss of a
material order or contract cancellation by any of MMI's customers which
loss would constitute a Material Adverse Effect on MMI;
(e) there have been no dividends except a dividend consistent with
past practices (but not greater than $0.04 per share), redemptions, share
dividends or other distributions in respect of any shares of MMI's Common
Stock declared, set aside or paid; or
(f) there has not been any other event or condition of any character
that would constitute a Material Adverse Effect on MMI.
5.8 No Brokers. Except as set forth on Schedule 5.8, MMI is not obligated
for the payment of fees or expenses of any broker or finder in connection with
the origin, negotiation or execution of this Agreement or in connection with any
transaction contemplated hereby.
5.9 Intellectual Property of MMI. MMI has full title and ownership of, or
rights to use, all the Intellectual Property necessary for the conduct of its
business as now conducted without any infringement of the rights of others.
MMI has not received any written communication nor does MMI
have knowledge of any Person alleging that MMI has violated,
or by conducting MMI's business as heretofore conducted would
violate, any Intellectual Property Rights of any other Person.
5.10 Litigation; Decrees of MMI. Schedule 5.10 sets forth a list of all
pending and, to MMI's knowledge, threatened, lawsuits or claims by or against
MMI or any of its respective properties, assets, operations or businesses which
relate to the transactions contemplated by this Agreement.
5.11 Environmental Matters of MMI. (a) There are no Hazardous Substances
at any or all of the facilities owned or used by MMI, and no spills, releases,
discharges or disposals of Hazardous Substances have occurred or are currently
occurring on or under any of such facilities or on or under any premises
previously occupied by MMI during the period in which such facilities have been
owned or used by MMI, except for any of the foregoing the presence of which does
not constitute a violation of any applicable governmental or regulatory law or
regulation or give rise to liability under any Environmental Law, (b) such
facilities do not now contain, nor did such facilities or any premises
previously occupied by MMI contain, any underground storage tanks for any
Hazardous Substances, (c) MMI has not shipped or arrangement shipment of any
Hazardous Substances to any facility for treatment, storage or disposal except
as set forth in Schedule 5.11(c), and such shipments have not and will not give
rise to any Claim under any Environmental Law, (d) MMI has complied and is in
compliance with all applicable Environmental Laws, (e) MMI has not been alleged
to be in violation of, or been subject to any administrative, judicial or
regulatory proceeding pursuant to, Environmental Laws either now or any time in
the past and (f) no Claims have been or are currently asserted against MMI or,
to MMI's knowledge, will be asserted against MMI after the Effective Time based
on MMI's acts or failures to act prior to the Effective Time with respect to
Hazardous Substances or under any Environmental Law.
ARTICLE VI
MUTUAL COVENANTS OF MMI, MMI SUB, MEDIQ AND MEDIQ SUB
Each of MMI, MMI Sub, MEDIQ and MEDIQ Sub, as the case may be, agrees and
covenants to the others, except as expressly provided otherwise herein, as
follows:
6.1 Cooperation. Each Party shall cooperate with each other Party in
every way in carrying out the transactions contemplated herein and in delivering
all documents and instruments deemed reasonably necessary or useful by legal
counsel for any Party hereto.
6.2 Publicity. Each Party agrees that, from the date hereof through the
Closing Date, no public release or announcement concerning the transactions
contemplated hereby shall be issued by any Party without the prior written
consent of each other party (which consent shall not be unreasonably withheld),
except as such release or announcement may be required by law or the rules or
regulations of any United States or foreign securities exchange or the NASDAQ
National Market System, in which case the party required to make the release or
announcement shall allow each other Party reasonable time to comment on such
release or announcement in advance of such issuance.
6.3 Best Efforts. Each Party will use all reasonable efforts to cause all
conditions to the Closing to be satisfied.
6.4 Warrant Agreement. MMI and MEDIQ agree, prior to the Closing, to
execute and deliver the Warrant Agreement.
6.5 Further Assurances. From time to time, as and when required by any
Party, each such other Party shall execute and deliver, or cause to be executed
and delivered, all such documents and instruments and shall take, or cause to be
taken, all such further or other actions as such other Party may reasonably deem
necessary or desirable to consummate the transactions contemplated by this
Agreement.
6.6 Actions Contrary to Stated Intent. Each Party will use its best
efforts to cause the Merger to qualify as a tax-free reorganization under
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code and accordingly will not,
either before or after consummation of the Merger, take any action or fail to
take any action that would prevent the Merger from qualifying as a tax-free
reorganization under Section 368(a)(2)(E) of the Code or be inconsistent with
such qualification.
6.7 Employee Matters.
(a) Except as a provided in Section 9.2(d) hereof, the Parties agree
that each of MMI, MMI Sub and the surviving corporation shall not be
required pursuant to this Agreement to offer employment or to continue
employment to persons employed by MEDIQ Sub ('MEDIQ Sub Employees') as of
the Closing Date.
(b) The Parties agree that each of MMI and MMI Sub shall not be
required pursuant to this Agreement to maintain after the Closing any
compensation and employee benefit plans, arrangements and perquisites
provided by MEDIQ Sub for any MEDIQ Sub Employee retained by MMI, MMI Sub
or the surviving corporation.
(c) MEDIQ and MEDIQ Sub shall take all action necessary so that MMI
and the surviving corporation do not incur any liability or continuing
obligation after the Closing for any Plan, except to the extent such
liability has been specifically accrued on the MEDIQ Sub Financials,
including without limitation MEDIQ Sub's participation in MEDIQ's fully
funded employee benefits plan(s) and its 401(k) plan and the distribution
of any benefits thereunder to the respective participants. MMI shall
provide to all employees of the surviving corporation, or cause to be
provided, as of the Effective Time, medical, dental, disability, workers
compensation, life insurance and other fringe benefits commensurate with
those benefits that are offered to other employees of R Squared Scan
Systems, Inc.
6.8 Tax Matters.
(a) MEDIQ will be responsible for and will cause to be prepared and
duly filed all Returns (as defined in Section 6.8(h)) in which MEDIQ Sub is
includible for all taxable years ending on or before the Effective Time,
and all consolidated, combined or similar Returns for periods beginning
September 30, 1993 and ending at the Effective Time with respect to which
MEDIQ Sub is includible for such period. MEDIQ shall prepare that portion
of any such Returns related to MEDIQ Sub in accordance with the methodology
used in prior years. MEDIQ will not amend that portion of any Return
related to MEDIQ Sub without the written approval of MMI, which approval
will not be unreasonably withheld. MEDIQ will pay or cause to be paid, and
shall indemnify and hold MEDIQ Sub and MMI harmless against, all Taxes (as
defined in Section 6.8(h)) to which such Returns relate, but only to the
extent such Taxes have not been specifically accrued on the Closing Balance
Sheet.
(b) Other than Returns to be prepared by MEDIQ pursuant to paragraph
(a), MMI will be responsible for and will cause to be prepared and duly
filed any and all Returns of MEDIQ Sub for any and all taxable periods
which include and end after the Effective Time (the 'Overlap Period'), and
any taxable period beginning after the Effective Time. MEDIQ will be
responsible for and will indemnify and hold harmless MEDIQ Sub and MMI with
respect to all Taxes for the Overlap Period in an amount equal to the
liability for Taxes that would have resulted had the Overlap Period ended
at the Effective Time (utilizing, if applicable, the actual tax rate
imposed on a particular category of income by the applicable taxing
jurisdiction) and which Taxes have not been accrued on the Closing Balance
Sheet. Any amount so payable by MEDIQ will be remitted to MEDIQ Sub at
least ten business days prior to the due date of the respective returns
pursuant to written notice by MMI of such due date; provided that MEDIQ
approves of the amount (such approval not to be unreasonably
withheld). MEDIQ Sub shall remit the full amount received from MEDIQ
pursuant to this Section 6.8(b) to the appropriate Tax authority within the
time period required by law.
(c) MMI will pay or cause to be paid and shall indemnify and hold
MEDIQ harmless from and against the following Taxes with respect to taxable
items of MEDIQ Sub: (i) any and all Taxes arising in or attributable to
any taxable period (or that portion of any taxable period) beginning after
the Closing Date, due or payable by MEDIQ Sub or MEDIQ (computed in a
manner consistent with the allocation of Taxes for the Overlap Period);
(ii) any and all Taxes not incurred in the ordinary course of business
attributable to acts or omissions of MMI or MEDIQ Sub occurring after the
Closing but on the Closing Date; (iii) any and all Taxes attributable to an
Overlap Period other than that portion of such Taxes for which MEDIQ is
responsible pursuant to Section 6.8(b) above; and (iv) any and all Taxes
arising in or attributable to any taxable period (or that portion of any
taxable period) ending on or before the Closing Date to the extent provided
for in the Closing Balance Sheet.
(d) MMI and MEDIQ Sub agree that, with respect to any Tax, MEDIQ Sub
shall not carry back a net operating loss which arises in any taxable
period ending after the Closing Date ('Subsequent Loss') to any taxable
period of MEDIQ ending on or before the Closing Date. If a Subsequent Loss
with respect to any Tax is carried back into any taxable period of MEDIQ
ending on or before the Closing Date, MEDIQ shall be entitled to any refund
or credit of Taxes realized as a result thereof. This paragraph (d) shall
not apply to any adjustment to which paragraph (e) applies.
(e) (i) If any adjustment is made to any Tax Return relating to MEDIQ
or any of its Affiliates (including MEDIQ Sub) for any taxable period (or
portion thereof) ending on or prior to the Closing Date (whether such
adjustment is a result of or in settlement of any audit, other
administrative proceeding or the filing of an amended return to reflect the
consequences of any determination made in connection with any such audit or
proceeding or otherwise) and there is a correlative offsetting adjustment
applicable to MMI or any of its Affiliates (including MEDIQ Sub) for any
taxable period (or portion thereof) ending after the Closing Date, the
party whose adjustment is favorable (i.e., the party to which there inures,
directly or indirectly, a net Tax benefit as the result of any adjustment
(MMI or MEDIQ, as the case may be)) shall pay to the other party the amount
of such net Tax benefit at such time or times as and to the
extent that such benefit is realized through a refund of Tax or actual
reduction in the amount of Taxes which would otherwise be paid if such
adjustment had not been made; provided, however, that the party whose
adjustment is favorable shall not be required to make a payment to the
other party in excess of the amount (if any) of the net Tax detriment to
such other party correlative to such net Tax benefit; provided, further,
that if the party whose adjustment is favorable realizes a net Tax
benefit prior to the time the other party realizes a net Tax detriment,
the party whose adjustment is favorable shall not be required to make any
payment to the other party until such time or times as the net Tax
detriment is actually realized by such other party.
(ii) If any adjustment is made to any Tax Return relating to MMI or
any of its Affiliates (including MEDIQ Sub) for any taxable period (or
portion thereof) ending after the Closing Date (whether as a result of
or in settlement of any audit, other administrative proceeding or
judicial proceeding or the filing of an amended Return to reflect the
consequences of any determination made in connection with
any such audit or proceeding or otherwise) and there is a correlative
offsetting adjustment applicable to MEDIQ or any of its Affiliates
(including MEDIQ Sub) for any taxable period (or portion thereof) ending
on or prior to the Closing Date, the party whose adjustment is favorable
(i.e., the party to which there inures, directly or indirectly, a net
Tax benefit as the result of any adjustment (MMI or MEDIQ, as the case
may be)) shall pay to the other party the amount of such net Tax benefit
at such time or times as and to the extent that such benefit is realized
through a refund of Tax or actual reduction in the amount of Taxes which
would otherwise be paid if such adjustment had not been made; provided,
however, that the party whose adjustment is favorable shall not be
required to make a payment to the other party in excess of the amount
(if any) of the net Tax detriment to such other party correlative to
such net Tax benefit; provided, further, that if the party whose
adjustment is favorable realizes a net Tax benefit prior to the time the
other party realizes a net Tax detriment, the party whose adjustment is
favorable shall not be required to make any payment to the other party
until such time or times as the net Tax detriment is actually realized
by such other party.
(iii) If either MMI or MEDIQ makes a payment to the other party
pursuant to subparagraphs (i) or (ii) above and (a) it is later
determined by the applicable taxing authority that the party who made
such payment is not entitled to the net Tax benefit which gave rise to
such payment, then the party who received such payment shall promptly
remit to the party who made such payment the amount of such payment that
is attributable to the disallowed Tax benefit or (b) if, as a result of
a correlative adjustment, an attribute arising in a later period which
would otherwise be able to be carried back to the taxable year or years
in which the party making the payment thereunder realized a net Tax
benefit (a 'Displaced Carryback') cannot be utilized, the party
receiving a payment pursuant to this subsection (e) will repay to the
payer an amount sufficient to place the payer in the same position
(ignoring for the purpose any potential carryforward of the Displaced
Carryback) as it would have been if the correlative adjustment had not
occurred, except that the payer shall subsequently return an amount up
to such repayment when, as and to the extent the payer actually receives
a net Tax benefit from the Displaced Carryback.
(iv) For purposes of determining whether a correlative adjustment
described in this paragraph (e) has a net Tax benefit or detriment to
the party affected, (a) all effects of such adjustment, including,
without limitation, interest, penalties and additions to Tax required
to be paid or received, any Tax imposed upon a refund or reduction in
Tax and any Tax consequences occasioned by any payment made or to be
made by one party to the other shall be taken into account, and (b)
whether a party suffers a Tax detriment or receives a Tax benefit will
be determined as if such party filed a separate Return for all periods.
(f) After the Effective Time, MMI and MEDIQ Sub, on the one hand, and
MEDIQ, on the other hand, will make available to the other, as reasonably
requested, all information, records or documents relating to the liability
for Taxes for all periods prior to or including the Effective Time and will
preserve such information, records or documents until the expiration of any
applicable statute of limitations or extensions thereof.
(g) Any and all tax sharing, tax indemnity, or tax allocation
agreements with respect to which MEDIQ Sub was a party at any time prior to
the Effective Time shall terminate upon the Effective Time. No further
amounts shall be payable under such agreements following the Effective
Time, other than amounts due MEDIQ Sub with respect to all periods through
and including the Effective Time.
(h) For purposes of this Agreement: (i) the term 'Taxes' means (A)
all federal, state, local, foreign and other net income, gross income,
gross receipts, sales, use, ad valorem, value added, intangible, unitary,
capital gain, transfer, franchise, profits, license, lease, service,
service use, withholding, backup withholding, payroll, employment,
estimated, excise, severance, stamp, occupation, premium, property,
prohibited transactions, windfall or excess profits, customs, duties or
other taxes, fees, assessments or charges of any kind whatsoever, together
with any interest and any penalties, additions to tax or additional amounts
with respect thereto, (B) any liability for payment of amounts described in
clause (A) whether as a result of transferee liability, of being a member
of an affiliated, consolidated, combined or unitary group for any period,
or otherwise through operation of law and (C) any liability for the payment
of amounts described in clauses (A) or (B) as a result of any tax sharing,
tax indemnity or tax allocation agreement or any other express or implied
agreement to indemnify any other person; and the term 'Tax' means any one
of the foregoing Taxes; and (ii) the term 'Returns' means all returns,
declarations, reports, statements and other documents required to be filed
in respect of Taxes; and the term 'Return' means any one of the foregoing
Returns.
(i) MEDIQ represents and warrants to MMI and MMI Sub as follows:
(i) To the extent a failure to do so would constitute a Material
Adverse Effect on MMI or MEDIQ Sub, MEDIQ Sub, and every member of a
consolidated, combined, unitary, or other similar group for federal,
state or local income tax purposes (for the period during which MEDIQ
Sub was included in that group) all such other entities collectively
referred to herein as 'Tax Affiliates'), has filed on a timely basis all
Returns required to have been filed by it and has paid on a timely basis
all Taxes shown thereon to be due. All such Returns were true, complete
and correct as of the date on which they were filed. The provisions for
taxes in the Financial Statements set forth the maximum liability of
MEDIQ Sub for Taxes relating to periods covered thereby. No liability
for Taxes has been incurred by MEDIQ Sub since the dates of the
Financial Statements other than in the ordinary course of MEDIQ Sub'
business. MEDIQ Sub is not aware of any reasonably possible state of
facts, other than the results from its normal business operations,
which could result in a liability for Taxes in excess of those shown
on the Financial Statements.
(ii) With respect to all amounts in respect of Taxes imposed upon
MEDIQ Sub or Tax Affiliates, or for which MEDIQ Sub or Tax Affiliates is
or could be liable, and with respect to all taxable periods or portions
of periods ending on or before the Effective Time, all applicable Tax
laws and agreements have been fully complied with, and all such amounts
required to be paid by MEDIQ Sub or Tax Affiliates to taxing authorities
or others have been paid.
(iii) Except as otherwise set forth on Schedule 6.8:
(1) None of the Returns required to be filed by MEDIQ Sub and
Tax Affiliates contains, or will contain, a disclosure statement
under Section 6662 (or any predecessor provision) of the Code, or any
similar provision of state, local or foreign law;
(2) MEDIQ Sub or Tax Affiliates have not received notice that
the Internal Revenue Service ('IRS') or any other taxing authority
has asserted against MEDIQ Sub or Tax Affiliates any deficiency or
claim for additional Taxes in connection with any Return, and no
issues have been raised (and are currently pending) by any taxing
authority in connection with any Return;
(3) All Tax deficiencies asserted or assessed against MEDIQ Sub
and Tax Affiliates have been paid or finally settled;
(4) There is no pending or threatened action, audit, proceeding,
or investigation with respect to (i) the assessment or collection of
Taxes or (ii) a claim for refund made by MEDIQ Sub and Tax Affiliates
with respect to Taxes previously paid;
(5) All amounts that were required to be collected or withheld
by MEDIQ Sub, or with respect to Taxes of MEDIQ Sub, have been duly
collected or withheld, and all such amounts that were required to be
remitted to any taxing authority have been duly remitted;
(6) All Returns have been audited by the IRS or the relevant
taxing authority, or the time for assessment of additional Taxes with
respect thereto has been closed by applicable statutes of limitation,
and all liabilities for Taxes asserted by the IRS (or any other
relevant taxing authority) have been satisfied, for all taxable years
ending on or before September 30, 1989; Returns for taxable years
beginning subsequent to September 30, 1989 remain subject to
examination;
(7) MEDIQ Sub and Tax Affiliates have not requested an extension
of time to file any Return not yet filed, and have not granted any
waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax;
(8) MEDIQ Sub and Tax Affiliates have not taken any action not
in accordance with past practice that would have the effect of
deferring any Tax liability of MEDIQ Sub from any taxable period
ending on or before or including the Effective Time to any subsequent
taxable period;
(9) None of the income recognized, for federal, state, local or
foreign income tax purposes, by MEDIQ Sub during the period
commencing on October 1, 1993 and ending at the Effective Time will
be derived other than in the ordinary course of business;
(10) MEDIQ Sub has not filed a consent pursuant to the
collapsible corporation provisions of Section 341(f) of the Code (or
any corresponding provision of state, local or foreign income tax
law) or agreed to have Section 341(f)(2) of the Code (or any
corresponding provision of state, local or foreign income tax law)
apply to any disposition of any asset owned by it;
(11) MEDIQ Sub was not acquired in a 'qualified stock purchase'
under Section 338(d)(3) of the Code and no elections under Section
338(g) of the Code, protective carryover basis elections, or offset
prohibition elections are applicable to MEDIQ Sub;
(12) MEDIQ Sub has not participated in, or cooperated with, an
international boycott within the meaning of Section 999 of the Code;
(13) MEDIQ Sub is not required to include in income any
adjustment pursuant to Sections 481 or 263A of the Code (or similar
provisions of other law or regulations) by reason of a change in
accounting method or otherwise, nor do MEDIQ Sub or the MEDIQ Sub
Shareholders have any knowledge that the IRS (or other taxing
authority) has proposed, or is considering, any such change in
accounting method or other adjustment;
(14) None of the assets of MEDIQ Sub is property which is
required to be treated as owned by any other person pursuant to the
'safe harbor lease' provisions of Section 168(f)(8) of the Internal
Revenue Code of 1954;
(15) None of the assets of MEDIQ Sub secures any debt the
interest on which is tax exempt under Section 103 of the Code;
(16) None of the assets of MEDIQ Sub is 'tax exempt use
property' within the meaning of Section 168(h) of the Code;
(17) There are no liens for Taxes (other than for current Taxes
not yet due and payable) upon the assets of MEDIQ Sub;
(18) MEDIQ Sub is not a party to any agreement, contract,
arrangement or plan that has resulted or would result, separately or
in the aggregate, in connection with the Merger, any change of
control of MEDIQ Sub or any other transaction contemplated by this
Agreement, in the payment of any 'excess parachute payments' within
the meaning of Section 280G of the Code;
(19) MEDIQ Sub is not, and has not been, a United States real
property holding corporation (as defined in Section 897(c)(2) of the
Code) during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code;
(20) No shareholder of MEDIQ Sub is other than a United States
person within the meaning of the Code;
(21) MEDIQ Sub does not have and has not had a permanent
establishment in any foreign country, as defined in any applicable
Tax treaty or convention between the United States of America and
such foreign country and MEDIQ Sub has not engaged in a trade or
business within any foreign country;
(22) MEDIQ Sub is not party to any joint venture, partnership,
or other arrangement or contract which could be treated as a
partnership for federal income tax purposes;
(23) All tax elections with respect to depreciation and
depreciable lives and research and development expenses that were
made with respect to the taxable year beginning October 1, 1988 and
subsequent years are set forth in Schedule 6.8 and after the date of
this Agreement, no material election with respect to Taxes will be
made without the prior written consent of MMI;
(24) Schedule 6.8 summarizes (a) any foreign Tax holidays that
MEDIQ Sub has in any jurisdiction, including the nature, amount and
lengths of such Tax holiday, (b) any transfer pricing
agreements or other arrangements that have been established by MEDIQ
Sub in any foreign jurisdiction, and (c) any expatriate tax programs
or policies affecting MEDIQ Sub;
(25) MEDIQ Sub has not made a 'waters edge election' pursuant to
California Revenue and Taxation Code Section 25110;
(26) MEDIQ Sub is not currently and never has been subject to
the reporting requirements of Section 6038A of the Code; and
(27) There are no excess loss accounts or deferred intercompany
gains or losses, as such terms are defined in the Treasury
Regulations, that will be required to be recognized or otherwise
taken into account as a result of the acquisition of the MEDIQ Sub
Common Stock pursuant to this Agreement.
(j) This Section 6.8 shall be the exclusive provision of this
Agreement relating to, addressing or covering any and all Taxes or any and
all matters in respect thereof, except that Article X shall apply to all
obligations, representations and warranties relating to Taxes for which a
claim for indemnification may be made. In applying Article X to
representations and warranties set forth in paragraph (i) of this Section
6.8, the representations and warranties in clauses (i), (ii), and
subclauses 1 through 7, inclusive, 9, 17, 24 and 27 of clause (iii) of
subsection (i) shall not give rise to a separate claim for indemnification,
it being understood that the rights of MMI and MEDIQ Sub to indemnification
for the matters covered by such representations and warranties are covered
solely by paragraph (a) of this Section 6.8.
6.9 Closing Balance Sheet. Within 90 days after the Closing Date, MEDIQ
will prepare and Deloitte & Touche, the independent certified public accountants
('MEDIQ's Auditors'), will audit and present to MMI and MEDIQ a balance sheet of
MEDIQ Sub as of the Closing Date (the 'Proposed Closing Balance Sheet') together
with their calculation of the Net Tangible Assets of MEDIQ Sub as of the Closing
Date (the 'Closing Calculation'). The Proposed Closing Balance Sheet shall
present fairly the financial position of MEDIQ Sub as of the Closing Date in
accordance with GAAP using practices and procedures consistent with the
preparation of the Audited Financials, except as required by or otherwise in
connection with SFAS 109. MMI and its independent certified public accountants
('MMI's Auditors') shall have the right to review the workpapers of MEDIQ's
Auditors (the 'Workpapers') utilized in preparing the Proposed Closing Balance
Sheet and calculating the Closing Calculation for purposes of verifying the
accuracy and fairness of the Proposed Closing Balance Sheet and the Closing
Calculation. The Proposed Closing Balance Sheet and the Closing Calculation
shall be binding upon MMI unless MMI gives written notice of disagreement
with any of said values or amounts to MEDIQ within 10 days after its
receipt of the Workpapers, specifying the nature and extent of such
disagreement. If MMI and MEDIQ mutually agree upon a balance sheet and/or the
Net Tangible Assets of MEDIQ Sub as of the date which is 10 days after MEDIQ's
receipt of such notice from MMI, such agreement shall be binding upon MMI and
MEDIQ. If MMI and MEDIQ are unable to resolve any such disagreement before such
date, the disagreement shall be referred for final determination to an
independent accounting firm of national reputation mutually acceptable to MMI
and MEDIQ (the 'Selected Firm'), and the resolution of that disagreement and the
calculation of the Net Tangible Assets of MEDIQ Sub resulting therefrom shall be
final and binding upon MMI and MEDIQ for purposes of this Agreement. The
Proposed Closing Balance Sheet as finally determined is the 'MEDIQ Sub Closing
Balance Sheet.' The fees and disbursements of MEDIQ's Auditors incurred in the
preparation of the Proposed Closing Balance Sheet submitted to MMI and the audit
thereof shall be paid by MEDIQ Sub. MMI shall pay the fees and disbursements of
the MMI's Auditors. The fees and disbursements of the Selected Firm shall be
paid by MMI and MEDIQ as the Selected Firm shall determine based upon its
assessment of the relative merits of the positions taken by each in any
disagreement presented to such firm.
6.10 Preparation of Proxy or Information Statement. MMI, acting through
its board of directors, shall cause a special meeting (the 'Special Meeting') as
soon as practicable after the date hereof, if determined by MMI, with advise of
its legal counsel, to be necessary or desirable, for the purpose of submitting
this Agreement and all actions contemplated hereby for approval of MMI's
shareholders. MMI, with the cooperation of MEDIQ, will use all reasonable best
efforts to obtain and furnish the information required to be included by it in a
Proxy Statement or, if MMI, with the advice of legal counsel, reasonably
determines, an Information Statement (i) to file a Proxy Statement or
Information Statement, as the case may be, with the SEC as soon as practicable
after the date hereof, (ii) to respond as soon as possible to any comments of
the SEC relating to the Proxy Statement or Information Statement, as the case
may be, and any preliminary version thereof and (iii) to cause the definitive
Proxy Statement or Information Statement, as the case may be, relating to this
Agreement and the transactions contemplated hereby and thereby to be mailed to
its shareholders, as soon as reasonably practicable. The Proxy Statement or
Information Statement, as the case may be, and all amendments and supplements
thereto, shall comply with applicable law. Each of MMI and MEDIQ agrees to
provide promptly to the other such information concerning its business and
financial statements and affairs as the other shall reasonably request and as
shall be reasonably required in connection with the action to be taken by MMI to
prepare the Proxy Statement or Information Statement, as the case may be, or any
amendments or supplements thereto, and each of MMI and MEDIQ agrees to cause
their respective counsel and auditors to cooperate with the other's counsel and
auditors in the preparation thereof. MMI will promptly advise MEDIQ, and MEDIQ
will promptly advise MMI, in writing if at any time prior to the Effective Time
either MMI or MEDIQ shall obtain knowledge of any facts that might make it
necessary or appropriate to amend or supplement the Proxy Statement or
Information Statement, as the case may be, in order to make the statements
contained or incorporated by reference therein not misleading
or to comply with applicable law. Anything to the contrary
contained herein notwithstanding, MMI shall not include in the Proxy Statement
or Information Statement, as the case may be, any information with respect to
MEDIQ or its affiliates or associates, the form and content of which information
shall not have been approved by MEDIQ prior to such inclusion, such approval not
to be unreasonably withheld.
6.11 Suppliers and Customers. (a) At the Closing, MEDIQ Sub shall deliver
Schedule 6.11(a) to MMI setting forth a list (by name, address and person to
contact) of the 20 largest customers of MEDIQ Sub and (b) as soon as practicable
after the date hereof, MEDIQ Sub shall deliver Schedule 6.11(b) to MMI setting
forth a list (by name, address and persons to contact) of the 20 largest
suppliers of MEDIQ Sub, each such schedule for the 12-month period ended
September 30, 1993 together with the approximate dollar amount of purchases and
sales during said period and a summary description of the products purchased or
sold, as applicable; provided, however, that prior to the Closing neither MMI
nor MMI Sub shall contact the suppliers set forth on Schedule 6.11(b) regarding
the accounts described therein without MEDIQ's prior written consent (such
consent not to be unreasonably withheld). Except as set forth in Schedule
6.11(b), MEDIQ Sub does not have any sole source suppliers (othen than in
situations where alternative sources are readily available).
ARTICLE VII
COVENANTS OF MEDIQ AND MEDIQ SUB
Each of MEDIQ and MEDIQ Sub, as the case may be, covenants to MMI and MMI
Sub, as follows:
7.1 No Solicitation. From the date hereof until the Closing or the
termination of this Agreement in accordance with Article VII hereof, whichever
occurs first, MEDIQ and MEDIQ Sub shall not, and shall cause their respective
officers, directors, agents and representatives (including without limitation
any investment banker) not to solicit, encourage, discuss or negotiate, or
authorize any Person or entity to solicit, encourage, discuss or negotiate on
MEDIQ Sub's or MEDIQ's behalf, with any other party, concerning the possible
disposition of MEDIQ Sub's business, assets or capital stock.
7.2 Absence of Certain Changes to MEDIQ Sub. Prior to the Closing, except
as expressly permitted or contemplated hereby, MEDIQ Sub will not, without MMI's
prior written consent (which consent shall not be unreasonably withheld):
(a) incur any additional indebtedness for money borrowed (except
indebtedness prepayable without penalty or premium) except in the ordinary
course of business or increase its obligation under the Advance Account
Obligation or any other indebtedness or obligation to MEDIQ except that
MEDIQ may loan additional funds to MEDIQ Sub pursuant to the Advance
Account Obligation which funds MEDIQ Sub may repay to MEDIQ prior to the
Closing but in no event shall the balance of the Advance Account Obligation
at the Closing be less than $12,121,000;
(b) guarantee any indebtedness or obligation of any other party;
(c) set aside or pay any dividend or distribution of assets to, or
repurchase any of MEDIQ Sub's stock from, its shareholders;
(d) issue or grant any securities or securities convertible into
capital stock or grant or issue any options, warrants or rights to
subscribe for MEDIQ Sub's capital stock or securities convertible into
MEDIQ Sub's capital stock;
(e) enter into, amend or terminate any employment agreement (except an
at-will employment agreement) or consulting agreement or any similar
agreement or arrangement;
(f) increase the compensation payable or to become payable to any of
MEDIQ Sub's officers or employees above the amount payable as of August 31,
1993, or adopt or amend any employee benefit plan or arrangement except in
the ordinary course of business;
(g) acquire or dispose of any properties or assets used in MEDIQ Sub's
business the individual value of which exceeds $15,000;
(h) permit any change in MEDIQ Sub's business as currently conducted
or the manner in which MEDIQ Sub's books and records are maintained;
(i) create or suffer to be imposed any lien, mortgage, security
interest or other charge on or against MEDIQ Sub's properties or assets,
except Permitted Liens;
(j) enter into, amend or terminate any lease of real or personal
property otherwise than in the ordinary course of business;
(k) amend MEDIQ Sub's Certificate of Incorporation or Bylaws; or
(l) engage in any activities or transactions outside the ordinary
course of MEDIQ Sub's business as currently conducted.
7.3 Maintenance of MEDIQ Sub's Business.
(a) During the period from the date hereof to the Effective Time,
MEDIQ Sub shall use its reasonable efforts to carry on and preserve its
business, goodwill and its relationships with customers, suppliers,
officers, employees, agents and others in substantially the same manner as
it did prior to the date of this Agreement. MEDIQ Sub will use all
reasonable efforts to keep and maintain the existing favorable business
relationship with each of such customers, suppliers, officers, employees
and agents. If MEDIQ Sub becomes aware of a deterioration in a
relationship with any customer, supplier, officer, employee or agent which
is material to its business, MEDIQ Sub will promptly bring such information
to the attention of MMI and will use all reasonable efforts to restore such
relationship or establish a reasonable replacement relationship, as may be
appropriate.
(b) MEDIQ Sub agrees to consult with MMI concerning any of its
material operating decisions (including, without limitation, proposed
employee hiring, layoff and termination decisions). Notwithstanding the
foregoing, MMI expressly acknowledges that MEDIQ Sub alone shall make such
operating decisions and if the Merger does not close, MMI shall have no
liability to MEDIQ or MEDIQ Sub in respect of such consultation; and if the
Merger does close, such consultation shall not affect the rights of MMI set
forth in Article X hereof.
7.4 Access to Information. Each of MEDIQ and MEDIQ Sub will give MMI and
its accountants, legal counsel and other representatives full access, during
normal business hours throughout the period prior to the Closing, to all of the
properties, books, contracts, commitments and records relating to MEDIQ Sub's
business, assets and liabilities, and each of MEDIQ and MEDIQ Sub will furnish
to MMI, its accountants, legal counsel and other representatives during such
period all such information concerning MEDIQ Sub's affairs as MMI may reasonably
request but subject to Section 13.10 below (confidentiality and nondisclosure
agreements); provided, that subject to Section 9.2(b) hereof, any furnishing
of such information pursuant hereto or any investigation by MMI shall not
affect MMI's right to rely on the representations, warranties, agreements and
covenants made by each of MEDIQ and MEDIQ Sub in this Agreement; and, provided,
further, however, that nothing contained herein shall require MEDIQ and MEDIQ
Sub to furnish any information on a 'by customer' basis, but only on an
aggregate basis except as specifically provided in Section 6.11 hereof. MEDIQ
and MEDIQ Sub shall deliver to MMI all written documentation requested by it
relating to the Intellectual Property rights of MEDIQ Sub, including without
limitation license or technology agreements for which MEDIQ Sub has contractual
arrangements subject to the provision in the preceding sentences concerning
customer information.
7.5 Transfer of MEDIQ Sub Books and Assets. MEDIQ Sub agrees, at any time
after the Closing, upon the request of MMI to do, execute, acknowledge and
deliver or to cause to be done, executed, acknowledged and delivered, all such
further acts, deeds, assignments, transfers, conveyances, power of attorney and
assurances as may be required for the better assigning, transferring, conveying
and confirming to MMI, or to its successors and assigns, or for the aiding,
assisting, collecting and reducing to possession of any or all of the books,
records and assets of MEDIQ Sub. As of or after the Closing, MEDIQ Sub and its
counsel shall provide MMI and its counsel upon request all documentation
covering all aspects of MEDIQ Sub's business operations.
7.6 Insurance. MEDIQ Sub shall keep, or cause to be kept, all insurance
policies currently maintained relating to MEDIQ Sub and its properties, or
suitable replacements therefor, in full force and effect through the close of
business on the Effective Date. Schedule 7.6 sets forth all the insurance
policies currently owned and maintained by MEDIQ Sub.
7.7 MEDIQ Consents. MEDIQ shall exercise all reasonable efforts to obtain
any consents necessary or desirable in connection with the consummation by MEDIQ
of the transactions contemplated by this Agreement.
7.8 Covenant Not to Compete. MEDIQ agrees to enter into a Non-Competition
Agreement substantially in the form attached hereto as Exhibit F with MMI and
the surviving corporation.
7.9 Commitment to Vote MMI Shares. Except with respect to the following
corporate actions and transactions, MEDIQ shall vote the MMI Shares and Warrant
Shares, if any, in accordance with the recommendation of a majority of the board
of directors of MMI for so long as (a) the board of directors of MMI has no
greater than seven members, (b) MMI shall be in compliance with the covenant set
forth in Section 8.1(c)(i) and (c) no shareholder of MMI who is a party to a
Voting Agreement shall have breached such Voting Agreement which results in a
MEDIQ Designee failing to be elected by a vote of the shareholders of MMI to the
board of directors of MMI; provided, however, that MEDIQ's obligations shall in
any event terminate upon the earlier of the distribution of the MMI Shares (i)
pursuant to Section 7.12 hereof and (ii) pursuant to an exemption from the 1933
Act and applicable state securities laws.
(a) Sale of all or substantially all of the assets of MMI, as
determined on a consolidated basis;
(b) The merger, consolidation of MMI or any direct or indirect
subsidiary of MMI which represents all of substantially all of the then
current business with or into any other entity, or the acquisition of any
entity or ongoing business;
(c) Any issuance by MMI or any direct or indirect subsidiary of MMI of
any securities, including without limitation (i) any shares of Common Stock
of MMI, (ii) any securities convertible into Common Stock or other
securities of MMI, (iii) any instrument which confers the right to acquire
any such securities and (iv) any instrument which entitles the holders
thereof to vote for the election of directors of MMI;
(d) A declaration of any dividends or other distributions, or the
redemption by MMI or any direct or indirect subsidiary of MMI of any
securities; and
(e) Any transaction to be entered into between MMI and any affiliate
of MMI in which MMI has a material economic interest.
7.10 Standstill. MEDIQ shall have executed and delivered to MMI as of the
date hereof the Standstill Agreement in the form attached hereto as Exhibit G.
7.11 Commitment to Favorable Vote. MEDIQ agrees to vote all shares of
MEDIQ Sub Common Stock held by it in favor of the approval of this Agreement and
the transactions contemplated herein.
7.12 Commitment to Distribute MMI Shares Free of Encumbrances. MEDIQ shall
hold the MMI Shares free and clear of all Encumbrances other than as
specifically contemplated hereby and shall cause the MMI Shares to be
distributed to its stockholders free and clear of all Encumbrances as soon as
practicable following the registration of the MMI Shares by MMI pursuant to the
terms and conditions of Article XI hereof, but in no event later than 60 days
following such registration; provided, however, that MEDIQ may distribute the
MMI Shares to its stockholders without registration thereof but only if Wilson,
Sonsini, Goodrich & Rosati shall have delivered to MMI, in a form reasonably
acceptable to MMI and its legal counsel, its legal opinion that such
distribution shall not violate Federal or applicable state securities laws and
that such shares shall be freely tradeable by Persons not 'affiliates' (as
defined in the 1933 Act) of MMI.
7.13 Merger Expenses. MEDIQ Sub shall not incur in excess of $200,000 in
the aggregate for all the out-of-pocket fees and expenses of counsel and
accountants, incurred by MEDIQ Sub in connection with the negotiation of the
transactions contemplated hereby and the consummation of the Merger.
7.14 Qualifications, Approvals. To the extent that MEDIQ Sub is not
qualified to do business and in good standing in any jurisdiction, MEDIQ Sub
shall use its reasonable efforts to become so qualified and in good standing
prior to the Effective Time. MEDIQ Sub shall use its reasonable efforts to
obtain such approvals and consents, prior to the Effective Time, as may be
required to avoid any breach, violation, default, termination or forfeiture set
forth on Schedule 4.4(b) or Section 4.4(c)(iv).
ARTICLE VIII
COVENANTS OF MMI
MMI covenants to MEDIQ and MEDIQ Sub, as the case may be, as follows:
8.1 Nomination of Two Directors to MMI Board.
(a) As of the Closing and thereafter until the distribution by MEDIQ
of the MMI Shares to its stockholders, MMI shall cause two individuals
designated in writing by MEDIQ (collectively, the 'MEDIQ Designees')
after the Closing Date and not later than 60 days in advance of the next
meeting held for the purpose of electing directors to be nominated for
election to the board of directors of MMI; provided, however, that MEDIQ
in its written designation of such individuals shall provide MMI with (i)
such information regarding each designee proposed by MEDIQ as would be
required to be included in a proxy statement filed pursuant to the proxy
rules of the United States Securities and Exchange Commission had the
nominee been nominated, or intended to be nominated, by the Board of
Directors of MMI, (ii) the consent of each nominee to serve as a director
of MMI if so elected and (iii) any other information reasonably requested
by MMI.
(b) In the event either MEDIQ Designee shall cease to serve as a
director of MMI prior to distribution of the MMI Shares by MEDIQ to its
stockholders, MEDIQ shall have the right, (i) unless in breach of its
obligation to distribute the MMI Shares in accordance with Section 7.12
hereof or (ii) upon a distribution by MEDIQ of the MMI Shares or the
Warrant in violation of the 1933 Act or applicable state securities laws,
to designate another individual, reasonably acceptable to a majority of the
other members of the board of directors of MMI, to fill the vacancy created
by such cessation in order to serve as a member of the board of directors
of MMI; provided, however, that MEDIQ in its written designation of such
individual shall provide MMI with such information regarding each designee
proposed by MEDIQ as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the United States Securities and
Exchange Commission had the nominee been nominated, or intended to be
nominated, by the board of directors of MMI, and any other information
reasonably requested by MMI. The board of directors of MMI shall review
such information and determine whether such designee is reasonably
acceptable to serve as a member of the board of directors of MMI (such
chosen designee, a 'Successor') as soon as reasonably practicable following
MEDIQ's designation of such individual. The process set forth in this
Section 8.1(b) shall be repeated until such vacancy no longer exists.
(c) MMI hereby covenants and agrees (i) to exercise its reasonable and
good faith efforts as of the Effective Time and until the MMI Shares are
distributed by MEDIQ to its stockholders, to cause the MEDIQ Designees and
any Successor to serve as members of the board of directors of MMI and (ii)
as of the Closing Date and until such time as the MMI Shares are
distributed by MEDIQ to its stockholders, to cause the board of directors
of MMI to consist of no more than seven members.
8.2 Absence of Certain Changes to MMI. Prior to the Closing, except as
expressly permitted or contemplated hereby, MMI will not, without MEDIQ's prior
written consent (which consent shall not be unreasonably withheld):
(a) set aside or pay any dividend to its shareholders except (i)
dividends consistent with past practices (but not greater than $0.04 per
share) and (ii) a special dividend of $0.15 per share (not including
dividends described in subsection (i) immediately above), or make any
distribution of assets to, or repurchase any MMI Common Stock or other
securities from its shareholders;
(b) issue or grant any securities or securities convertible into
capital stock or grant or issue any options, warrants or rights to
subscribe for capital stock or securities convertible into capital stock;
(c) amend (other than an amendment to increase the compensation
payable or to become payable thereunder) or terminate the employment
contract of Mr. Alan D. Margulis as President and Chief Executive Officer;
(d) acquire or dispose of any properties or assets used in MMI's
business the individual value of which exceeds $50,000 except in the
ordinary course of business;
(e) amend MMI's Articles of Incorporation or Bylaws; or
(f) engage in any activities or transactions outside the ordinary
course of MMI's business as currently conducted.
8.3 Material Operating Decisions. Prior to the Effective Time MMI agrees
to consult with MEDIQ concerning any of its material operating decisions
(including, without limitation, proposed employee hiring, layoff and termination
decisions). Notwithstanding the foregoing MEDIQ expressly acknowledges that MMI
alone shall make such operating decisions and if the Merger does not close,
MEDIQ shall have no liability to MMI in respect to such consultation; and if the
Merger does close, such consultation shall not effect the rights of MEDIQ set
forth in Article X hereof.
8.4 Access to Information. Each of MMI and MMI Sub will give MEDIQ and
its accountants, legal counsel and other representatives full access, during
normal business hours throughout the period prior to the Closing, to all of the
properties, books, contracts, commitments and records relating to their
respective business, assets and liabilities, and each of MMI and MMI Sub will
furnish to MEDIQ, its accountants, legal counsel and other representatives
during such period all such information concerning their respective affairs as
MEDIQ may reasonably request but subject to Section 13.10 below (confidentiality
and nondisclosure agreements); provided, that, subject to Section 9.3(b) hereof,
any furnishing of such information pursuant hereto or any investigation by MEDIQ
shall not affect MEDIQ's right to rely on the representations, warranties,
agreements and covenants made by each of MMI and MMI Sub in this Agreement.
8.5 Commitment to Favorable Vote. MMI agrees to vote all shares of MMI
Sub Common Stock held by it in favor of the approval of this Agreement and the
transactions contemplated herein.
8.6 MEDIQ Guarantees. MMI will use its reasonable efforts to obtain
releases of MEDIQ from its guarantees of indebtedness of MEDIQ Sub. To the
extent any such release shall not be obtained, MMI shall indemnify MEDIQ and
hold MEDIQ harmless against all liability or obligation arising out of such
guarantees.
8.7 MMI Qualifications. To the extent that MMI is not qualified to do
business and in good standing in any jurisdiction in which it is required to be
qualified, MMI shall use its reasonable efforts to become so qualified and in
good standing prior to the Effective Time.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE PARTIES
9.1 Conditions to the Obligations of the MMI Parties and the MEDIQ
Parties. The respective obligations of the MMI Parties and the MEDIQ Parties to
consummate the Merger shall be subject to the satisfaction prior to the Closing
of the following conditions:
(a) Shareholder Approval. MMI shall have obtained all consents and
approvals of its shareholders required to consummate the transactions
contemplated by this Agreement.
(b) No Actions. Consummation of the transactions contemplated by this
Agreement shall not violate any order, decree or judgment of any court or
governmental body having jurisdiction over any of the MMI Parties or the
MEDIQ Parties.
(c) Statutes. No statute, rule, regulation or order shall have been
enacted, promulgated or issued or deemed applicable to the Merger by any
governmental entity which would (i) make the consummation of the Merger
illegal or (ii) render MMI Sub or MEDIQ Sub unable to consummate the
Merger, except for any waiting period provisions.
(d) Warrant Agreement. MMI and MEDIQ shall have entered into that
Warrant Agreement substantially in the form attached hereto as Exhibit A
which shall be in full force and effect in accordance with its terms.
9.2 Conditions to the Obligations of the MMI Parties. The obligations of
the MMI Parties to consummate the Merger are subject to satisfaction of the
following conditions unless waived in writing by MMI:
(a) Consents and Approvals. The MEDIQ Parties shall have obtained all
consents and approvals set forth in Schedule 4.4(b) and approval of third
parties (including governmental authorities) set forth in Schedule
4.4(c)(iv) required to consummate the transactions contemplated by this
Agreement and MEDIQ Sub shall have obtained approval of its stockholder.
(b) Representations, Warranties and Agreements. All representations
and warranties made herein by the MEDIQ Parties shall be true, accurate
and correct in all material respects as of the date made and, except as
expressly contemplated in this Agreement, as if made as of the Closing.
The MEDIQ Parties shall have performed all covenants, obligations, and
agreements undertaken herein to be performed at or prior to the Closing
in all material respects. Notwithstanding anything to the contrary set
forth in Section 7.4, to the extent that, prior to the Closing, MEDIQ
delivers to MMI in accordance with Section 13.1 hereof a written statement
advising MMI that an event has occurred (specifying in reasonable detail
such event) subsequent to the date of execution of this Agreement that
would render any representation or warranty made by MEDIQ or MEDIQ Sub in
this Agreement untrue if such representation or warranty were made as of
the Closing and MMI shall subsequently waive the failure to satisfy
the condition set forth in this Section 9.2(b) with respect to such
representation or warranty, MMI shall have no remedy against MEDIQ or
MEDIQ Sub in respect of such untrue representation or warranty but shall
only have the right not to close the transactions contemplated by this
Agreement for failure to satisfy the condition set forth in this Section
9.2(b).
(c) Opinion of Counsel to MEDIQ Parties. MMI shall have received at
the Closing an opinion dated the Closing Date from each of (i) Wilson,
Sonsini, Goodrich & Rosati, counsel to MEDIQ and MEDIQ Sub, (ii) general
counsel to MEDIQ and (iii) general counsel to MEDIQ Sub, each in form and
substance satisfactory to MMI and MMI Sub and their counsel, substantially
in the form of Exhibits H-1, H-2 and H-3, respectively.
(d) Employment Agreements. Each of Mr. J. Thomas Owings and Mr. Bruce
Cree shall have entered into an Employment Agreement with MEDIQ Sub, which,
in the case of Mr. Owings shall be substantially in the form attached
hereto as Exhibit I, and each such agreement shall be in full force and
effect as of the Closing.
(e) Standstill Agreements. MMI and MMI Sub shall have received a
Standstill Agreement executed by each of MEDIQ and all Persons
constituting the MEDIQ Control Group each of which shall be in full force
and effect in accordance with its terms.
(f) Noncompetition Agreement. MEDIQ shall have entered into a
Noncompetition Agreement (the 'Noncompetition Agreement') substantially in
the form attached hereto as Exhibit F, and such Noncompetition Agreement
shall be in full force and effect in accordance with its terms.
(g) Contracts. MMI shall be satisfied that MEDIQ Sub shall have
amended or obtained waivers in respect of any and all rights pursuant to
any contract that will be necessary in order to enable the surviving
corporation to conduct MEDIQ Sub's business and operations after the
Effective Time of the Merger substantially as MEDIQ Sub did immediately
preceding the Effective Time of the Merger, such contracts being set forth
on Schedule 9.2(g).
(h) FIRPTA Certificate. MEDIQ Sub shall have delivered to MMI a
certification, meeting the requirements of Sections 1.897-2(h) and
1.1445-2(c)(3) of the United States Treasury Regulations, to the effect
that MEDIQ Sub is not, and has not been, a United States real property
holding corporation, as defined in Section 897(c)(2) of the Code, during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(i) Receipt of Documents by MMI. MMI shall have received the
following:
(i) A certificate, dated as of the Closing Date and executed by its
President and Secretary from each of MEDIQ and MEDIQ Sub, to the effect
that the conditions set forth in Sections 9.1 and 9.2 hereof with
respect to it shall have been satisfied.
(ii) Certified copies of the resolutions of the Board of Directors
of each of MEDIQ and MEDIQ Sub respecting this Agreement and the
transactions contemplated herein;
(iii) Certified copies of MEDIQ's and MEDIQ Sub's Certificate of
Incorporation and Bylaws, together with a certificate of the corporate
secretary of each that none of such documents have been amended;
(iv) One or more certificates as to the incumbency of each officer
of MEDIQ or MEDIQ Sub who has signed this Agreement, the Certificate of
Merger or any certificate, document or instrument delivered pursuant
hereto;
(v) Good standing certificates for MEDIQ and MEDIQ Sub from the
Secretaries of State of their respective states of incorporation, dated
as of a date not earlier than 5 business days prior to the Closing Date;
(vi) Copies of all third party and governmental consents, permits
and authorizations that MEDIQ or MEDIQ Sub has received in connection
with this Agreement and the transactions contemplated herein; and
(vii) Copies of the Audited Financials.
(j) Forgiveness of Advance Account Obligation. Immediately prior to
the Closing Date, MEDIQ shall forgive the Advance Account Obligation which
shall be treated as a contribution to the capital of MEDIQ Sub.
9.3 Conditions to the Obligations of the MEDIQ Parties. The obligations
of the MEDIQ Parties to consummate the Merger are subject to satisfaction of the
following conditions unless waived in writing by MEDIQ:
(a) Consents and Approvals. MMI Sub shall have obtained all consents
and approvals of its shareholders and MMI and MMI Sub shall have obtained
all consents and approvals of third parties (including governmental
authorities) set forth in Section 5.3(c) hereof required to consummate the
transactions contemplated by this Agreement.
(b) Representations, Warranties and Agreements. All representations
and warranties made herein by the MMI Parties shall be true, accurate and
correct in all material respects as of the date made and, except as
expressly contemplated in this Agreement, as if made as of the
Closing. The MMI Parties shall have performed all covenants, obligations,
and agreements undertaken herein to be performed at or prior to the Closing
in all material respects. Notwithstanding anything to the contrary set
forth in Section 8.3, to the extent that prior to the Closing MMI delivers
to MEDIQ in accordance with Section 13.1 hereof a written statement
advising MEDIQ that an event has occurred (specifying in reasonable detail
such event) subsequent to the date of execution of this Agreement that
would render any representation or warranty made by MMI or MMI Sub in this
Agreement untrue if such representation or warranty were made as of the
Closing and MEDIQ shall subsequently waive the failure to satisfy the
condition set forth in this Section 9.3(b) with respect to such
representation or warranty, MEDIQ shall have no remedy against MMI or MMI
Sub in respect of such untrue representation or warranty but shall only
have the right not to close the transactions contemplated by this Agreement
for failure to satisfy the condition set forth in this Section 9.3(b).
(c) Opinion of Counsel to MMI. MEDIQ and MEDIQ Sub shall have
received at the Closing an opinion dated the Closing Date of Gibson, Dunn &
Crutcher, counsel to MMI and MMI Sub, in form and substance satisfactory to
MEDIQ and MEDIQ Sub and their counsel, substantially in the form of Exhibit
J.
(d) Commitment to Vote. Each shareholder of MMI Common Stock listed
on Schedule 9.3(d) shall have entered into a voting agreement (each, a
'Voting Agreement') to vote in favor of this Agreement and the transactions
contemplated herein substantially in the form of Exhibit K which shall be
in full force and effect in accordance with its terms.
(e) Receipt of Documents by MEDIQ. MEDIQ shall have received the
following:
(i) A certificate, dated as of the Closing Date and executed by its
President and Secretary from each of MMI and MMI Sub, to the effect that
the conditions set forth in Sections 9.1 and 9.3 hereof with respect to
it shall have been satisfied.
(ii) Certified copies of the resolutions of the Board of Directors
of each of MMI and MMI Sub respecting this Agreement and the
transactions contemplated herein;
(iii) Certified copies of MMI's and MMI Sub's Articles of
Incorporation or Certificate of Incorporation, as the case may be, and
their respective Bylaws, together with a certificate of the corporate
secretary of each that none of such documents have been amended;
(iv) One or more certificates as to the incumbency of each officer
of MMI or MMI Sub who has signed the Agreement, the Certificate of
Merger or any certificate, document or instrument delivered pursuant
hereto;
(v) Good standing certificates for MMI and MMI Sub from the
Secretaries of State of their respective states of incorporation,
dated as of a date not earlier than 5 business days prior to the
Closing Date; and
(vi) Copies of all third party and governmental consents, permits
and authorizations that MMI or MMI Sub has received in connection with
this Agreement and the transactions contemplated herein.
ARTICLE X
INDEMNITY
10.1 Indemnification of MMI and the Surviving Corporation. MEDIQ agrees
to indemnify, defend and hold harmless MMI, and the surviving corporation from
and against and shall reimburse MMI and the surviving corporation against and in
respect of any and all Losses that MMI or the surviving corporation shall incur
or suffer and which arise from or are attributable to, by reason of or in
connection with any breach or inaccuracy of or any failure to perform or comply
with any of MEDIQ's or MEDIQ Sub's representations, warranties, agreements or
covenants contained in this Agreement, including all schedules and certificates
referred to herein or officers' certificates required to be delivered hereunder;
provided, however, that indemnification for matters specifically contemplated by
Section 11.6 shall be governed by such section and not this Section 10.1.
The indemnity obligations of MEDIQ pursuant to this Section 10.1 for a
breach or inaccuracy of or a failure to perform or comply with any or all of
such representations, warranties, covenants and agreements shall terminate upon
the earlier of (i) the distribution of the MMI Shares to the stockholders of
MEDIQ pursuant to a registration statement prepared by MMI in accordance with
Article XI hereof and (ii) April 30, 1995 (the earlier date, the
'Indemnification Cut-off Date'), except with respect to the obligations,
representations and warranties set forth in Section 6.8(i) hereof (tax matters)
which shall terminate sixty days following the expiration of the statute of
limitations applicable to the Tax with respect to which the representation or
warranty applies (the 'Tax Indemnification Cut-off Date'), and, in either case,
except to the extent that a Notice (as defined in Section 10.3 below) has been
delivered to MEDIQ prior to the Indemnification Cut-off Date or the Tax
Indemnification Cut-off Date, as applicable in respect of claims for
indemnification set forth in such Notice.
Except as set forth in the immediately succeeding sentence, MEDIQ shall
have no obligations under this Section 10.1 unless and until the aggregate
amount of liability for Losses to MMI and the surviving corporation exceeds
$300,000, whereupon MEDIQ shall be liable to indemnify for all such amounts over
$300,000 up to a maximum aggregate of Ten Million Dollars ($10,000,000).
In any case in which claims for indemnification have been asserted by MMI
or the surviving corporation and have been set forth in a Notice, all Parties
agree that the indemnity obligations of MEDIQ with respect to such matters shall
continue in full force and effect until such matters have been settled by
agreement of the Parties or by resolution of such matters in accordance with the
terms of this Agreement. Subject to Section 9.2(b) no
disclosure by MEDIQ or MEDIQ Sub other than the disclosure contained in this
Agreement, including the schedules hereto, nor any investigation made by or on
behalf of MMI or MMI Sub with respect to MEDIQ or MEDIQ Sub shall be deemed to
affect MMI's reliance on the representations, warranties, covenants and
agreements made by MEDIQ or MEDIQ Sub contained in this Agreement
and shall not constitute a waiver of MMI's or the surviving corporation's
rights to indemnity as herein provided for the breach or inaccuracy of or
failure to perform or comply with any of MEDIQ's or MEDIQ Sub's representations,
warranties, covenants or agreements under this Agreement.
10.2 Indemnification of MEDIQ. MMI agrees to indemnify, defend and hold
harmless MEDIQ from and against and shall reimburse MEDIQ against and in respect
of any and all Losses that MEDIQ shall incur or suffer and which arise from or
are attributable to, by reason of or in connection with any breach or inaccuracy
of or any failure to perform or comply with any of MMI's representations,
warranties, agreements or covenants contained in this Agreement, including all
schedules and certificates referred to herein and officers' certificates
required to be delivered hereunder; provided, however, that indemnification for
matters specifically contemplated by Section 11.6 shall be governed by such
section and not this Section 10.2.
The indemnity obligations of MMI pursuant to this Section 10.2 for a breach
or inaccuracy of or a failure to perform or comply with any or all of such
representations, warranties, covenants and agreements shall terminate upon the
Indemnification Cut-off Date, except to the extent a Notice (as defined in
Section 10.3) has been delivered to MMI prior to the Indemnification Cut-off
Date in respect of claims for indemnification set forth in such Notice.
MMI shall have no obligations under this Section 10.2 unless and until the
aggregate amount of liability for Losses to MEDIQ exceeds $300,000, whereupon
MMI shall be liable to indemnify MEDIQ for all such amounts over $300,000 up to
a maximum aggregate of Ten Million Dollars ($10,000,000).
In any case in which claims for indemnification have been asserted by MEDIQ
and have been set forth in a Notice, all Parties agree that the indemnity
obligations of MMI with respect to such matters shall continue in full force and
effect until such matters have been settled by agreement of the Parties or by
resolution of such matters in accordance with the terms of this
Agreement. Subject to Section 9.3(b), no disclosure by MMI or MMI Sub other
than the disclosure contained in this Agreement, including the schedules hereto,
nor any investigation made by or on behalf of MEDIQ or MEDIQ Sub, with respect
to MMI or MMI Sub shall be deemed to affect MEDIQ's reliance on the
representations, warranties, covenants and agreements made by MMI or MMI Sub
contained in this Agreement and shall not constitute a waiver of MEDIQ's rights
to indemnity as herein provided for the breach or inaccuracy of or failure to
perform or comply with any of MMI's or MMI Sub's representations, warranties,
covenants or agreements under this Agreement.
10.3 Procedure for Indemnification
(a) In the event that a Party shall incur or suffer any Losses in
respect of which indemnification may be sought by such party pursuant to
the provisions of this Article X, the party seeking to be indemnified
hereunder (the 'Indemnitee') shall assert a claim for indemnification by
written notice (a 'Notice') to the party from whom indemnification is
sought (the 'Indemnitor') briefly stating the nature and basis of such
claim. In the case of Losses arising by reason of any third party claim,
the Notice shall be given within 25 days of the filing or other written
assertion of any such claim against the Indemnitee, but the failure of the
Indemnitee to give the Notice within such time period shall not relieve
the Indemnitor of any liability that the Indemnitor may have to the
Indemnitee except to the extent that the Indemnitor is actually prejudiced
thereby; provided, however, that any such notice shall be given no later
than the Indemnification Cut-off Date, or the Tax Indemnification Cut-off
Date, as applicable.
(b) The Indemnitee shall provide to the Indemnitor on request all
information and documentation reasonably necessary to support and verify
any Losses which the Indemnitee believes give rise to a claim for
indemnification hereunder and shall give the Indemnitor reasonable access
to all books, records and personnel in the possession or under the control
of the Indemnitee which would have bearing on such claim.
(c) In the case of third party claims for which indemnification is
sought, the Indemnitor shall have the option (i) to conduct any proceedings
or negotiations in connection therewith, (ii) to take all other steps to
settle or defend any such claim (provided that the Indemnitor
shall not settle any such claim without the
consent of the Indemnitee, which consent shall not be unreasonably
withheld) and (iii) to employ counsel to contest any such claim or
liability in the name of the Indemnitee or otherwise. In any event, the
Indemnitee shall be entitled to participate at its own expense with its own
counsel in any proceedings relating to any third party claim. The
Indemnitor shall, within 25 days of receipt of the Notice, notify the
Indemnitee of its intention to assume the defense of the claim. Until the
Indemnitee has received notice of the Indemnitor's election whether to
defend any claim, the Indemnitee shall take reasonable steps to defend (but
may not settle) such claim and the reasonable costs and expenses (including
the reasonable fees and expenses of counsel) in connection therewith shall
be reimbursed by Indemnitor if and to the extent the claim itself is one
for which indemnification is owing hereunder. If the Indemnitor shall
decline to assume the defense of any such claim, or shall fail to notify
the Indemnitee within 25 days after receipt of the notice of the
Indemnitor's election to defend such claim, the Indemnitee may settle such
claim (provided that any such settlement without the prior written consent
of the Indemnitor shall not be determinative of the amount of any
Loss). If the Indemnitor notifies the Indemnitee that it wishes to accept
a bona fide written offer from any such claimant or plaintiff (which offer
includes a release of the Indemnitor from all liability in respect of such
claim), and the Indemnitee does not consent to such settlement, the
Indemnitor shall not be liable under this Section 10.3 for the amount by
which any subsequent settlement or judgment with respect to such claim
exceeds such bona fide written settlement offer. The expenses of all
proceedings, contests or lawsuits in respect of such claims shall be borne
by the Indemnitor if and to the extent such third party claim itself is one
for which indemnification is owing hereunder. Regardless of which Party
shall assume the defense of the claim, the Parties agree to cooperate fully
with one another in connection therewith. If and to the extent the
Indemnitor is responsible pursuant hereto to indemnify the Indemnitee in
respect of a third party claim then within 10 days after the occurrence of
a settlement or judgment with respect to such third party claim, the
Indemnitor shall deliver to the Indemnitee, at the Indemnitor's option
either: (a) the number of shares (in whole shares) of MMI Common Stock that
have an aggregate value (valued at $5.25 per share) most nearly equal to
the amount of any Losses (or such portion thereof as the
Indemnitor shall be responsible for pursuant to the provisions hereof), or
(b) cash equal to the amount of any Losses (or such portion thereof as the
Indemnitor shall be responsible for pursuant to the provisions hereof).
In the event that any Losses incurred by the Indemnitee do not involve
payment by the Indemnitee of a third party claim, then, if and to the
extent the Indemnitor is responsible pursuant hereto to indemnify the
Indemnitee against such Losses, the Indemnitor shall within 10 days after
agreement on the amount of Losses or the determination of the amount by
an arbitrator in accordance with Section 10.4 hereof deliver to the
Indemnitee at the Indemnitor's option either: (a) the number of shares
(in whole shares) of MMI Common Stock that have an aggregate value (valued
at $5.25 per share) most nearly equal to the amount of such Losses
(or such portion thereof as the Indemnitor shall be responsible for
pursuant to the provisions hereof), or (b) cash equal to the amount of
such Losses (or the portion thereof as the Indemnitor shall be responsible
for pursuant to the provisions hereof). Any shares of MMI Common Stock
delivered by (i) MEDIQ to MMI to satisfy Losses shall be cancelled and
(ii) MMI to MEDIQ to satisfy Losses shall be deemed fully paid and
nonassessable.
10.4 Arbitration. Any controversy involving a claim by an indemnified
party pursuant to this Article X shall be finally settled by arbitration in Los
Angeles, California, in accordance with the then-current Commercial Arbitration
Rules of the American Arbitration Association, and judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. Such arbitration shall be conducted by an arbitrator chosen by mutual
agreement of MMI and MEDIQ. Failing such agreement, the arbitration shall be
conducted by 3 independent arbitrators, none of whom shall have any competitive
interest with MMI or MEDIQ: MMI shall choose one such arbitrator, MEDIQ shall
choose one such arbitrator, and such two arbitrators shall mutually select a
third arbitrator. Any decision of two such arbitrators shall be binding on MMI
and MEDIQ. There shall be limited discovery prior to the arbitration hearing,
subject to the discretion of the arbitrators, as follows: (a) exchange of
witness lists and copies of documentary evidence and documents related to or
arising out of the issues to be arbitrated, (b) depositions of all party
witnesses, and (c) such other depositions as may be allowed by the arbitrator
upon a showing of good cause. Depositions shall be conducted in accordance with
the California Code of Civil Procedure. Each party shall pay its own costs and
expenses (including counsel fees) of any such arbitration except that the
arbitrator can compel one Party to pay all or a portion of the other Party's
costs and expenses.
10.5 Survivability of Representations, Warranties, Covenants and
Agreements. Except as expressly set forth herein, each Party's respective
representations, warranties, covenants and agreements contained in this
Agreement and any other document delivered in connection herewith shall
terminate and be of no further force and effect after the date which is the
Indemnification Cut-off Date, except with respect to (i) the representations and
warranties set forth in Section 6.8(i) hereof (tax matters) which shall
terminate and be of no further force and effect after the date which is the Tax
Indemnification Cut-off Date and (ii) the covenants and agreements of either MMI
or MEDIQ set forth herein which by their terms pertain to periods following the
Indemnification Cut-off Date.
10.6 Exclusive Remedy. Except as set forth herein, the respective
indemnity obligations of MMI and MEDIQ pursuant to this Article X, (together
with all of MMI Parties' and MEDIQ Parties' representations, warranties,
covenants and other agreements) shall survive the Closing and the indemnity
obligations set forth in this Article X, absent fraud, shall be the exclusive
remedy of MMI and MEDIQ, with respect to matters resulting in Losses; provided
that the Parties recognize and agree that in the event of a breach by the MMI
Parties on the one hand or the MEDIQ Parties on the other hand of the covenants
and agreements set forth in Sections 6.5, 7.5, 7.9, 7.11, 7.12, 8.1, 8.5, and
Article 11 that money damages would not be an adequate remedy to either for such
breach and, even if money damages were adequate, it would be impossible to
ascertain or measure with any degree of accuracy the damages sustained by the
respective Parties therefrom and, accordingly, if there should be a breach or
threatened breach of such sections, the Party to be harmed thereby shall be
entitled to an injunction restraining the other or others from any breach
without showing or proving actual damages. Nothing in the preceding sentence
shall limit or otherwise affect any remedies the Parties may otherwise have
against each other under Applicable Law. Notwithstanding anything to the
contrary contained herein, such covenants and agreements shall survive the
Closing and terminate only upon expiration of the applicable statutes of
limitations.
ARTICLE XI
REGISTRATION RIGHTS
11.1 Definitions. For purposes of this Article XI:
(a) The terms 'register,' 'registered,' and 'registration' refer to a
registration effected by preparing and filing a registration statement in
compliance with the 1933 Act and the declaration or ordering of
effectiveness of such registration statement; and
(b) The term 'Registrable Securities' refers to the MMI Shares, the
Noncompetition Shares, the Warrant and Warrant Shares and any MMI Common
Stock issued as a dividend or other distribution with respect to, or in
exchange or in replacement thereof except that the MMI Shares, the
Noncompetition Shares, the Warrant or Warrant Shares (or any particular
shares thereof) shall cease to be Registrable Securities when and to the
extent (i) except as otherwise contemplated by Section 11.2(b) hereof, a
registration statement with respect to the sale of the MMI Shares, the
Noncompetition Shares, the Warrant or Warrant Shares has become effective
under the 1933 Act and the MMI Shares, the Noncompetition Shares, the
Warrant and Warrant Shares have been disposed of in accordance with such
registration statement; or (ii) the MMI Shares, the Warrant or Warrant
Shares cease to be outstanding; or (iii) except as otherwise contemplated
by Section 11.2(b), the MMI Shares shall have been distributed to the
stockholders of MEDIQ pursuant to the provisions beginning 'provided,
however' in Section 7.12 hereof.
11.2 Registration.
(a) MMI shall employ its reasonable efforts to cause all Registrable
Securities to be registered under the 1933 Act as soon as reasonably
practicable after the filing of its annual report on Form 10-K for the
fiscal year ending April 28, 1995; provided, however, that if MMI shall
furnish to MEDIQ a certificate signed by its President stating that, in the
good faith judgment of the board of directors of MMI, it would be
detrimental to MMI or its shareholders for a registration statement to be
filed in the near future, then MMI shall have the right to defer the
filing of a registration statement with respect to such Registrable
Securities until such time as the board of directors of MMI deems
advisable, but in no event later than November 30, 1995, and thereafter
shall employ its reasonable efforts to cause all Registrable Securities
to be registered under the 1933 Act as soon as practicable.
MMI shall be obligated to effect only one registration pursuant to this
Article XI.
(b) The registration referred to in Section 11.2(a) hereof shall cover
the subsequent sale of Registrable Securities distributed to any MEDIQ
stockholders who may also then be deemed an 'affiliate' (as defined in the
1933 Act) of MMI (each such Person, an 'Affiliate Stockholder'), and MMI
shall cause the registration statement with respect to such Affiliate
Stockholders' Registrable Securities to remain effective for 180 days after
first becoming effective; provided, however, that no Affiliate Stockholder
shall sell an amount of Registrable Securities to any one purchaser
constituting more than 5% of then outstanding MMI Common Stock pursuant to
the registration statement.
(c) MMI and MEDIQ shall enter into a 'piggy-back' registration rights
agreement which shall contain customary terms and conditions,
including without limitation (i) the transfer of such rights from MEDIQ to
Affiliate Stockholders upon distribution pursuant to Section 7.12 hereof,
(ii) the period such rights shall survive which shall be for a period of
two years following the expiration of the 180-day period referred to in
Section 11.2(b) above and (iii) indemnification provisions substantially
similar to those provided for in Section 11.6 hereof.
(d) Nothwithstanding anything to the contrary in Section 13.13 hereof,
it is expressly agreed that the Affiliate Stockholders at the time of the
distribution pursuant to Section 7.12 are intended thrid party
beneficiaries of Article XI as applicable to such Affiliate Stockholders.
11.3 Obligations of MMI. Whenever required under paragraph 11.2 to use
its reasonable efforts to effect the registration of any Registrable Securities,
MMI shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of
the 1933 Act with respect to the disposition of all securities covered by
such registration statement.
(c) Furnish to MEDIQ such numbers of copies of a prospectus, and such
other documents as it may reasonably request in order to facilitate the
disposition of Registrable Securities owned by it.
(d) Use its reasonable efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue
Sky laws of such jurisdictions as shall be reasonably appropriate for the
distribution of the securities covered by the registration statement,
provided that MMI shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
11.4 Condition Precedent. It shall be a condition precedent to the
obligations of MMI to take any action pursuant to this Article XI that MEDIQ
shall furnish to MMI information regarding MEDIQ, the Registrable Securities
held by MEDIQ and other such information as MMI shall reasonably request and as
shall be required in connection with the action to be taken by MMI.
11.5 Expenses of Registration. All expenses incurred by MMI in connection
with preparation of a registration statement, I including without limitation all
registration and qualification fees, printers' and accounting fees, fees and
disbursements of counsel for MMI shall be borne by MMI.
11.6 Indemnification. Notwithstanding anything to the contrary set forth
in Article X hereof, in connection with the Registrable Securities being
included in a registration statement under this Article XI:
(a) To the extent permitted by law, MMI will indemnify and hold
harmless MEDIQ and each Person, if any, who controls MEDIQ within the
meaning of the 1933 Act, against any losses, claims, damages or liabilities
to which they may become subject under the 1933 Act insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based on any untrue or alleged untrue statement of any material fact
contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments
or supplements thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be
therein, or necessary to make the statements therein not misleading;
and will reimburse MEDIQ or such controlling person of MEDIQ for any
legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity
agreement contained in this paragraph 11.6(a) shall not (i) apply
to amounts paid in settlement of any such loss, claim, damage, liability,
or action if such settlement is effected without the consent of MMI (which
consent shall not be unreasonably withheld); or (ii) apply to any such case
for any such loss, claim, damage, liability, or action to the extent that
it arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in connection with such
registration statement, preliminary prospectus, final prospectus, or
amendments or supplements thereto, in reliance upon and in conformity with
written information furnished by MEDIQ or such controlling person of MEDIQ
for use in connection with such registration.
(b) To the extent permitted by law, MEDIQ will indemnify and hold
harmless MMI, each of its directors, each of its officers who have signed
the registration statement, each Person, if any, who controls MMI within
the meaning of the 1933 Act, and each agent for MMI against any losses,
claims, damages or liabilities to which MMI or any such director, officer,
controlling person or agent of MMI may become subject under the 1933 Act
insofar as such losses, claims, damages or liabilities arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in such registration statement, preliminary or final
prospectus, or amendments or supplements thereto, in reliance upon and in
conformity with information furnished by MEDIQ for use in connection with
such registration; and MEDIQ will reimburse any legal or other expenses
reasonably incurred by MMI or any such director, officer, controlling
person or agent of MMI in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that
the indemnity agreement contained in this paragraph 11.6(b) shall not
apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of
MEDIQ (which consent shall not be unreasonably withheld). This indemnity
will be in addition to any liability which MEDIQ may otherwise have.
(c) Any Person entitled to indemnification hereunder will: (i) give
notice to the indemnifying party of any claim with respect to which it
seeks indemnification; and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is
assumed, the indemnifying party will not be subject to any liability for
any settlement made without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or
elects not to, assume the defense of a claim will not be obligated to pay
the fees and expenses of more than one counsel for all parties indemnified
by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may
exist between such indemnified party and any other such indemnified parties
with respect to such claim. The failure to notify an indemnifying party of
the commencement of any such action, if prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability
to the indemnified party under this paragraph, but the omission to notify
the indemnifying party will not relieve him of any liability that he may
have to any indemnified party otherwise than under this paragraph.
11.7 Transfer of Registration Rights. The registration rights of MEDIQ
under this Article XI shall not be transferred to any transferee who acquires
any shares of the Registrable Securities without the prior written consent of
MMI which may be withheld for any reason or no reason at all, provided, however,
that the registration rights of MEDIQ under this Article XI may be transferred
to one transferee who acquires all the shares of Registrable Securities in a
transaction where MEDIQ is selling all of its outstanding capital stock or
substantially all of its assets or where MEDIQ is merged into another
corporation and is not the surviving entity with the prior written consent of
MMI which shall not be unreasonably withheld.
ARTICLE XII
TERMINATION
12.1 Termination by Mutual Consent. Notwithstanding approval of the
Merger by MMI, MMI Sub, MEDIQ or MEDIQ Sub, or their respective stockholders,
this Agreement may be terminated (i) at any time prior to the Closing by written
consent of MMI and MEDIQ or (ii) by either MMI or MEDIQ if the Closing does
not occur within 120 days of the date of this Agreement provided that no MMI
Party as to MMI and no MEDIQ Party as to MEDIQ is in breach of any of its
representations, warranties, consents or agreements contained herein.
12.2 Termination by MMI. MMI may terminate this Agreement at any time
prior to the Closing by delivery of written notice to MEDIQ if: (a) MMI
determines in the exercise of its reasonable judgment that the pendency of any
lawsuit or the institution or threat of any governmental or administrative
action, investigation or inquiry which questions the validity or the legality of
the transactions contemplated hereby or which seeks to prevent, restrain, change
or obtain damages in respect of such transactions, makes it inadvisable to
consummate the transactions contemplated hereby, notwithstanding that such
lawsuit, action, investigation or inquiry may be deemed to be without merit; (b)
MEDIQ or MEDIQ Sub have breached or violated this Agreement in any material
respect and, if such breach or violation is curable, has failed to cure such
violations within 10 days of receiving written notice thereof.
12.3 Termination by MEDIQ. MEDIQ may terminate this Agreement at any time
prior to the Closing by delivery of written notice to MMI if: (a) MEDIQ
determines in the exercise of its reasonable judgment that the pendency of any
lawsuit or the institution or threat of any governmental or administrative
action, investigation or inquiry which questions the validity or the legality of
the transactions contemplated hereby or which seeks to prevent, restrain, change
or obtain damages in respect of such transactions, makes it inadvisable to
consummate the transactions contemplated hereby, notwithstanding that such
lawsuit, action, investigation or inquiry may be deemed to be without merit; (b)
MMI or MMI Sub has breached or violated this Agreement in any material respect
and, if such breach or violation is curable, has failed to cure such violations
within 10 days of receiving written notice thereof; or (c) any representation or
warranty made by MMI or MMI Sub is false or inaccurate in any material respect
or there is any material misrepresentation or omission by either MMI or MMI Sub;
or (d) the average of the daily closing prices for 10 consecutive trading days
of the MMI Common Stock between the date of this Agreement and the second day
preceding the Closing falls below $4.00 (a 'Stock Price Default') provided MEDIQ
delivers written notice of its election to terminate within 10 business days of
the occurrence of a Stock Price Default. For purposes of this Section 12.3, the
closing price for each day shall be the last such reported sales price, or, in
case no such reported sale takes place on such day, the average of the closing
bid and asked prices for such day of the MMI Common Stock in the over-the
counter market as reported by the Nasdaq National Market System or any
comparable system.
12.4 Effect of Termination. In the event of termination as provided
above, all parties hereto shall bear their own costs associated with this
Agreement and all transactions mentioned herein and there shall be no obligation
on the part of either party's officers, directors or share/stockholders;
provided, that (a) Sections 13.5 (publicity), 13.9 (each party to bear own
costs), 13.10 (confidentiality) and 13.11 (attorneys' fees) shall survive such
termination and continue in full force and effect and (b) nothing herein will
relieve any party from liability for any breach of this Agreement prior to such
termination.
ARTICLE XIII
MISCELLANEOUS
13.1 Notices. Any notice given hereunder shall be in writing and shall be
deemed effective upon the earlier of personal delivery (including personal
delivery by facsimile) or the third day after mailing by certified or registered
mail, postage prepaid, as follows:
(a) If to MMI or MMI Sub:
MMI Medical, Inc.
1611-B Pomona Road
Corona, California 91720
Attention: President and Chief Executive Officer
Facsimile: (909) 736-3753
With a copy to:
Gibson, Dunn & Crutcher
333 South Grand Avenue
Los Angeles, California 90071
Attention: Peter F. Ziegler, Esq.
Facsimile: (213) 229-7520
(b) If to MEDIQ:
MEDIQ Incorporated
One MEDIQ Plaza
Pennsauken, New Jersey 08110
Attention: President and General Counsel
Facsimile: (609) 486-4720
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attention: Robert T. Clarkson, Esq.
Facsimile: (415) 858-4488
(c) If to MEDIQ Sub:
MEDIQ Equipment and Maintenance Services, Inc.
4330 Beltway, Suite 300
Arlington, Texas 76018
Attention: Chief Financial Officer
Facsimile: (609) 486-4720
or to such other address as any party may have furnished in writing to the
other parties in the manner provided above.
13.2 Entire Agreement; Modifications; Waiver. Except as set forth below
in Section 13.10 (confidentiality and nondisclosure agreements) and except for
the agreements contemplated herein and that certain Employee Solicitation
Agreement entered into as of March 21, 1994, this Agreement constitutes the
final, exclusive and complete understanding of the Parties with respect to the
subject matter hereof and supersedes any and all prior agreements,
understandings and discussions with respect thereto, including, without
limitation, the Letter of Understanding dated December 21, 1993, by and among
MMI, MMI Sub, MEDIQ and MEDIQ Sub. No variation or modification of this
Agreement and no waiver of any provision or condition hereof, or granting of any
consent contemplated hereby, shall be valid unless in writing and signed by the
party against whom enforcement of any such variation, modification, waiver or
consent is sought.
13.3 Captions. The captions in this Agreement are for convenience only
and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
13.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall constitute an original copy
hereof, but all of which together shall constitute one agreement.
13.5 Publicity. Except for disclosure (if any) required by any law to
which any Party is subject, the timing and content of any announcements, press
releases and public statements concerning the acquisition contemplated hereby
shall be by mutual agreement of MMI and MEDIQ.
13.6 Successors and Assigns. No Party may, without the prior express
written consent of each other party, assign this Agreement in whole or in
part. This Agreement shall be binding upon and inure to the benefit of the
respective successors and permitted assigns of the Parties hereto.
13.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California as applied to contracts
between California residents made and to be performed entirely within the State
of California.
13.8 Further Assurances. At the request of any of the Parties hereto, and
without further consideration, the other Parties agree to execute such documents
and instruments and to do such further acts as may be necessary or desirable to
effectuate the Merger.
13.9 Each Party to Bear Own Costs. Each of the Parties shall pay all
costs and expenses incurred or to be incurred by it in negotiating and preparing
this Agreement and in closing and carrying out the transactions contemplated by
this Agreement including without limitation fees and disbursement of counsel,
financial advisors and accountants, it being understood that the fees and
expenses of Wilson, Sonsini, Goodrich & Rosati and Deloitte & Touche are being
incurred by MEDIQ Sub.
13.10 Confidentiality and Nondisclosure Agreements. Except as required by
law, statute, rule or regulation, all confidential information which shall have
been furnished or disclosed by one party to the other
pursuant to this Agreement shall be held in confidence pursuant hereto or
pursuant to the confidential information non-disclosure
agreements entered into by such Parties and shall not be disclosed to any
Person other than their respective employees, directors, legal counsel,
accountants or financial advisors, with a need to have access to such
information.
13.11 Attorneys' Fees. In the event of any suit or other proceeding to
construe or enforce any provision of this Agreement or any other agreement to be
entered into pursuant hereto, or otherwise in connection with this Agreement,
the prevailing Party's or Parties' reasonable attorneys' fees and costs (in
addition to all other amounts and relief to which such Party or Parties may be
entitled) shall be paid by the other Party or Parties.
13.12 Knowledge. The terms 'knowledge' or 'know' for purposes of this
Agreement mean, with respect to those Persons holding positions set forth on
Schedule 13.12 with any of the MMI Parties or the MEDIQ Parties, as applicable,
as of the Closing Date, actual knowledge or the receipt of written notification
by such Persons.
13.13 Third Party Beneficiaries. No provision of this Agreement
shall create any third party beneficiary rights in any Person.
IN WITNESS WHEREOF, each of the parties has executed this Agreement as of
the date first above written.
<TABLE>
<S> <C>
MMI MEDICAL, INC. MEDIQ INCORPORATED
By: /s/ Alan D. Margulis By:
Alan D. Margulis
Its: President and Chief Executive Officer Its:
</TABLE>
<TABLE>
<S> <C>
MMI ACQUISITION SUBSIDIARY, INC. MEDIQ EQUIPMENT AND MAINTENANCE SERVICES, INC.
By: /s/ Alan D. Margulis By: /s/ J. Thomas Owings
Alan D. Margulis J. Thomas Owings
Its: President and Chief Executive Officer Its: President and Chief Executive Officer
</TABLE>
<PAGE>
EXHIBIT A -- Form of Warrant Agreement
WARRANT AGREEMENT
This WARRANT AGREEMENT (the 'Agreement') is made as of [__________], 1994
between MMI Medical, Inc., a California corporation ('MMI'), and MEDIQ
Incorporated, a Delaware corporation ('MEDIQ').
RECITALS
WHEREAS, in connection with that certain Agreement and Plan of
Reorganization among MMI, MMI Acquisition Subsidiary, Inc., MEDIQ and MEDIQ
Equipment and Maintenance Services, Inc. dated [______________], 1994 (the
'Reorganization Agreement'), MMI shall issue to MEDIQ (i) 2,050,000 shares (the
'MMI Shares') of $0.01 par value common stock of MMI (the 'MMI Common Stock')
and (ii) one warrant (the 'Warrant') entitling MEDIQ to purchase an aggregate of
325,000 shares of MMI Common Stock (the shares of MMI Common Stock issued upon
exercise of the Warrant are referred to herein as the 'Warrant Shares'); and
WHEREAS, in connection with the Reorganization Agreement, MMI and MEDIQ
have agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth herein and in the Reorganization Agreement, the parties hereto agree
as follows:
ARTICLE I
ISSUANCE AND DELIVERY OF THE WARRANT
1.01. Issuance of the Warrant. Subject to the Closing (as defined and as
such other capitalized terms used herein without definition are defined in the
Reorganization Agreement) having occurred MMI will issue and deliver the Warrant
to MEDIQ on the Closing Date. The Warrant shall be substantially in the form of
Exhibit 1 attached hereto. The Warrant shall be dated the Closing Date, and
shall be signed on behalf of MMI by its President or a Vice President under its
corporate seal reproduced thereon and attested by its Secretary or an Assistant
Secretary.
ARTICLE II
DURATION AND EXERCISE OF THE WARRANT
2.01. Duration of Warrant. The Warrant may be exercised on or after the
business day following the Closing and prior to the close of business on the
fourth anniversary thereof, except as otherwise provided in Article IV hereof.
2.02. Terms of Exercise. The Warrant shall entitle the holder thereof to
purchase the number of shares of MMI Common Stock stated therein, adjusted as
provided in Article III, upon payment of $6.25 per share, adjusted as provided
in Article III. Such price, as in effect from time to time as provided in
Article III, is referred to herein as the 'Exercise Price.'
2.03. Exercise of the Warrant.
(a) The Warrant shall be exercised in whole or in part by surrendering
it, together with a subscription in the form appearing on the reverse side
thereof duly executed and accompanied by a certified or official bank
check in payment of the Exercise Price.
(b) In lieu of paying the Exercise Price to MMI with respect to the
exercise of the Warrant into Warrant Shares as required by Section 2.03(a)
hereof, the holder may pay all or any portion of the Exercise Price with
respect to such Warrant Shares by surrendering the Warrant to MMI to the
extent representing Warrant Shares equal to (A) the aggregate Exercise
Price of the Warrant Shares so surrendered, divided by (B) the excess of
(1) the current market price per share of MMI Common Stock (determined as
provided in Section 3.01(d) below) on the business day immediately
preceding the date on which the Warrant is delivered to the Company for
exercise, over (2) the Exercise Price per share in effect at such time.
Any Warrant surrendered pursuant to this Section 2.03(b) shall be
accompanied by a duly completed and executed Assignment in such form as
attached to the Warrant set forth in Schedule 1 attached hereto assigning
the right to purchase surrendered Warrant Shares to the Company.
(c) The Warrant shall be exercisable during the period provided in
Section 2.01 hereof at any time in whole or from time to time in part. As
soon as practicable after the Warrant has been so exercised, MMI shall
issue and deliver or cause to be delivered to, or upon the order of, the
holder of such Warrant, in such name or names as may be directed by such
holder, a certificate or certificates for the number of full Warrant Shares
to which such holder is entitled, and cash as provided in Section 3.09 in
respect of any remaining fractional interest in a Warrant Share and, if
such Warrant shall not have been exercised in full, a new Warrant for the
number of full shares of MMI Common Stock as to which such Warrant shall
not have been exercised. Any Warrant so surrendered shall be cancelled by
or on behalf of MMI.
2.04. Common Stock Issued upon Exercise of the Warrant.
(a) All Warrant Shares, when issued in accordance with the terms
hereof, shall be duly authorized, validly issued, fully paid and
nonassessable, and shall be free and clear of all Encumbrances. MMI shall
pay all documentary stamp taxes, if any, attributable to the initial
issuance of Warrant Shares. MMI shall not be required, however, to pay any
tax imposed in connection with any transfer involved in the issue of the
Warrant Shares in a name other than that of the holder of the Warrant who
shall have exercised the same. In such case, MMI shall not be required to
issue any certificate for Warrant Shares until the person or persons
requesting the same shall have paid to MMI the amount of any such tax or
shall have established to MMI's reasonable satisfaction that the tax has
been paid or that no tax is due.
(b) Irrespective of the date of issue of certificates for any Warrant
Shares, each person in whose name any certificate is issued shall be deemed
to have become the holder of record of the Warrant Shares represented
thereby on the date on which the Warrant was exercised and payment of the
Exercise Price was tendered as provided in Section 2.03.
ARTICLE III
ANTI-DILUTION PROVISIONS
3.01. Adjustment of Exercise Price and Number of Warrant Shares. The
number of Warrant Shares purchasable upon the exercise of each Warrant
and the Exercise Price shall be subject to adjustment as follows:
(a) If MMI shall (i) pay a dividend in shares of MMI Common Stock or
make a distribution in shares of MMI Common Stock, (ii) subdivide its
outstanding shares of MMI Common Stock, (iii) combine its outstanding
shares of MMI Common Stock or (iv) issue by reclassification of its shares
of MMI Common Stock other securities of MMI (including any such
reclassification in connection with a consolidation or merger in which MMI
is the surviving corporation), the number of Warrant Shares purchasable
upon exercise of each Warrant immediately prior thereto shall be adjusted
so that the holder of each Warrant shall be entitled to receive the kind
and number of Warrant Shares or other securities of MMI which the holder
would have owned or would have been entitled to receive after the happening
of any of the events described above, had such Warrant been exercised
immediately prior to the happening of such event or any record date with
respect thereto. An adjustment made pursuant to this paragraph (a) shall
become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event. Such adjustment
shall be made successively whenever any event listed above shall occur.
(b) If MMI shall issue rights, options or warrants to all holders of
the outstanding MMI Common Stock, without any charge to such holders,
entitling them (for a period within 45 days after the record date mentioned
below) to subscribe for or purchase shares of MMI Common Stock at a price
per share which is lower at the record date mentioned below than the then
current market price per share of MMI Common Stock (as defined in paragraph
(d) below), the number of Warrant Shares thereafter purchasable upon the
exercise of each Warrant shall be determined by multiplying the number of
Warrant Shares theretofore purchasable upon exercise of each Warrant by a
fraction, the numerator of which shall be the number of shares of MMI
Common Stock outstanding on the date of issuance of such rights, options or
warrants plus the number of additional shares of MMI Common Stock offered
for subscription or purchase, and the denominator of which shall be the
number of shares of MMI Common Stock outstanding on the date of issuance of
such rights, options or warrants plus the number of shares which the
aggregate offering price of the total number of shares of MMI Common Stock
so offered would purchase at the current market price per share of MMI
Common Stock at such record date. Such adjustment shall be made whenever
such rights, options or warrants are issued, and shall become effective
immediately after the record date for the determination of stockholders
entitled to receive such rights, options and warrants.
(c) If MMI shall distribute to all holders of shares of MMI Common
Stock (including any such distribution made in connection with a
consolidation or merger in which MMI is the surviving corporation)
evidences of its indebtedness or assets (excluding cash dividends or
distributions payable out of consolidated earnings or earned surplus and
dividends or distributions referred to in paragraph (a) above or in the
paragraph immediately following this paragraph) or rights, options or
warrants, or convertible or exchangeable securities containing the right
to subscribe for or purchase shares of MMI Common Stock (excluding those
referred to in paragraph (b) above) then, in each case, the number of
Warrant Shares thereafter purchasable upon the exercise of each Warrant
shall be determined by multiplying the number of Warrant Shares
theretofore purchasable upon the exercise of each Warrant by a fraction,
the numerator of which shall be the then current market price per share of
MMI Common Stock (as defined in paragraph (d) below) on the date of such
distribution, and the denominator of which shall be the then current
market price per share of MMI Common Stock (as defined in paragraph (d)
below), less the then fair value (as determined in good faith by the
board of directors of MMI, whose determination shall be conclusive
if made in good faith) of the portion of the assets or evidences of
indebtedness so distributed or of such subscription rights, options or
warrants, or of such convertible or exchangeable securities applicable to
one share of MMI Common Stock. Such adjustment shall be made whenever
any such distribution is made, and shall become effective on the date of
distribution retroactive to the record date for the determination of
shareholders entitled to receive such distributions.
If MMI shall make a distribution to all holders of the shares of MMI
Common Stock of stock of a subsidiary or securities convertible into or
exercisable for such stock, then in lieu of an adjustment in the number of
Warrant Shares purchasable upon the exercise of each Warrant, the holder
of each Warrant, upon the exercise thereof at any time after such
distribution, shall be entitled to receive from MMI, such subsidiary or
both, as MMI shall determine, the stock or other securities to which such
holder would have been entitled if such holder had exercised such Warrant
immediately prior thereto, all subject to further adjustment as provided
in this Section 3.01; provided, however, that no adjustment in respect of
dividends or interest on such stock or other securities shall be made
during the term of a Warrant or upon the exercise of a Warrant.
(d) For the purpose of any computation under (i) Section 2.03(b), (ii)
paragraphs (b) or (c) of this Section 3.01 and (iii) Section 3.05, the
current market price per share of MMI Common Stock at any date shall be the
average of the daily closing prices for 20 consecutive trading days
commencing 30 trading days before the date of such computation. The closing
price for each day shall be the last such reported sales price regular way
or, in case no such reported sale takes place on such day, the average of
the closing bid and asked prices regular way for such day, in each case on
the principal national securities exchange on which the shares of MMI
Common Stock are listed or admitted to trading or, if not listed or
admitted to trading, the closing sale price, or if none available, the
average of the closing bid and asked prices of the MMI Common Stock in the
over-the-counter market as reported by the NASDAQ National Market System
or any comparable system or if not approved for quotation on the NASDAQ
National Market System or any comparable system, the average of the
closing bid and asked prices as furnished by two members of the National
Association of Securities Dealers, Inc. selected from time to time by MMI
for that purpose.
(e) No adjustment in the number of Warrant Shares purchasable
hereunder shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the number of Warrant
Shares purchasable upon the exercise of each Warrant; provided, however,
that any adjustments which by reason of this paragraph (e) are not required
to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations shall be made to the nearest
one-thousandth of a share.
(f) Whenever the number of Warrant Shares purchasable upon the
exercise of each Warrant is adjusted, as herein provided, the Exercise
Price payable upon exercise of each Warrant shall be adjusted by
multiplying the Exercise Price immediately prior to such adjustment by a
fraction, the numerator of which shall be the number of Warrant Shares
purchasable upon the exercise of each Warrant immediately prior to such
adjustment, and the denominator of which shall be the number of Warrant
Shares purchasable immediately thereafter.
(g) No adjustment in the number of Warrant Shares purchasable upon the
exercise of each Warrant need be made under paragraphs (b) and (c) if MMI
issues or distributes to each holder of Warrants the rights, option,
warrant, or convertible or exchangeable securities, or evidences of
indebtedness or assets referred to in those paragraphs which each holder of
Warrants would have been entitled to receive had the Warrants been
exercised prior to the happening of such event or the record date with
respect thereto. No adjustment need be made for a change in the par value
of the Warrant Shares.
(h) In the event that at any time, as a result of an adjustment made
pursuant to paragraph (a) above, the holders of Warrant shall become
entitled to purchase any securities of MMI other than shares of MMI Common
Stock, thereafter the number of such other shares so purchasable upon
exercise of each Warrant and the Exercise Price of such shares shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Warrant
Shares contained in paragraphs (a) through (g), inclusive, above, and the
provisions of Sections 2.01 (duration), 2.02 (terms of exercise), 3.02
(notice) and 3.03 (no adjustment for dividends), with respect to the
Warrant Shares, shall apply on like terms to such other securities.
(i) Upon the expiration of any rights, options, warrants or conversion
or exchange privileges, if any thereof shall not have been exercised, the
Warrant Price and the number of shares of MMI Common Stock purchasable
upon the exercise of each Warrant shall, upon such expiration, be
readjusted and shall thereafter be such as it would have been had it been
originally adjusted (or had the original adjustment not been required, as
the case may be) as if (i) the only shares of MMI Common Stock so issued
were the shares of MMI Common Stock, if any, actually issued or sold upon
the exercise of such rights, options, warrants or conversion or exchange
rights and (ii) such shares of MMI Common Stock, if any, were issued or
sold for the consideration actually received by MMI upon such exercise
plus the aggregate consideration, if any, actually received by MMI for the
issuance, sale or grant of all such rights, options, warrants or
conversion or exchange rights whether or not exercised; provided,
however, that no such readjustment shall have the effect of increasing the
Warrant Price or decreasing the number of shares of MMI Common Stock
purchasable upon the exercise of each Warrant by an amount in excess of
the amount of the adjustment initially made in respect to the issuance,
sale or grant of such rights, options, warrants or conversion or exchange
rights.
3.02. Notice of Change in Shares Issuable, etc. Whenever the securities
issuable or deliverable in exchange for Warrant is changed pursuant to this
Article III, MMI promptly shall prepare a certificate executed by its chief
financial officer, setting forth a brief statement of the facts requiring the
change and specifying the effective date of such change and the number or amount
of, and describing the shares or other securities issuable or deliverable in
exchange for, each Warrant as so changed. MMI shall mail such a notice to each
holder of Warrant at the address registered with MMI. Failure to file such
statement or to publish such notice, or any defect in such statement or notice,
shall not affect the legality or validity of any such change.
3.03. No Adjustment for Dividends. Except as provided in Section 3.01, no
adjustment in respect of any dividends shall be made during the term of a
Warrant or upon the exercise of a Warrant.
3.04. Form of Warrant. The form of Warrant need not be changed because of
any change in the amounts or nature of securities issuable or deliverable
pursuant to this Article III, and Warrants issued after such change may state
the same number of shares issuable in exchange for the Warrant as is stated in
the Warrant initially issued pursuant to this Agreement. However, MMI at any
time, in its sole discretion (which shall be conclusive), may change the form of
Warrant to reflect any such change in the amounts or nature of securities
issuable or deliverable upon exercise, provided such change in form does not
otherwise affect the substance thereof; and any Warrant thereafter issued or
countersigned, whether in exchange or substitution for an outstanding Warrant or
otherwise, may be in the form as so changed.
3.05. Cash in Lieu of Fractional Shares. MMI shall not be required to
issue fractional shares of MMI Common Stock upon exercise of Warrants. If, by
reason of any change be made pursuant to this Article III, the holder of any
Warrant would be entitled, upon the exercise of any rights evidenced thereby, to
receive a fractional interest in a share, MMI, upon such exercise, shall
purchase such fractional interest for an amount in cash equal to the current
market price per share of MMI Common Stock (as defined in Section 3.01(d)) on
the trading day immediately preceding the date the Warrant is presented for
exercise multiplied by such fractional interest.
ARTICLE IV
PRESERVATION OF PURCHASE RIGHTS UPON MERGER, CONSOLIDATION, ETC.
In case of any consolidation of MMI with or merger of MMI into another
corporation or in case of any sale, transfer or lease to another corporation of
all or substantially all the property of MMI, MMI or such surviving or
purchasing corporation, as the case may be, shall execute with each holder of
Warrants an agreement that each holder shall have the right thereafter upon
payment of the Exercise Price in effect immediately prior to such action to
purchase upon exercise of each Warrant the kind and amount of shares and other
securities, cash and property which the holder would have owned or would have
been entitled to receive after the happening of such consolidation, merger,
sale, transfer or lease had such Warrant been exercised immediately prior to
such action; provided, however, that no adjustment in respect of dividends,
interest or other income on or from such shares or other securities, cash and
property shall be made during the term of a Warrant or upon the exercise of a
Warrant. Such agreement shall provide for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in Article
III. The provisions of this Article IV shall similarly apply to successive
consolidations, mergers, sales, transfers or leases.
ARTICLE V
OTHER PROVISIONS FOR PROTECTION OF WARRANT HOLDERS
5.01. Reservation of Shares. MMI at all times shall reserve and keep
available such number of shares of its authorized but unissued MMI Common Stock
as from time to time shall be sufficient to permit the exercise of all
outstanding Warrants. If at any time the number of authorized but unissued
shares of MMI Common Stock shall not be sufficient for such purpose, MMI will
take such action as, in the opinion of its counsel, may be necessary to
increase its authorized but unissued MMI Common Stock to such number of shares
as shall be sufficient for such purpose. Prior to the issuance of any Warrant
Shares, MMI shall secure the listing of such Warrant Shares upon any securities
exchange upon which shares of Common Stock are then listed, if any.
5.02. Lost and Misplaced Warrant Certificates. If any Warrant becomes
lost, stolen, mutilated or destroyed, MMI, on such terms as to indemnity or
otherwise as it may in its discretion impose, will issue a new Warrant of like
denomination, tenor and date as the Warrant so lost, stolen, mutilated or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of MMI, whether or not the allegedly lost, stolen, mutilated or
destroyed Warrant shall at any time be enforceable by anyone.
5.03. Enforcement of Warrant Rights. All rights of action are vested in
the respective holders of the Warrant. Any holder of any Warrant may, in his
own behalf and for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against MMI suitable to enforce, or otherwise in
respect of, his right to exercise his Warrant for the purchase of the number of
Warrant Shares issuable or deliverable in exchange therefor, in the manner
provided in the Warrant and in this Agreement.
5.04. Notice of Distributions. Whenever MMI shall authorize the payment
or distribution of a cash or other dividend to all holders of the MMI Common
Stock which does not require an adjustment to the Warrant pursuant to
Subsections (a), (b) or (c) of Section 3.01 hereof, then MMI will cause to be
mailed to the holder of the Warrant by first class mail addressed to such holder
at the address appearing in the records of MMI, at least 10 days before the
applicable record date with respect to such dividend or distribution, a notice
stating (A) the date on which record is to be taken for the purpose of such
dividend or distribution, or, if a record is not to be taken, the date as of
which the holders of MMI Common Stock of record to be entitled to such dividend
or distribution are to be determined and (B) a brief description of the kind and
aggregate amount of such dividend or distribution, including, if available, the
amount thereof on a per share of MMI Common Stock basis.
ARTICLE VI
TRANSFER AND OWNERSHIP OF WARRANT
6.01. Negotiability and Ownership. Any Warrant issued hereunder shall not
be sold, transferred, assigned or hypothecated or in any manner transferred by
MEDIQ except in compliance with the Securities Act of 1933, as amended, and any
applicable state securities laws. Any attempt to sell, transfer, assign or
hypothecate in contravention of this Section shall be null and void.
6.02. Exchange of Warrant. Upon the issuance and prior to the expiration
thereof, one or more Warrant may be surrendered at the office MMI for exchange
and, upon cancellation thereof, one or more new Warrant shall be issued as
requested by the holder of the cancelled Warrant or Warrants for the same
aggregate number of shares as were issuable in exchange for the Warrant or
Warrants so cancelled.
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.01. Applicable Law. This Agreement and the Warrant shall be governed by
and construed in accordance with the laws of the State of California, without
regard to the choice of law rules thereof.
7.02. Notices. Any notice pursuant to this Agreement to be given to MMI
shall be sufficiently given if sent by first-class mail, postage prepaid,
addressed (until another address is provided by MMI in writing) as follows:
MMI Medical, Inc.
1611-B Pomona Road
Corona, California 91720
Attention: President and Chief Executive Officer
7.03. Successors. All the covenants and provisions of this Agreement by
or for the benefit of MMI shall bind and inure to the benefit of its respective
successors and assigns hereunder.
7.04. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than MMI and the holders of
Warrants or Warrant Shares any legal or equitable right, remedy or claim under
this Agreement. This Agreement shall be for the sole and exclusive benefit of
MMI and the holders of Warrants or Warrant Shares.
7.05. Headings. The section headings herein are for convenience only
and are not part of this Agreement and shall not affect the interpretation
hereof.
7.06. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.01. Termination upon Failure of Closing. Notwithstanding anything herein
to the contrary, this Agreement shall terminate and all Warrant granted
hereunder shall be null and void in the event that the Reorganization Agreement
shall have been terminated prior to the Closing thereof.
8.02. Amendment. This Agreement may only be amended by a written
instrument executed by MMI and by the holders of greater than 50% of the then
outstanding Warrant, provided that, if any such amendment affects the rights of
holders of Warrant Shares as well, then such amendment must be executed by the
holders of Warrant or Warrant Shares or both representing greater than 50% of
the total number of such Warrant and Warrant Shares.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
MMI MEDICAL, INC.
By: /s/ Alan D. Margulis
Alan D. Margulis
Its: President and Chief Executive Officer
[CORPORATE SEAL]
Attest:
__________________________
MEDIQ INCORPORATED
By: /s/ Bernard J. Korman
Bernard J. Korman
Its: President and Chief Executive Officer
<PAGE>
EXHIBIT 1
THIS WARRANT IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE AGREEMENT,
DATED , 1994, BETWEEN MMI MEDICAL, INC. AND MEDIQ INCORPORATED.
NO TRANSFER IN VIOLATION OF SAID AGREEMENT SHALL BE EFFECTIVE.
Warrant to Purchase
_____________________
shares of Common Stock,
as herein described
No. W(U) _____
MMI MEDICAL, INC.
(a California corporation)
------------------------------
COMMON STOCK PURCHASE WARRANT
------------------------------
This Warrant Will Be Void After , 1998
------------------------------
This certifies that
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(herein called the Holder)
is entitled to purchase, at any time on or after , 19 and
on or before , 1998, fully paid and nonassessable
shares of Common Stock, par value $0.01 per share, of MMI Medical, Inc., a
corporation duly organized and existing under the laws of California (the
'Company'), at the exercise price of $6.25 per share (but the number of shares
issuable in exchange for this Warrant and the exercise price therefor may be
changed from time to time, upon the occurrence of certain events as provided in
the Warrant Agreement hereinafter described) by surrendering this Warrant, with
the subscription form on the reverse side hereof duly executed, at the corporate
trust office of the transfer agent for the Common Stock, and by paying, in
lawful money of the United States or by certified or official bank check, the
exercise price for the number of shares in exchange for which this Warrant is
exercised, but only subject to the conditions set forth herein and in the
Warrant Agreement.
This Warrant is one of a duly executed issue of Common Stock Purchase
Warrant evidencing the right to purchase Common Stock of MMI, and is issued
under and in accordance with an Agreement authorized by the Board of Directors
of MMI and dated as of , 1994 (the 'Warrant Agreement') and is
subject to the terms and provisions contained in the Warrant Agreement, to all
of which the holder of this Warrant, by acceptance hereof, consents. A copy
of the Warrant Agreement may be obtained by the holder upon written request
to the Secretary of MMI.
In certain events provided for in the Warrant Agreement, the shares of
Common Stock issuable upon the exercise of this Warrant may be changed as
therein provided. No fractional shares will be issued upon the exercise of this
Warrant, but in lieu of any fractional interest MMI shall pay cash, as provided
in the Warrant Agreement. Upon any partial exercise of this Warrant, there
shall be executed and issued to or upon the order of the holder a new Warrant in
respect of the shares as to which this Warrant shall not have been exercised.
Warrants shall be transferable of record only by MMI.
This Warrant does not entitle any holder to any of the rights of a
shareholder of MMI.
MMI MEDICAL, INC.
By: /s/ Alan D. Margulis
Alan D. Margulis
Its: President and Chief Executive Officer
[Seal]
Attest:
___________________
Secretary
ASSIGNMENT
(To be executed by the registered holder to effect a transfer of the within
Warrant)
FOR VALUE RECEIVED, the undersigned registered holder hereby sells, assigns
and transfers unto
(Name) ___________________________________________________________________
(Address) ________________________________________________________________
the right to purchase the Common Stock evidenced by the within Warrant, and
does irrevocably constitute and appoint
__________________________________________________________________________
to transfer the said right on the books of MMI, with full power of
substitution.
Dated, ________________________ , 199_____
SIGNATURE
______________________________________
NOTICE: The signature to this Assignment must correspond with the name as
written upon the face of the within Warrant, in every particular, without
alteration or change whatsoever, and must be guaranteed by a bank or trust
company having an office or correspondent in Los Angeles, California, or by a
firm having membership on a registered national securities exchange.
(SUBSCRIPTION FORM TO BE EXECUTED UPON EXERCISE OF WARRANT)
The undersigned, registered holder or assignee of such registered holder of
the within Warrant, hereby (1) subscribes for _____ shares of Common Stock which
the undersigned is entitled to purchase under the terms of the within Warrant,
(2) makes the full cash payment therefor called for by the within Warrant, and
(3) directs that the Common Stock issuable upon exercise of said Warrant be
issued as follows:
(Name) _______________________________
(Address) ____________________________
SIGNATURE
______________________________________
Dated: __________________________________
NOTICE: The signature on this subscription form must correspond with the
name as written upon the face of the within Warrant, or upon the assignment form
on the reverse side thereof, in every particular, without alteration or
enlargement, or any change whatsoever, and must be guaranteed by a bank or trust
company having an office or correspondent in Los Angeles, California, or by a
firm having membership on a registered national securities exchange.
<PAGE>
EXHIBIT B
CERTIFICATE OF INCORPORATION
OF
MMI ACQUISITION SUBSIDIARY, INC.
ARTICLE I
NAME OF CORPORATION
The name of this corporation is
MMI ACQUISITION SUBSIDIARY, INC.
ARTICLE II
REGISTERED OFFICE
The address of the registered office of the corporation in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle,
and the name of its registered agent at that address is The Corporation Trust
Company.
ARTICLE III
PURPOSE
The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
ARTICLE IV
AUTHORIZED CAPITAL STOCK
The corporation shall be authorized to issue one class of stock to be
designated Common Stock; the total number of shares which the corporation shall
have authority to issue is One Thousand (1,000), and each such share shall have
a par value of one cent ($0.01).
ARTICLE V
INCORPORATOR
The name and mailing address of the incorporator of the corporation is:
Christopher J. Purcell
MMI Medical, Inc.
1611-B Pomona Road
Corona, California 91720
ARTICLE VI
BOARD POWER REGARDING BYLAWS
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to make, repeal, alter, amend
and rescind the bylaws of the corporation.
ARTICLE VII
ELECTION OF DIRECTORS
Elections of directors need not be by written ballot unless the bylaws of
the corporation shall so provide.
ARTICLE VIII
LIMITATION OF DIRECTOR LIABILITY
To the fullest extent permitted by the Delaware General Corporation Law as
the same exists or may hereafter be amended, a director of the corporation shall
not be liable to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director. If the Delaware General Corporation Law
is amended after the date of the filing of this Certificate of Incorporation to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended from time to time. No repeal or
modification of this Article VIII by the stockholders shall adversely affect any
right or protection of a director of the corporation existing by virtue of this
Article VIII at the time of such repeal or modification.
ARTICLE IX
CORPORATE POWER
The corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred on stockholders herein
are granted subject to this reservation.
ARTICLE IX
CREDITOR COMPROMISE OR ARRANGEMENT
Whenever a compromise or arrangement is proposed between this corporation
and its creditors or any class of them and/or between this corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors,
and/or on all the stockholders or class of stockholders, of this
corporation, as the case may be, and also on this corporation.
THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation to do business both within and without the
State of Delaware, and in pursuance of the Delaware General Corporation Law,
does make and file this Certificate.
Dated: January 27, 1994
________________________________________
Christopher J. Purcell
Incorporator
<PAGE>
EXHIBIT C
Omitted from this filing is Exhibit C to the Merger Agreement.
Exhibit C contains the By-Laws of MMI Medical, Inc.
Copies of such By-Laws are available to any stockholder of MMI Medical,
Inc. upon request.
Copies of such By-Laws will be provided supplementally to the Commission
upon request.
<PAGE>
EXHIBIT D
Omitted from this filing is Exhibit D to the Merger Agreement.
Exhibit D contains the Confidentiality Agreement between the parties to
the Merger Agreement.
Copies of such agreement will be provided supplementally to the
Commission upon request.
<PAGE>
EXHIBIT E -- FORM OF CALCULATION OF NET TANGIBLE
ASSETS OF MEDIQ SUB
<TABLE>
<S> <C>
Stockholder's Equity $
---------------------------
Less: Goodwill
---------------------------
Patents
---------------------------
Copyrights
---------------------------
Trademarks
---------------------------
Other Intangibles:
Deferred Tube Expense ---------------------------
Deferred Commissions ---------------------------
Deferred Software Costs ---------------------------
Deferred Start-up Costs ___________________________
Plus: Expenses and Liabilities (Section 13.9)
---------------------------
Net Tangible Assets of MEDIQ Sub $
===========================
</TABLE>
<PAGE>
EXHIBIT F -- Form of Noncompetition Agreement
MEDIQ NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (the 'Agreement') is made and entered into as
of [ ], 1994, by and between MMI Medical, Inc., a California
corporation ('MMI'), MEDIQ Equipment and Maintenance Services, Inc., a Delaware
corporation ('MEDIQ Sub') and MEDIQ Incorporated, a Delaware corporation
('MEDIQ').
RECITALS
WHEREAS, MEDIQ has this date conveyed to MMI, all of the issued and
outstanding capital stock of MEDIQ Sub pursuant to that certain Agreement and
Plan of Reorganization among MMI, MMI Acquisition Subsidiary, Inc. ('MMI Sub'),
MEDIQ Sub and MEDIQ (the 'Reorganization Agreement');
WHEREAS, upon the consummation of the transactions contemplated in the
Reorganization Agreement, MMI Sub merged with and into MEDIQ Sub with MMI
holding all of the outstanding capital stock of MEDIQ Sub as the 'surviving
corporation' (as defined in the Reorganization Agreement);
WHEREAS, the business of MEDIQ Sub as currently conducted, including
without limitation the business of providing repair and maintenance services,
and sales of parts for, and management of the technical operation of, CT
scanners, nuclear medicine equipment, magnetic resonance imaging
systems and other diagnostic imaging equipment for hospitals and mobile and
fixed-site operators (the 'Business') has heretofore been conducted in the
Territory (as defined below);
WHEREAS, MMI through MEDIQ Sub intends to carry on the Business;
WHEREAS, pursuant to Section 7.8 of the Reorganization Agreement, MEDIQ has
agreed to enter into a noncompetition agreement in favor of MMI and the
surviving corporation;
WHEREAS, if MEDIQ were to compete with MMI's operation of the Business in
the Territory through the surviving corporation other than as permitted herein,
MMI could be deprived of the benefit of any reputation or goodwill of the
surviving corporation as may exist after the date hereof; and
WHEREAS, the covenants provided herein are material, significant and
essential to effecting the transactions contemplated by the Reorganization
Agreement, and the Noncompetition Shares (defined below) and the consideration
under the Reorganization Agreement has been transferred from MMI to MEDIQ in
exchange for such covenants.
AGREEMENT
NOW, THEREFORE, in consideration of the sum of 20,000 shares (the
'Noncompetition Shares') of MMI Common Stock, as that term is defined in the
Reorganization Agreement, and the premises and of the respective representations
and warranties contained herein and the respective covenants and agreements
contained in this Agreement and the Reorganization Agreement and to induce MMI
to perform its obligations thereunder, the parties hereto agree as follows:
1. Term. The term of this Agreement shall commence on the date of the
Closing, as that term is defined in the Reorganization Agreement, and shall
terminate on the fifth anniversary of the date of the Closing,
except that the covenant set forth in Section 2(c) shall terminate on the third
anniversary of the date of the Closing.
2. Covenant Not to Compete. For the term of this Agreement, MEDIQ shall
not, directly or indirectly:
(a) engage in the Business or any business competing with the
Business;
(b) have any interest in, own, manage, operate, control, be connected
with as a stockholder (other than as a stockholder of less than one percent
(1%) of the issued and outstanding stock of a publicly held corporation),
joint venturer, officer, partner, employee or consultant, or otherwise
engage or invest or participate in the Business or any business which shall
compete with the Business conducted by the surviving corporation or any
successor of the surviving corporation in the Territory; or
(c) solicit any then current employee of the surviving corporation to
leave the employ of the surviving corporation.
(d) Notwithstanding the foregoing, MEDIQ shall not be restricted from
repairing or maintaining (directly or indirectly through subsidiaries)
nuclear medicine equipment in conjunction with MEDIQ Sub's business of
providing nuclear medicine and ultrasound services, so long as MEDIQ does
not bid for nuclear medicine equipment maintenance contracts currently held
by MMI when such contracts are renewed.
3. Injunctive Relief. The parties hereto agree that damages would be an
inadequate remedy for MMI or the surviving corporation in the event of breach or
threatened breach of this Agreement and thus, in any such event, MMI or the
surviving corporation may, either with or without pursuing any potential damage
remedies, immediately obtain and enforce an injunction prohibiting MEDIQ from
violating this Agreement.
4. Territory. For purposes of this Agreement, 'Territory' means the
Business carried on by the surviving corporation in those counties in the
respective states listed on Schedule 1.
5. Enforceability. It is the desire and intent of the parties hereto that
the provisions of this Agreement be enforced to the fullest extent permissible
under the laws and public policies of each jurisdiction in which enforcement is
sought. Accordingly, if any provision of this Agreement shall be adjudicated to
be invalid or unenforceable, such provision, without any action on the part of
the parties hereto, shall be deemed amended to delete or to modify (including,
without limitation, a reduction in duration, geographical area or prohibited
business activities) the portion adjudicated to be invalid or unenforceable,
such deletion or modification to apply only with respect to the operation of
such provision in the particular jurisdiction in which such adjudication is
made, and such deletion or modification to be made only to the extent necessary
to cause the provision as amended to be valid and enforceable.
6. Noncompetition Shares. As an inducement to MEDIQ to enter into this
Agreement, MMI represents and warrants that (a) the Noncompetition Shares which
are to be transferred to MEDIQ by MMI pursuant hereto are free and clear of any
and all Encumbrances (as defined in the Reorganization Agreement); (b) MMI has
the full right, power and authority to issue and transfer the Noncompetition
Shares to MEDIQ pursuant to the terms of this Agreement; and (c) the
Noncompetition Shares to be issued to MEDIQ as contemplated hereunder are duly
authorized and, when issued pursuant to the terms of this Agreement, will be
duly authorized, validly issued, fully paid, non-assessable, not subject to any
preemptive or similar rights.
7. Amendment; Beneficiary; Termination. This Agreement may be amended
only by a written instrument signed by each of the parties hereto. Nothing in
this Agreement, express or implied, is intended to confer upon any third person
any rights or remedies under or by reason of this Agreement. This Agreement
may be terminated only upon the written agreement of MMI, the surviving
corporation and MEDIQ. No waiver of any provision of this Agreement shall
constitute a waiver of any other provision hereof (whether or not similar) nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
8. Complete Understanding. This Agreement constitutes the full and
complete understanding and agreement of the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous understandings and
agreements with respect to the subject matter hereof.
9. Notices. All notices, requests, demands, applications, services of
process, and other communications required or permitted to be given under this
Agreement shall be deemed to have been duly given when transmitted by telex,
telecopier or facsimile transmission or when delivered or mailed, certified
first class mail, postage prepaid, return receipt requested, to the parties
hereto at the following addresses:
(a) If to MMI or surviving corporation:
MMI Medical, Inc.
1611-B Pomona Road
Corona, California 91720
Attention: President and Chief Executive Officer
Facsimile: (909) 736-3753
With a copy to:
Gibson, Dunn & Crutcher
333 South Grand Avenue
Los Angeles, California 90071
Attention: Peter F. Ziegler, Esq.
Facsimile: (213) 229-7520
(b) If to MEDIQ:
MEDIQ Incorporated
One MEDIQ Plaza
Pennsauken, New Jersey 08110
Attention: President and General Counsel
Facsimile: (609) 486-4720
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94306
Attention: Robert T. Clarkson, Esq.
Facsimile: (415) 858-4488
or to such other address as any party shall furnish to the other by notice
given in accordance with this Section.
10. Construction. This Agreement shall be governed and construed in
accordance with the laws of the State of California, without regard to the
choice of law rules thereof.
11. Successors and Assigns. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
<TABLE>
<S> <C>
MMI MEDICAL, INC. MEDIQ INCORPORATED
By: By:
Alan D. Margulis Bernard J. Korman
Its: President and Chief Executive Officer Its: President and Chief Executive Officer
</TABLE>
<PAGE>
SCHEDULE 1
State Applicable Counties
<PAGE>
EXHIBIT G -- Form of Standstill Agreement
STANDSTILL AGREEMENT
This Standstill Agreement (this 'Agreement') is entered into as of
[_______________], 1994 by and between MMI Medical, Inc., a California
corporation ('MMI'), and [entity/individual/trust] ('Coventor').
RECITALS
A. This Agreement is entered into pursuant to Section 7.10 of that certain
Agreement and Plan of Reorganization (the 'Reorganization Agreement') entered
into as of the date hereof by and among MMI, MMI Acquisition Subsidiary, Inc., a
Delaware corporation ('MMI Sub'), MEDIQ Equipment and Maintenance Services,
Inc., a Delaware corporation ('MEDIQ Sub'), and MEDIQ Incorporated, a Delaware
corporation and sole shareholder of MEDIQ Sub ('MEDIQ').
B. Pursuant to the Reorganization Agreement, MMI Sub will be merged with
and into MEDIQ Sub and all of the outstanding shares of common stock of MEDIQ
Sub will be exchanged for 2,030,000 shares (the 'MMI Shares') of MMI's common
stock, par value $0.01 per share (the 'MMI Common Stock'), and one warrant (the
'Warrant') to purchase 325,000 shares of MMI Common Stock.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained in this Agreement and in the Reorganization Agreement, the parties
hereto, intending to be legally bound, do hereby agree as follows:
Section 1. Standstill.
(a) Coventor agrees that, subject to Section 2 of this Agreement and
except as may be expressly set forth in the Reorganization Agreement,
without MMI's prior written consent, Coventor shall not and will cause each
of [its/his] affiliates [and immediate family members] to not, directly or
indirectly, alone or in concert with others: (i) acquire, offer to acquire,
or agree to acquire, by purchase, gift or otherwise, any Voting Securities,
except for the exercise of the Warrant, (as defined below) or make any
proposal for or offer of any extraordinary transaction involving MMI or
(ii) arrange, or participate in the arranging of, financing for the
purchase of Voting Securities by any Person.
(b) For purposes of this Agreement, the following terms shall have the
following meanings:
'Person' means any individual, sole proprietorship, partnership, joint
venture, trust incorporated organization, association, corporation, institution,
party or other entity.
'Voting Securities' means any voting securities of MMI, including without
limitation the MMI Common Stock, and any direct or indirect rights or options to
acquire voting securities of MMI, including without limitation the Warrants.
Section 2. Termination of Standstill.
(a) If the Closing (as defined in the Reorganization Agreement) shall
not have occurred pursuant to the terms of the Reorganization Agreement,
then Coventor shall be released from the obligations contained in Section
1(a) hereof.
(b) If the Closing of the Reorganization Agreement shall have
occurred, then Coventor shall be released from the obligations contained in
Section 1(a) hereof on the third anniversary of the date of the Closing.
Section 3. Representations and Warranties of Coventor. As an inducement
to MMI to enter this Agreement, Coventor represents and warrants to MMI as
follows:
(a) Coventor has full power and authority to execute, deliver and
perform its obligations under this Agreement and all action on Coventor's
part necessary for such execution, delivery and performance has been duly
taken. This Agreement has been duly executed and delivered by Coventor.
[(a) For trust only] Coventor is a trust duly established and validly
existing under the laws of the state of [state governing trust].
[Trustee] has full power and authority to execute, deliver and cause the
performance by Coventor of its obligations under this Agreement and all
action necessary for such execution, delivery and performance has been
duly taken. This Agreement has been duly executed and delivered by
Coventor.
(b) Coventor is not a party to, subject to or bound by any agreement
or judgment, order, writ, prohibition, injunction or decree of any court or
other governmental body which would prevent the execution or delivery of
this Agreement or consummation of the transactions contemplated herein by
Coventor and the execution and delivery by Coventor of this Agreement does
not, and the performance and consummation of the transactions contemplated
by this Agreement will not result in any conflict with, breach or violation
of or default, termination or forfeiture under (or upon the failure to give
notice or the lapse of time, or both, result in any conflict with, breach
or violation of or default, termination or forfeiture under) [any terms or
provisions of Coventor's Certificate of Incorporation or Bylaws,][the trust
instrument] or any statute, rule, regulation, judicial, governmental,
regulatory or administrative decree, order or judgment, or any agreement,
lease or other instrument to which Coventor is a party.
(c) No consent, approval, authorization, order, registration,
qualification of filing of or with any court or any regulatory authority or
any other governmental or administrative body is required on Coventor's
part for the consummation by Coventor of the transactions contemplated by
this Agreement.
(d) This Agreement is Coventor's legal, valid and binding obligation,
enforceable against Coventor in accordance with its terms except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally and subject to general
principles of equity.
Section 4. Representations and Warranties of MMI. As an inducement to
Coventor to enter this Agreement, MMI represents and warrants to Coventor as
follows:
(a) MMI has full corporate power and authority to execute, deliver
and, subject to obtaining the required approvals of the holders of MMI
Common Stock, perform its obligations under this Agreement, and all
corporate action on its part necessary for such execution, delivery and,
subject to obtaining the required approvals of the holders of MMI Common
Stock, performance has been duly taken. This Agreement has been duly
executed and delivered by MMI.
(b) This Agreement is the legal, valid and binding obligation of MMI,
subject to obtaining the required approvals of the holders of MMI Common
Stock, enforceable against MMI in accordance with its terms except as may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and subject to
general principles of equity.
Section 5. Specific Enforcement. Coventor acknowledges that MMI would not
have an adequate remedy at law for money damages in the event that any or all of
the covenants of Coventor in this Agreement were not performed in accordance
with their terms and therefore agrees that MMI shall be entitled to specific
enforcement of such covenants in addition to any other remedy to which it
may be entitled, at law or in equity.
Section 6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without regard
to the choice of law rules thereof.
Section 7. Assignment. No party may, without the prior express written
consent of the other party, assign this Agreement in whole or in part. This
Agreement shall be binding upon and inure to the benefit of the respective
successors and permitted assignees of the parties hereto.
Section 8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall constitute an original copy
hereof, but all of which together shall constitute one agreement.
Section 9. Costs. In the event of any suit or other proceeding to
construe or enforce any provision of this Agreement, or otherwise in connection
with this Agreement, the prevailing party's or parties' reasonable attorneys'
fees and costs (in addition to all other amounts and relief to which such party
or parties may be entitled) shall be paid by the other party or parties.
IN WITNESS WHEREOF, each of the parties has executed this Agreement as of
the date first above written.
<TABLE>
<S> <C>
MMI MEDICAL, INC. [Entity]
By: By: ____________________
Alan D. Margulis
Its: President and Chief Executive Officer Its: ____________________
</TABLE>
<TABLE>
<S> <C>
[Individual]
_________________________
</TABLE>
<TABLE>
<S> <C>
[Trust]
By: ____________________
as Trustee
</TABLE>
<PAGE>
EXHIBIT H-1 -- Form of WSGR Opinion
(i) The authorized and outstanding shares of capital stock of MEDIQ
Sub is as set forth in Section 4.2 of the Agreement. All outstanding
shares of MEDIQ Sub Common Stock have been validly issued, are fully paid
and nonassessable.
(ii) Each of MEDIQ and MEDIQ Sub has the requisite corporate power and
authority to execute and deliver, and to perform its obligations under, the
Warrant Agreement, the Standstill Agreement (collectively, the 'Ancillary
Agreements'), the Reorganization Agreement and the Noncompetition Agreement
to which it is a party. Each of MEDIQ and MEDIQ Sub has taken all
requisite corporate and shareholder action to approve and adopt the
Reorganization Agreement, the Ancillary Agreements and the Noncompetition
Agreement to which it is a party, and the performance by each of their
respective obligations thereunder. The Reorganization Agreement and the
Ancillary Agreements to which each is a party have been duly and validly
executed and delivered by MEDIQ and MEDIQ Sub and constitute legal, valid
and binding obligations of each of MEDIQ and MEDIQ Sub, except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally and subject to general
principles of equity.
(iii) The execution and delivery of the Reorganization Agreement, the
Ancillary Agreements and the Noncompetition Agreement by each of MEDIQ and
MEDIQ Sub, and the performance and consummation by each of MEDIQ and MEDIQ
Sub of the transactions contemplated thereby, do not result in any conflict
with, breach or violation of or default, termination, forfeiture or lien
under (or upon the failure to give notice or the lapse of time, or both,
result in any conflict with, breach or violation of or default,
termination, forfeiture or lien under) any terms or provisions of their
respective Certificates of Incorporation or Bylaws, or, to the best of such
counsel's knowledge, any judicial or governmental decree, order or judgment
to which MEDIQ Sub is a party or to which either of MEDIQ or MEDIQ Sub.
The following opinion shall be given by either Wilson, Sonsini, Goodrich &
Rosati or each General Counsel to MEDIQ and MEDIQ Sub:
(iv) To such counsel's knowledge, there is no consent, approval,
authorization, order, registration, qualification or filing of or with any
court or any regulatory authority or other governmental body (other than
the filing of the Certificate of Merger and other than consents or filings
required by state and federal securities laws in connection with the
issuance of MMI Common Stock) required for the consummation by MEDIQ or
MEDIQ Sub of the transactions contemplated by this Agreement which has not
been obtained or waived.
(v) Upon the delivery and filing of the Certificate of Merger with the
Secretary of State of the State of Delaware pursuant to and in accordance
with the laws of Delaware, the Merger will be effective in accordance with
Delaware law.
<PAGE>
EXHIBIT H-2 -- Form of MEDIQ General Counsel Opinion
(i) MEDIQ is a corporation duly organized, validly existing and in
good standing under the laws of the state of Delaware, has all requisite
corporate power and authority to own, operate and lease its properties and
carry on its business as now conducted, and is duly qualified to do
business and is in good standing in [_________] and [__________], except to
the extent where the failure to so qualify would not have a material
adverse effect on MEDIQ.
(ii) To the best of such counsel's knowledge, the transactions
contemplated by the Reorganization Agreement, including the Merger, will
not constitute a violation of any preemptive or similar rights applicable
to the transfer of any shares of MEDIQ Sub Common Stock pursuant to MEDIQ's
Certificate of Incorporation, Bylaws and such shares are free and clear of
any lien, security interest, encumbrance, option, warrant, voting trust or
other similar arrangement.
(iii) The Noncompetition Agreement has been duly and validly executed
and delivered by MEDIQ.
The following opinion shall be given by either Wilson, Sonsini, Goodrich &
Rosati or each General Counsel to MEDIQ and MEDIQ Sub:
(iv) To such counsel's knowledge, there is no consent, approval,
authorization, order, registration, qualification or filing of or with any
court or any regulatory authority or other governmental body (other than
the filing of the Certificate of Merger and other than consents or filings
required by state and federal securities laws in connection with the
issuance of MMI Common Stock) required for the consummation by MEDIQ of the
transactions contemplated by the Reorganization Agreement which has not
been obtained or waived.
(v) To such counsel's knowledge, there is no suit, arbitration or
legal, administrative or other proceeding or governmental investigation
pending or threatened to which MEDIQ is a party that would preclude MEDIQ
from consummating the transactions contemplated by the Reorganization
Agreement, the Warrant Agreement, the Standstill Agreement or the
Noncompetition Agreement.
(vi) To such counsel's knowledge, there is no outstanding judicial or
administrative order, decree, judgment or stipulation to which MEDIQ is a
party or is subject that would preclude MEDIQ from consummating of the
transactions contemplated by the Reorganization Agreement, the Warrant
Agreement, the Standstill Agreement or the Noncompetition Agreement.
<PAGE>
EXHIBIT H-3 -- Form of MEDIQ Sub General Counsel Opinion
(i) MEDIQ Sub is a corporation duly organized, validly existing and in
good standing under the laws of the state of Delaware, has all requisite
corporate power and authority to own, operate and lease its properties and
carry on its business as now conducted, and is duly qualified to do
business and is in good standing in [___________] and [____________]except
to the extent where the failure to so qualify would not have a material
adverse effect on MEDIQ Sub taken as a whole.
(ii) The authorized and outstanding shares of capital stock of MEDIQ
Sub is as set forth in Section 4.2 of the Agreement. All outstanding
shares of MEDIQ Sub Common Stock have been duly authorized, validly issued,
are fully paid and nonassessable.
(iii) To the best of such counsel's knowledge, the transactions
contemplated by the Reorganization Agreement, including the Merger, will
not constitute a violation of any right of first refusal, option or other
restriction applicable to the transfer of any shares of MEDIQ Sub Common
Stock pursuant to MEDIQ Sub's Certificate of Incorporation, Bylaws, or any
agreement to which MEDIQ Sub is a party.
The following opinion shall be given by either Wilson, Sonsini, Goodrich &
Rosati or each General Counsel to MEDIQ and MEDIQ Sub:
(iv) To such counsel's knowledge, there is no consent, approval,
authorization, order, registration, qualification or filing of or with any
court or any regulatory authority or other governmental body (other than
the filing of the Certificate of Merger and other than consents or filings
required by state and federal securities laws in connection with the
issuance of MMI Common Stock) required for the consummation by MEDIQ Sub of
the transactions contemplated by the Reorganization Agreement which has not
been obtained or waived.
(v) To such counsel's knowledge, there is no suit, arbitration or
legal, administrative or other proceeding or governmental investigation
pending or threatened to which MEDIQ Sub is a party that would preclude the
consummation of the transactions contemplated by the Reorganization
Agreement.
(vi) To such counsel's knowledge, there is no outstanding judicial or
administrative order, decree, judgment or stipulation to which MEDIQ Sub is
a party or is subject that would preclude the consummation of the
transactions contemplated by the Reorganization Agreement.
<PAGE>
EXHIBIT I
Omitted from this filing is Exhibit C to the Merger Agreement.
Exhibit C contains the Form of Employment Agreement to be entered into by
MMI Medical, Inc. and the current President of MEDIQ Equipment & Maintenance
Services, Inc.
Such employment agreement as and when executed by the parties thereto will
be filed as an exhibit to the filings of MMI Medical, Inc. under the Securities
Exchange Act of 1934, if required thereunder.
Copies of the Form of such Employment Agreement will be provided
supplementally to the Commission upon request.
<PAGE>
EXHIBIT J -- Form of GD&C Opinion
(i) MMI is a corporation duly incorporated, validly existing and in
good standing under the laws of the state of California and MMI Sub is a
corporation duly incorporated, validly existing and in good standing under
the laws of the state of Delaware.
(ii) MMI has all requisite corporate authority to own, operate or
lease its respective properties and carry on its respective business as now
conducted and is duly qualified to do business and is in good standing as a
foreign corporation in [_________]and [_____________], except to the
extent failure to qualify would not have a material adverse affect on MMI,
taken as a whole.
(iii) The authorized and outstanding shares of capital stock of MMI is
as set forth in Section 5.6 of the Reorganization Agreement.
(iv) Each of MMI and MMI Sub has the requisite corporate power and
authority to execute and deliver, and to perform its obligations under the
Reorganization Agreement, the Warrant Agreement and the Noncompetition
Agreement to which it is a party. Each of MMI and MMI Sub has taken all
requisite corporate action to approve and adopt the Reorganization
Agreement, the Warrant Agreement and the Noncompetition Agreement to which
it is a party and the performance of each of their respective obligations
thereunder. The Reorganization Agreement, the Warrant Agreement and the
Noncompetition Agreement to which it is a party, have been duly and validly
executed and delivered by each of MMI and MMI Sub. The Reorganization
Agreement and Warrant Agreement to which each is a party constitute legal,
valid and binding obligations of each of MMI and MMI Sub except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights and subject to general principles
of equity.
(v) The execution and delivery of the Reorganization Agreement, the
Warrant Agreement and the Noncompetition Agreement by each of MMI and MMI
Sub and the performance and consummation by each of MMI and MMI Sub of the
transactions contemplated thereto, do not result in any conflict with,
breach or violation of or default, termination, forfeiture or lien under
(or upon the failure to give notice or the lapse of time, or both, result
in any conflict with, breach or violation of or default, termination,
forfeiture or lien under) any terms or provisions of MMI's Articles of
Incorporation, MMI Sub's Certificate of Incorporation or their respective
Bylaws, or, to the best of such counsel's knowledge, any judicial or
governmental decree, order or judgment, to which MMI or MMI Sub is a party
or to which either of MMI, R Squared Scan Systems, Inc or MMI Sub.
(vi) To the best of such counsel's knowledge, there is no consent,
approval, authorization, order, registration, qualification or filing of or
with any court or any regulatory authority or other governmental body
(other than the filing of the Certificate of Merger and other than consents
or filings required by state or federal securities laws in connection with
the issuance of MMI Shares and the Warrant) required for the consummation
by MMI or MMI Sub of the transactions contemplated by this Agreement which
has not been obtained or waived.
(vii) When issued in the Merger in accordance with the Reorganization
Agreement the MMI Shares will be duly authorized, validly issued, fully
paid and nonassessable.
(viii) To the best of such counsel's knowledge, (a) the transactions
contemplated by the Reorganization Agreement, including the Merger, will
not constitute a violation of any preemptive or other similar rights or
other restriction applicable to the issue of any MMI Shares or
Noncompetition Shares pursuant to MMI's Articles of Incorporation, Bylaws,
or any agreement to which MMI is a party and (b) the MMI Shares and the
Noncompetition Shares are free and clear of any lien, security interest,
encumbrance, option, warrant, voting trust or other similar arrangement.
(ix) The Company has reserved out of its authorized and unissued
shares of Common Stock a number of shares sufficient to provide for the
exercise of the rights of purchase currently represented by the Warrant.
(x) The Warrant Shares, when issued and paid for upon exercise of the
Warrant in accordance with the terms of the Warrant and the Warrant
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable.
(xi) Upon the delivery and filing of the Certificate of Merger with
the Secretary of State of the State of Delaware pursuant to and in
accordance with Delaware Law, the Merger will be effective in accordance
with the laws of Delaware.
<PAGE>
EXHIBIT K -- Form of Voting Agreement
MMI MEDICAL, INC.
VOTING AGREEMENT
This Voting Agreement ('Agreement') is made and entered into as of ,
1994, between MEDIQ Incorporated, a Delaware corporation, ('MEDIQ') and the
undersigned shareholder ('Shareholder') of MMI Medical, Inc., a California
corporation ('MMI'). Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Reorganization Agreement (as defined in
Recital A below).
RECITALS
A. Concurrently with the execution of this Agreement, MEDIQ, MEDIQ
Equipment & Maintenance Services, Inc., a Delaware corporation and a wholly
owned subsidiary of MEDIQ ('MEDIQ Sub'), MMI and MMI Acquisition Subsidiary,
Inc., a Delaware corporation and a wholly owned subsidiary of MMI ('MMI Sub'),
have entered into an Agreement of Merger and Plan of Reorganization (the
'Reorganization Agreement') which provides for the merger (the 'Merger') of MMI
Sub with and into MEDIQ Sub. Pursuant to the Merger, all shares of capital stock
of MEDIQ Sub will be converted into MMI Common Stock on the basis described in
the Reorganization Agreement.
B. The Shareholder is the record holder and 'beneficial owner,' as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
'Exchange Act'), of such number of outstanding shares of MMI Common Stock as is
indicated on the signature page of this Agreement (the 'Shares').
C. As a material inducement for MEDIQ and MEDIQ Sub to enter into the
Reorganization Agreement, Shareholder is willing to agree not to transfer or
otherwise dispose of any of the Shares, or any other shares of capital stock of
MMI acquired hereafter and prior to the Effective Time, and to vote the Shares
and any other such shares of capital stock of MMI so as to facilitate
consummation of the Merger and the other transactions contemplated by the
Reorganization Agreement, including without limitation service of the MEDIQ
Designees on the board of directors of MMI.
NOW, THEREFORE, intending to be legally bound hereby the parties agree as
follows:
1. Agreement to Retain Shares.
1.1 Transfer and Encumbrance. Shareholder agrees not to transfer,
sell, exchange, pledge or otherwise dispose of or encumber any of the
Shares or any New Shares as defined in Section 1.2 below, or to make any
offer or agreement relating thereto, at any time prior to the Effective
Time.
1.2 Additional Purchases. Shareholder agrees that any shares of voting
stock of MMI, including MMI Common Stock, that Shareholder purchases or
with respect to which Shareholder otherwise acquires beneficial ownership
after the execution of this Agreement and prior to the Expiration Date
('New Shares') shall be subject to the terms and conditions of this
Agreement to the same extent as if they constituted Shares.
1.3 Transfer to Affiliate. As a condition to any transfer of any
shares to an affiliate (as that term is defined in Rule 405 promulgated
under the Securities Act of 1933, as amended) of Shareholder's immediate
family, the transfer shall agree to be bound by all the provisions of this
Agreement.
2. Agreement to Vote Shares. Until the Expiration Date (as defined in
Section 6 hereof), at every meeting of the shareholders of MMI called with
respect to any of the following, and at every adjournment thereof, and on every
action or approval by written consent of the shareholders of MMI with respect to
any of the following, Shareholder shall vote the Shares and any New Shares as
follows: (i) in favor of approval of the Reorganization Agreement and the Merger
and those matters necessary to effect the Merger; (ii) prior to the Effective
Time, against approval of any proposal made in opposition to or competition with
consummation of the Merger and against any merger, consolidation, sale of
assets, reorganization or recapitalization, with any party other than with MEDIQ
and its affiliates and against any liquidation or winding up of MMI (each of the
foregoing is hereinafter referred to as an 'Opposing Proposal'); and (iii) in
favor of those matters necessary to cause immediately following the Effective
Time and thereafter (x) the MEDIQ Designees to serve as members of the Board of
Directors of MMI and (y) the Board of Directors of MMI to consist of no more
than seven members. Shareholder agrees not to take action contrary to the
consummation of the Merger.
3. Irrevocable Proxy. Concurrently with the execution of this Agreement,
Shareholder agrees to deliver to MEDIQ and MEDIQ agrees to exercise its rights
to effect the Merger pursuant a proxy in the form attached hereto as Exhibit A
(the 'Proxy'), which shall be irrevocable to the extent provided in California
General Corporation Law, with the total number of shares of capital stock of MMI
'beneficially owned' (as such term is defined in Rule 13d-3 under the Exchange
Act) by Shareholder set forth therein.
4. Representations, Warranties and Covenants of the Shareholder.
Shareholder hereby represents, warrants and covenants to MEDIQ and MEDIQ Sub as
follows:
4.1 Ownership of Shares. Shareholder (i) is the beneficial owner of
the Shares, which at the date hereof and at all times up until the
Effective Time or earlier termination of the Reorganization Agreement will
be free and clear of any liens, claims, options, charges or other
encumbrances; (ii) does not beneficially own any shares of voting stock of
MMI, including the MMI Common Stock other than the Shares (excluding shares
as to which Shareholder currently disclaims beneficial ownership in
accordance with applicable law); and (iii) has full power and authority to
execute, deliver and carry out the terms of this Agreement and the Proxy.
4.2 No Proxy Solicitations. Shareholder will not, and will not permit
any entity under Shareholder's control to: (i) solicit proxies or become a
'participant' in a 'solicitation' (as such terms are defined in Regulation
14A under the Exchange Act) with respect to an Opposing Proposal or
otherwise seek to advise or influence any party in taking or planning any
action that would compete with or restrain the timely consummation of the
Merger in accordance with the terms of the Reorganization Agreement; (ii)
initiate a shareholders' vote or action by consent of MMI shareholders with
respect to an Opposing Proposal; or (iii) become a member of a 'group' (as
such term is used in Section 13(d) of the Exchange Act) with respect to any
voting securities of MMI with respect to an Opposing Proposal.
5. Additional Documents. Shareholder and MEDIQ hereby covenant and agree to
execute and deliver any additional documents necessary or desirable, in the
reasonable opinion of MEDIQ or Shareholder, as the case may be, to carry out the
intent of this Agreement.
6. Termination. This Agreement shall terminate and shall have no further
force or effect as of the Expiration Date. As used herein, the term 'Expiration
Date' shall mean the earlier to occur of (i) such date and time as the MMI
Shares are required to, and may, under applicable law, be distributed by MEDIQ
to its stockholders pursuant to Section 7.12 of the Reorganization Agreement and
(ii) such date and time as the Reorganization Agreement shall be terminated
pursuant to Article XII thereof.
7. Miscellaneous.
7.1 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, then the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
7.2 Binding Effect and Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, neither this Agreement
nor any of the rights, interests or obligations of the parties hereto may
be assigned by either of the parties without prior written consent of the
other.
7.3 Amendments and Modification. This Agreement may not be modified,
amended, altered or supplemented except upon the execution and delivery of
a written agreement executed by the party against whom enforcement is
sought.
7.4 Specific Performance; Injunctive Relief. The parties hereto
acknowledge that MEDIQ will be irreparably harmed and that there will be no
adequate remedy at law for a violation or breach of any of the covenants or
agreements of Shareholder set forth herein. Therefore, it is agreed that,
in addition to any other remedies that may be available to MEDIQ upon any
such violation or breach, MEDIQ shall have the right to enforce such
covenants and agreements by specific performance, injunctive relief or by
any other means available to MEDIQ at law or in equity.
7.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and sufficient if delivered in
person, by cable, telegram or telex, or sent by mail (registered or
certified mail, postage prepaid, return receipt requested) or overnight
courier (prepaid) to the respective parties as follows:
<TABLE>
<S> <C>
If to MEDIQ: MEDIQ Incorporated
One MEDIQ Plaza
Pennsauken, NJ 08110
Attn: President
With a copy to its General Counsel at the
same address
With a copy to: Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attn: Robert T. Clarkson, Esq.
If to Shareholder: To the address for notice set forth on the
last page hereof.
</TABLE>
or to such other address as any party may have furnished to the other in
writing in accordance herewith, except that notices of change of address
shall only be effective upon receipt.
7.6 Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the internal laws of the State of
California.
7.7 Entire Agreement. This Agreement contains the entire understanding
of the parties in respect of the subject matter hereof, and supersedes all
prior negotiations and understandings between the parties with respect to
such subject matter.
7.8 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
7.9 Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction or interpretation of
this Agreement.
IN WITNESS WHEREOF, the parties have caused this Voting Agreement to be
duly executed on the date and year first above written.
<TABLE>
<S> <C>
SHAREHOLDER MEDIQ INCORPORATED
Print Name of Shareholder: By: ______________________________
Title
__________________________________
By: ______________________________
Title:
By: ______________________________
Title:
By: ______________________________
Title:
Shareholder's Address for Notice
________________________________
________________________________
________________________________
Shares beneficially owned:
__________ shares of Common Stock
</TABLE>
<PAGE>
EXHIBIT A
IRREVOCABLE PROXY
The undersigned shareholder of MMI Medical, Inc., a California corporation
('MMI'), hereby irrevocably (to the extent provided and permitted by applicable
law) appoints the directors on the board of directors of MEDIQ Incorporated, a
Delaware corporation ('MEDIQ'), and each of them, the attorneys and proxies of
the undersigned, with full power of substitution and resubstitution, to the full
extent of the undersigned's rights with respect to the shares of capital stock
of MMI beneficially owned by the undersigned, which shares are listed below (the
'Shares'), and any and all other shares or securities issued or issuable in
respect thereof on or after the date hereof, but only to the extent provided
below, until such time as that certain Agreement and Plan of Reorganization
dated as of , 1994 (the 'Reorganization Agreement'), among MMI,
MMI Acquisition Subsidiary, Inc., a Delaware corporation ('MMI Sub'), MEDIQ and
MEDIQ Equipment and Maintenance Services, Inc., a Delaware corporation ('MEDIQ
Sub'), shall be terminated in accordance with its terms or the Merger (as
defined in the Reorganization Agreement) is effective. Upon the execution
hereof, any and all prior proxies given by the undersigned with respect to the
Shares and any all other shares or securities issued or issuable in respect
thereof on or after the date hereof are hereby revoked and no subsequent proxies
will be given. This proxy is irrevocable (to the extent provided by applicable
law) and is granted in connection with the Voting Agreement dated as
of , 1994 (the 'Voting Agreement') among MEDIQ and the
undersigned shareholder, and is granted in consideration of MEDIQ entering into
the Reorganization Agreement.
The attorneys and proxies named above will be empowered at any time prior
to termination of the Reorganization Agreement to exercise all voting and other
rights (including, without limitation, the power to execute and deliver written
consents with respect to the Shares) of the undersigned at every annual, special
or adjourn meeting of MMI shareholders and in every written consent in lieu of
such a meeting, or otherwise, in favor of approval of the Merger and the
Reorganization Agreement and those matters necessary to effect the Merger, and,
prior to the Effective Time against any proposal made in opposition to or
competition with the consummation of the Merger and against any merger,
consolidation, sale of assets, reorganization or recapitalization of MMI with
any party other than MEDIQ and its affiliates and against any liquidation or
winding up of MMI.
Any obligations of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned. This proxy is irrevocable.
Dated: __________________________ , 1994
Print name of shareholder: _____________________________________________________
By: _________________________________________________
Title:
By: _________________________________________________
Title:
By: _________________________________________________
Title:
Shares benefically owned: ______________________________________________________
<PAGE>
MEDIQ INCORPORATED AND MMI MEDICAL, INC. ANNOUNCE AGREEMENT FOR MERGER OF
SUBSIDIARIES
PENNSAUKEN, NJ -- MEDIQ Incorporated (AMEX-MED) and MMI Medical, Inc.
(NASDAQ-MMIM) announced today the execution of a definitive agreement to merge
MEDIQ's MEDIQ Equipment & Maintenance Services, Inc. subsidiary ('MEMS') and
MMI's R Squared Scan System subsidiary.
Under the terms of the merger agreement, MEDIQ will receive 2,050,000
shares of MMI common stock and warrants to purchase at $6.25 per share an
additional 325,000 shares of MMI common stock. It is anticipated that MEDIQ
will distribute the 2,050,000 shares of MMI common stock to MEDIQ
shareholders. The transaction is subject to approval by the shareholders of
MMI. It is anticipated that the merger will be completed prior to July 31,
1994.
Bernard J. Korman, President and Chief Executive Officer of MEDIQ, and Alan
D. Margulis, President and Chief Executive Officer of MMI, commented, 'This
combination will create the strongest independent provider of diagnostic
equipment service in the country, with a wide variety of products available for
the healthcare industry. An integration plan for the two companies has been
developed to generate significant improved operating results.'.
MEDIQ provides essential healthcare services in a cost effective manner to
a variety of healthcare providers. MEDIQ's principal businesses include
MEDIQ/PRN Life Support Services, Inc., the country's leading provider of life
support and critical care equipment on a rental basis, and the Diagnostic
Imaging Services Group, which provides portable x-ray, nuclear imaging and
ultrasound services. MEDIQ also owns significant equity interests in two
publicly traded companies, NutraMax Products, Inc. (NASDAQ-NMPC) and PCI
Services, Inc. (NASDAQ-PCIS). MEDIQ's securities trade on the American Stock
Exchange under these symbols: common stock (MED), preferred stock (MED.Pr),
convertible debentures (MED.C) and subordinated debentures (MED.NP) exchangeable
into shares of NutraMax.
-END-
