37
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
An-Con Genetics, Inc.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
032347 20 5
(CUSIP Number)
Kenneth W. Davidson, President
Maxxim Medical, Inc.
10300 49th Street North
Clearwater, Florida 33762
(813) 561-2100
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
September 8, 1998
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act,
but shall be subject to all other provisions of the Act (however, see the
Notes.)
<PAGE>
1 NAMES OF REPORTING PERSONS/I.R.S. IDENTIFICATION NOS.
Maxxim Medical, Inc.
76-0291634
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
Not applicable. See Introduction to the Statement and Item 3 of the
Statementbelow..
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or
2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Texas
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NUMBER OF 7 SOLE VOTING POWER
SHARES 3,000,000
-----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
0
OWNED BY EACH -----------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING 3,000,000
-----------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER
0
-----------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,000,000
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (10) EXCLUDES CERTAIN
SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
18.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
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<PAGE>
INTRODUCTION
This statement on Schedule 13D is filed on behalf of Maxxim Medical, Inc.,
a Texas corporation ("Maxxim"). On May 8, 1998, Maxxim and An-Con Genetics, Inc.
("An-Con") entered into an agreement whereby An-Con purchased certain assets
(and assumed certain liabilities) associated with the Bovie brand
electrosurgical products manufactured and sold by Maxxim (the "Bovie Assets"),
for a purchase price of 3 million shares of An-Con common stock ("Common
Stock"). As An-Con did not have a sufficient number of authorized but unissued
shares of its Common Stock available at the time of the closing of the
transaction, the purchase price was paid by the issuance by An-Con to Maxxim of
a secured convertible subordinated promissory note in the principal amount of $3
million (the "Note"). The Note provided that it would automatically convert into
3 million shares of Common Stock upon the filing with the Delaware Secretary of
State of an amendment to the Certificate of Incorporation of An-Con (the
"Amendment") increasing the number of shares of its authorized Common Stock. The
filing of the Amendment was subject to the approval of the increase in the
number of authorized shares of Common Stock by the stockholders of An-Con at the
1998 annual meeting of the stockholders of An-Con. The An-Con annual meeting was
held on September 8, 1998, the increase in the number of authorized shares of
Common Stock was approved by the stockholders at the meeting, and the Amendment
was filed with the Delaware Secretary of State on September 8, 1998.
In connection with the above described transaction, Maxxim and An-Con
entered into a Registration Rights Agreement, pursuant to which An-Con agreed to
register the 3 million shares of Common Stock for resale by Maxxim under the
federal and state securities laws as soon as reasonably practicable after demand
by Maxxim; provided however, that Maxxim may not make such a demand until
immediately after the earlier to occur of: (a) six months following the date of
first inclusion of An-Con's Common Stock on the NASDAQ Small Cap Market, the
NASDAQ National Market System or other national securities exchange; and (b)
August 8, 1999.
Also, An-Con created a vacancy in its Board of Directors and elected a
nominee of Maxxim, Mr. Kenneth W. Davidson, to fill the vacancy, and An-Con
agreed to appoint additional nominees of Maxxim to its board in the event that
its board was expanded during the term of the Agreement, so that Maxxim's
designees would hold an approximate percentage of the total number of seats on
the board of An-Con equal to the percentage of the outstanding shares of Common
Stock of An-Con owned by Maxxim.
Item 1. Security and Issuer:
This statement relates to shares of Common Stock of An-Con Genetics, Inc.,
a Delaware corporation, the principal executive offices of which are located at
734 Walt Whitman Road, Melville, New York 11747.
Item 2. Identity and Background.
The person filing this statement is Maxxim Medical, Inc., a Texas
corporation. The principal business of Maxxim is the manufacture and development
of a diversified range of specialty medical products. The principal office and
principal business of Maxxim are located at 10300 49th Street North, Clearwater,
Florida 33762. The attached Schedule I sets forth a list of the executive
officers and directors of Maxxim as well as their business addresses, present
principal occupations or employment and the name, principal business and address
of any corporation or other organization in which such employment is conducted,
and citizenship. Maxxim has no controlling person or corporation.
During the last five years, neither Maxxim nor, to the best of Maxxim's
knowledge, any person named on Schedule I, has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) nor been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction in which as a result of such proceeding Maxxim or any such person
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
On May 8, 1998, Maxxim and An-Con Genetics, Inc. ("An-Con") entered into an
agreement whereby An-Con purchased certain assets (and assumed certain
liabilities) associated with the Bovie brand electrosurgical products
manufactured and sold by Maxxim (the "Bovie Assets"), for a purchase price of 3
million shares of An-Con Common Stock.
Item 4. Purpose of Transaction
The purpose of Maxxim's acquisition of the Note and the Common Stock was to
assist An-Con in financing the purchase of the Bovie Assets from Maxxim.
In connection with the transaction between Maxxim and An-Con, Maxxim and
An-Con entered into a Registration Rights Agreement, pursuant to which An-Con
agreed to register the 3 million shares of Common Stock for resale by Maxxim
under the federal and state securities laws as soon as reasonably practicable
after demand by Maxxim; provided however, that Maxxim may not make such a demand
until immediately after the earlier to occur of: (a) six months following the
date of first inclusion of An-Con's Common Stock on the NASDAQ Small Cap Market,
the NASDAQ National Market System or other national securities exchange; and (b)
August 8, 1999. Maxxim intends to sell shares of the Common Stock and reduce its
percentage of share ownership as opportunities arise, consistent with
maintaining the value of its investment in its remaining shares.
Also, An-Con created a vacancy in its Board of Directors and elected a
nominee of Maxxim, Mr. Kenneth W. Davidson, to fill the vacancy, and An-Con
agreed to appoint additional nominees of Maxxim to its board in the event that
its board was expanded during the term of the Agreement, so that Maxxim's
designees would hold an approximate percentage of the total number of seats on
the board of An-Con equal to the percentage of the outstanding shares of Common
Stock of An-Con owned by Maxxim.
Item 5. Interest in Securities of the Issuer.
(a) According to An-Con's most recently available filing with the
Commission, there were 13,629,693 shares of Common Stock outstanding on July 31,
1998. Giving effect to the issuance of 3 million shares of Common Stock to
Maxxim on September 8, 1998, An-Con would have 16,629,693 shares outstanding,
with Maxxim owning approximately 18.0% of the total number of outstanding
shares.
To the best of Maxxim's knowledge, none of the persons listed on Schedule I
beneficially own any shares of Common Stock of An-Con.
(b) Maxxim has the sole right to vote and dispose of all of the Common
Stock beneficially owned by it.
(c) To the best of Maxxim's knowledge, there have been no other
transactions in the An-Con Common Stock effected during the past 60 days by
Maxxim or any of the persons listed in Schedule I.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
In connection with the transaction between Maxxim and An-Con, Maxxim and
An-Con entered into a Registration Rights Agreement, pursuant to which An-Con
agreed to register the 3 million shares of Common Stock for resale by Maxxim
under the federal and state securities laws as soon as reasonably practicable
after demand by Maxxim; provided however, that Maxxim may not make such a demand
until immediately after the earlier to occur of: (a) six months following the
date of first inclusion of An-Con's Common Stock on the NASDAQ Small Cap Market,
the NASDAQ National Market System or other national securities exchange; and (b)
August 8, 1999.
In connection with the transaction between Maxxim and An-Con, An-Con
created a vacancy in its Board of Directors and elected a nominee of Maxxim, Mr.
Kenneth W. Davidson, to fill the vacancy, and An-Con agreed to appoint
additional nominees of Maxxim to its board in the event that its board was
expanded during the term of the Agreement, so that Maxxim's designees would hold
an approximate percentage of the total number of seats on the board of An-Con
equal to the percentage of the outstanding shares of Common Stock of An-Con
owned by Maxxim.
Item. 7. Material to be Filed as Exhibits.
1.1 Asset Purchase Agreement dated May 8, 1998, by and between An-Con and
Maxxim.
1.2 Registration Rights Agreement dated May 8, 1998, by and between An-Con
and Maxxim.
<PAGE>
Schedule I
Each of the individuals below, except for Messrs. Davidson, Graham, Lamont,
Wafelman and Beek, is a citizen of the United States of America. Messrs.
Davidson, Graham and Lamont are citizens of Canada. Messrs. Wafelman and Beek
are citizens of The Netherlands. For each person whose employment is with
Maxxim, the principal business of their employer and their business address is
described under Item 2 above.
<TABLE>
<S> <C>
Principal Occupation or Employment; Principal Business of
Name Employer; Business Address.
Kenneth W. Davidson............... Chairman of the Board, President and Chief Executive Officer
Maxxim Medical, Inc.
Peter M. Graham................... Executive Vice President, Chief Operating Officer and
Secretary
Maxxim Medical, Inc.
David L. Lamont................... Vice President and Group Vice President
Maxxim Medical, Inc.
Henry T. DeHart................... Vice President, Executive Vice President Operations, Case
Management
Maxxim Medical, Inc.
Jack F. Cahill.................... Vice President, Executive Vice President Sales and
Marketing, Case Management
Maxxim Medical, Inc.
Alan S. Blazei.................... Vice President, Controller and Treasurer
Maxxim Medical, Inc.
Joseph D. Dailey.................. Vice President, Information Services
Maxxim Medical, Inc.
Suzanne R. Garon.................. Vice President, Human Resources
Maxxim Medical, Inc.
Rob W. Beek....................... Vice President, Managing Director, Maxxim Medical Europe
Maxxim Medical, Inc.
Donald R. DePriest................ President of MedCom Development Corporation, the General
Partner of MCT Investors, L.P., a limited partnership
engaged in the business of venture capital investing.
MCT Investors, L.P.
625 Slaters Lane, G100
Alexandria, VA 22314
Peter G. Dorflinger............... President and Chief Operating Officer of Physicians Resource
Group, Inc., a physicians practice management company.
Physicians Resource Group, Inc.
3 Lincoln Center, Suite 1540
5430 LBJ Freeway
Dallas, TX 75240
Martin Grabois, M.D............... Professor and Chairman of the Department of Physical
Medicine and Rehabilitation at Baylor College of
Medicine in Houston, Texas.
Baylor College of Medicine
Dept. of PM&R
1333 Moursund Ave.
Clinic Bldg. A221
Houston, TX 77030
Ernest J. Henley, Ph.D............ Professor of Chemical Engineering at the University of
Houston
49 Briar Hollow Lane
#1902
Houston, TX 77027
Richard O. Martin, Ph.D........... Chairman and Chief Executive Officer, of Physio-Control
International Corp., a manufacturer of cardiac
defibrillators and monitoring equipment.
Physio-Control International Corp.
11811 Willows Road N.E.
Redmond, WA 98073-9706
Henk R. Wafelman, Ing............. Executive Chairman of the Dutch Society of Enterprises in
Medical Technology, a Netherlands based technology
society.
Taksteeg 3
1012 PB
Amsterdam, The Netherlands
</TABLE>
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: September 21, 1998
_/s/ Alan S. Blazei_________________
(Signature)
_Alan S. Blazei_____________________
_Vice President, Corporate Controller & Treasurer
(Name and Title)
Exhibit 1.1
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated the 8th day of May 1998, by and between
MAXXIM MEDICAL, INC., a Delaware corporation ("Seller"), and AN-CON GENETICS
INC., a Delaware corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller desires to sell, transfer and assign to Buyer, and Buyer
desires to purchase and assume from Seller, certain of Seller's assets and
liabilities of Seller's electrosurgical generator product line, all upon the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the respective covenants,
representations, warranties and agreements herein contained, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE I - PURCHASE AND SALE
1.1. Sale of Assets. Seller hereby grants, sells, conveys, assigns,
transfers and delivers to Buyer all right, title and interest of Seller in and
to the following assets of Seller's electrosurgical product line, including
models X10, 400, CSV and Specialist, and associated with the name "Bovie"
(collectively, the "Assets"):
a. the machinery, equipment, tools, furniture, furnishings, goods and other
tangible personal property set forth on Exhibit A annexed hereto;
b. the inventory set forth on Exhibit B annexed hereto;
c. the rights and ownership to the name "Bovie" under any trade names and
the trademarks and patents set forth on Exhibit C annexed hereto (the
"Intellectual Property"); and
d. the goodwill associated with the name "Bovie".
1.2. Assumption of Liabilities. From and after the date hereof, Buyer
agrees to assume responsibility for all liabilities and obligations associated
with the Assets, including but not limited to all liabilities and obligations
therefor under warranties, express or implied (but not including any product
liability obligations for products sold by Seller prior to the date hereof), and
all liabilities and obligations for purchase orders outstanding on the date
hereof for parts therefor as set forth on Exhibit D hereto (collectively, the
"Assumed Liabilities"). Seller agrees to reimburse Buyer for repairs performed
by or on behalf of Buyer after the date hereof under any outstanding product
warranties for "Bovie" branded generators sold by Seller prior to the date
hereof as follows: (i) parts shall be reimbursed to the extent of Buyer's direct
out of pocket expenses therefor and (ii) labor shall be reimbursed at the rate
of $42.50 per hour. Buyer shall submit detailed invoices for such parts and
labor to Seller on a quarterly basis.
1.3. The Purchase Price. The total purchase price to be paid by Buyer to
Seller for the sale of the Assets and the assumption of the Assumed Liabilities
(the "Purchase Price") is three million (3,000,000) shares of the common stock
of Buyer, $.001 par value per share (the "Shares"). Buyer and Seller acknowledge
that the Shares can not be delivered to Seller until an amendment to Buyer's
Certificate of Incorporation increasing the authorized Common Stock of Buyer
(the "Amendment") is approved by its shareholders and filed with the Secretary
of State of Delaware. Accordingly, Buyer hereby delivers to Seller a Secured
Convertible Promissory Note, in the form annexed hereto as Exhibit E (the
"Note"), which Note shall (a) be in the principal amount of Three Million
Dollars ($3,000,000), (b) be secured in accordance with the terms of the
Security Agreement delivered herewith by Buyer and its wholly owned subsidiary,
Aaron Medical Industries, Inc., to Seller in the form annexed hereto as Exhibit
F (the "Security Agreement"), and (c) automatically convert into the Shares upon
the filing of the Amendment with the Secretary of State of Delaware. With
respect to the Shares, Seller shall have all the rights and benefits of the
Registration Rights Agreement to be entered into simultaneously herewith between
Buyer and Seller in the form annexed hereto as Exhibit G (the "Registration
Rights Agreement").
1.4. Allocation of Purchase Price. The Purchase Price shall be allocated
among the Assets as set forth on Exhibit H annexed hereto. Buyer and Seller each
hereby covenant and agree that it will not take a position that is in any way
inconsistent with the terms of this Section 1.4 on any income tax return, before
any governmental agency charged with the collection of any income tax or in any
judicial proceeding.
ARTICLE II - CLOSING, ITEMS TO BE DELIVERED,
FURTHER ASSURANCES
2.1. Closing. The closing (the "Closing") of the sale and purchase of the
Assets shall take place simultaneously with the execution of this Agreement on
the date hereof but shall be effective at 12:01 a.m. on May 11, 1998. The date
of the Closing is sometimes herein referred to as the "Closing Date."
2.2. Items to be Delivered at Closing. At the Closing:
a. Seller shall deliver to Buyer the following:
(i) a duly executed bill of sale in the form annexed hereto as Exhibit I
transferring and assigning to and vesting in Buyer all of Seller's right, title
and interest in and to the Assets;
(ii) a duly executed Registration Rights Agreement; and
(iii) a duly executed Supply and License Agreement between Buyer and Seller
in the form annexed hereto as Exhibit J (the "Supply and License Agreement").
b. Buyer shall deliver to Seller the following:
(i) a duly executed Note;
(ii) a duly executed Registration Rights Agreement;
(iii) a duly executed Supply and License Agreement;
(iv) a duly executed Security Agreement;
(v) written confirmation from each member of its Board of Directors that
Kenneth W. Davidson is appointed to Buyer's Board of Directors effective on the
date hereof;
(vi) a copy of its Articles of Incorporation and By-laws, certified by an
officer of Buyer as being true, correct and complete; and
(vii) a certificate, dated as of a recent date, of the Secretary of State
of Delaware and each additional state in which Buyer is qualified to do business
to the effect that Buyer is in good standing in such state.
2.3. Further Assurances. From and after the Closing, Seller and Buyer will
cooperate with each other and execute and deliver to each other such other
instruments and documents and take such other actions as may be reasonably
requested from time to time by the other party hereto as necessary to carry out,
evidence and confirm the intended purposes of this Agreement.
ARTICLE III - REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of Seller. Seller represents and
warrants to Buyer as follows:
a. Legal Authority and Enforceable Obligations. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Seller has the power and authority to execute, deliver and
perform this Agreement and all the other documents and agreements delivered in
connection herewith. This Agreement and all the other documents and agreements
required to be delivered by Seller in accordance with the provisions hereof have
been duly executed and delivered on behalf of Seller and constitute the legal,
valid and binding obligation of Seller, enforceable against Seller in accordance
with their respective terms, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies.
b. Validity of Contemplated Transactions. The execution, delivery and
performance of this Agreement by Seller does not and will not violate, conflict
with or result in the breach of any term, condition or provision of, or require
the consent of any other party under (i) any existing law, ordinance or
governmental rule or regulation to which Seller is subject, (ii) any judgment,
order, writ, injunction, decree or award of any court, arbitrator or
governmental or regulatory official, body or authority which is applicable to
Seller, (iii) the Articles of Incorporation or By-laws of Seller or (iv) any
mortgage, indenture, agreement, contract, commitment, lease, plan or other
instrument, document or understanding, oral or written, to which Seller is a
party or by which any of the Assets are bound. No authorization, approval or
consent of, and no registration or filing with, any governmental or regulatory
official, body or authority is required in connection with the execution,
delivery or performance of this Agreement by Seller or the sale to Buyer of the
Assets.
c. Title to Tangible Assets. Seller has and shall transfer to Buyer at the
Closing good and marketable title to all of the tangible Assets being sold and
transferred hereunder, free and clear of all mortgages, liens, pledges, security
interests, charges, claims, restrictions and other encumbrances and defects of
title of any nature whatsoever.
d. Intellectual Property. Seller owns or has the legal right to use and
transfer to Buyer the Intellectual Property. To Seller's knowledge, such
ownership or use does not conflict, infringe or violate the rights of any other
person.
e. Compliance. To Seller's knowledge, the tangible Assets are in compliance
in all material respects with all applicable rules and regulations, including
but not limited to applicable rules and regulations of the Food and Drug
Administration.
f. Finder's Fee. Seller has not incurred any obligation for any finder's,
broker's or agent's fee in connection with the transactions contemplated hereby.
3.2. Representations and Warranties of Buyer. Buyer represents and warrants
to Seller as follows:
a. Legal Authority and Enforceable Obligations. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer has the power and authority to execute, deliver and perform this
Agreement and all the other documents and agreements delivered in connection
herewith and issue and deliver the Note to Seller. Upon the filing of the
Amendment with the Secretary of State of Delaware, Buyer will have all necessary
power and authority to issue the Shares to Seller. This Agreement and all the
other documents and agreements required to be delivered by Buyer in accordance
with the provisions hereof have been duly executed and delivered on behalf of
Buyer and constitute the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with their respective terms, except as
may be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
b. Validity of Contemplated Transactions. Except as set forth on Schedule
3.2(b), the execution, delivery and performance of this Agreement and the other
documents and agreements delivered in connection herewith to Seller by Buyer
does not and will not violate, conflict with or result in the breach of any
term, condition or provision of, or require the consent of any other party under
(i) any existing law, ordinance or governmental rule or regulation to which
Buyer is subject, (ii) any judgment, order, writ, injunction, decree or award of
any court, arbitrator or governmental or regulatory official, body or authority
which is applicable to Buyer, (iii) the Articles of Incorporation or By-laws of
Buyer or (v) any mortgage, indenture, agreement, contract, commitment, lease,
plan or other instrument, document or understanding, oral or written, to which
Buyer is a party or by which Buyer is otherwise bound. Except as set forth on
Schedule 3.2(b) no authorization, approval or consent of, and no registration or
filing with, any governmental or regulatory official, body or authority is
required in connection with the execution, delivery and performance of this
Agreement by Buyer or the issuance and delivery of the Shares to Seller.
c. Capitalization; Stock Ownership. The authorized capital stock of Buyer
consists of 15,000,000 shares of Common Stock, $.001 par value per share, of
which 15,000,000 shares are reserved for issuance or issued and outstanding. No
shares of the Buyer's capital stock are held by it as treasury stock. All of
such issued and outstanding shares have been duly authorized and validly issued
and are fully paid and non-assessable and none of them have been issued in
violation of any preemptive or other right. Except as set forth on Schedule
3.2(c), Buyer is not a party to or bound by any contract, agreement or
arrangement to issue, sell or otherwise dispose of or redeem, purchase or
otherwise acquire any capital stock or any other security of Buyer or any other
security exercisable or exchangeable for or convertible into any capital stock
or any other security of Buyer and, except for this Agreement, there is no
outstanding option, warrant or other right to subscribe for or purchase, or
contract, agreement or arrangement with respect to, any capital stock or any
other security of Buyer or any other security exercisable or convertible into
any capital stock or any other security of Buyer. Except as set forth on
Schedule 3.2(c), Buyer is not a party to or bound by any contract, agreement or
arrangement to register under the Securities Act of 1933, as amended, or
otherwise dispose of any of its capital stock. Except as set forth on Schedule
3.2(c), Buyer does not own, directly or indirectly, any shares of capital stock
of any corporation or any equity investment in any partnership, association or
other business organization. The Shares have been duly and validly issued and
are fully paid and nonassessable. Upon the filing of the Amendment with the
Secretary of State of Delaware, the authorized capital stock of Buyer will
consist of 50,000,000 shares of Common Stock and 10,000,000 shares of Preferred
Stock.
d. Financial Statements. Buyer has delivered to Seller the audited
consolidated balance sheet of Buyer as of December 31, 1995, 1996 and 1997 and
the related consolidated statements of operations, shareholders' equity and cash
flows for the fiscal years then ended, including the notes thereto (collectively
the "Financial Statements"). The Financial Statements, including the notes
thereto, have been prepared in accordance with generally accepted accounting
principles consistently applied by Buyer according to past practice throughout
the periods indicated. The Financial Statements are complete and correct and
fairly and accurately present the financial condition and the results of
operations of Buyer as at the dates and for the periods indicated. As at
December 31, 1997 (the "Balance Sheet Date") there was no liability of any
nature or in any amount that should be properly reflected or reserved against in
the balance sheet as of such date (the "Balance Sheet") which is not fully
reflected or reserved against in the Balance Sheet.
e. No Undisclosed Liabilities. Except as set forth in Schedule 3.2(e),
Buyer has no known material liabilities or obligations of any nature (whether
absolute, accrued, contingent or otherwise) except for liabilities or
obligations adequately reflected or reserved against in the Balance Sheet (and
the notes thereto) and current liabilities incurred since the Balance Sheet Date
in the ordinary course of business. Buyer is not in default under the terms or
conditions of any indebtedness for which it is obligated directly, indirectly or
as an endorser thereof.
f. Absence of Changes. Since the Balance Sheet Date, Buyer has conducted
its business in the ordinary and usual course and has used its best efforts to
preserve intact its business organization, keep available the services of its
officers and employees, and maintain satisfactory relationships with vendors,
suppliers, distributors, clients and others having business relationships with
it. Since the Balance Sheet Date, Buyer has not had any material adverse change
in its business, operations (present or prospective), assets, properties,
liabilities or condition (financial or otherwise) and, to Buyer's best
knowledge, no event has occurred or circumstance exists that could reasonably be
expected to result in such a material adverse change.
g. Title to and Condition of Properties and Assets. Except as set forth on
Schedule 3.2(g), Buyer has good and marketable title to all of its properties
and assets, including, without limitation (i) all properties and assets used in
its business and (ii) all properties and assets reflected on the Balance Sheet,
in each instance free and clear of all encumbrances, liens, charges, claims or
other restrictions of any kind or character, except liens for current taxes,
assessments or governmental charges not yet due as to which sufficient reserves
have been created. The facilities and fixed assets of Buyer are in good
operating condition and repair, subject to normal wear and tear, and none of the
properties or assets owned or leased by Buyer is in violation of any applicable
law, ordinance, rule or regulation.
h. Contracts. Schedule 3.2(h) contains an accurate and complete list of all
contracts which (i) are material to the condition (financial or otherwise),
operations, assets or business of Buyer; (ii) involve total annual sales,
payments or commitments by Buyer in excess of $100,000; (iii) include
distribution, supply and licensing arrangements; (iv) are contracts with
security holders, directors, officers, employees, agents or consultants, or any
affiliates of the foregoing; (v) provide for a discount other than in the
ordinary course of business and consistent with past practices; (vi) provide for
the future purcghase by Buyer of any materials, equipment, services or supplies
continuing for a period of more than twelve months from the date of such
contract (including periods covered by any option to renew by either party), or
provide for a price materially in excess of current market prices or for
purchase obligations in excess of normal operating requirements over its
remaining term; (vii) obligate Buyer to borrow money or guarantee, endorse, or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations or any other person or entity; or (viii) limit
the freedom of Buyer to compete in any line of business in any geographic area.
Complete and correct copies of all such contracts have been delivered to Seller.
All of such contracts are valid and binding, in full force and effect and
enforceable in accordance with their respective terms. Neither Buyer nor any
other party thereto is in violation of any of the terms of or in default under
any such contract, nor has there occurred any event or condition which, with the
passage of time or giving of notice (or both), would constitute a violation or a
default by any party thereunder.
i. Litigation. Except as set forth in Schedule 3.2(i), there is no action,
suit, proceeding or investigation, either at law or in equity, by or before any
governmental or other instrumentality or agency, or any other entity or person
pending or, to Buyer's best knowledge, threatened or proposed or any
circumstances that could reasonably form the basis of any action, suit,
proceeding or investigation, against or affecting Buyer or any of its properties
or assets which, if determined adversely to Buyer, could (i) materially and
adversely affect the condition (financial or otherwise), operations (present or
prospective), properties or assets of Buyer; (ii) question the validity of this
Agreement or any of the transactions contemplated hereby; or (iii) seek to
delay, prohibit or restrict any actions taken or to be taken by Buyer hereunder.
j. Intellectual Properties. Schedule 3.2(j) contains a true and complete
list of all patents, copyrights, inventions, software, customer lists,
trademarks, trade names, service marks and all registrations and applications
therefor and licenses thereto, owned or used by Buyer in the operation of its
business. All such intellectual property is owned by Buyer free and clear of all
liens, claims, restrictions and encumbrances of any nature whatsoever, and Buyer
has the exclusive right to use such intellectual property in the operation of
its business without payment to a third party. None of Buyer's intellectual
property infringes or, to Buyer's best knowledge, is infringed upon by any
rights of third parties or is involved in any opposition, invalidation or
cancellation action. Buyer's intellectual property is sufficient for the
operation of Buyer's business as currently conducted.
k. Compliance with Laws. Buyer and all of its assets and properties are in
compliance in all material respects with all applicable laws, rules,
regulations, ordinances, orders, judgments and decrees of each and every
jurisdiction applicable to Buyer, its assets and properties. Buyer has not
received any notice or other communication from any governmental authority or
agency regarding any actual, alleged or potential violation of, or failure to
comply with, any law, rule, regulation, ordinance, order, judgment or decree
and, to Buyer's best knowledge, there does not exist any reasonable basis for
any claim of material default under or material violation of any such law, rule,
regulation, ordinance, order, judgment or decree.
l. Employees. Schedule 3.2(l) sets forth an accurate and complete list of
all officers and key employees of Buyer showing as to each the nature of the
officer's or employee's job, years of service, the amount or rate of
compensation, all entitlements to vacation, personal days and sick leave and
eligibility to participate in any of Buyer's pension, retirement, profit
sharing, deferred compensation, stock bonus, stock option, stock ownership,
insurance, medical or any other employee benefit plan. No employee of Buyer is a
party to, or is otherwise bound by, any agreement or arrangement with any third
party, including any confidentiality, non-competition or proprietary rights
agreement, that in any way adversely affects (i) the performance of his or her
duties as an employee of Buyer, (ii) the ability of Buyer to conduct its
business as presently conducted and contemplated to be conducted or (iii) the
consummation of the transactions contemplated by this Agreement.
m. Employee Benefit Plans. Set forth on Schedule 3.2(m) is an accurate and
complete list of all employee benefit plans ("Employee Benefit Plans"), within
the meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), whether or not any such Employee Benefit Plans are
otherwise exempt from the provisions of ERISA, currently maintained or
contributed to by Buyer. Buyer does not maintain or contribute to any Employee
Benefit Plan subject to ERISA which is not in compliance with ERISA, or which
has incurred any accumulated funding deficiency within the meaning of Section
412 or 418B of the Internal Revenue Code of 1986 as amended (the "Code"), or
which has applied for or obtained a waiver from the Internal Revenue Service of
any minimum funding requirement under Section 412 of the Code. Buyer has not
incurred any liability to the Pension Benefit Guaranty Corporation ("PBGC") in
connection with any Employee Benefit Plan covering any employees of Buyer or of
any entity treated as a single employer with Buyer under Section 414 of the Code
(an "ERISA Affiliate") or ceased operations at any facility or withdrawn from
any such Plan in a manner which could subject it to liability under Sections
4062(f), 4063 of 4064 of ERISA, and Buyer does not know of any facts or
circumstances which could reasonably be expected to give rise to any liability
of Buyer to the PBGC under Title IV of ERISA which could reasonably be expected
to result in any claims being made against the Purchaser by the PBGC. Buyer is
not a party to any pension plan that is a "multi-employer plan" (within the
meaning of Section 4001(a)(3) of ERISA) and has not incurred any withdrawal
liability (including any contingent or secondary withdrawal liability), within
the meaning of Sections 4201 and 4202 of ERISA, to any Employee Benefit Plan
which is a multi-employer plan and no event has occurred, and, to Buyer's best
knowledge, there exists no condition or set of circumstances which presents a
material risk of the occurrence of any withdrawal from or the partition,
termination, reorganization or insolvency of any multi-employer plan which could
result in any liability to a multi-employer plan. Buyer has made all payments
and contributions which Buyer is required to make and which are currently due
with respect to all Employee Benefit Plans in accordance with applicable law,
the terms of the Employee Benefit Plans or any agreement relating to any
Employee Benefit Plan to which Buyer is a party. Buyer has made adequate
provisions for reserves required to be reflected in accordance with generally
accepted accounting principles consistently applied in the Balance Sheet to meet
contributions that have not been made because they are not yet due under the
terms of any Employee Benefit Plan or related agreements. Benefits under all
Employee Benefit Plans are as set forth in the documents evidencing such Plans
and have not been materially increased subsequent to the date as of which
documents have been provided. Buyer has no material monetary obligation,
contingent or otherwise, under any Employee Benefit Plan providing
hospitalization, major medical or other medical coverage, other than the payment
of premiums to insurance carriers, health maintenance organizations or preferred
provider organizations, which is not fully insured or substantially covered by
adequate stop loss policies currently in force. Except as set forth on Schedule
3.2(m), Buyer has no obligations under any Employee Benefit Plan, or under any
oral or written agreement with any present or former employees, to provide (i)
ongoing medical or life insurance coverage or similar post-termination benefits
to any former employee (other than COBRA continuation coverage required by law),
or (ii) severance payments (other than accrued salary and vacation pay) to any
employee upon retirement or other termination of employment.
n. Governmental Authorizations and Regulations. Schedule 3.2(n) lists all
licenses, franchises, permits and other governmental authorizations held by
Buyer material to the conduct of its business. Such licenses, franchises,
permits and other governmental authorizations are valid, and Buyer has not
received any notice that any governmental authority intends to cancel, terminate
or not renew any such license, franchise, permit or other governmental
authorization. Buyer holds all licenses, franchises, permits and other
governmental authorizations the absence of any of which could have a material
adverse effect on its business. Except as set forth on Schedule 3.2(n), Buyer's
business is not being conducted, and no properties or assets of Buyer relating
thereto are owned or are being used by Buyer, in violation of any statute, law,
ordinance, regulation, rule or permit of any governmental entity or any
judgment, order or decree. All products manufactured or sold by Buyer comply in
all material respects with all statutes, laws, ordinances, regulations and rules
and criteria governing the design, manufacture and intended use thereof.
o. Taxes.
(i) Buyer has filed within the times and within the manner prescribed by
law, all federal, state, local and foreign tax returns, information returns,
forms, reports, declarations and all other tax reports and returns
(collectively, "Returns") which are required to be filed by it through the date
hereof. Each Return is true, correct and complete and accurately reflects all
required and appropriate liability for taxes of Buyer for the periods covered
thereby and no Return has been amended. All federal, state, local and foreign
income, profits, franchise, sales, use, occupancy, excise and other taxes and
assessments, including estimated taxes and interest and penalties (collectively,
"Taxes"), payable by or due from Buyer have been fully and timely paid or fully
provided for in the books and records of Buyer except for such Taxes which are
being contested in good faith, by appropriate proceedings, and as to which
adequate reserves (determined in accordance with generally accepted accounting
principles consistently applied) have been provided in the Balance Sheet. Buyer
has not waived any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to the filing of any Return or the payment of any
Tax assessment or deficiency.
(ii) All deficiencies proposed as a result of any audits conducted of the
Returns of Buyer by the Internal Revenue Service or relevant state or local tax
authorities have been paid, reserved against, settled or are being contested in
good faith by appropriate proceedings and are disclosed on Schedule 3.2(o). No
examination, audit or inquiry of any Return, federal, state or otherwise, of
Buyer is currently in progress and Buyer has not received notice of intent to
commence any examination, audit or inquiry of any such Return from any taxing
authority. Buyer has not settled, issued or entered into a closing agreement
with respect to any tax year for which an audit or examination has been
concluded that may reasonably be expected to result in a material deficiency for
any other taxable year not so examined that has not been accrued on the Balance
Sheet in accordance with generally accepted accounting principles consistently
applied.
(iii) The charges, accruals and reserves with respect to Taxes on the
Balance Sheet and the books and records of Buyer are adequate (determined in
accordance with generally accepted accounting principles consistently applied)
and are at least equal to Buyer's liability for Taxes. There exists no proposed
tax assessment against Buyer except as disclosed in the Balance Sheet. All Taxes
that Buyer is or was required to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the proper governmental
authority.
p. Insurance. Schedule 3.2(p) contains a true and complete list of all
insurance policies which Buyer maintains with respect to its business, its
products and its officers, directors and employees together with the name of the
insurer, each insured party, the type and amount of coverage, premium and
deductible amounts and the expiration dates therefor. All such policies are in
full force and effect and accurate and complete copies thereof have been
delivered to Seller. Buyer has paid all premiums due and has otherwise performed
all of its obligations under such policies and there currently exists no right
of termination or refusal of coverage on the part of the insurance carriers as a
result of any prior default on the part of Buyer. Buyer will maintain such
policies in full force and effect following the consummation of the transactions
contemplated hereby, with total coverage of no less than $5 million for product
liability insurance, and will provide Seller with prompt notice of any
cancellation of or material modifications to any such insurance policies.
q. Related Transactions. Except as set forth on Schedule 3.2(q), neither
Buyer nor any officer, director, employee or affiliate of Buyer currently has
any interest in any property (whether real, personal or mixed and whether
tangible or intangible), used in or pertaining to Buyer's business or owns (of
record or as a beneficial owner) an equity interest or any other financial or
profit interest in, a person or entity that (i) has business dealings or a
material financial interest in any transaction with Buyer (other than business
dealings or transactions conducted in the ordinary course of business with Buyer
at substantially prevailing market prices and on substantially prevailing market
terms), or (ii) is engaged in competition with Buyer with respect to any line of
the products or services of Buyer. Except as set forth on Schedule 3.2(q), none
of Buyer's officers, directors, employees or affiliates is a party to any
contract with, or has any claim or right against, Buyer, other than employment
contracts between Buyer and its officers and employees.
r. Disclosure. To the best of its knowledge, no representation or warranty
of Buyer in this Agreement or in any schedule, agreement, document or
certificate delivered in accordance with the terms hereof by Buyer contains any
untrue statement of a material fact or omits to state any material fact
necessary, in light of the circumstances under which made, in order to make the
statements contained herein or therein not misleading. There is no fact that
affects, or in the future might reasonably be expected to affect, adversely the
condition (financial or otherwise), operations (present or prospective),
properties, assets or liabilities of Buyer in any material respect that is not
set forth in this Agreement or the schedules hereto.
s. Public Documents. Buyer has furnished Seller with a true and complete
copy of each report and registration statement filed by it with the Securities
and Exchange Commission ("SEC") since January 1, 1995, which are all the
documents that it was required to file with the SEC since such date (the "Public
Documents"). As of their respective dates, the Public Documents did not contain
any untrue statements of material facts or omit to state material facts required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, the Public Documents complied in all material respects with
the applicable requirements of the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated under such statutes. The Public Documents do not contain any untrue
statements of material facts or omit to state any material facts required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading as of the date hereof
except for such facts as are disclosed herein and except for the transactions
contemplated hereby.
t. Finder's Fee. Buyer has not incurred any obligation for any finder's,
broker's or agent's fee in connection with the transactions contemplated hereby.
ARTICLE IV - INDEMNIFICATION
4.1. Indemnification Obligation of Seller. From and after the Closing,
Seller will reimburse, indemnify and hold harmless Buyer and its successors and
assigns (an "Indemnified Buyer Party") against and in respect of any and all
damages, losses, deficiencies, liabilities, costs and expenses, including
reasonable attorneys' fees (collectively, "Damages"), incurred or suffered by
any Indemnified Buyer Party that result from, relate to or arise out of (i) any
and all liabilities and obligations of Seller that arose prior to the Closing
which are not included in the Assumed Liabilities; (ii) any misrepresentation,
breach of warranty or non-fulfillment of any agreement or covenant on the part
of Seller under this Agreement or any other document or agreement furnished to
Buyer pursuant to the terms hereof; or (iii) any liability under any federal or
state securities laws arising from or relating to any misstatements or omissions
of material facts concerning this Agreement or the transactions contemplated
hereby in any documents filed by Seller with the SEC except to the extent such
liability relates to written information provided by Buyer included in such
documents.
4.2. Indemnification Obligation Of Buyer. From and after the Closing, Buyer
will reimburse, indemnify and hold harmless Seller and its successors or assigns
(an "Indemnified Seller Party") against and in respect of any and all Damages
incurred or suffered by any Indemnified Seller Party that result from, relate to
or arise out of any (i) any Assumed Liability; (ii) any liability or obligation
with respect to any Asset that arises on or after the Closing Date; (iii) any
misrepresentation, breach of warranty or non-fulfillment of any agreement or
covenant on the part of Buyer under this Agreement or other document or
agreement furnished to Seller pursuant to the terms hereof; or (iv) any
liability under any federal or state securities laws arising from or relating to
the sale or offer to sell the Shares to Seller or any misstatements or omissions
of material facts concerning this Agreement or the transactions contemplated
hereby in any documents filed by Buyer with the SEC, except to the extent such
liability relates to written information provided by Seller included in such
documents .
4.3. Procedure for Indemnification Claims. If at any time a claim shall be
made or threatened, or an action or proceeding shall be commenced or threatened,
against a party hereto (the "Aggrieved Party") which could result in liability
of the other party (the "Indemnifying Party") under its indemnification
obligations hereunder, the Aggrieved Party shall give to the Indemnifying Party
prompt notice of such claim, action or proceeding. Such notice shall state the
basis for the claim, action or proceeding and the amount thereof (to the extent
such amount is determinable at the time when such notice is given) and shall
permit the Indemnifying Party to assume the defense of any such claim, action or
proceeding (including any action or proceeding resulting from any such claim).
Failure by the Indemnifying Party to notify the Aggrieved Party of its election
to defend any such claim, action or proceeding within a reasonable time shall be
deemed a waiver by the Indemnifying Party of its right to defend such claim,
action or proceeding; provided, however, that the Indemnifying Party shall not
be deemed to have waived its right to contest and defend against any claim of
the Aggrieved Party for indemnification hereunder based upon or arising out of
such claim, action or proceeding.
If the Indemnifying Party assumes the defense of any such claim, action or
proceeding, the obligation of the Indemnifying Party as to such claim, action or
proceeding shall be limited to taking all steps necessary in the defense or
settlement thereof and, to the extent the Indemnifying Party is liable for
indemnification hereunder, to holding the Aggrieved Party harmless from and
against any and all losses, damages and liabilities caused by or arising out of
any settlement approved by the Indemnifying Party or any judgment or award
rendered in connection with such claim, action or proceeding. The Aggrieved
Party agrees to cooperate and make available to the Indemnifying Party all books
and records and such officers, employees and agents as are reasonably necessary
and useful in connection with the defense. The Aggrieved Party may participate,
at its expense, in the defense of such claim, action or proceeding provided that
the Indemnifying Party shall direct and control the defense of such claim,
action or proceeding; provided, however, if in the reasonable opinion of the
Aggrieved Party any such claim, action or proceeding involves an issue or matter
which, if adversely determined, would have a materially adverse effect on the
Aggrieved Party, then the Aggrieved Party shall have the right to control the
defense or settlement of any such claim, action or proceeding and its reasonable
costs and expenses shall be included as a part of the indemnification obligation
of the Indemnifying Party. The Indemnifying Party shall not, with respect to any
such claim, action or proceeding, consent to the entry of any judgment or award,
or enter into any settlement, except with the prior written consent of the
Aggrieved Party, which consent shall not be unreasonably withheld; provided,
however, in the case of any such judgment, award or settlement for money, it
shall be a condition thereto that the Indemnifying Party shall acknowledge its
obligation to indemnify the Aggrieved Party pursuant to this Article IV; and
provided, further, that any such judgment, award or settlement include, as an
unconditional term thereof, the release of the Aggrieved Party from all
liability by the third party claimant or plaintiff.
4.4. Payment. Upon the determination of the liability under Section 4.3
hereof, the appropriate party shall pay to the other, as the case may be, within
ten (10) days after such determination, the amount of any claim for
indemnification made hereunder. The indemnification obligations hereunder shall
survive the consummation of the transactions described herein and shall not be
limited by any amount payable by Buyer to Seller hereunder.
4.5. Other Rights and Remedies Not Affected. The indemnification rights of
the parties under this Article IV are independent of and in addition to such
rights and remedies as the parties may have at law or in equity or otherwise for
any misrepresentation, breach of warranty or failure to fulfill any agreement or
covenant hereunder on the part of any party hereto, including, without
limitation the right to seek specific performance, recision or restitution, none
of which rights or remedies shall be affected or diminished hereby.
ARTICLE V - POST CLOSING MATTERS
5.1. Survival of Representations and Warranties. All representations,
warranties, agreements and obligations made by the parties in this Agreement or
in any exhibit, document or instrument furnished hereunder shall survive the
Closing for a period of three years; provided, however, the representations and
warranties contained in Sections 3.1(c) and 3.2(c) shall survive indefinitely.
Notwithstanding any investigation or audit conducted before or after the Closing
Date or the decision of any party to complete the Closing, each party shall be
entitled to rely upon the representations and warranties set forth herein and
therein and each such representation and warranty shall be deemed to be
material.
5.2. Amendment of An-Con Certificate of Incorporation. As promptly as
practicable after the execution hereof, Buyer agrees to take all action
necessary to obtain shareholder approval for and to file with the Secretary of
State of Delaware the Amendment so that the Note can be converted into the
Shares. As soon as the Amendment is so filed, Buyer shall deliver written
confirmation thereof and the Shares to Seller and Seller shall deliver the Note
to Buyer. Buyer agrees to provide Seller with copies of all proxy statements and
other communication between it and its shareholders concerning the Amendment
simultaneously with any distribution of such communication to its shareholders.
Buyer agrees to use its best efforts to conclude all such actions within six
months of the date hereof.
5.3. Maintenance of Records. Each of Seller and Buyer shall preserve until
the fifth anniversary of the Closing Date all records possessed or to be
possessed by such party relating to any of the Assets or the Assumed Liabilities
which records are either required by law to be maintained or reasonably
necessary in order for Buyer to conduct its business. After the Closing Date,
Seller shall provide Buyer with access, upon prior reasonable written request
specifying the need therefor, during regular business hours, to such records of
Seller but only to the extent relating to the Assets or the Assumed Liabilities
prior to the Closing, and Buyer and its representatives shall have the right to
make copies of such books and records.
5.4. Payments Received. Seller and Buyer each agree that after the Closing
they will hold and will promptly transfer and deliver to the other, from time to
time as and when received by them, any cash, checks with appropriate
endorsements (using their best efforts not to convert such checks into cash) or
other property that they may receive on or after the Closing which properly
belongs to the other party, and will account to the other for all such receipts.
5.5. Transition Period. For a period of sixty (60) days after the Closing
Date (the "Transition Period"), Seller agrees to use reasonable efforts to make
available to Buyer certain of its employees and sublease to Buyer a portion of
its Sugar Land facilities currently used by Seller, in order to assist Buyer in
the operation, use and transfer of the Assets. Seller agrees to provide the
foregoing to Buyer free of charge to Buyer for the Transition Period. In the
event Buyer utilizes such facilities and any such employees beyond the
Transition Period, Buyer shall reimburse Seller for the same at the rate of
$7,500 per week, payable in the form of a credit against any purchases of
Buyer's products by Seller pursuant to the Supply and License Agreement. Buyer
agrees to be bound by and comply with all of the terms and conditions of the
lease between Seller and Henley Healthcare for such facilities for so long as
Buyer uses such premises.
5.6. Additional Actions and Documents. From and after the Closing Date,
Seller will take or cause to be taken such further actions, and execute, deliver
and file such further documents and instruments as Buyer may request from time
to time to evidence the transfer of the Assets to Buyer and to fully effectuate
the purposes and terms of this Agreement
5.7. Press Releases. Neither of the parties hereto nor any of their
respective employees, agents or representatives shall issue any press release
concerning the transactions described herein without prior notice to and
reasonable consent and approval of the other party hereto. Each of the parties
hereto agrees to pay to the other party liquidated damages of One Hundred
Thousand Dollars ($100,000) in the event of a breach by such party of the
provisions of this Section 5.7 which the parties agree is a reasonable amount to
pay for such breach because of the irreparable damage that such a breach will
create. In the event Buyer breaches the provisions of this Section 5.7, at its
election it may issue Seller such additional number of shares of its duly
authorized Common Stock which are valued at $100,000 based on the average of the
closing bid and asked prices for the Common Stock, as quoted on the Over the
Counter Bulletin Board (or such other market or exchange on which it is then
listed), for the thirty (30) days preceding such breach.
5.8. Reversion of Intellectual Property. In the event that Buyer applies
for or consents to the appointment of a receiver, trustee or liquidator of it or
any of its property, admits in writing its inability to pay its debts as they
mature, makes a general assignment for the benefit of creditors, files a
petition seeking relief under Title 11 of the United States Code or under any
other federal or state bankruptcy, reorganization or insolvency law or has a
petition filed against it which is not dismissed within 60 days, then all right,
title and interest in and to the Intellectual Property shall automatically
revert to Seller. Notwithstanding the foregoing, Buyer shall retain its right,
title and interest in and to the Intellectual Property in the event any of the
foregoing actions involve a petition for reorganization and Buyer is reorganized
as a solvent entity within one year of the date of such petition. Buyer agrees
to take any action and execute any document which Seller deems necessary or
desirable to effectuate the foregoing transfer.
5.9. Enlargement of Board of Directors. Buyer represents to and warrants to
Seller that its By-laws fix the maximum number of members of its Board of
Directors at seven (7). Buyer agrees that in the event the size of its Board of
Directors is enlarged it will cause its directors to appoint as director such
additional designees as Seller selects in the approximate proportion that
Seller's shares of Common Stock bears to the total outstanding shares of Common
Stock. Consistent with the foregoing, if the Board is increased to nine (9)
members, Seller may appoint one (1) additional designee to the Board.
ARTICLE VI - MISCELLANEOUS
6.1. Taxes. Buyer shall pay all federal, state and local sales, documentary
and other transfer taxes, if any, due as a result of the purchase, sale or
transfer of the Assets in accordance therewith whether imposed by law on Seller
or Buyer and Buyer shall indemnify, reimburse and hold harmless Seller in
respect of the liability for payment of or failure to pay any such taxes or the
filing of or failure to file any reports required in connection therewith.
6.2. Expenses. Except as otherwise provided in this Agreement, each party
hereto shall pay its own expenses incidental to the preparation of this
Agreement, the carrying out of the provisions hereof and the consummation of the
transactions contemplated hereby.
6.3. Contents of Agreement. This Agreement sets forth the entire
understanding of the parties hereto with respect to the subject matter hereof.
It shall not be amended or modified, and no provision hereof shall be waived,
except by written instrument duly executed by each of the parties hereto. Any
and all previous agreements and understandings between the parties regarding the
subject matter hereof, whether written or oral, are superseded by this
Agreement.
6.4. Assignment and Binding Effect. This Agreement may not be assigned by
any party hereto without the prior written consent of the other parties. Subject
to the foregoing, all of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the permitted
successors and assigns of the parties.
6.5. Waiver. No delay or failure on the part of either party in exercising
any right hereunder, and no partial or single exercise hereof, will constitute a
waiver of such right or of any other right hereunder.
6.6. Notices. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally or sent by overnight,
registered or certified mail, postage prepaid, to the parties' respective
principal places of business. Such notice, request, demand, waiver, consent,
approval or other communication will be deemed to have been given as of the date
so personally delivered, one business day after being sent by overnight mail or
five business days after being deposited in the U.S. mail.
6.7. Governing Law. This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the State of Florida.
6.8. No Benefit to Others. The representations, warranties, covenants and
agreements contained in this Agreement are for the sole benefit of the parties
hereto and, in the case of Article IV hereof, the other Indemnified Parties, and
their heirs, executors, administrators, legal representatives, successors and
assigns, and they shall not be construed as conferring any rights on any other
persons.
6.9. Exhibits and Schedules. All Exhibits and Schedules referred to herein
are intended to be and hereby are specifically made a part of this Agreement.
6.10. Severability. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
6.11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original and all of which counterparts when taken together shall constitute but
one and the same instrument.
6.12. Rules of Construction. The rules of construction which require the
terms of an agreement to be construed most strictly against the drafter of such
an agreement are hereby waived and relinquished by each party.
6.13. Arbitration. Any dispute arising under or in connection with this
Agreement shall be submitted to arbitration in Pinellas County, Florida to a
member of the American Arbitration Association mutually appointed by the parties
hereto (or, in the event the parties cannot agree on a single such member, to a
panel of three members selected in accordance with the rules of such
Association), who shall promptly arbitrate such dispute in accordance with the
rules of such Association and report their findings to the parties. Such report
shall be final, binding and conclusive on the parties. Judgment upon the award
by the arbitrator(s) may be entered in any court having jurisdiction. The
prevailing party in any such arbitration shall be entitled to recover from, and
have paid by, the other party hereto to all fees and disbursements of such
arbitrator or arbitrators and reasonable attorney's fees, costs and expenses
incurred by the prevailing party in such arbitration.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
MAXXIM MEDICAL, INC.
By: /s/ Kenneth W. Davidson
Name: Kenneth W. Davidson,
Chief Executive Officer
AN-CON GENETICS INC.
By: /s/ J. Robert Saron
Name: J. Robert Saron,
Chief Executive Officer
Exhibit 1.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT dated May 8, 1998, by and between AN-CON
GENETICS, INC., a Delaware corporation having its principal office at 7100 30th
Avenue North, St. Petersburg, Florida ("An-Con"), and MAXXIM MEDICAL, INC., a
Delaware corporation having its principal office at 10300 49th Street North,
Clearwater, Florida 33762 ("Maxxim").
W I T N E S S E T H:
WHEREAS, An-Con and Maxxim have entered into that certain Asset Purchase
Agreement dated the date hereof (the "Purchase Agreement") pursuant to which
An-Con has issued and delivered to Maxxim a Convertible Promissory Note (the
"Note") which Note is convertible into shares of Common Stock of An-Con, par
value $.001 per share (the "An-Con Shares"), all as more fully set forth in the
Note;
WHEREAS, it is a condition precedent to Maxxim entering into the Purchase
Agreement that it receive registration rights for the An-Con Shares; and
WHEREAS, it is the intent of the parties hereto that the registration
rights granted to Maxxim herein shall be entitled to at least equal rights and
priorities with respect to the registration of the registrable shares granted to
(i) Advanced Refractory Technologies, Inc ("ART") pursuant to that certain
Registration Rights Agreement dated as of February 9, 1998 between An-Con and
ART (the "ART Registration Rights Agreement") and (ii) the stockholders of
An-Con (the "Stockholders") pursuant to that certain Registration Rights
Agreement dated February 9, 1998 between An-Con and the Stockholders (the
"Stockholders' Registration Rights Agreement").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto (each
individually, a "Party" and collectively, the "Parties") hereby agree as
follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. For purposes of this Agreement, the following terms shall
have the respective meanings set forth below:
a. "Affiliate" of a Party means any Person (as hereinafter defined) which
Controls (as hereinafter defined), is Controlled by, or is under common Control
with, such Party.
b. "Applicable Law" means any and all applicable laws, rules, regulations,
statutes, orders and ordinances of any Government Authority (as hereinafter
defined).
c. "Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
d. "Fair Market Value" for An-Con Shares as of a particular date means the
closing sale price for one (1) share of An-Con Shares as reported on the primary
securities exchange on which such shares are listed or, in the event such shares
are not listed on any securities exchange, the last reported sale price on the
NASDAQ National Market System ("NASDAQ/NMS") or, in the event no such reported
sale takes place on the day subject to determination of the Fair Market Value,
the average of the reported closing bid and asked prices on such securities
exchange or NASDAQ/NMS, or, in the event such shares are not listed on any
securities exchange or quoted on the NASDAQ/NMS, the average of the bid and
asked prices for the immediately preceding forty-five (45) days as quoted on the
NASDAQ Small Cap Market, or in the event such shares are not quoted on the
NASDAQ Small Cap Market, the average of the bona fide independent bid prices for
the immediately preceding forty-five (45) days as reported in the NASDAQ
Bulletin Board, or in the event such shares are not reported in the NASDAQ
Bulletin Board, the average of the bona fide independent bid prices for the
immediately preceding forty-five (45) days reported in the "over-the-counter"
market in the "pink sheets" published by the National Quotation Bureau, Inc., or
in the event such shares are not so listed, quoted or included, the Fair Market
Value as established by the good faith determination of any nationally
recognized firm of certified public accountants selected by Maxxim.
e. "Government Authority" means any foreign, federal, state, local or other
government, government agency or authority or quasi-governmental body, or any
entity exercising any executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including, without
limitation, any arbitrator and any government department, board, commission,
court or tribunal.
f. "Person" means any individual, proprietorship, joint venture,
corporation, partnership, limited liability company, limited liability
partnership, trust, unincorporated organization or Government Authority.
g. "Prospectus" means any prospectus which is a part of a Registration
Statement, together with any and all amendments and supplements thereto.
h. "Registrable Stock" means: (i) the An-Con Shares, (ii) any other
securities issued as a dividend or other distribution with respect to, or in
exchange for or in replacement of, any An-Con Shares including, without
limitation, any security received in consideration of any such shares in a
merger, combination or transaction with a similar economic effect.
i. "Registration Statement" means a registration statement filed with and
declared effective by the Securities and Exchange Commission ("SEC"), pursuant
to the Securities Act of 1933, as amended ("Securities Act").
ARTICLE 2
REGISTRATION RIGHTS
2.1 Demand Registration Rights. Subject to the terms and conditions
hereof, if at any time Maxxim shall decide, in Maxxim's sole discretion, to
cause the sale or other disposition of shares of Registrable Stock, then
Maxxim shall give written notice to An-Con of the desired sale or other
disposition, which notice shall specify the number of shares of Registrable
Stock to be sold or disposed of and shall request that An-Con prepare and file
a Registration Statement under the Securities Act covering such shares of
Registrable Stock (each individually, a "Demand Registration", and
collectively, the "Demand Registrations"). An-Con shall cause an appropriate
Registration Statement covering such shares of such Registrable Stock to be
filed with the SEC and to become effective as soon as reasonably practicable
and to remain effective until the completion of the sale or other disposition
of the shares of Registrable Stock included in such Registration Statement.
(The holders whose shares of Registrable Stock are included in a Registration
Statement are hereinafter occasionally referred to as the "Selling
Stockholders"). An-Con shall not be obligated to file more than two (2)
Registration Statements pursuant to this Section 2. 1.
2.2 "Piggy-back" Registration. Subject to the terms and conditions
hereof, if An-Con at any time proposes or is required to register any of its
securities under the Securities Act on a form which permits inclusion of the
shares of Registrable Stock, An-Con shall, at such time, give written notice to
Maxxim of its intention (or such demand or requirement) to do so. Upon the
written request of Maxxim, given within twenty (20) business days after their
receipt of such notice, An-Con shall use its best efforts to cause all shares of
Registrable Stock which Maxxim shall have requested be included in such
registration, to be registered under the Securities Act to the extent required
to permit the sale or other disposition of the shares of Registrable Stock so
registered.
2.3 Registration Procedures. Whenever An-Con is required by the
provisions of this Agreement, or otherwise proposes, to effect the registration
of any shares of Registrable Stock under the Securities Act, An-Con shall, as
expeditiously as reasonably practicable:
a. prepare and file with the SEC a Registration Statement with
respect to such shares of Registrable Stock and use its best efforts to cause
such Registration Statement to become and remain effective for a period of not
less than one (1) year or for such longer period as any shares of Registrable
Stock continue to be held by Maxxim or any of its Affiliates; provided, however,
that before filing a Registration Statement or Prospectus or any amendments or
supplements thereto, An-Con shall furnish to Maxxim or such Affiliates copies of
all such documents proposed to be filed, which documents shall be subject to the
review and approval of such Persons and their respective counsel;
b. prepare and file with the SEC such amendments and
supplements to such Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective for
a period of not less than one (1) year or for such longer period as any shares
of Registrable Stock continue to be held by Maxxim or any of its Affiliates as
may be necessary to comply with the provisions of the Securities Act with
respect to the sale or other disposition of all shares of Registrable Stock
owned by such Person and covered by such Registration Statement during such
period in accordance with the intended method or methods of disposition set
forth in such Registration Statement;
c. furnish to Maxxim or any of its Affiliates such number of
copies of such Registration Statement, each amendment and supplement thereto,
the Prospectus included in the Registration Statement and such other documents
as such Persons may reasonably request in order to facilitate the sale or other
disposition of the shares of Registrable Stock owned by such Persons and covered
by such Registration Statement;
d. use its best efforts to register or qualify all shares of
Registrable Stock owned by Maxxim or any of its Affiliates and covered by such
Registration Statement under such other securities or blue sky laws of such
jurisdictions as such Persons shall reasonably request, and use its best efforts
to do any and all other acts and things which may be necessary under such
securities or blue sky laws to enable such Persons to consummate the sale or
other disposition of shares of Registrable Stock covered by such Registration
Statement in such jurisdictions;
e. notify Maxxim or its Affiliates at any time when a
Prospectus relating to the shares of Registrable Stock owned by such Persons and
covered by such Registration Statement is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
Prospectus included in such Registration Statement contains an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading, and prepare a
supplement or amendment to such Prospectus so that as thereafter delivered to
the purchasers of the shares of Registrable Stock covered by such Registration
Statement, such Prospectus will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading;
f. cause all such shares of Registrable Stock owned by Maxxim
or any of its Affiliates and covered by such Registration Statement to be
approved for inclusion in The NASDAQ Stock Market or to be listed on each
securities exchange or other national securities market on which securities of
the same class are then listed;
g. provide a transfer agent and registrar (which may be the
same entity as the transfer agent) for the shares of Registrable Stock owned
by Maxxim or any of its Affiliates not later than the effective date of such
Registration Statement covering such shares of Registrable Stock;
h. upon execution of reasonably requested confidentiality
agreements, make available for inspection by Maxxim or any of its Affiliates,
any underwriter participating in any sale or other disposition pursuant to such
Registration Statement and any attorney, accountant or other agent retained by
any such Persons or such underwriter, all financial and other records and
pertinent corporate documents of An-Con, and cause An-Con's officers, directors,
agents, Affiliates and employees to supply all information reasonably requested
by any such Person or any underwriter, attorney, accountant or other agent of
any such Person in connection with such Registration Statement;
i. obtain a "cold comfort letter" from An-Con's independent
public accountants and a legal opinion letter from An-Con's counsel in customary
form and covering matters of the type customarily covered by "cold comfort
letters" or legal opinion letters, as the case may be, as the underwriters or
Maxxim or its Affiliates shall reasonably request; and
j. in the event a Registration Statement including any shares
of Registrable Stock relates to an underwritten public offering, An-Con shall
enter into and perform its obligations under an underwriting agreement, in
customary form, with the managing underwriter of such offering.
2.4 Costs and Expenses. To the fullest extent allowable under
Applicable Law, the following reasonable and customary costs and expenses
("Costs and Expenses") incurred in effecting the Demand Registrations provided
for in Section 2.1 shall be paid by the Selling Stockholders: (a) registration
and filing fees; (b) printing expenses; (c) expenses of complying with the
securities or blue sky laws of any jurisdictions described in Section 2.3d; (d)
the reasonable fees and expenses of An-Con's certified public accountants and
the reasonable fees and expenses of An-Con's counsel, which counsel shall be
reasonably satisfactory to Maxxim (collectively, the "Professional Fees and
Expenses"), which Professional Fees and Expenses are directly related to the
Demand Registrations and to the extent, and only to the extent, such
Professional Fees and Expenses are in excess of the normally recurring
Professional Fees and Expenses attributable to An-Con's periodic reporting
obligations under the Securities Exchange Act of 1934 ("Exchange Act"); and (e)
any underwriting discounts or commissions with respect to shares of Registrable
Stock of the Selling Stockholders being offered; provided, however, that all
such Costs and Expenses shall be shared and borne by the Selling Stockholders,
and the other stockholders of An-Con entitled to include securities in such
Demand Registrations, pro rata in accordance with the number of shares which
such Persons shall have included therein.
ARTICLE 3
LIMITATIONS ON REGISTRATION RIGHTS
3.1 [Reserved]
3.2 Demand Registration Underwriter. Demand Registrations must be
managed by a qualified underwriter; provided, however, that the proposed
underwriter and the terms and conditions of the proposed underwriting
arrangements, which shall be permitted, but shall not be required, to be on a
"best efforts" basis, shall be reasonably satisfactory to both An-Con and
Maxxim. Each Party shall reasonably cooperate with the other Party with respect
to the selection and engagement of such underwriter; provided, however, that
An-Con shall have no obligation to locate any such qualified underwriter.
3.3 Timing of Demand Registrations. Maxxim or its Affiliates shall not
be entitled to include their shares of Registrable Stock in a Demand
Registration until immediately after the earlier to occur of: (a) six (6) months
following the date of first inclusion of An-Con's Common Stock on the NASDAQ
Small Cap Market, the NASDAQ National Market System or other national securities
exchange; or (b) Fifteen (15) months following the date of this Agreement.
3.4 Demand Registration Priority. With respect to the Demand
Registrations, Maxxim and its Affiliates shall have the first priority right to
include all of their shares of Registrable Stock in each Demand Registration;
provided, however, that in the event that ART or the Stockholders are entitled
and desire to include all or a portion of the shares of An-Con Common Stock in
such Demand Registration in accordance with the rights provided to ART pursuant
to the ART Registration Rights Agreement or the Stockholders pursuant to the
Stockholders' Registration Rights Agreement, Maxxim, ART and the Stockholders
shall be subject to the proration provisions set forth in Section 3.6 of this
Agreement, and the corresponding provision of the ART Registration Rights
Agreement and the Stockholders' Registration Rights Agreement, mutatis mutandis.
3.5 "Piggy-back" Registration Underwriter. An-Con shall have the right,
upon the prior written consent of Maxxim, which consent shall not be
unreasonably withheld or delayed, to select the underwriter, if any, who shall
serve as the manager for all offerings of securities under Section 2.2.
3.6 "Piggy-back" Proration. If:
a. Maxxim, ART and the Stockholders or their
respective Affiliates are entitled and desire to
register any Registrable Stock in a "piggyback"
registration made pursuant to Section 2.2;
b. the offering proposed to be made is to be an
underwritten offering;
c. Maxxim, ART and the Stockholders or their respective
Affiliates and one or more other holders of An-Con
securities desire to register securities in such
registration; and
d. the managing underwriter of such offering furnishes a
written opinion to Maxxim, ART and the Stockholders
or their respective Affiliates that the total amount
of securities to be included in such underwritten
offering would exceed the maximum amount of
securities (as specified in such opinion) which can
be marketed at a price reasonably related to the then
current Fair Market Value of such securities and
without otherwise materially and adversely affecting
such offering;
then, Maxxim, ART and the Stockholders or their respective Affiliates and all
other holders of An-Con securities entitled to include such securities in such
registration shall be entitled to participate pro rata in accordance with the
number of shares which Maxxim, ART and the Stockholders or their respective
Affiliates and each such holder proposes to include in such registration.
ARTICLE 4
INDEMNIFICATION
4.1 By An-Con. An-Con shall indemnify, defend and hold harmless, Maxxim
and its Affiliates, and their respective directors, officers, employees,
shareholders and agents, each underwriter (as defined in the Securities Act),
each other Person who participates in the offering of such shares of Registrable
Stock, and each other Person, if any, who controls (as defined in Section 15 of
the Securities Act) any such Person or any such underwriters or participating
Persons (collectively, the "Stockholder Indemnitees"), with respect to the
aggregate of any and all claims, losses, costs, judgments, deficiencies,
penalties, obligations, liabilities, damages, fines and expenses, including,
without limitation, reasonable attorneys' fees and disbursements (collectively,
the "Claims"), whether or not any of the Claims result from third party claims
or result from the assertion of any of the rights of Maxxim hereunder, incurred
or suffered by any Stockholder Indemnitees or which any Stockholder Indemnitees
may become subject to under the Securities Act or any other Applicable Law (at
common law or otherwise), directly or indirectly, arising out of or relating to:
a. in the event of any registration of any shares of Registrable Stock
under the Securities Act pursuant to this Agreement, any untrue or alleged
untrue statement of any material fact contained in any Registration Statement or
Prospectus under which any shares of Registrable Stock were registered, any
omission or alleged omission to state in any such document a material fact
required to be stated therein or necessary to make the statements made therein,
in the light of the circumstances under which they were made, not misleading, or
any amendment or supplement thereto, provided, however, that An-Con shall not be
required to indemnify, defend or hold harmless any Stockholders Indemnitees in
any such case to the extent that any such Claim arises out of or relates to any
such untrue or alleged untrue statement or any such omission or alleged omission
made in such Registration Statement or Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished to An-Con by such Stockholder Indemnitees specifically for use
therein;
b. any breach of or default in the observance or performance of any
agreement made by An-Con in this Agreement or the failure of An-Con to fulfill
any other obligation which An-Con is required to perform or observe in this
Agreement;
c. any inaccuracy in any, breach of any, or false or fraudulent,
representation or warranty made by An-Con in this Agreement; or
d. the investigation or defense of any Claim which is made or brought
against any Stockholder Indemnitees relating to any of the foregoing.
4.2 By the Stockholders. Maxxim shall indemnify, defend and hold
harmless, An-Con, and its Affiliates and their respective directors, officers,
employees, stockholders and agents, each underwriter (as defined in the
Securities Act), each other Person who participates in the offering of such
shares of Registrable Stock, and each other Person, if any, who controls (as
defined in Section 15 of the Securities Act) An-Con or any such underwriters or
participating Persons (collectively, the "An-Con Indemnitees"), with respect to
any and all Claims, whether or not any of the Claims result from third party
claims or result from the assertion of any of An-Con's rights hereunder,
incurred or suffered by any An-Con Indemnitee or which any An-Con Indemnitee may
become subject to under the Securities Act or any other Applicable Law (at
common law or otherwise), directly or indirectly, arising out of or relating to:
a. in the event of any registration of any shares of Registrable Stock
under the Securities Act pursuant to this Agreement, any untrue or alleged
untrue statement of any material fact contained in any Registration Statement or
Prospectus under which any shares of Registrable Stock were registered, any
omission or alleged omission to state in any such document a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading, or any
amendment or supplement thereto, in any such case, to the extent and only to the
extent that any such Claim arises out of or relates to any such untrue or
alleged untrue statement or any such omission or alleged omission made in such
Registration Statement or Prospectus, or any amendment or supplement thereto, in
reliance upon and in conformity with written information furnished to An-Con by
Maxxim or any of its Affiliates specifically for use therein. In no event shall
the liability of Maxxim under this Section 4.2a exceed the net proceeds (that
is, after deduction of underwriting discounts or commissions) attributable to
Maxxim with respect to the sale of Maxxim shares of Registrable Stock;
b. any breach of or default in the observance or performance of any
agreement made by Maxxim in this Agreement or the failure of Maxxim to fulfill
any other obligation which Maxxim is required to perform or observe in this
Agreement;
c. any inaccuracy in any, breach of any, or false or fraudulent,
representation or warranty made by Maxxim in this Agreement; or
d. the investigation or defense of any Claim which is made or brought
against any An-Con Indemnitees relating to any of the foregoing.
4.3 Rules Regarding Indemnification. The obligations and liabilities
of each Party which may be subject to indemnification liability under Section
4.1 or Section 4.2 ("Indemnifying Party") to the Stockholder Indemnitees
and/or the An-Con Indemnitees, as the case may be ("Indemnified Party") shall
be subject to the following terms and conditions:
a. Claims by Non-Parties. After receipt by an Indemnified
Party of notice of the commencement of any proceeding against it by a third
party which is likely to give rise to Claims of An-Con Indemnitees or Claims of
Stockholder Indemnitees, as the case may be, the Indemnified Party shall give
prompt written notice ("Notice of Third Party Claim") to the Indemnifying Party
stating the nature of such Claim, the amount thereof and a brief description of
the facts and circumstances relating thereto, to the extent known. The Notice of
Third Party Claim shall contain or be accompanied by all reasonably appropriate
documentation relating to the circumstances giving rise to the Claim, including,
without limitation, a copy of all pleadings and other papers served, if any. The
failure of an Indemnified Party to give such Notice of Third Party Claim to the
Indemnifying Party or delay in giving such Notice of Third Party Claim, will not
affect the validity or amount of the Claim and the indemnification obligations
of the Indemnifying Party will remain in effect as to such Claim, unless such
failure or delay prejudices the Indemnifying Party's defense of such Claim, in
which case the Indemnifying Party will be relieved of its indemnification
obligations to the extent that it has been so prejudiced. If within thirty (30)
days after receiving such Notice of Third Party Claim, the Indemnifying Party
advises the Indemnified Party that it will provide indemnification and assume
the defense at its expense, then so long as such defense is being conducted, the
Indemnified Party shall not settle or admit liability with respect to the Claim
and shall provide the Indemnifying Party and defending counsel reasonable
assistance in defending against the Claim. If the Indemnifying Party assumes a
defense, counsel shall be selected by such Indemnifying Party, which counsel
shall be reasonably acceptable to the Indemnified Party, and if the Indemnified
Party then retains its own counsel, it shall do so at its own expense, and the
Indemnifying Party shall have the right to settle the Claim with the consent of
the Indemnified Party, which consent shall not be unreasonably withheld or
delayed. If the Indemnified Party does not receive a written notice of
assumption of the defense as hereinabove provided from the Indemnifying Party
within thirty (30) days after the Indemnifying Party's receipt of such Notice of
Third Party Claim, the Indemnifying Party will be bound by any determination
made in such proceeding or any compromise or settlement affected by the
Indemnified Party, and the Indemnified Party thereafter may control the defense
of such proceeding and, in its sole discretion, settle or admit liability.
b. Claims by a Party. The determination of a Claim asserted by
one or more of the Stockholder Indemnitees or the An-Con Indemnitees, as the
case may be, hereunder (other than as set forth in Section 4.3a) shall be made
as follows: the Indemnified Party shall give prompt written notice to the
Indemnifying Party of any Claim by the Indemnified Party which has not been made
pursuant to Section 4.3a, stating the nature of such Claim, the amount thereof
and a brief description of the facts and circumstances relating thereto, to the
extent known. If the Indemnified Party does not receive a written objection to
the notice from the Indemnifying Party within thirty (30) days after the
Indemnifying Party's receipt of such notice, the Claim shall be conclusively
presumed to be a liability of the Indemnifying Party in an amount equal to such
Claim. If within the aforesaid thirty (30) day period the Indemnified Party
shall have received written objection to the notice (which written objection
shall briefly describe, the basis of the objection to the notice or the amount
thereof, all in good faith), then for a period of sixty (60) days after the
receipt of such objection, the Parties shall attempt to settle the disputed
Claim as between the Indemnified Party and Indemnifying Party. If the Parties
are unable to settle the disputed Claim, either Party may submit the dispute to
arbitration as provided in Section 5.4.
4.4 Contribution. If the indemnification provided for in this Article 4
is held by a court of competent jurisdiction or arbitrator to be unavailable to
an Indemnified Person with respect to any Claim herein, or, if the Indemnified
Person or Indemnifying Person seeks contribution under the Securities Act, the
Exchange Act or otherwise, then the Indemnifying Person, in lieu of indemnifying
such Indemnified Person hereunder, shall contribute to the amount paid or
payable by such Indemnified Person as a result of such Claim in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Person, on
the one hand, and of the Indemnified Person, on the other hand, in connection
with the statements or omissions or alleged statements or omissions that
resulted in such Claims as well as any other relevant equitable consideration.
The relative fault of the Indemnifying Person and of the Indemnified Person
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of the material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Indemnifying Person or by the Indemnified Person, the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
ARTICLE 5
MISCELLANEOUS
5.1 Survivability. Notwithstanding anything contained herein to the
contrary, all representations, warranties and agreements set forth in this
Agreement shall survive and continue to bind the Parties after the execution
and delivery of this Agreement, the termination or expiration of this
Agreement, and any investigation conducted by either Party, to the extent and
for as long as may be necessary to give effect to the rights, duties and
obligations of the Parties pursuant to this Agreement, subject to any
applicable statutes of limitations.
5.2 Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without reference to
principles of conflicts of laws.
5.3 Notices. All notices required or permitted hereunder shall be in
writing and shall be: (a) sent by telex or facsimile transmission (to be
effective when receipt is acknowledged unless sent after 5:00 p.m. on any
business day, in which event notice shall be deemed received on the next
business day); (b) personally delivered; (c) sent by certified mail, return
receipt requested; or (d) sent by a nationally recognized, commercial overnight
delivery service with provisions for a receipt, postage or delivery charges
prepaid and, except as otherwise provided in Section 5.3(a), shall be deemed
given when personally delivered or when placed in the possession of such mail or
delivery service, and addressed to the Parties, as follows:
To An-Con: An-Con Genetics, Inc.
734 Wait Whitman Road
Suite 207
Melville, New York 11747
Attn.: Andrew Makrides, President
Facsimile: (516) 421-5821
with a copy to: Alfred V. Greco P.C.
666 Fifth Avenue
14th Floor
New York, New York 10103
Attn.: Alfred V. Greco, Esq.
Facsimile: (212) 582-0176
To Maxxim: Maxxim Medical, Inc.
10300 49th Street North
Clearwater, Florida 33762
Attn: Kenneth W. Davidson, President
and CEO
Facsimile: (813) 561-2180
with a copy to: Shumaker, Loop & Kendrick, LLP
101 East Kennedy Boulevard
Suite 2800
Tampa, Florida 33602
Attn: W. Thompson Thorn, Esq.
Facsimile: (813) 229-1660
Notice of change of address shall be given in accordance with the
provisions of this Section 5.3 and shall be effective only upon receipt.
5.4 Arbitration. Any controversy or claim arising out of or pursuant
to this Agreement shall be submitted to final and binding arbitration
conducted in accordance with the expedited Commercial Arbitration Rules of the
American Arbitration Association ("Rules") by one (1) arbitrator appointed in
accordance with this Agreement and the Rules. The seat of the arbitration
shall be in Tampa, Florida. Judgment upon any award rendered in such
arbitration may be entered in any court of competent jurisdiction. This
Section shall not limit either Party's right to obtain any provisional or
equitable remedy, including, without limitation, injunctive relief from any
court of competent jurisdiction, as may be necessary in the sole judgment of
such Party to protect its rights hereunder.
5.5 Expenses. The nonprevailing Party in any arbitration or litigation
hereunder shall be required to reimburse the prevailing Party for all of its
reasonable costs and expenses in such arbitration or litigation, including,
without limitation, attorneys' fees and costs.
5.6 Parties Bound. This Agreement shall be binding upon and shall inure
to the benefit of each Party and its respective successors and permitted
assigns, subject to the restrictions against assignment provided in Section 5.9.
5.7 Waiver. Failure by either Party to insist upon strict performance
of any provision herein by the other Party shall not be deemed a waiver by such
Party of its rights or remedies or a waiver by it of any subsequent default by
the other Party, and no waiver shall be effective unless it is in writing and
duly executed by the Party entitled to enforce the provision being waived. No
representation or warranty by either Party herein shall be affected or deemed
waived by reason of any investigation made by or on behalf of the other Party,
including, without limitation, ally investigation made by any of the other
Party's representatives or its advisors, attorneys and accountants
(collectively, the "Representatives") or by reason of the fact that such other
Party or any of its Representatives knew or should have known that any such
representation or warranty is or may be inaccurate.
5.8 Severability. If any provision of this Agreement is determined by a
court of competent jurisdiction or an arbitrator to be illegal or unenforceable,
the Parties shall use reasonable efforts to negotiate a legal and enforceable
provision reflecting the legal and economic substance of such illegal or
unenforceable provision as closely as possible. The invalidity of any part of
this Agreement shall not render invalid the remainder of this Agreement.
5.9 Assignability. Neither Party shall have the right to assign any
of its rights, duties or obligations hereunder without the prior written
consent of the other Party, which consent shall not be unreasonably withheld
or delayed; provided, however, Maxxim, upon written notice to An-Con, shall
have the right to assign its rights and obligations under this Agreement to
any subsequent holder of shares of Registrable Stock which consents in writing
to be bound by the terms and conditions of this Agreement. No assignment of
any rights, duties or obligations under this Agreement relieves the assigning
Party of primary liability for its duties or obligations under this Agreement,
and as between the Parties, the assigning Party shall continue to be liable
for all of its duties or obligations under this Agreement as though no
assignment has been made.
5.10 Entire Agreement. This Agreement constitutes the entire
agreement by and between the Parties regarding the subject matter contained
herein and supersedes all prior and contemporaneous undertakings and
agreements by and between the Parties, whether written or oral, with respect
to such subject matter.
5.11 Amendment. This Agreement may not be amended except by a writing
executed by both Parties. An-Con agrees not to amend, modify or supplement the
ART Registration Rights Agreement or the Stockholders' Registration Rights
Agreement without the prior written consent of Maxxim, which consent shall not
be unreasonably withheld or delayed. If Maxxim elects, this Agreement shall be
amended to include any amendments to such other agreements.
5.12 Cooperation. Each Party agrees to take all such steps, execute
and deliver such further documents and perform such acts as may be reasonably
requested by the other Party in order to effectuate the purpose of this
Agreement.
5.13 Counterparts. This Agreement may be executed simultaneously in
two (2) or more counterparts, any of which shall be deemed an original, and
all of which together shall constitute one and the same instrument,
notwithstanding that both Parties are not a signatory to the original or the
same counterpart.
5.14 Headings. The headings used herein are inserted for convenience
only and are in no way intended to describe, interpret, define or limit the
scope, extent or intent of this Agreement.
5.15 Cumulative Rights and Remedies. The rights and remedies of the
Parties under this Agreement shall be in addition to and cumulative of, and
not in lieu or exclusive of, any other rights or remedies of the Parties
pursuant to this Agreement, at law or in equity, except that the arbitration
remedy set forth in Section 5.4 is exclusive to the extent provided therein.
The rights and remedies of either Party based upon, arising out of or
otherwise in respect of, any inaccuracy in or breach of, any representation,
warranty or agreement of the other Party or failure to fulfill any condition
shall in no way be limited by the fact that the act, omission, occurrence or
other statement of facts upon which any claim for such inaccuracy or breach is
based may also be the subject matter of any other representation, warranty or
agreement as to which there is no inaccuracy or breach.
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IN WITNESS WHEREOF, the Parties have caused this Registration Rights
Agreement to be signed by their duly authorized officers as of the day and
year first above written.
AN-CON GENETICS, INC.
By: /s/ J. Robert Saron
J. Robert Saron
Chief Executive Officer
MAXXIM MEDICAL, INC.
By: /s/ Kenneth W. Davidson
Kenneth W. Davidson
Chief Executive Officer
