UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 12, 1997
Lukens Medical Corporation
(Exact name of registrant as specified in its charter)
Delaware 1-11109 22-2429965
- --------------- ----------------- --------------------
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) Number)
3820 Academy Parkway North, NE, Albuquerque, New Mexico 87109
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (505) 342-9638
(Former name or former address, if changed since last report)
Exhibit Index on Sequentially Numbered Page 5
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Item 2. Acquisition or Disposition of Assets
On May 12, 1997, the Registrant acquired through merger Pro-Tec
Containers, Inc., a Florida corporation ("Pro-Tec"), a manufacturer and marketer
of a broad line of specialized containers for the disposal of used "sharps",
such as needles and scalpel blades. Following the merger, Pro-Tec became a
wholly-owned subsidiary of the Registrant.
The acquisition was made pursuant to an Agreement of Merger and
Reorganization, dated as of May 12, 1997, between the Registrant, PTC Merger
Corp., a Florida corporation and wholly-owned subsidiary of the Registrant,
Pro-Tec and Treesa Spencer (the "Pro-Tec Merger Agreement"). Pursuant to the
Pro-Tec Merger Agreement, Ms. Spencer, the sole shareholder of Pro-Tec, received
200,000 shares of the Registrant's Common Stock (the "Shares") and a one-year
promissory note of the Registrant in the principal amount of $133,413 bearing
interest at the prime rate, in exchange for all of her shares in Pro-Tec. The
Registrant also purchased from Ms. Spencer certain patents relating to Pro-Tec's
business for $250,000 in cash.
The Registrant and Ms. Spencer also entered into a Consulting
Agreement, dated as of May 12, 1997, between Pro-Tec and Ms. Spencer pursuant to
which she is to be paid for consulting services at the rate of $4,000 per month,
provided that until the effective date of a registration statement on Form S- 3
to be filed to register the Shares for resale (the "Registration Statement"),
Ms. Spencer is to be paid at the rate of $6,700 per month.
Pursuant to the terms of the Pro-Tec Merger Agreement, 8,346 of the
Shares are being held in escrow by the Registrant for ninety (90) days to cover
adjustments to the merger consideration payable and claims in respect of
misrepresentations, breaches of covenants and indemnity obligations. Ms. Spencer
is entitled to exercise any and all voting rights attached to such Withheld
Shares for the period they are retained by the Registrant as security, in
accordance with the terms of the Pro-Tec Merger Agreement.
Additionally, pursuant to the terms of the Pro-Tec Merger Agreement,
upon the expiration of six (6) months from the date the Registration Statement
is declared effective by the Commission, the value of the shares issued in
connection with the merger shall be recomputed by the Registrant in accordance
with the Pro-Tec Merger Agreement, and subject to compliance with the terms and
conditions contained therein, the Registrant and Ms. Spencer each agreed to
adjust the number of shares of the Registrant comprising the purchase price for
Pro-Tec based on increases or decreases in the value of such shares of the
Registrant as of the end of such six-month period.
The source of funds for the cash portion of the purchase price was
obtained from loans made to the Registrant by two of its outside directors and
its cash on hand.
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Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired - Not
required.
(b) Pro forma Financial Information - Not required.
(c) Exhibits:
1. Agreement of Merger and
Reorganization, dated as of
May 12, 1997, by and among
the Registrant, PRO-TEC
Containers, Inc., a Florida
corporation, Treesa Spencer
and PTC Merger Corp., a
Florida corporation, and
the exhibits thereto (other
than those exhibits which
correspond to agreements
listed below).
2. Consulting Agreement, dated
as of May 12, 1997, between
Treesa Spencer and Pro-Tec
Containers, Inc.
3. Non-Transferable Subordin-
ated Promissory Note, dated
May 12, 1997, by Registrant
to Treesa Spencer.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned hereunto duly authorized.
LUKENS MEDICAL CORPORATION
(Registrant)
By: /s/ Robert S. Huffstodt
------------------------------
Robert S. Huffstodt, President
and Chief Executive Officer
Dated: May 20, 1997
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EXHIBIT INDEX
Sequentially
Exhibit Numbered Page
-------
1. Agreement of Merger and Reorganization, dated
as of May 12, 1997, by and among the
Registrant, PRO-TEC Containers, Inc., a
Florida corporation, Treesa Spencer, and PTC
Merger Corp., a Florida corporation, and the
exhibits thereto (other than those exhibits
which correspond to agreements listed below).
2. Consulting Agreement, dated as of May 12,
1997, between Treesa Spencer and Pro-Tec
Containers, Inc., a Florida corporation.
3. Non-Transferable Subordinated Promissory Note,
dated May 12, 1997, by Registrant to Treesa
Spencer.
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EXHIBIT 1
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AGREEMENT OF MERGER AND REORGANIZATION
This Agreement dated as of May 12, 1997, by and among PRO-TEC
Containers, Inc., a Florida corporation ("Company"), Treesa Spencer, an
individual residing at 109 West Greentree Lane, Lake Mary, Florida 32749, and
the sole shareholder of Company ("Shareholder" and together with Company,
collectively referred to herein as the "Selling Parties"), Lukens Medical
Corporation, a Delaware corporation ("Buyer"), and PTC Merger Corp., a Florida
corporation and wholly-owned subsidiary of Buyer ("Subsidiary").
W I T N E S S E T H:
WHEREAS, Company manufactures and markets a broad line of
specialized containers for the disposal of used "sharps" such as needles and
scalpel blades (with all such business, activities and operations conducted
and/or engaged in by or through Company being referred to herein as the
"Business"); and
WHEREAS, the respective Boards of Directors of Buyer,
Subsidiary and Company deem it advisable to effect the reorganization
contemplated hereby, by means of a merger (the "Merger") of Subsidiary with and
into Company (Company and Subsidiary being herein sometimes collectively
referred to as the "Constituent Corporations"); and
WHEREAS, the parties desire that the plan, terms and
conditions of the Merger, the mode of carrying the Merger into effect and
certain other provisions relating thereto shall be as hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual promises, covenants and conditions hereinafter contained, the parties
hereto agree as follows:
ARTICLE 1
The Merger
1.1 General. Subject to and upon the terms and conditions
hereof and the Florida Business Corporation Act (the "FBCA"), at the Effective
Time (as defined in Section 1.2 hereof), Subsidiary shall be merged with and
into Company, whereupon Company shall be the surviving corporation (hereinafter
sometimes called the "Surviving Corporation") of the Merger, shall retain its
corporate name and shall continue its corporate existence under the laws of the
State of Florida. From and after the effectiveness of the Merger: the separate
existence of Subsidiary shall cease and its corporate existence shall be merged
into the Surviving
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Corporation, and the Surviving Corporation shall possess all of the rights,
privileges, immunities and franchises of each of the Constituent Corporations,
all as provided under the FBCA.
1.2 Effective Time. The Merger shall become effective (the
"Effective Time") on the day on which and at the time at which an appropriate,
executed Articles of Merger, together with the Plan of Merger attached thereto,
in substantially the form attached hereto as Exhibit 1.2 (the "Articles of
Merger"), shall have been delivered to and filed with the office of the
Secretary of State of the State of Florida on behalf of the Constituent
Corporations in accordance with the applicable provisions of the FBCA.
1.3 Charter and By-laws. The certificate of incorporation and
by-laws of the Surviving Corporation shall upon the Effective Time be as set
forth in the Articles of Merger until amended as provided therein or by law.
1.4 Directors and Officers. The directors and officers of
Subsidiary in office at the Effective Time shall act as such of the Surviving
Corporation and shall hold office until their respective successors shall have
been elected and qualified.
1.5 Additional Actions. If, at any time after the Effective
Time, the Surviving Corporation shall believe that any further assignments,
instruments or assurances or any other acts are necessary or desirable (a) to
vest, perfect or confirm in the Surviving Corporation title to or possession of
any of the Company's Assets (as hereinafter defined), or (b) otherwise to carry
out the purposes of this Agreement, then each of Subsidiary and Company and
their respective officers and directors immediately prior to the Effective Time
shall be deemed to have granted to the Surviving Corporation and each of the
officers of the Surviving Corporation an irrevocable power of attorney to
execute and deliver all such assignments, instruments and assurances and to do
all acts deemed by the Surviving Corporation to be necessary or desirable and to
do so in the name and on behalf of Company.
ARTICLE 2
Terms of Merger
2.1 Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of Company and Subsidiary or any
other holders of any of the following securities:
(a) Each share of common stock, $1.00 par value, of
Company issued and outstanding immediately prior to the Effective Time
(collectively, "Company Common Stock"), other than shares to
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be canceled pursuant to Section 2.1(b), and subject to the provisions of Section
2.4 hereto shall, at the Effective Time, automatically be converted into the
number of shares of common stock, par value $.01 per share, of Buyer ("Buyer
Common Stock") determined by dividing the Base Consideration (as hereinafter
defined) by the product of (x) the aggregate number of issued and outstanding
shares of Company Common Stock at the Effective Time, times (y) the Average
Price Per Share (as hereinafter defined); provided that, if the aggregate number
of shares of Buyer Common Stock determined as aforesaid shall be in excess of
200,000 shares, then Buyer shall have the right to reduce the number of shares
deliverable in connection with the Merger to 200,000 shares, and in lieu of
delivering such shares of Buyer Common Stock in excess of 200,000 shares (the
"Excess Shares"), Buyer shall deliver to Shareholder at the Closing a promissory
note in a principal amount equal to (A) the number of such Excess Shares,
multiplied by, (B) the Average Price Per Share. Such promissory note shall bear
interest at the Prime Rate, be payable in equal monthly installments of
principal and interest over a one-year period beginning sixty (60) days
following Closing Date and be in the form attached as Exhibit 2.1(a) hereto (the
"Promissory Note"). The number of shares of Buyer Common Stock computed hereby
which shall be deliverable at the Effective Time is referred to herein as the
"Merger Shares". The term "Prime Rate" as in effect on any given day shall mean
the rate announced as of the first business day of the calendar month during
which such day falls by Citibank, N.A. as such bank's prime or reference lending
rate.
(i) For purposes of this Agreement, "Base Consideration"
equals $1,300,000, as adjusted by the "Adjustment Amount," determined in
accordance with the following:
(A) in the event that the aggregate working capital of
Company as of the Closing Date (determined in accordance with generally accepted
accounting principles, applied consistently with those applied in the
preparation of the Balance Sheet (as hereinafter defined)) and including and
excluding those items described below (the "Closing Working Capital"), exceeds
$88,415 (or if it shall be determined that the value of Company's inventory as
of December 31, 1996 exceeded such amount, such higher amount, if applicable,
such amount being referred to herein as the "12/31/96 Inventory Amount"), then
the Adjustment Amount shall be equal to one-half (1/2) of such excess, and such
amount shall be added to the Base Consideration, provided, however, that in no
event shall the Adjustment Amount representing an increase to the Base
Consideration exceed $50,000.
(B) in the event the Closing Working Capital is less than
the 12/31/96 Inventory Amount, the Adjustment Amount shall be equal to such
deficit, and such amount shall be subtracted from the Base Consideration.
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(ii) For purposes of this Agreement, there shall be
included in the determination of Closing Working Capital, all liabilities
(current and long term) of Company as of the Closing Date of the type required
in accordance with generally accepted accounting principles, applied
consistently with those applied in the preparation of the Balance Sheet, to be
reflected on a balance sheet of Company as of the Closing Date, including,
without limitation, all accounts payable, indebtedness for borrowed money
(including long term debt), liabilities to employees (including, without
limitation, severance pay, accrued vacation pay and other employee benefits
payable), liabilities in respect of taxes and all Transaction Expenses not
satisfied by Company or Shareholder on or prior to the Closing. There shall not
be considered or included in the determination of Closing Working Capital (A)
any receivables owing to Company from any stockholder, officer or employee of
Company (except for the $2,500 owed by Jack Elliot), (B) any accounts receivable
not arising from bona fide transactions in the ordinary course of business with
third parties or outstanding more than sixty (60) days, (C) any prepaid assets
to the extent the same are not fully usable by and of direct benefit to Company
in the Business from and after the Closing Date in the full amount thereof
reflected on Company's books and records or (D) receivables or proceeds in
respect of an item which would not itself be included within the Closing Working
Capital. The Closing Working Capital statement shall be in the form attached as
Schedule 4.6(b) hereto.
(iii) For purposes of this Agreement, "Average Price Per
Share," shall be equal to the average of the bid and asked price of Buyer Common
Stock, as reported on the Nasdaq SmallCap Market, on each of the trading days
occurring in the 20- day period ending five (5) days before the Closing Date.
Notwithstanding the foregoing, in the event that the Average Price Per Share
calculated as aforesaid shall be (A) less than $4.50, Shareholder, at her sole
option, shall be entitled not to consummate the Closing contemplated by this
Agreement, or (B) greater than $8.75, Buyer, at its sole option, shall be
entitled not to consummate the Closing contemplated by this Agreement.
(b) Each share of Company Common Stock held in the
treasury of Company (if any) at the Effective Time shall, by virtue of the
Merger and without any further action on the part of the holder thereof, be
canceled and retired and cease to exist.
(c) Each share of common stock, par value $.01 per share,
of Subsidiary then issued and outstanding shall, upon the effectiveness of the
Merger be converted into, and Buyer as the holder shall receive, one share of
common stock, par value $.01 per share of Company.
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2.2 Delivery of Certificates. Shareholder shall cause all
certificates, evidencing all issued shares of Company Common Stock to be duly
and appropriately delivered for surrender to Company at the Closing, in such
manner and form as shall be requested by Buyer. From and after the Effective
Time, no holder of shares of Company Common Stock, or any other equity security
of Company shall be deemed a shareholder or a holder of any capital stock of or
equity interest in the Surviving Corporation, or entitled to any of the rights
or privileges of a shareholder of the Surviving Corporation, the sole right and
interest of any such holder being in all respects limited to the right to
receive shares of Buyer Common Stock pursuant to this Agreement.
2.3 Fractional Shares. No fractional shares of Buyer Common
Stock shall be issued in the Merger. Any such fractional share shall be deemed
canceled and eliminated and no scrip or other consideration in respect thereof
shall be issuable or payable in respect thereof.
2.4 Share Escrow. (a) At the Closing, Shareholder shall
deliver back to Buyer, and Buyer shall retain in its possession and hold in
escrow a number of the Merger Shares having an aggregate Average Price Per Share
of $50,000 (the "Withheld Shares"). Subject to the provisions of this Section
2.4 and Section 8.3 hereto, $50,000 worth of the Withheld Shares shall be
retained by Buyer for a period of up to ninety (90) days following the Closing
Date (the "Settlement Date") as security for Buyer's confirmation of the
accuracy of each of the elements constituting the Adjustment Amount and the
Closing Working Capital (including, without limitation, the actual amount of
inventory as of the Closing Date, the actual liabilities of Company as of the
Closing Date and the amount of accounts receivables actually collected by Buyer
as of the Settlement Date), and as security for the obligations of Shareholder
under Article 8 hereof.
(b) Any cash dividends declared and paid in respect of
the Withheld Shares shall be paid to Shareholder in respect thereof.
Notwithstanding the foregoing, in the event that Buyer shall give written notice
to Shareholder of a claim against any such Withheld Shares, Buyer's obligation
to release the Withheld Shares in accordance with the foregoing shall be tolled
until such time as such claim shall be definitively resolved. Subject to the
terms of the Stockholder Agreement (as hereinafter defined), Shareholder shall
be entitled to exercise any and all voting rights attached to the Withheld
Shares for the period they are retained by Buyer as security in accordance with
this Section 2.4. At Shareholder's option, Shareholder shall be entitled to
possession of the Withheld Shares by providing to Buyer $50,000 in cash (or
other collateral of equivalent value acceptable to Buyer) in lieu thereof, in
which case such substituted collateral shall be held by
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Buyer (if cash, in an interest bearing account) in accordance with the terms of
this Agreement.
ARTICLE 3
Closing; Deliveries; Conditions Precedent; Various Actions
3.1 Closing. (a) The Closing under this Agreement (the
"Closing") shall take place at 10:00 a.m., local time, on May 11, 1997, or such
earlier date as Buyer shall specify upon at least ten (10) days prior notice to
Shareholder, or such other date, place or time as the parties hereto shall
mutually agree upon (the date of the Closing being called the "Closing Date").
In the event either of the parties is entitled not to close on the scheduled
date because a condition to the Closing set forth in Section 3.8 or 3.9 hereof
has not been met (or waived by the party or parties entitled to waive it), such
party may postpone the Closing from time to time, by giving written notice to
the other party, until the condition has been met, but in no event to a date
later than May 31, 1997.
(b) All proceedings to be taken and all documents to be
executed and delivered by the parties at the Closing shall be deemed to have
been taken and executed simultaneously and no proceedings shall be deemed taken
nor any documents executed or delivered until all have been taken, executed and
delivered.
3.2 Purchase of Patents. (a) At the Closing, on the terms and
subject to the conditions set forth herein, Shareholder shall sell, transfer,
convey, assign, grant and deliver to Buyer, free and clear of all Liens (as
hereinafter defined), and Buyer shall purchase, all right, title and interest of
Shareholder in and to the patent rights of Shareholder of every nature, kind and
description, whether or not carried or reflected on the books or records of
Company, of or related to the Business, and all of the goodwill pertaining
thereto and the right to fully exploit the same, including, without limitation,
those patents and patent applications listed on Schedule 3.2 hereto
(collectively called the "Patents"). In full payment and consideration for the
Patents, at the Closing, Buyer shall pay Shareholder an amount equal to $250,000
(the "Patent Consideration"). The Patents shall be transferred to Buyer pursuant
to an assignment instrument in the form of Exhibit 3.2 hereto (the "Patent
Assignment").
3.3 Related Party Assets. Shareholder shall transfer to
Company, free and clear of all Liens, at or prior to the Closing good and valid
title to all rights and assets, including, without limitation, machinery,
equipment, molds, dies, tools and templates, used in connection with, or
necessary or desirable to conduct, the Business, which are owned by Shareholder
or any other Related Party (as hereinafter defined), but not including the
Patents (the
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"Related Party Assets"), as more particularly described on Schedule 3.3 hereto.
Without limiting any other rights Buyer may have under this Agreement or
otherwise, in the event that all of the Related Party Assets are not transferred
to Company at or prior to the Closing, Shareholder hereby grants to Buyer and
Company, and/or Shareholder shall cause to be granted, the exclusive, worldwide,
royalty-free license to use all of the Related Party Assets in connection with
the conduct of the Business following the Closing until transferred to and in
the name of Company.
3.4 Satisfaction of Liabilities; Satisfaction of Certain
Amounts. (a) At the Closing, the Selling Parties shall cause all indebtedness
and liabilities of Company to banks and/or other credit or lending institutions
or otherwise secured by any of the Company's Assets (other than the Permitted
Liens (as hereinafter defined) to be paid and satisfied in full and shall cause
to be delivered to Buyer at the Closing releases and discharges of all Liens and
all other rights, claims and interests in respect of the Company's Assets
relating to any of such indebtedness and liabilities (including without
limitation all required Form UCC-3 termination statements) in form and substance
reasonably required by Buyer. The parties agree that indebtedness for borrowed
money in amount of $31,000 payable to Great Western Bank under Company's
unsecured line of credit shall be accrued as a liability of Company on the
Closing Working Capital, and Buyer agrees to satisfy such amount and terminate
such line of credit within ninety (90) days following the Closing Date.
(b) At or prior to the Closing, Company shall cause
all amounts owing to or payable by Company to its stockholders, officers,
directors or employees (except for the $2,500 owing to Company from Jack
Elliot), to be paid and satisfied in full.
3.5 The Selling Parties' Deliveries. At the Closing, the
Selling Parties shall cause to be delivered to Buyer:
(a) share certificates representing each of the issued
shares of capital stock of Company, in due and proper form for surrender as
required by Subsidiary;
(b) a General Release in favor of Company from
Shareholder, provided, however, such release shall not in any manner impair any
indemnification right of Shareholder pursuant to this Agreement;
(c) a duly executed and acknowledged investment agreement
and questionnaire, in the form of Exhibit 3.5(c) hereto, from Shareholder;
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(d) a duly executed termination and cancellation of any
and all agreements among Shareholder and Company, including without limitation,
the Lease (as hereinafter defined);
(e) a Non-competition Undertaking, executed by of
Shareholder, in the form of Exhibit 3.5(e) hereto;
(f) an agreement of Shareholder as to the Buyer Common
Stock, in the form of Exhibit 3.5(f) hereto (the "Stockholder Agreement"),
executed by Shareholder;
(g) a consulting agreement in the form of Exhibit 3.5(g)
hereto (the "Consulting Agreement"), executed by Shareholder;
(h) the Patent Assignment, executed by Shareholder;
(i) stock powers, in denominations required by Buyer,
duly endorsed in blank, for the Withheld Shares;
(j) the Articles of Merger, duly executed by Company;
(k) evidence satisfactory to Buyer that the Related Party
Assets have been transferred to Company, or at the option of Buyer, directly to
Buyer;
(l) copies of all corporate and shareholder resolu- tions
of Company authorizing the execution and delivery of this Agreement and each
exhibit hereto and the consummation of the transactions contemplated hereby and
thereby, which shareholder resolutions shall have been approved and adopted by
Shareholder, as the sole shareholder of Company, certified as true and correct
and in effect by Shareholder;
(m) a good standing certificate with respect to Company,
issued as of a recent date by the Secretary of State of the State of Florida,
and each other state where Company is qualified to do business, as well as copy
of the Company's Certificate of Incorporation, certified as true and correct by
the Secretary of State of the State of Florida; and
(n) all other documents required by the terms of this
Agreement to be delivered by the Selling Parties, or any of them, to Subsidiary
or Buyer at the Closing.
3.6 Buyer's Deliveries. At the Closing, Buyer will deliver the
following:
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(a) to the Shareholder, duly issued and executed
certificates representing the Merger Shares required to delivered at the Closing
to Shareholder;
(b) to the Shareholder, the Patent Consideration;
(c) the Stockholder Agreement, executed by Buyer;
(d) the Consulting Agreement, executed by Buyer;
(e) the Articles of Merger, duly executed by Subsidiary;
(f) the Promissory Note, if applicable;
(g) copies of all corporate resolutions of Buyer and
Subsidiary authorizing the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, certified by a duly
authorized officer thereof;
(h) long-form good standing certificates with respect to
Buyer and Subsidiary, issued as of a recent date by the Secretary of State of
the States of Delaware and Florida, respectively;
(i) all other documents required by the terms of this
Agreement to be delivered to Shareholders at the Closing.
3.7 Further Assurances. At any time and from time to time
after the Closing, at Buyer's request, and without further consideration,
Shareholder will execute and deliver such other instruments, and take such
actions, as Buyer may reasonably deem necessary or desirable in order to more
effectively confirm Company's title to its assets, properties and rights,
Buyer's ownership of all issued and outstanding shares of Company, and to put
Buyer in effective operating control thereof, and to assist Buyer and Company in
exercising all rights with respect thereto.
3.8 Subsidiary's and Buyer's Conditions Precedent. The
obligations of Subsidiary and Buyer under this Agreement to proceed with the
transactions contemplated hereby are, at the option of Subsidiary and Buyer in
their sole discretion, subject to the fulfillment of the following conditions at
or prior to the Closing:
(a) no action, suit, proceeding or investigation shall
have been instituted against Subsidiary or Buyer or any of the Selling Parties
by and be continuing before any court, tribunal or governmental body or agency,
or have been threatened, and be unresolved, to restrain or prevent, or to obtain
substantial damages by reason of, any of the transactions contemplated hereby;
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(b) the representations and warranties of any of the
Selling Parties contained in this Agreement, the Disclosure Schedule or any
Schedules and Exhibits hereto and/or any certificates or documents delivered in
connection with this Agreement shall, in all material respects, be true and
correct when made, and true and correct at the time of Closing with the same
force and effect as though such representations and warranties were made at that
time, except for changes expressly permitted by this Agreement;
(c) each covenant, agreement and obligation required by
the terms of this Agreement to be complied with and performed by any of the
Selling Parties at or prior to the Closing shall have been duly and properly
complied with and performed;
(d) since the date of this Agreement, there shall not
have occurred any material adverse change in the financial condition, prospects
or results of the operations of Company or in the Business, and no warehouse
facility storing any of the Company's assets or inventory shall have suffered a
substantial fire or other substantial casualty loss or damage not fully covered
by insurance proceeds;
(e) all consents necessary in connection with the
transactions contemplated by this Agreement under each of those contracts and
agreements listed on Schedule 3.8(e)(i) of the Disclosure Schedule, and such
consents and approvals and assignments of governmental licenses and permits
which are listed on Schedule 3.8(e)(ii) of the Disclosure Schedule, shall have
been obtained, and there shall have been delivered to Buyer and Subsidiary
executed counterparts reasonably satisfactory in form and substance to Buyer of
such consents;
(f) there shall be delivered to Buyer a certificate of
the Selling Parties executed on the Closing Date that the conditions set forth
in subsections (a) through (e) of this Section 3.8 have been fulfilled.
3.9 Company's and Shareholder's Conditions Precedent. The
obligations of Company and Shareholder under this Agreement to proceed with the
transactions contemplated hereby are, at the option of Company, subject to the
fulfillment of each of the following conditions at or prior to the Closing:
(a) the representations and warranties of Buyer contained
in this Agreement or any certificates or documents delivered by Buyer or
Subsidiary to Company in connection with this Agreement shall, in all material
respects, be true and correct when made, and true and correct at the time of the
Closing with the same force and effect as though such representations and
warranties were
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made at that time, except for changes expressly permitted by this
Agreement;
(b) each covenant, agreement and obligation required by
the terms of this Agreement to be complied with and performed by Buyer or
Subsidiary at or prior to the Closing shall have been duly and properly complied
with and performed; and
(c) there shall be delivered to Shareholder a certificate
of Buyer executed on the Closing Date that the conditions set forth in
subsections (a) and (b) of this Section 3.9 have been fulfilled;
ARTICLE 4
Representations and Warranties of the Selling Parties
The Selling Parties hereby jointly and severally make each of
the following representations and warranties:
4.1 Organization, Standing and Qualification; No Subsidiaries.
(a) Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida; and has all requisite power and
authority and is entitled to own, lease and operate its properties and to carry
on its business as and in the places such properties are now owned, leased or
operated and where such business is presently conducted. Company is qualified to
do business and is in good standing in each State listed in Schedule 4.1 of the
Disclosure Schedule delivered by the Selling Parties in connection and
concurrently with the execution and delivery of this Agreement (the "Disclosure
Schedule"), which States constitute all States in which the failure to be so
qualified could have a material adverse effect on the condition (financial or
otherwise), business, properties, assets, liabilities, prospects, or results of
the operations of Company. The copies of the Certificate of Incorporation and
By-Laws of Company delivered by Company to Buyer are complete and correct.
(b) Except for the Patents and the Related Party Assets
(which are owned by Shareholder and are being transferred to Buyer and the
Company, respectively, at the Closing), all of the business, properties, assets,
inventories, accounts receivable, machinery, equipment, furniture, fixtures,
franchises, goodwill and rights (accrued and contingent) of every nature, kind
and description relating to the Business are owned by and operated through
Company. Company does not have, nor has it ever had, any subsidiaries, and
Company has no interest, direct or indirect, and has no commitment to purchase
any interest, direct or indirect, in any other corporation or in any
partnership, joint venture or other business enterprise or entity.
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4.2 Related Transactions. Except as set forth on Schedule 4.2
of the Disclosure Schedule, during the past three years Company has not,
directly or indirectly, purchased, leased from others or otherwise acquired any
property or obtained any services from, or sold, leased to others or otherwise
disposed of any property or furnished any services to, or otherwise dealt with,
except with respect to remuneration for services rendered as an officer or
employee of Company in the ordinary course of business, (i) any shareholder of
Company, or any member of the family of any such shareholder, (ii) any person,
firm or corporation which, directly or indirectly, alone or together with
others, controls, is controlled by or is under common control with Company or
any shareholder of Company, or any member of the family of any such person, or
(iii) any entity in which Company or Shareholder, or any person related to
Shareholder by blood or marriage, is a director or officer or directly or
indirectly is a creditor of or owns any equity interest thereof (excluding any
equity ownership not in excess of 1% of a publicly traded company), or has the
right to participate in or otherwise receive any portion of the income or
profits thereof (any such person or entity described in clauses (i), (ii) or
(iii) above being referred to herein as a "Related Party"). Except for the
Patents and the Related Party Assets listed on Schedule 3.3 hereto, no part of
the property or assets of any Related Party is used by Company in connection
with the Business.
4.3 Authority; Capitalization. (a) Each of the Selling Parties
has all requisite power and authority to enter into this Agreement and each
other agreement, document and instrument to be executed or delivered by the
respective Selling Parties in accordance with this Agreement (the "Seller
Documents") and to carry out the transactions contemplated hereby and thereby.
This Agreement constitutes, and, when executed and delivered at the Closing,
each other Seller Document will constitute, the legal, valid and binding
obligation of the Selling Parties and enforceable against the Selling Parties in
accordance with their respective terms. All proceedings and action required to
be taken by the Selling Parties relating to the execution, delivery and
performance of this Agreement and the Seller Documents and the consummation of
the transactions contemplated hereby and thereby have been or prior to the
Closing will timely be duly taken. Shareholder is the lawful record and
beneficial owner of all the issued and outstanding shares of Company's capital
stock, free and clear of any Liens.
(b) There are no outstanding subscriptions, options,
warrants, calls, puts, contracts, demands, commitments, convertible securities
or other agreements or arrangements of any character or nature whatever with
respect to, or under which Company or any shareholder thereof is or may become
obligated to issue, assign, purchase, acquire or transfer, any shares of the
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capital stock or other securities of, or beneficial interest or equity interest
in, Company.
(c) Except as specifically set forth in this Agreement,
no shares of capital stock of Company have been issued, redeemed, sold,
transferred or purchased in anticipation of or after the date that consideration
was first given or negotiations were first commenced by or on behalf of Company
or any of its shareholders, officers or directors with respect to the Merger or
any direct or indirect acquisition of shares of capital stock or control of
Company by Buyer, and, since such time, Company has not declared or made any
payment of any dividend or any other distribution to its shareholders or upon or
in respect of any shares of capital stock, or other securities, or purchased,
retired or redeemed, or obligated any of them to purchase, retire or redeem, any
of their respective capital stock, or other securities.
(d) Shareholder is the lawful record and beneficial owner
of all of the shares of Company Common Stock and upon the Closing Buyer shall be
the lawful record and beneficial owner of 100% of all interest in Company, in
each case free and clear of all liens, pledges, charges, mortgages, security
interests, restrictions, liabilities, claims, encumbrances or rights of others
of every kind and description (collectively, "Liens"), and all of such shares
are validly issued and outstanding, fully paid and nonassessable and free of
preemptive and participation rights and rights of refusal of any kind
whatsoever. Upon the effectiveness of the Merger, Buyer will own the entire
equity interest in Company free and clear of all Liens.
(f) Neither Shareholder nor any Affiliate or Associate
(as such terms are defined in Rule 405 promulgated under the Securities Act of
1933, as amended) of Shareholder directly or indirectly beneficially owns any
shares of Buyer Common Stock.
4.4 No Conflicts; Filings. (a) Except as indicated on Schedule
4.4 of the Disclosure Schedule, the execution, delivery and performance by the
Selling Parties of this Agreement and the Seller Documents by any of the
respective Selling Parties which is or shall be a party thereto and the
consummation by the Selling Parties of the transactions contemplated hereby and
thereby, will not (i) conflict with or violate any provision of the Certificate
of Incorporation or By-Laws of Company, (ii) with or without the giving of
notice or the passage of time, or both, result in a breach of, or violate, or be
in conflict with, or constitute a default under, or permit the termination of,
or cause or permit acceleration under, any agreement or instrument or any debt
or obligation to which any of the Selling Parties is a party or to or by which
any of them or any of the Company's Assets is subject or bound, or result in the
loss or adverse modification of any license, franchise, or other authorization
granted to or otherwise
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held by any of the Selling Parties, (iii) require the consent of any party to
any agreement or commitment to which any of the Selling Parties is a party, or
to or by which any of them or any of the Company's Assets is subject or bound,
(iv) result in the creation or imposition of any Lien upon any of the Company's
Assets or any of the shares of Company Common Stock, or (v) violate any law,
rule or regulation or any order, judgment, decree or award of any court,
governmental authority or arbitrator to or by which any of the Selling Parties,
or any of the Company's Assets, or any of the shares of Company Common Stock, is
subject or bound.
(b) Except for the filing of appropriate articles of
merger as are required to effect the Merger pursuant to the laws of the State of
Florida, and except as set forth on Schedule 4.4(b) of the Disclosure Schedule,
no consent, approval or authorization of, or declaration, filing or registration
with, any governmental or regulatory authority or any other third party is
required to be obtained or made by any of the Selling Parties in connection with
the execution, delivery and performance of the Agreement, or any of the Seller
Documents, or the consummation of the transactions contemplated hereby and
thereby.
4.5 Title to and Condition of Company Assets. (a) Except for
the Patents, the Related Party Assets and the personal property leased by
Company pursuant to the Personal Property Leases (as hereafter defined), Company
has good and marketable title to all of the assets, rights and property,
tangible and intangible, it owns or uses or purports to own or use in connection
with, the Business (collectively with the Patents and the Related Party Assets,
referred to herein as the "Company's Assets"). The Company's Assets constitutes
all of the assets, properties, and rights necessary or useful to conduct the
Business as presently conducted.
(b) Except as set forth on Schedule 4.5(b)(i) of the
Disclosure Schedule, none of the Company's Assets is subject to any Liens,
except for those Liens identified on Schedule 4.5(b)(ii) of the Disclosure
Schedule which shall be permitted to survive the Closing ("Permitted Liens").
Company's office and warehouse facility located at 5400 South Bryant Avenue,
Sanford, Florida 32773 (the "Facility") and, except as otherwise indicated in
the report dated January 22, 1997, prepared by Jim Schiffmacher and attached as
Schedule 4.5(b)(iii) hereto, including all repairs subsequently made to such
assets specifically indicated in the attachments to such report, all of the
Company's Assets are in good condition and repair, are suitable for the purposes
used, and are directly related to the conduct of the Business. Company is not in
default or breach of any of its obligations under any mortgage or security
agreement affecting the Facility, or any leases or other agreements related to
the Facility.
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4.6 Financial Statements. (a) The Selling Parties have
delivered to Buyer copies of the unaudited financial statements of Company
listed on Schedule 4.6 of the Disclosure Schedule (the "Financial Statements"),
including without limitation, the balance sheet of Company as at December 31,
1996 (the "Balance Sheet"). All of the Financial Statements are complete and
correct, have been prepared from the books and records of Company in accordance
with generally accepted accounting principles consistently applied and
maintained throughout the periods indicated and fairly present the financial
condition of Company as at their respective dates and the results of operations
of Company for the periods covered thereby. Such Financial Statements do not
contain any items of special or nonrecurring income or any other income not
earned in the ordinary course of business except as expressly specified therein,
and include all adjustments, which consist only of normal recurring accruals,
necessary for such fair presentation.
(b) The Closing Working Capital statement attached as
Schedule 4.6(b) hereto represents the Selling Parties' good faith reasonable
estimate of the Closing Working Capital as of the Closing Date to be prepared
pursuant to Section 2.1(a)(i) hereto.
4.7 Absence of Undisclosed Liabilities. (a) Except as and to
the extent reflected or reserved against on the face of the Balance Sheet
(excluding the notes thereto), or set forth on Schedule 4.7(a) of the Disclosure
Schedule, as of December 31, 1996 (the "Balance Sheet Date"), Company had no
debts, liabilities or obligations (whether absolute, accrued, contingent or
otherwise) relating to or arising out of any act, transaction, circumstance or
state of facts which occurred or existed on the Balance Sheet Date, whether or
not then known, due or payable.
(b) Except as indicated in Schedule 4.7(b) of the
Disclosure Schedule, none of the obligations or liabilities of Company is
guaranteed by any other person or entity, nor has Company guaranteed or assumed
any of the obligations or liabilities of any other person or entity.
4.8 Absence of Changes or Events. Except as set forth on
Schedule 4.8 of the Disclosure Schedule, since the Balance Sheet Date Company
has conducted its business only in the ordinary course in a manner consistent
with past practices. Without limiting the foregoing, since such date, Company
has not:
(i) incurred any obligation or liability, absolute,
accrued, contingent or otherwise, whether due or to become due, except current
liabilities for trade or business obligations incurred in the normal and
ordinary course of business and consistent with its prior practice, none of
which liabilities, in any case or in the aggregate, materially and adversely
affects
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the business, condition (financial or otherwise), assets,liabilities, results of
operations or prospects of Company;
(ii) discharged or satisfied any Lien or paid any
obligation or liability, absolute, accrued, contingent or otherwise, whether due
or to become due, other than current liabilities shown on the Balance Sheet and
current liabilities described in clause (i) above incurred since the Balance
Sheet Date in the ordinary course of business and consistent with its prior
practice;
(iii) declared or made any payment of any dividend or any
other distribution to its shareholders or upon or in respect of any shares of
capital stock or other securities, or purchased, retired or redeemed, or
obligated any of them to purchase, retire or redeem, any of its capital stock or
other securities;
(iv) mortgaged, pledged or subjected to any Lien any of
their property, business or assets, tangible or intangible, except for Permitted
Liens;
(v) sold, transferred, leased to others or otherwise
disposed of any of their assets, except for inventory or minor items of obsolete
and unused equipment sold in the ordinary course of business on customary terms
and conditions, or canceled, settled or compromised any debt, account receivable
or claim, or waived or released any right of substantial value;
(vi) received any notice of termination of any contract,
lease or other agreement, or any permit, license, approval or other authority,
or suffered any damage, destruction or loss (whether or not covered by
insurance) which, in any case or in the aggregate, has had or could have a
materially adverse effect on the business, assets, condition (financial or
otherwise), operations or prospects of Company;
(vii) encountered any labor union organizing activity,
had any actual or threatened employee strikes, workstoppages, slow downs or
lockouts, or had any material change in its relations with any of its employees,
agents, customers, suppliers, or buying organizations or any governmental
regulatory authority or self-regulatory authority;
(viii) transferred or granted any rights under, or
entered into any settlement regarding the breach or infringement of, any United
States or foreign license, copyright, trademark, trade name, service mark,
service name, patent, invention or other proprietary right, or modified any
existing rights with respect thereto;
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(ix) made any change (in excess of a 5% change for any
particular individual consistent with past practice and in the ordinary course
of business) in the rate of compensation, commission, bonus or other direct or
indirect remuneration payable, or paid or agreed or orally promised to pay,
conditionally or otherwise, any bonus, extra compensation, pension or severance
pay, to any shareholder, director, officer, partner, employee, salesman,
distributor or agent of Company;
(x) issued or sold any shares of capital stock or other
securities, or issued, granted or sold any options, rights or warrants with
respect thereto, or acquired any capital stock or other securities of any entity
or any interest in any business enterprise, or otherwise made any loan or
advance to or investment in any person or entity;
(xi) made any capital expenditures or capital additions
or betterments in excess of an aggregate of $10,000;
(xii) instituted, settled or agreed to settle any
litigation, action or proceeding before any court or governmental body or
arbitrator relating to Company or any of Company's Assets;
(xiii) suffered any damage, destruction, loss, change,
event or condition which, in any case or in the aggregate, has had or may have
an adverse effect on the business, condition (financial or otherwise), assets,
liabilities, operations or prospects of Company, including, without limitation,
any change in revenues, costs, levels or types of warranty or defective product
claims, or relations with employees, landlords, agents, customers or suppliers;
(xiv) entered into any transaction, contract or
commitment other than in the ordinary course of business, or paid or agreed to
pay any brokerage, finder's fee, or other compensation in connection with, or
incurred any severance pay obligations by reason of, this Agreement or the
transactions contemplated hereby;
(xv) received any notice from any customer or supplier
that it, or has knowledge that any customer or supplier, intends to cease doing
business with Company, which, in any case, has had or could have a material
adverse effect on the business, condition (financial or otherwise), assets,
liabilities, operations or prospects of Company;
(xvi) failed to replenish or maintain the quality of its
inventories and supplies in a normal and customary manner consistent with its
prior practice and prudent business practices prevailing in the industry, or
made any purchase commitment in excess of the normal, ordinary and usual
requirements of its business or at any price or upon terms and conditions more
onerous
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than those usual and customary in the industry, or made any change in its
selling, pricing, advertising or personnel practices inconsistent with its prior
practice;
(xvii) changed in any material respect its maintenance or
repair policies with respect to its assets or permitted any material
deterioration in the condition thereof;
(xviii) engaged in transactions giving rise to accounts
receivable which, to the knowledge of Shareholder, involve material increased
risks or expectations of noncollection; or
(xviii) entered into any agreement or made any commitment
to take any of the types of actions described in any of subsections (i) through
(xviii) above.
4.9 Litigation; Liability Claims. (a) Except as set forth in
Schedule 4.9(a) of the Disclosure Schedule, there is no action, suit, proceeding
or investigation pending against or affecting any Selling Party or the
transactions contemplated by this Agreement, nor to the best of any Selling
Party's knowledge, any basis therefor or threat thereof, which, in any case or
in the aggregate, could if adversely determined have a materially adverse effect
on the business, condition (financial or otherwise), properties, assets,
liabilities, or prospects of Company, the Facility, the Business or the
Company's Assets or the use thereof by Buyer. No Selling Party is subject to any
court or administrative order, writ, injunction or decree, applicable
specifically to it or to Company's business, property or employees, nor is it in
default with respect to any order, writ, injunction or decree, of any court or
federal, state, municipal or other governmental department, commission, board,
agency or instrumentality.
(b) Schedule 4.9(b) of the Disclosure Schedule sets forth
a complete list and description of all defective product or service warranty
and/or third party liability claims, other than mere returns or exchanges of
defective goods in the ordinary course of business consistent with industry and
practice, made against Company during the past five years, together with the
resolution thereof (whether under insurance policies or otherwise). None of the
Selling Parties have knowledge of any facts that would likely cause warranty
claims on products sold and/or services provided for a period of two years prior
to the Closing to exceed those historically experienced by Company and reflected
on the Financial Statements.
4.10 Compliance with the Law, Licenses and Permits; FDA and
OSHA Approvals. (a) No Selling Party, nor any officer or director of Company has
violated any existing law, rule, regulation, order, judgment or decree
applicable to Company and its
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assets, which violation could have a material adverse effect on the condition
(financial or otherwise), business, properties, assets, liabilities, prospects
or results of the operations of Company, the Facility, the Company Assets or the
Business. Company has all necessary licenses, franchises, permits, and
authorizations issued by any department, agency, board, commission, bureau or
instrumentality (the "Licenses") necessary to conduct the Business in the manner
that it is currently conducted, and none of the Company's operations are being
conducted in any manner which violates in any material respect any of the terms
of conditions under which any such License was granted. Each License has been
duly obtained, is valid and in full force and effect, and is not subject to any
pending or, to the knowledge of any Selling Party, threatened administrative or
judicial proceeding to revoke, cancel or declare such License invalid in any
respect. No Licenses by their terms will terminate or lapse by reason of the
transactions contemplated by this Agreement.
(b) Without limiting the foregoing, except as set forth
on Schedule 4.10 hereto, Company has conducted its business in compliance with
all applicable regulations promulgated by the United States Food and Drug
Administration (the "FDA") and the federal Occupational Safety and Health Act
and/or the rules and regulations thereunder (collectively "OSHA"). Company and
all of the products manufactured, sold or licensed by Company (the "Products")
have received and maintains in full force and effect all approvals or permits
required by the FDA and under OSHA. All such FDA and OSHA approvals are set
forth on Schedule 4.10 hereto. There have previously been delivered to Buyer
true and complete copies of all filings, applications, registrations, reports,
statements and notices made by or on behalf of any Selling Party to, or
certifications and approvals received by any Selling Party from, the FDA or any
other applicable governmental body, commission or agency in respect of any
Product or part thereof. All applications for all FDA and OSHA approvals were
true and correct when made and continue to be true and correct as they pertain
to the manufacture, sale, license and use of the Products. Except as set forth
on Schedule 4.10 hereto, no license, franchise, permit or authorization is
required for the manufacture, sale or license of any of the Products. All
Products manufactured by or for Company are manufactured in facilities utilizing
procedures in compliance with Good Manufacturing Practices ("GMP") as defined by
the FDA. Except as set forth on Schedule 4.10 hereto, Company has never violated
(i) any regulations promulgated by the FDA or under OSHA, (ii) the terms or
conditions of any FDA or OSHA approvals or (iii) any GMP guidelines, and Company
has never been subject to or threatened with any investigation or administrative
proceeding initiated by or on behalf of the FDA or under OSHA, or received any
notice in respect thereof.
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4.11 Schedules. Schedule 4.11 of the Disclosure Schedule
contains a true, complete and accurate list and sufficient description (or a
true copy thereof is attached thereto) of the following:
(a) all real property, and all buildings and improvements
thereon owned, leased or used by Company (the "Properties"), together with a
description of each lease, sublease or license under which Company holds any
leasehold or other interest or right to the use thereof (the "Real Property
Leases") or pursuant to which Company has assigned, sublet or granted any rights
therein, identifying the parties thereto, the rental and all other payment
terms, expiration date and cancellation and renewal terms thereof and any
provisions thereof which individually or in aggregate could have a material
effect on Company;
(b) all material items of machinery, tools, equipment,
vehicles, rolling stock and other tangible personal property owned, leased or
used by Company, except for items having a value of less than $500 which do not,
in the aggregate, have a total value of more than $1,500, setting forth with
respect to all such listed property a summary description of all leases relating
thereto, identifying the parties thereto, the rental or other payment terms,
expiration date and cancellation and renewal terms thereof (the "Personal
Property Leases") and any provisions thereof which individually or in aggregate
could have a material effect on Company;
(c) all trademarks, trademark registrations, and
applications therefor, service marks, service names, trade names, patents and
patent applications, copyrights and copyright registrations, and applications
therefor, wholly or partially owned, held or used by Company; and all contracts,
agreements, commitments or licenses relating to one or more patents, trademarks,
trade names, copyrights, software, processes, inventions,know-how, or trade
secrets to which Company is a party or by which it is bound;
(d) all agency, representative, supply or distributorship
agreements or franchises and all agreements providing for the services of an
independent contractor to which Company is a party or by which it is bound;
(e) all guarantees, loan agreements, indentures,
mortgages pledges, conditional sale or title retention agreements, security
agreements, equipment obligations, leases or lease purchase agreements as to
items of personal property, in each case to which Company is a party or by which
it is bound;
(f) all contracts, agreements and commitments, whether or
not fully performed, in respect of the issuance, sale
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voting, purchase, retirement, or transfer of any of the capital stock, bonds,
partnership interests or other securities of Company, or pursuant to which
Company or any of its shareholders has acquired or disposed of any substantial
portion of the capital stock, business or assets of Company;
(g) all contracts, agreements, commitments, purchase
orders, leases, licenses or other understandings or arrangements to which
Company is a party or by which any of the Company's Assets are bound or
affected, but excluding (i) purchase and sale orders and commitments for the
purchase or sale of normal and customary supplies and inventory made in the
ordinary course of business (consistent with past practice) involving payments
or receipts by Company of less than $500 in any single case or series of related
orders but not more that $1,500 in the aggregate, and (ii) contracts entered
into in the ordinary course of business which are terminable by Company on less
than 60 days' notice without any penalty or consideration and involving payments
or receipts during the entire life of such contracts by Company of less than
$500 in the case of any single contract but not more than $1,500 in the
aggregate;
(h) all collective bargaining agreements, all employment
and consulting agreements, all executive compensation, bonus, deferred
compensation, severance, vacation, sick pay, personal day, education, pension,
retirement, profit sharing, welfare, stock option or stock purchase, all group
or individual life, health, hospitalization, dental and accident insurance, and
all other employee benefit, plans, agreements, arrangements, commitments and/or
practices, to which Company is a party or bound or which cover or relate to any
of the past or present employees of Company;
(i) as of a date no earlier than April 25, 1997, 1996,
all of Company's receivables (which shall include accounts receivable, loan
receivable and any advances), together with an aging as to each such listed
receivable;
(j) as of a date no earlier than April 25, 1997, all of
Company's accounts payable and open purchase orders;
(k) the names and current annual salary rates of all
persons (including independent commission agents) employed or engaged by
Company, and showing separately for each such person the amounts paid or payable
as salary, bonus and any indirect or non-cash compensation for the year ended
December 31, 1996, and for the current calendar year, respectively;
(l) the names of all of the directors and officers of
Company; the name of each bank and other institution in which Company has an
account or safe deposit box and the names of all
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persons authorized to draw thereon or have access thereto; and the names of all
persons, if any, holding tax or other powers of attorney from Company and a
summary of the terms thereof; and
(m) all fire, theft, casualty, liability and other
insurance policies insuring Company, specifying with respect to each such policy
the name of the insurer and of the insured, the risk insured against, the limits
of coverage, the deductible amount (if any), the premium rate and the date
through which coverage will continue by virtue of premiums already paid. Such
policies are with reputable insurers and provide adequate coverage for all
normal risks incident to the Company's Assets, properties and business
operations.
True and complete copies of all contracts, agreements, plans,
arrangements, commitments and documents required to be listed or identified
pursuant to this Section 4.11 (to the extent in writing or if not in writing, an
accurate summary thereof), together with any and all amendments thereto, have
either been delivered to Buyer or attached to Schedule 4.11.
Except as expressly set forth on Schedule 4.11 of the
Disclosure Schedule, all of the contracts, agreements and commitments required
to be listed pursuant to this Section 4.11 (other than those which have been
fully performed) are in full force and effect, do not require the consent or
approval of any party to the assignment thereof and will be unaffected by the
Merger or the transactions contemplated by this Agreement, and, after the
Merger, Company will be entitled to the full benefits thereof. Except as
expressly set forth in said Schedule 4.11, to the best of the Selling Parties'
knowledge, there is not under any contract, agreement, policy, plan or
commitment required to be listed pursuant to this Section 4.11, any existing
default or event which, after notice or lapse of time, or both, would constitute
a material default or result in a right to accelerate or loss of material rights
thereunder. There have been no oral or written modifications to the terms or
provisions of any of such agreements. No amount payable or reserved under any
such agreement has been assigned or anticipated and no amount payable under any
such agreement is in arrears or has been collected in advance and to the best of
the knowledge of any of the Selling Parties, there exists no offset or defense
to payment of any amount under such an agreement.
4.12 Rights and Licenses. (a) Except as indicated in Schedule
4.12(a) of the Disclosure Schedule, Company owns or possesses the perpetual,
worldwide and royalty-free licenses and other rights to use all patents,
copyrights, trademarks, service marks (and any applications relating to the
foregoing), service names, trade names, trade secrets, know how, proprietary
processes, methods and apparatus, ideas, concepts, designs, discoveries,
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formulae, product and service developments, inventions, improvements, processes
and any information relating to any Product which has either been developed,
acquired or licensed for or by Company, and all other intellectual property and
proprietary rights (collectively, "Proprietary Rights") currently used in
connection with or necessary to the conduct of the Business as presently
operated, uncontested and free and clear of all Liens.
(b) Except as set forth on Schedule 4.12(b) of the
Disclosure Schedule, no Selling Party is infringing upon or otherwise acting
adversely to any proprietary or other intellectual property rights owned by any
other person or persons, and neither the Proprietary Rights, nor the operation
of the Business infringes or violates any proprietary or other intellectual
property rights of any third party. Except as set forth on Schedule 4.12(b) of
the Disclosure Schedule, no claim, suit, demand, proceeding or investigation is
pending or has been asserted and, to the knowledge of the Selling Parties, no
claim, suit, demand, proceeding or investigation is threatened against the
Selling Parties with respect to, based on or alleging infringement of, any such
rights of any third party, or challenging the validity or effectiveness of any
license for such rights, and the Selling Parties know of no basis for any such
claim, suit, demand, proceeding or investigation. Company has taken all
necessary actions to maintain and protect those Proprietary Rights which it owns
or uses or have been licensed to any of the Selling Parties.
4.13 Customers and Suppliers. Schedule 4.13 of the Disclosure
Schedule sets forth: (i) a list of the twenty largest customers of Company in
terms of sales during the 1996 fiscal year, and (ii) a list of the twenty
largest suppliers of Company in terms of purchases during the 1997 fiscal year.
There has not been any adverse change in the business relationship of Company
with any customer or supplier named, or required to be named, in Schedule 4.13.
Except as set forth on Schedule 4.13 none of the customers of Company accounted
for greater than 5% of the sales of Company during the 1996 fiscal year. There
exists no actual or threatened termination, cancellation or limitation of, or
any modification or change in, the business relationship of Seller with any
customer or supplier listed such Schedule 4.13.
4.14 Absence of Certain Business Practices. No Selling Party
nor any officer, employee or agent of Company, nor any other person acting on
its behalf, has, directly or indirectly, within the past five years given or
agreed to give any gift or similar benefit to any customer, supplier,
governmental employee or other person who is or may be in a position to help or
hinder the business of Company (or assist Company in connection with any actual
or proposed transaction) which (a) might subject Company to any damage or
penalty in any civil, criminal or governmental litigation or proceeding, (b) if
not given in the past, might have
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had an adverse effect on the assets, business or operations of Company or the
Business, or (c) if not continued in the future, might adversely affect
Company's assets, business, operations or which might subject Company to suit or
penalty in any private or governmental litigation or proceeding.
4.15 Inventory. Except as set forth on Schedule 4.15 of the
Disclosure Schedule, all items of inventory, now owned or hereafter acquired
(and not subsequently disposed of in the ordinary course of business), are
merchantable, for sale in the ordinary course of business as first quality goods
at normal mark-ups, and all inventory reflected in the Balance Sheet or
thereafter acquired is reflected thereon or if thereafter acquired on the books
and records of Company at the lower of cost (on a last-in, first-out basis) or
market in accordance with generally accepted accounting principles consistently
applied with past periods. None of the Selling Parties has been advised of, or
has any knowledge of, any fact which would materially adversely affect the
future marketability of any of the Products. The Company's practices and
experience with regard to returned items from customers is and has been in
conformity with and not in excess, to any material degree, of normal,
industry-wide return practices in the ordinary course of business.
4.16 Environmental Matters. (a) Except as set forth on
Schedule 4.16 of the Disclosure Schedule, no Hazardous Substance (as hereinafter
defined) is present or at any time has been stored (except for sealed
manufacturers' containers held for resale and stored in compliance with
applicable laws, rules and regulations), treated, recycled, released, disposed
of or discharged on, about, from or affecting the Facility, prior to or during
any period of ownership, lease or usage of any thereof by Company, any other
property or location heretofore owned, leased or used by Company or any
predecessor in interest thereto (each a "Former Property and collectively the
"Former Properties") in any material amounts, and none of the Selling Parties
has any liability or obligation which is based upon or related to any
environmental condition under or about the Facility or any of the Former
Properties, and there is no reasonable basis for any such liability arising.
(b) Except as set forth on Schedule 4.16 of the
Disclosure Schedule, no Selling Party nor, to the best knowledge of the Selling
Parties, any prior or current owner, tenant or occupant of any part of the
Properties or any of the Facility, has received (i) any notification or advice
from or given or been required to have given any report or notice to any
governmental agency or authority or any other person, firm or entity whatsoever
involving the use, management, handling, transport, treatment, generation,
storage, spill, escape, seepage, leakage, spillage, emission, release,
discharge, remediation or clean-up of any Hazardous Substance on or about any of
the Properties or, during any period
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of ownership, lease or usage thereof, the Facility, or caused by Company or any
Affiliate of Company (a "Hazardous Discharge") or (ii) any complaint, order,
citation or notice with regard to an air emission, water or ground discharge,
noise emission, solid or liquid or gas storage or disposal, a Hazardous
Substance or any other environmental, health or safety matter affecting the
Facility, or, during any period of ownership, lease or usage thereof, any of the
Former Properties, or any of the business or operations conducted thereat (an
"Environmental Complaint"), under the federal Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA") or under any other federal,
state or local law, ordinance, rule or regulation.
(c) Except as set forth on Schedule 4.16 of the
Disclosure Schedule, the Facility does not contains any asbestos or
asbestos-containing materials.
(d) Except as set forth on Schedule 4.16 of the
Disclosure Schedule, to the best of the Selling Parties' knowledge, there are no
fuel or gasoline storage tanks presently in use or at any time abandoned in, on
or under the Facility.
(e) Company has made available to Buyer: true and
complete copies of all safety data sheets ("MSDS") under the federal
Occupational Safety and Health Act and/or the rules and regulations thereunder
(collectively "OSHA") for all Hazardous Substances stored, processed or
otherwise used at the Facility in respect of which an MSDS has been submitted to
any governmental agency or authority; a true and complete list of other
Hazardous Substances stored, manufactured, processed or otherwise used at the
Facility, specifying the amount thereof, the chemical abstract service number,
and the related threshold quantity; true and complete copies of all materials
(if any) filed with or submitted under the OSHA Hazard Communication Standard
and all materials (if any) filed with or submitted to the Environmental
Protection Agency or any other federal, state or local agency or authority; and
true and complete copies of all insurance company and other investigations and
reports relating to any of the matters or conditions referred to in this Section
4.16.
(f) The term "Hazardous Substance" as used in this
Agreement shall include, without limitation, gasoline, oil and other petroleum
products, explosives, radioactive materials and related and similar materials,
and any other substance or material defined as a hazardous, toxic or polluting
substance or material by any federal, state or local law, ordinance, rule or
regulation, including, without limitation, asbestos and asbestos-containing
materials.
(g) The Selling Parties have delivered to Buyer true and
complete copies of all engineering and environmental
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reports and studies, and all other reports, evaluations and assessments,
relating to the Facility and the Former Properties and any matter referred to in
this Section 4.16.
4.17 Employee Benefits. All pension, retirement,
profit-sharing, deferred compensation, bonus and incentive plans, all medical,
vision, dental and other health insurance plans, all life insurance plans and
all other employee benefit plans required to be listed in Schedule 4.11 of the
Disclosure Schedule ("Employee Benefit Plans") conform to, and the
administration thereof is, in all material respects, in compliance with, all
applicable laws and regulations, and neither the operation or administration of
any Employee Benefit Plan, nor the Merger under this Agreement, will result in
Company or Buyer incurring or suffering any liability, or have any material
adverse effect on the business, condition (financial or otherwise), assets,
liabilities or results of operations of Company or Buyer. Except as set forth on
Schedule 4.17(a) of the Disclosure Schedule, (i) Company does not participate,
maintain or contribute to or have any liability or obligation under or with
respect to any single or multi-employer employee benefit or retirement plan
governed by or subject to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") (whether by reason of being a member of an affiliated group
of companies, one of which maintains such a plan, or otherwise), nor has it
participated, maintained, contributed or incurred any liability or obligation
with respect to any such plan, (ii) each funded Employee Benefit Plan is a
qualified plan under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and complies, in all material respects, with all
applicable requirements of ERISA, (iii) there are no unfunded accrued benefits
under any of the Employee Benefit Plans and, except for normal and customary
amounts which may be required to be contributed in respect of the current plan
year and properly accrued for on the Financial Statements, no amounts are or
will be required to be contributed by Company or Buyer in respect of any plan
year under any such Employee Benefit Plan, (iv) with respect to each Employee
Benefit Plan, complete copies of the last filed Form 5500, and all schedules
attached thereto, have been furnished to Buyer, (v) Company nor any other
"party-in-interest" or "disqualified person", has engaged in a "prohibited
transaction," as such terms are defined in IRC Section 4975 and Title I of
ERISA, in connection with any Employee Benefit Plan maintained by, or to which
contributions are made by, Company which would subject a party-in-interest or
disqualified person (after giving effect to any exemption) to the tax on
prohibited transactions imposed by Section 4975 of the Code or any other
liability, (vi) no Employee Benefit Plan has been terminated, nor has there been
any "reportable event" (as defined under any applicable provision of the Code or
ERISA) ("Reportable Event") with respect to any Employee Benefit Plan or any
trust related thereto, (vii) Company has timely filed or delivered all summary
plan descriptions, annual
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reports (Forms 5500), Forms 1099, summary annual reports, COBRA continuation
health coverage election notices, and other documents with the appropriate
governmental agencies as required by ERISA, the Code, or other applicable law,
or the respective Employee Benefit Plan, and all such reports were when filed
true and correct in all material respects, (viii) no Employee Benefit Plan is
under review or audit by the Internal Revenue Service or the U.S. Department of
Labor, and (ix) no Employee Benefit Plans which constitute "welfare benefit
plans" described in Section 3(1) of ERISA provide for vested rights to benefits.
4.18 Taxes. (a) All taxes, fees, assessments, duties and
charges, including without limitation, on or with respect to income, receipts,
profits, lease, occupancy, property, sales, use, transfer, excise, franchise,
added value, employees' income or wage withholding, social security, employment,
unemployment compensation, capital, and imports, imposed by the United States or
by any foreign country or by any state, municipality, subdivision or
instrumentality of the United States or of any foreign country, or by any other
taxing authority, which are due or payable by Company or arise out of the
operations of Company or are attributable to any period on or prior to the
Closing Date, or for which Company may be liable (including any for which
Company may be liable by reason of its being a member of an affiliated,
consolidated or combined group with any other company at any time on or prior to
the Closing Date), and all interest and penalties thereon (collectively, "Taxes"
or "Tax"), whether disputed or not, have been duly paid in full, or if not yet
due have been adequately and timely reserved for on the books and records of
Company and the appropriate Financial Statements; all returns, reports,
declarations, forms, information returns, and statements relating to Taxes
("Returns") required to be filed by Company have been completed, accurately
prepared, and duly and timely filed, and such Returns disclose all Taxes
required to be paid by Company for the periods covered thereby; and all deposits
required by law to be made by Company with respect to employees' payroll and
other withholding taxes have been duly made. Company has not consented to have
the provisions of Section 341(f) of the Code, relating to collapsible
corporations, apply to it. The Selling Parties have delivered to Buyer true,
correct and complete copies of all federal, state and local income tax Returns
of Company for each of the last three (3) fiscal years of Company. The federal
income tax Returns applicable to Company have been audited and accepted by the
Internal Revenue Service for the fiscal years ended July 31, 1994 and 1995;
there is no action, suit, investigation, audit or assessment pending or, to the
knowledge of the Selling Parties, proposed or threatened with respect to any
Taxes or any Return of Company; no questions have been raised by any
governmental authority with respect to any Tax or Return of Company or which
arise out of the operations of Company attributable to any period on or prior to
the Closing Date, and there is not now in force any
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extension of time with respect to the date on which any Return was or is due to
be filed with respect to Company, or any waiver or agreement by any of them for
the extension of time for the assessment or collection of any Tax. There are no
Tax rulings, requests for rulings or closing agreements relating to Company
which could affect Company's liability for Taxes for any future period.
(b) Except as set forth on Schedule 4.17(b) of the
Disclosure Schedule, Company has never been a member of or been required to file
as a part of an affiliated group (as defined in Section 1504(a) of the Code) or
any other group of corporations which files or has filed any Return on a
combined, consolidated or unitary basis for purposes of any Tax. Company has no
liability for Taxes of any person under Treas. Reg. ss. 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract, or otherwise. Company is not nor has been a party to any tax sharing
or tax indemnity arrangement or agreement.
(c) Schedule 4.17(c) of the Disclosure Schedule sets
forth the following information with respect to Company as of the most recent
practicable date: (i) the basis of Company in its assets; (ii) the amount of any
net operating loss, net capital loss, unused investment or other credit, or
excess charitable contribution allocable to Company; and (iii) the earnings and
profits (as such term is used under the Code) of Company. No transaction
contemplated by this Agreement is subject to withholding under Section 1445 of
the Code.
4.19 Receivables. Except as set forth on Schedule 4.19 of the
Disclosure Schedule, all receivables of Company which are reflected in the
Balance Sheet, and all receivables of Company which have arisen or will have
arisen since the date thereof, have and shall have arisen only from bona fide
transactions with unrelated third parties in the ordinary course of business,
and, to the knowledge of the Selling Parties, except for a normal and customary
reserve for doubtful accounts consistent (as a percentage of outstanding
receivables) with past periods, are and shall be collectible in the ordinary
course of business (without resort to litigation) and in accordance with their
respective terms and not subject to any set off, defense, reduction or
counterclaim. Buyer has been furnished with true and accurate copies of the most
recent accounts receivable aging reports for Company.
4.20 Records. The books of account of Company are complete and
correct in all material respects, and there have been no transactions involving
the business of Company which properly should have been set forth therein and
which have not been accurately so set forth.
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4.21 Disclosure. No representation or warranty by any Selling
Party contained in this Agreement nor any written statement or certificate
furnished or to be furnished by or on behalf of any Selling Party to Buyer or
its representatives in connection with or pursuant to this Agreement contains or
will contain any untrue statement of a material fact, or omits or will omit to
state any material fact required to make the statements herein or therein
contained, under the circumstances under which made, not misleading or necessary
in order to provide a prospective purchaser of Company Assets with adequate
information as to Company, the Business, the Facility and Company Assets, and
the Selling Parties have disclosed to Buyer in writing all material adverse
facts known to them relating to any of the foregoing. The representations and
warranties contained in this Agreement or any document delivered in connection
with this Agreement shall not be affected or deemed waived by reason of the fact
that Buyer and/or its representatives knew or should have known that any such
representation or warranty is or might be inaccurate in any respect.
4.22 Investment. (a) Shareholder will receive the shares of
Buyer Common Stock pursuant to this Agreement with the intent of holding the
same for investment and with no intention of distributing or reselling the same
or any part thereof, or interest therein, in any transaction which would be, or
would cause the issuance or transfer of the shares of Buyer Common Stock to be,
in violation of the securities laws of the United States or any state thereof.
Shareholder understands that the issuance of the shares of Buyer Common Stock
pursuant to this Agreement is intended to be exempt from registration under the
Securities Act if 1933, as amended (the "Securities Act"), pursuant to Section
4(2) of the Securities Act and pursuant to an exemption from registration or
qualification under the securities or blue sky laws of the State of Florida.
(b) Shareholder acknowledges that Buyer has made
available to her all documents and information relating to Buyer and an
investment in the shares of Buyer Common Stock requested by or on behalf of
Shareholder. In evaluating the suitability of an investment in shares of Buyer
Common Stock, Shareholder has not relied upon any representation or other
information (whether oral or written) made by or on behalf of Subsidiary or
Buyer, other than the representations and warranties expressly set forth in this
Agreement.
(c) Shareholder is an "accredited investor" within the
meaning of Regulation D promulgated under the Securities Act, and has such
knowledge and experience in financial and business matters that she is capable
of evaluating the merits and risks of the transactions contemplated by this
Agreement and her investment in shares of Buyer Common Stock.
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ARTICLE 5
Representations and Warranties of Buyer
Buyer represents and warrants that:
5.1 Organization and Standing. Each of Buyer and Subsidiary is
a corporation duly incorporated, validly existing and in good standing under the
laws of the States of Delaware and Florida, respectively, and has all necessary
corporate power and corporate authority to enter into this Agreement and to
carry out the transactions contemplated hereby.
5.2 Authority. The execution, delivery and performance by
Buyer and Subsidiary of this Agreement and each other agreement, instrument and
document to be executed by Buyer or Subsidiary pursuant hereto (the "Subsidiary
Documents") and the consummation by Buyer and Subsidiary of the transactions
contemplated hereby and thereby shall have been duly authorized by all necessary
corporate action on the part of Subsidiary and Buyer at or prior to the Closing;
this Agreement has been duly executed by a duly authorized officer of Subsidiary
and Buyer; and this Agreement constitutes, and, when executed and delivered by
Subsidiary or Buyer pursuant hereto, the Subsidiary Documents will constitute,
the legal, valid and binding obligation of such of Subsidiary and Buyer as is
party thereto.
5.3 Compliance; Consents; Approvals. (a) Except for compliance
with any applicable requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder, and compliance with any applicable State's securities or blue sky
laws, and assuming the accuracy of the representations set forth in Section 4.4
hereof, except as set forth on Schedule 5.3 to the Disclosure Schedule, the
execution, delivery and performance by Subsidiary and Buyer of this Agreement
and the Subsidiary Documents, and the consummation of the transactions
contemplated hereby and thereby, by Subsidiary and Buyer, will not (i) conflict
with or violate any provision of the certificate of incorporation or by-laws of
Subsidiary or Buyer, (ii) with or without the giving of notice or the passage of
time, or both, result in a breach of, or violate, or be in conflict with, or
constitute a default under, or permit the termination of, or cause or permit
acceleration under, any agreement or instrument or any debt or obligation to
which Subsidiary or Buyer is a party or by which it is bound, or result in the
loss or adverse modification of any license, franchise, or other authorization
granted to or otherwise held by Subsidiary or Buyer, (iii) require the consent
of any party to any agreement or commitment to which Subsidiary or Buyer is a
party or by which it is bound, or (iv) violate any law, rule or regulation or
any order,
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judgment, decree or award of any court, governmental authority or arbitrator to
or by which Subsidiary or Buyer is subject or bound.
(b) Except for the filing of appropriate articles of
merger as are required to effect the Merger pursuant to the laws of the State of
Delaware and assuming the accuracy of the representations set forth in Section
4.3 hereof, no consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority or any other third
party is required to be obtained or made by in connection with the execution,
delivery and performance by Buyer or Subsidiary of this Agreement and the
Subsidiary Documents, or the consummation of the transactions contemplated
hereby or thereby.
5.4 Financial Statements. The audited consolidated financial
statements of Buyer and its subsidiaries as at and for the fiscal year ended
December 31, 1996 and the notes thereto, which appeared in the Annual Report on
Form 10-K of Buyer for the fiscal year ended December 31, 1996, fairly present,
in all material respects, the consolidated financial position of Buyer and its
subsidiaries as at the dates thereof and the consolidated results of their
operations for the periods then ended.
5.5 Validity of Buyer Shares. The shares of Buyer Common Stock
to be issued pursuant to this Agreement have been duly authorized and, when
issued and delivered as provided by this Agreement, will be validly issued,
fully paid and nonassessable.
5.6 Changes. There has been no material adverse change in the
consolidated financial condition or consolidated results of operations of Buyer
and its subsidiaries since December 31, 1996.
5.7 SEC Filings. Since January 1, 1996, and, except for
compliance with the requirements of the Exchange Act, and the rules and
regulations promulgated thereunder, in connection with the transactions
contemplated by this Agreement, Buyer has filed with the Securities and Exchange
Commission (the "SEC") all reports and proxy statements required to be filed by
Buyer under the Securities Exchange Act and the rules and regulations
promulgated thereunder (other than reports or proxy statements as at which the
required filing date has not yet passed), and, to the knowledge of Buyer, such
reports and proxy statements as of the respective dates thereof did not contain
an untrue statement of material facts or omit to state material facts necessary
to make the statements therein not misleading in a material respect at the time
when and in light of the circumstances under which they were made.
ARTICLE 6
Certain Covenants of the Selling Parties
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6.1 Conduct of Business. During the period from the date of
this Agreement to and including the Closing Date, the Selling Parties shall
cause the operations and business of Company, to be conducted in the ordinary
and usual course of business and consistent with past practices. Without
limiting the foregoing, prior to the Closing, the Selling Parties will not,
without the prior written consent of Buyer, permit Company to:
(a) dissolve, liquidate, merge or consolidate or sell or
otherwise dispose of all or any substantial portion of its assets or obligate
itself to do so;
(b) sell, transfer, lease or otherwise dispose of any
assets or properties, other than inventory in the ordinary course of business on
standard terms, conditions and operating procedures customarily used by Company;
(c) amend, modify, change, alter, terminate, rescind or
waive any rights or benefits under any contract, agreement or commitment
required to be listed, or enter into any contract, agreement or commitment
which, if in existence as of the date of this Agreement would have been required
to be listed, under Schedule 4.11 hereto;
(d) fail to maintain the Company's Assets or the Facility
in good repair and condition, reasonable and ordinary wear and tear excepted; or
cancel any of the current insurance policies or any of the coverage thereunder
maintained for the protection of the Facility, the Business or any Company
Assets.
(e) perform, take any action or incur or permit to exist
any of the acts, transactions, events or occurrences of the type described in
Section 4.8 hereof which would have been inconsistent with the representations
and warranties set forth in Section 4.8 hereof had the same occurred after the
Balance Sheet Date and prior to the date hereof.
6.2 Changes in Information. During the period from the date of
this Agreement to the Closing Date, each party shall give the other prompt
written notice of any change in, or any of the information contained in, the
representations and warranties made in or pursuant to this Agreement or of any
event or circumstance which, if it had occurred on or prior to the date hereof,
would cause any of such representations or warranties not to be true and
correct.
6.3 Access to Information; Press Releases. (a) During the
period from the date of this Agreement to the Closing Date, Buyer and its
counsel, accountants and other representatives shall be given full access during
normal business hours to all of the facilities, properties, books, tax returns
and records of Company
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relating to or constituting any part of the Facility and/or the Company's Assets
and all personnel of Company, and they shall be furnished with such documents
and information with respect to the affairs of Company as may from time to time
reasonably be requested.
(b) Buyer and its employees, representatives and agents
shall be entitled after consultation with Company's management to communicate
with vendors, customers and others having business relations with Company
regarding the transactions contemplated by this Agreement as believed by Buyer
in good faith to be appropriate in order to facilitate such transactions and its
rights under this Agreement.
(c) No Selling Party shall directly or indirectly make,
or authorize to be made, any press release or other public announcement
regarding the transactions contemplated by this Agreement with out the prior
written approval of Buyer. Buyer shall be entitled to make such public
announcements, issue such press releases and file such documents as it shall in
good faith deem appropriate in order to comply with applicable securities law
and self-regulatory body imposed obligations.
6.4 Preservation of Business. During the period from the date
of this Agreement to the Closing Date, the Selling Parties shall use their best
efforts to preserve intact the goodwill of the Business, the relationships of
Company with customers, suppliers, contracting parties, governmental authorities
and others having business relations with it.
6.5 Employees. (a) Buyer intends to employ only one of
Company's employees following the Closing (but has agreed that the other
employees shall continue to perform their employment dutes in consideration of
the continued payment of their current salary until May 30, 1997).
Notwithstanding any offer or determination to so employ any employee, Buyer
shall not be obligated to maintain any employee for any specific length of time
after the Closing Date and all such employees shall be employees at will.
(b) The Company shall promptly pay all amounts due and
payable to, or accrued in respect of, its employees in the nature of wages,
commissions, salary, insurance and other benefits (including accrued vacation
and sick pay and unearned bonuses), and shall pay all withholding tax and
similar obligations in each case with respect to all employees of Company and
all periods ending on or prior to the Closing Date (and shall accrue on the
Closing Working Capital all amounts payable through May 30, 1997 in respect of
accrued vacation and sick pay and unearned bonuses, as well as all severance or
termination benefits payable).
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(c) The Selling Parties shall be solely responsible for,
and shall jointly and severally indemnify and hold harmless Buyer from and
against, any and all claims and obligations, if any, for severance pay,
termination pay and other benefits arising or claimed to arise out of (i) the
termination of employment of any employee of Company on or prior to the Closing
Date, (ii) the effect of the transactions contemplated by this Agreement on the
employment status of any of the employees of Company, including any which may
hereafter be employed by Buyer, and/or (iii) the termination of employment with
Buyer or Company within 120 days after the Closing Date of any employee who
prior to the Closing Date was an employee of Company and thereafter becomes an
employee of Buyer or Company (in this latter case to the same extent as if any
such employee were then still employed by Company, but only with respect to such
severance pay, termination pay or other benefits which arise or are claimed to
arise out of the employee's employment with Company prior to the Closing Date).
(d) Nothing in this Section 6.5 or elsewhere in this
Agreement, express or implied, shall be construed to confer any rights or
remedies on any employee of Company.
6.6 Brokerage or Finder's Fee. The Selling Parties represent
and warrant to Buyer that no person is entitled to any brokerage commissions or
finder's fees in connection with the transactions contemplated by this Agreement
as a result of any action taken by the representing party or any of the
affiliates, officers, directors or employees thereof, except as, and in the
amount, set forth on Schedule 6.6 to the Disclosure Schedule (the "Finder's
Fee"). Buyer and Shareholder agree that the obligation to pay the Finder's Fee
shall be split among Buyer and Shareholder on a 50%/50% basis.
6.7 Consents. The Selling Parties shall use their best efforts
to obtain prior to the date scheduled for the Closing under this Agreement all
consents and approvals referred to in Section 3.8(e) hereof.
6.8 Interim Financial Statements. Shareholder shall cause to
be promptly prepared and delivered to Buyer promptly upon completion, income
statements and balance sheets of Company for its fiscal quarter ending March 31,
1997 and each subsequent month (the "Interim Financial Statements"). The Interim
Financial Statements shall be prepared in a manner consistent with the Financial
Statements and in accordance with generally accepted accounting principles, but
need not be audited.
6.9 Environmental Notices. In the event that, on or prior to
the Closing, any of the Selling Parties receives any notice or advice from any
governmental agency or authority or any other source whatsoever with respect to
a Hazardous Discharge or
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presence of a Hazardous Substance, they shall immediately notify Buyer and
furnish to Buyer a copy of all such notices, correspondence and other
documentation. If required to do so by any governmental agency or authority, and
requested by Buyer, Shareholder shall cause the Selling Parties shall conduct
and complete all investigations, studies, sampling, and testing, in connection
with any of the foregoing.
6.10 No Shop. Shareholder agrees that from after the date
hereof and until the Closing (but in the event any condition to the obligations
of Company and Shareholder pursuant to Section 3.9 hereof shall not be
satisfied, or Buyer shall have elected not to consummate the Closing, then until
June 30, 1997), none of the Selling Parties will, or will arrange to, sell,
transfer or otherwise dispose of any of the capital stock, or assets (except for
dispositions of assets in the ordinary course of business as expressly permitted
elsewhere in this Agreement) of Company (or any rights in or to any of such
stock or assets), and none of the Selling Parties will, directly or indirectly,
respond to inquiries or proposals, or enter into or pursue any discussions, or
enter into any agreements (oral or written), with respect to, the issuance, sale
or purchase of any of the capital stock of Company, any security convertible
into or exchangeable for any such stock interest, or any option or warrant with
respect to any such stock, or the merger, consolidation, sale, lease or other
disposition of all or any portion of the assets or business of Company. The
provisions of this Section 6.10 shall not be deemed to limit or negate any other
obligations of Shareholder under this Agreement.
6.11 Transaction Expenses. The parties hereby agree that all
fees, charges, costs and expenses incurred and to be incurred by Company,
including, without limitation, legal, accounting, and any finder's fee listed
(or required to be listed) on Schedule 6.6 of the Disclosure Schedule, in
connection with the planning, negotiation, investigation, execution and closing
of this Agreement and all documents in connection with this Agreement and the
consummation of the transactions contemplated hereby, including, without
limitation, the payment of all transfer, gains, sales, use and similar taxes
applicable to this Agreement and/or such transactions, and the costs not in
excess of $1,200 incurred by Buyer or the Company in connection with the
preparation and filing of Tax returns for the tax period ending with the Closing
Date (collectively "Transaction Expenses"), shall be the responsibility of and
payable by Shareholder and shall not be charged to Company, except that Buyer
has agreed to pay 50% of the Finder's Fee.
6.12 Certain Shareholder Matters. Prior to the Closing,
Shareholder shall pay, or cause to be paid, to Company any amounts owed by her,
or any officers, directors or employees of Company, to Company.
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ARTICLE 7
Further Agreements
7.1 Securities Act Compliance. The Buyer Common Stock
delivered pursuant to this Agreement shall not be transferable except upon the
conditions specified in this Article 7, which conditions are intended in
furtherance of compliance with the provisions of the Securities Act in respect
of the transfer of any such Buyer Common Stock. Shareholder will cause any
proposed transferee of such Buyer Common Stock, other than a transferee who
purchases pursuant to an effective registration statement satisfying the
requirements of the Securities Act or pursuant to Rule 144 under the Securities
Act, to agree to take and hold such Buyer Common Stock subject to the provisions
and upon the conditions specified in this Article 7. The provisions of this
Article 7 are not intended to limit or negate any of the provisions of the
Stockholder Agreement.
7.2 Legends. Each certificate for shares of Buyer Common Stock
delivered pursuant to this Agreement or to a subsequent transferee shall (unless
otherwise permitted by the provisions of this Article 7) include a legend in
substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, TRANSFERRED,
PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
AN EXEMPTION THEREFROM UNDER SAID ACT AND THE RULES AND REGULATIONS
THEREUNDER. BY ITS ACCEPTANCE HEREOF, THE HOLDER OF THIS CERTIFICATE
AGREES TO COMPLY IN ALL RESPECTS WITH THE PROVISIONS OF ARTICLE 7 OF
THE AGREEMENT OF MERGER AND REORGANIZATION DATED AS OF MAY 12, 1997 IN
RELATION TO WHICH THESE SHARES WERE ISSUED. COPIES OF SUCH ARTICLE 7
MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THIS COMPANY AT ITS
PRINCIPAL EXECUTIVE OFFICES.
7.3 Proposed Transfers. Except with respect to a sale pursuant
to the Registration Statement (as hereinafter defined), prior to any proposed
sale, transfer or other disposition of Buyer Common Stock delivered pursuant to
this Agreement, the registered holder shall give written notice to Buyer of such
holder's intention to effect such sale, transfer or other disposition. Each such
notice shall describe the manner and circumstances of the proposed sale,
transfer or other disposition in reasonable detail, and shall be accompanied by
either (i) an opinion of counsel, and in form and substance, reasonably
acceptable to Buyer, addressed to Buyer, to the effect that the proposed sale,
transfer or other disposition of such Buyer Common Stock may be effected without
registration under the Securities Act, or (ii) a "no action"
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letter, in form and substance reasonably acceptable to Buyer, from the SEC to
the effect that such sale, transfer or other disposition of such Buyer Common
Stock without registration will not result in a recommendation by the staff of
the SEC that action be taken with respect thereto, whereupon such holder of such
Buyer Common Stock shall be entitled to transfer such Buyer Common Stock in
accordance with the terms of the notice delivered by such Holder to Buyer,
subject, however, to any other agreement with or for the benefit of Buyer as
shall apply to the sale, transfer, or other disposition of Buyer Common Stock.
7.4 Registration of Stock; Restriction on Sales. (a) Buyer
agrees to prepare and, subject to the Shareholder providing the requisite
information pursuant to Section 7.6, promptly file following the Closing Date a
registration statement (the "Registration Statement"), including a prospectus
(the "Prospectus"), with the SEC under the Securities Act and satisfy such
filing, registration and qualification requirements of the relevant state
securities (blue sky) laws of such states as the Shareholder may reasonably
request, covering the sale of the Merger Shares; provided that Buyer will not be
required to (i) qualify generally to do business in any such jurisdiction where
it would not otherwise be required to qualify but for this Agreement, (ii)
subject itself to taxation in any such jurisdiction or (iii) consent to general
service of process in any such jurisdiction (unless Buyer is already subject to
service of process in such jurisdiction). Buyer further agrees to use its best
efforts to cause the Registration Statement and such registration and
qualification to become effective as soon as practicable after filing. The
Registration Statement shall be on Form S-3; provided that, if such form ceases
at any time to be available, the Registration Statement shall be on such other
form for the general registration of securities as Buyer may deem appropriate.
Buyer shall furnish the Shareholder with an initial draft of the Registration
Statement prior to filing such Registration Statement or any amendment or
supplement thereto (other than any documents incorporated by reference therein).
(b) Except as provided in Subsections (c) and (d), at any
time during the period the Registration Statement is effective, prior to any
proposed sale, transfer or other disposition of any Buyer Common Stock delivered
pursuant hereto, Shareholder shall give at least seven days' written notice to
Buyer of Shareholder's intention to effect such sale, transfer or other
disposition. Such notice shall state that such sale, transfer or other
disposition is intended to be made pursuant to such Registration Statement and
the Prospectus and that Shareholder has a bona fide intention of making such
sale, transfer or other disposition. Subject to the provisions of Subsections
(c) and (d) below, Shareholder shall be permitted to effect such sale, transfer
or other disposition without further notice to Buyer during the
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fourteen-day period following the expiration of such seven-day period.
(c) Notwithstanding anything contained in subsection (b),
if at any time after receipt of any such notice from Shareholder and prior to
such sale, transfer or other disposition, Buyer shall furnish to Shareholder a
certificate signed by its Chairman, Chief Executive Officer, President, Chief
Financial Officer or any Vice President stating that in his good faith judgment
it would be seriously detrimental to Buyer or its shareholders for such sale,
transfer or other disposition to be made at such time (including, without
limitation, by reason of any disclosure which Buyer may be required to make for
such purpose), Shareholder shall not effect such sale, transfer or other
disposition except during the fourteen-day period following the expiration of
the sooner of (i) a period of 60 days from the date of receipt of such written
notice from such officer of Buyer or (ii) the receipt of written notice from
Buyer stating that Shareholder is permitted to effect such sale, transfer or
other disposition. If prior to such 60-day period there shall no longer be any
basis for such a certificate to be issued, Buyer shall promptly under the
circumstances notify Shareholder to the effect provided in clause (ii) above.
Buyer shall not be entitled to defer any sales by Shareholder during any such
fourteen-day period.
(d) Notwithstanding anything contained in subsections (b)
and (c), Shareholder shall be permitted, without notice to Buyer and free from
any right of Buyer to defer such sales as herein provided, to sell, transfer or
otherwise dispose of Buyer Common Stock pursuant to the Registration Statement
and the Prospectus during the period of 60 days following the date the
Registration Statement first becomes effective.
(e) Buyer will, upon delivery to it or its agent of
certificates for the Buyer Common Stock containing the legend set forth in
Section 7.2 hereof by a Shareholder for registration of the transfer of such
stock in accordance with the provisions of this Section, cause certificates
without such legend representing the number of shares of Buyer Common Stock
equal to the number of shares of Buyer Common stock being transferred and new
certificates with such legend representing the number of remaining shares not
being so transferred, if any, to be issued in exchange for such legended
certificates.
7.5 Registration Procedures and Expenses. Buyer agrees that
after the filing of the Registration Statement it will:
(a) prepare and file with the SEC such amendments and
supplements to the Registration Statement and the Prospectus as may be necessary
to keep the Registration Statement effective until the Buyer Common Stock so
registered and qualified is no longer
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owned by Shareholder or until the expiration of a period of one year following
the Closing Date, whichever is earlier.
(b) if the Registration Statement ceases for any reason
to be effective during the period referred to in clause (a), take all reasonable
action to either make such Registration Statement effective or to file another
registration statement (which for purposes of this Agreement shall be the
"Registration Statement" and the related prospectus shall be the "Prospectus")
and use it best efforts to cause such registration statement to become effective
as soon as practicable and remain effective for the period referred to in clause
(a);
(c) deliver to Shareholder, as soon as it is available, a
conformed copy of the Registration Statement (including any preliminary
prospectus) as originally filed and of each amendment thereto (including
exhibits and documents incorporated by reference therein);
(d) furnish to Shareholder selling Buyer Common Stock so
registered under the Securities Act such number of copies of the Prospectus and
any amendments or supplements thereto (including all Exhibits thereto and all
documents incorporated by reference therein) and the Prospectus included in such
Registration Statement (including each preliminary prospectus) as the
Shareholder may reasonably request in order to effect the offering and sale of
the shares of Buyer Common Stock to be offered and sold); and
(e) pay all fees and expenses (including without
limitation registration and filing fees and legal, accounting and printing fees
and expenses but excluding selling fees, discounts and commissions with respect
to the sale of Buyer Common Stock and any out-of-pocket expenses of the
Shareholder) in connection with such registration or qualification.
7.6 Accuracy of Information Relating to Shareholder. Buyer may
require Shareholder promptly to furnish in writing to Buyer such information
regarding Shareholder, the plan of distribution of the Buyer Common Stock and
other information as Buyer may from time to time reasonably request or as may be
legally required in connection with such registration.
7.7 Certain Notifications. During the period of effectiveness
of the Registration Statement, Buyer shall promptly notify Shareholder of:
(a) the effectiveness of the Registration Statement, the
receipt of any comments from the SEC relating to statements set forth in the
Registration Statement that relate to the Shareholder, and the issuance (or any
threatened issuance of
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which Buyer shall be aware) by the SEC of any stop order suspending the
effectiveness of the Registration Statement or of any amendment thereto (in
which case, the Shareholder will not sell, transfer or otherwise dispose of any
Buyer Common Stock during the pendency of such stop order), and Buyer shall take
all reasonable actions required to prevent the entry of such stop order or to
remove it if entered; and
(b) its intention to file any amendment to the
Registration Statement (other than documents incorporated by reference therein)
which shall amend the statements referred to in Section 7.6.
7.8 Stock Valuation Guaranty. (a) Upon the expiration of six
(6) months from the date the Registration Statement is declared effective by the
SEC (such date being referred to herein as the "Valuation Date"), the value of
the Merger Shares shall be recomputed by Buyer and Shareholder and shall have a
deemed valuation equal to the value of the Merger Shares as of the Valuation
Date (calculated at the average of the bid and asked price of Buyer Common
Stock, as reported on the Nasdaq SmallCap Market, on each of the trading days
occurring in the 20-day period ending five (5) days before the Valuation Date
(the "Valuation Price")), except that any Merger Shares previously sold by
Shareholder at a gross sales price (not including any reductions in respect of
commissions or other selling expenses) higher than the Valuation Price shall be
valued at such higher gross sales price. Such valuation is referred to herein as
the "Valuation Amount".
(b) Subject to compliance with the terms and conditions
of this Agreement and the Seller Documents, on the Valuation Date Buyer shall
pay to Shareholder the amount (the "Deficiency Amount"), if any, by which (i)
the Valuation Amount as of the Valuation Date is less than (ii) the Base
Consideration (less the principal amount of the Promissory Note, if any).
Notwithstanding the foregoing, (A) Buyer, in its sole and absolute discretion,
shall be entitled to satisfy the Deficiency Amount by issuing to Shareholder a
number of shares of Buyer Common Stock equal to (1) the Deficiency Amount,
divided by (2) the Valuation Price (such number of shares to be so issued being
referred to herein as the "Deficiency Shares"); provided, however, that in the
event that the number of Deficiency Shares to be issued plus the number of
Merger Shares previously issued shall exceed 200,000 shares of Buyer Common
Stock, Buyer shall be entitled to satisfy the remainder of the Deficiency Amount
(i.e. the amount in excess of the valuation of the Deficiency Shares) by issuing
to Shareholder a promissory note of Buyer for such amount, which note shall bear
interest at the Prime Rate, be payable in equal monthly installments of
principal and interest over a one-year period beginning sixty (60) days
following Valuation Date and be in form and substance reasonably satisfactory to
the Buyer and Shareholder.
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(c) Subject to compliance with the terms and conditions
of this Agreement, on the Valuation Date Shareholder shall pay to Buyer the
amount (the "Excess Amount"), if any, by which (i) the Valuation Amount as of
the Valuation Date is greater than (ii) 110% of the Base Consideration (less the
principal amount of the Promissory Note, if any). Notwithstanding the foregoing,
(A) Shareholder, in her sole and absolute discretion, shall be entitled to
satisfy the Excess Amount by transferring back to Buyer a number of shares of
Buyer Common Stock equal to (1) the Excess Amount, divided by (2) the Valuation
Price.
(d) The provisions of this Section 7.8 shall be subject
to the following additional terms and conditions, the breach of any of which
will result in Shareholder forfeiting her right to receive payment of the
Deficiency Amount from Buyer:
(i) Shareholder shall not sell more than 8,000 shares of
Buyer Common Stock in any one-week period without the prior written consent of
Buyer;
(ii) Shareholder shall not sell any shares of Buyer
Common Stock in any one-day period at a Sale Price less than the Sale Price of
Buyer Common Stock previously sold by Shareholder in such one-day period;
(iii) Shareholder shall directly or indirectly effect any
"short" sales of Buyer Common Stock;
(iv) All sales of securities by Shareholder must be in
compliance with all applicable federal and state securities laws; and
(v) Upon the request of Buyer, Shareholder shall provide
to Buyer all relevant documentation deemed reasonably necessary by Buyer to
confirm any prior sales of Merger Shares by Shareholder and the gross sales
prices paid in connection therewith.
7.9 Preparation of Schedule 13D. Shareholder shall prepare and
file with the SEC and other required entities, a Schedule 13D to report her
beneficial ownership of Buyer Common Stock following the Closing. Buyer agrees
to reimburse Shareholder in respect of all required filing fees and the
reasonable legal fees of counsel incurred in connection with the preparation
thereof.
7.10 Product Liability Insurance. Buyer agrees that for a
period of five (5) years from the Closing Date (or such shorter period that
Company or an affiliate of Buyer shall conduct the Business), it will cause
Company (or such other affiliate of Buyer then conducting the Business) to
maintain product liability
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insurance with a minimum coverage of $1,000,000 and will name Shareholder as an
additional insured under product liability insurance policy.
ARTICLE 8
Indemnification; Survival of Representations
8.1 Obligation to Indemnify. (a) Following the Closing, Buyer
hereby agrees to save, indemnify and hold harmless Shareholder from and against,
and shall on demand reimburse Shareholder for:
(i) any and all loss, liability, damage or deficiency
suffered or incurred by Shareholder by reason of any misrepresentation or breach
of warranty by Buyer or nonfulfillment of any covenant or agreement to be
performed or complied with by Subsidiary or Buyer under this Agreement or in any
agreement, certificate, document or instrument executed by Subsidiary or Buyer
and delivered to the Selling Parties pursuant to or in connection with this
Agreement; and
(ii) any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including, without
limitation, reasonable attorneys' fees, incident to any of the foregoing, or
incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing any of the obligations under this Section
8.1(a).
(b) Company (but only in the event the Closing shall not
occur under this Agreement) and Shareholder (jointly and severally with Company
if the Closing shall not occur or individually if the Closing shall occur)
agrees to save, indemnify and hold harmless Subsidiary, Company and Buyer from,
against and in respect of, and shall on demand reimburse Subsidiary, Company and
Buyer for:
(i) any and all loss, liability, damage or deficiency
suffered or incurred by any of any of Subsidiary, Company and/or Buyer by reason
of any misrepresentation, breach of warranty or nonfulfillment of any covenant
or agreement to be performed or complied with by any of the Selling Parties
under this Agreement or any agreement, certificate, document or instrument
executed by any of the Selling Parties and delivered to Subsidiary or Buyer
pursuant to or in connection with this Agreement;
(ii) any and all loss, liability or damage suffered or
incurred by any of Subsidiary, Company and/or Buyer in respect of or in
connection with any and all debts, liabilities and obligations of, and any and
all violations of laws, rules, regulations, codes or orders by, Company, direct
or indirect,
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fixed, contingent, legal, statutory, contractual or otherwise, which exist at or
as of the Closing Date or which arise after the Closing Date but which are based
upon or arise from any act, transaction, circumstance, sale of goods or
services, state of facts or other condition which occurred or existed on or
before the Closing Date, whether or not then known, due or payable, except for
those liabilities specifically included in the Closing Working Capital;
(iii) any and all loss, liability, damage, cost or
expense suffered or incurred by Buyer based on or arising out of any defective
or allegedly defective product or service warranty and/or third party liability
claims (whether alleged in contract, tort, strict liability or otherwise), which
exist at or as of the Closing Date or which arise after the Closing Date but
which are based upon or arise from any act, transaction, circumstance, sale of
goods or services, state of facts or other condition which occurred or existed
on or before the Closing Date, including, without limitation, any products
manufactured, assembled, sold or distributed by Company or its predecessors in
interest at any time;
(iv) any and all loss, liability, damage, cost or expense
suffered or incurred by any of Subsidiary, Company and/or Buyer based on or
arising from (A) the presence of any Hazardous Substance on the Facility or the
Former Properties or any Hazardous Discharge on or prior to the Closing Date by,
on or from or involving Company or the Facility or the Former Properties, and/or
any Environmental Complaint against Company or the Facility or the Former
Properties, and/or the failure to obtain any license or permit required in
connection with any Hazardous Substance or Hazardous Discharge on or from or
involving Company or the Facility or the Former Properties, or the retention,
disposal, treatment or use thereof, and/or arising out of any noncompliance with
any environmental, health or safety law, ordinance, rule or regulation (each, an
"Environmental Requirement"), in each case, based on or arising from any act,
transaction, state of facts or other condition which occurred or existed on or
before the Closing Date at or on the Facility or the Former Properties, whether
or not then known, or (B) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related to any such
Hazardous Discharge, any such presence, use, disposal or treatment of a
Hazardous Substance, or any such noncompliance with any Environmental
Requirement, on or prior to the Closing Date, and/or any Environmental Complaint
and/or any demand of any government agency or authority prior to, on or after
the Closing Date, which is based upon or in any way related to any Hazardous
Discharge, the presence, use, disposal or treatment of a Hazardous Substance,
and/or noncompliance with any Environmental Requirement on or prior to the
Closing Date, on or from, by or involving Company or the Facility or the Former
Properties, and including, without limitation and in each such case under this
clause (iii),
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the reasonable costs and expenses of all remedial action and clean-up, attorney
and consultant fees, investigation, sampling and laboratory fees, court costs
and litigation expense and costs arising out of emergency or temporary
assistance or action undertaken by or as required by any regulatory body in
connection with any of the foregoing;
(v) any and all Taxes which are due or payable by
Company, or arise out of the operation of Company's business on or prior to the
Closing Date, except for the amount of Taxes which are specifically reflected in
the Closing Working Capital;
(vi) any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including, without
limitation, reasonable attorneys' fees, incident to any of the foregoing or
incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing any of the obligations under this Section
8.1(b).
(c) Without limiting any party's rights under this
Article 8, if any legal action or court or arbitration proceeding (or threat
thereof) shall be commenced (or threatened) by a third party against a party (an
"Indemnitee") entitled to indemnification in respect thereof under this Article
8 (a "Covered Proceeding"), the Indemnitee shall give the indemnifying party
prompt written notice of such Covered Proceeding and copies of all pleadings
filed relating thereto within ten (10) days after the Indemnitee's receipt
thereof. The Indemnitee also agrees to provide the Indemnitor five (5) days
prior notice of the payment or settlement by Indemnitee of any indemnifiable
claim. Notwithstanding the foregoing, failure by an Indemnitee to provide an
indemnifying party any such notice shall not affect indemnifying party's
obligations under Article 8 hereof.
8.2 Survival and Other Matters. Each representation, warranty,
indemnity, covenant and agreement made by any of the Selling Parties in this
Agreement or in any agreement, certificate or instrument delivered by or on
behalf of any Selling Party pursuant to or in connection with this Agreement,
are, and shall be deemed, joint and several representations, warranties,
indemnities and covenants of each of the Selling Parties. Each representation,
warranty, indemnity, covenant and agreement of each of the parties hereto shall
survive the Closing; provided, however, that no party shall be entitled to
assert claims against the other for misrepresentations or breach of warranty
under or pursuant to this Agreement unless the party asserting such claim shall
notify the other in writing of such claim within three (3) years after the
Closing Date; provided, further, that the foregoing limitation on the survival
of representations and warranties shall not apply to any of the representations
and warranties in Section 4.3, 4.8, 4.12 or 4.19 hereof. Notwithstanding the
foregoing, in no event shall
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the Selling Parties have any liabilities under or pursuant to this Agreement for
any misrepresentations or breaches of warranties hereunder unless such
liabilities shall exceed a liability cushion in the aggregate of $15,500, in
which event such liabilities shall include all such first $15,500 thereof and
all liabilities in excess thereof, provided that the foregoing liability cushion
shall not apply to liabilities or obligations of Buyer or Company to third
parties, irrespective of whether the same also constitutes a misrepresentation
or breach of warranty.
8.3 Offsets. Without limiting its other rights and remedies,
or any other amounts or recoveries to which Subsidiary, Company or Buyer may be
entitled, Buyer shall have the right to set off the amount of any claims
asserted by or on behalf of Buyer in respect of any obligation under this
Article 8 or otherwise under this Agreement, against the Withheld Shares and/or
under any instrument or agreement executed and delivered by Buyer or its
affiliates to Shareholder in connection with the Closing or as contemplated by
this Agreement, including, without limitation, the Consulting Agreement and the
Promissory Note, in each case at the option of Buyer, in such order as the Buyer
shall determine. Any such setoff against the Withheld Shares shall be based on
the fair market value of the Withheld Shares at the time of such setoff. No
setoff pursuant to this Section 8.3 shall constitute a breach or default under
this Agreement or otherwise, it being agreed that Buyer shall have a period of
ten (10) days after the final and binding resolution of all such good faith
claims and/or disputes relating to such setoff to deliver the shares of Buyer
Common Stock (or other collateral) determined as a result of such resolution to
be due and owing to Shareholder. If it shall be determined that Buyer improperly
(despite Buyer's good faith belief that such setoff was proper) withheld any
cash payment under this Section, such cash amount shall bear interest at the
rate of eight percent (8%) per annum from the date such amount was due. The
remedies provided for in this Agreement are not exclusive and shall be in
addition to any other remedies that Buyer may have at law, in equity or
otherwise.
ARTICLE 9
Miscellaneous
9.1 Specific Performance. The Selling Parties agree that the
Company Common Stock is unique property that cannot be readily obtained on the
open market and that Buyer will be irreparably injured if this Agreement is not
specifically enforced. Therefore, Buyer shall have the right specifically to
enforce the performance of the Selling Parties under this Agreement without the
necessity of posting any bond or other security, and the Selling Parties hereby
waive the defense in any such suit that Buyer has an adequate remedy at law and
agree not to interpose any opposition,
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legal or otherwise, as to the propriety of specific performance as a remedy. The
remedy of specifically enforcing any or all of the provisions of this Agreement
in accordance with this Section 9.1 shall not be exclusive of any other rights
which Buyer may have to terminate this Agreement, or of any other rights or
remedies which Buyer may otherwise have under this Agreement or otherwise, all
of which rights and remedies shall be cumulative.
9.2 Binding Agreement; Assignment. All the terms and
provisions of this Agreement shall be binding upon, inure to the benefit of, and
be enforceable by, the parties hereto and their respective heirs, legal
representatives, successors and assigns. This Agreement shall not be assignable
by any of the Selling Parties without the prior written consent of Buyer.
9.3 Law To Govern. This Agreement shall be construed and
enforced in accordance with the internal laws of the State of Delaware, without
regard to principles of conflict of laws. The Selling Parties hereby agree that
any action with respect to this Agreement or any of the other documents executed
in connection herewith may be brought in the courts of the State of New Mexico
or any federal court sitting in the State of New Mexico and consents to the
jurisdiction of each such court and to service of process in any such suit being
made upon any of the Selling Parties by mail at the address specified in Section
9.4 hereof. The Selling Parties hereby waive any objection that they may now or
hereafter have to the venue of any such suit or any such court or that such suit
was brought in any inconvenient court.
9.4 Notices. All notices shall be in writing and shall be
deemed to have been duly given to a party hereto if delivered personally, then
on the date of such delivery, or on the fifth day after being deposited in the
mail if mailed via registered or certified mail, return receipt requested,
postage prepaid, or on the next business day after being sent by recognized
national overnight courier services, in each case, to such party, at the
following respective addresses:
if to any of the Selling Parties, to:
Treesa Spencer
109 West Greentree Lane
Lake Mary, Florida 32749
with a copy to
Bronstein, Carlson, Gleim & Smith
150 Second Avenue North #1100
St. Petersburg, Florida 33701
Attention: Susan W. Carlson, Esq.
Telecopy: (813) 898-8811
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if to Subsidiary or Buyer, to:
Lukens Medical Corporation
3820 Academy Parkway North, NE
Albuquerque, New Mexico 87109-4409
Attention: Mr. Robert S. Huffstodt
Telecopy: (505) 342-9735
with a copy to:
Golenbock, Eiseman, Assor & Bell
437 Madison Avenue
New York, New York 10022
Attention: Lawrence M. Bell, Esq.
Telecopy: (212) 754-0330
or to such other address as any such party may designate in writing in
accordance with this Section 9.4.
9.5 Fees and Expenses. Except as set forth in this Agreement,
each of the parties hereto shall pay its own fees and expenses with respect to
the transactions contemplated hereby.
9.6 Entire Agreement. This Agreement sets forth the entire
understanding of the parties hereto in respect of the subject matter hereof and
may not be modified, amended or terminated except by a written agreement
specifically referring to this Agreement signed by all of the parties hereto.
This Agreement supersedes all prior agreements and understandings among the
parties with respect to such subject matter.
9.7 Waivers. Any failure by any party to this Agreement to
comply with any of its obligations hereunder may be waived by Shareholder in the
case of a default by Subsidiary or Buyer and or Buyer in case of a default by
any of the Selling Parties. No waiver shall be effective unless in writing and
signed by the party granting such waiver, and no such waiver shall be deemed a
waiver of any subsequent breach or default of the same or similar nature.
9.8 Severability. If any provision of this Agreement would be
held to be invalid, prohibited or unenforceable in any jurisdiction for any
reason, such provision, as to such jurisdiction only, shall be ineffective to
the extent of such invalidity, prohibition, unenforceability, without
invalidating the remaining provisions of this Agreement, and the validity,
legality and enforceability of such remaining provisions shall not be affected
in any way thereby.
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9.9 No Third-Party Beneficiaries. Nothing herein, express or
implied, is intended or shall be construed to confer upon or give to any person,
firm, corporation or legal entity, other than the parties hereto, any rights,
remedies or other benefits under or by reason of this Agreement or any documents
executed in connection with this Agreement.
9.10 Drafting. No party shall be deemed to have drafted this
Agreement but rather this Agreement is a collaborative effort of the undersigned
parties and their attorneys.
9.11 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same agreement.
9.12 Headings. The Section and paragraph headings contained
herein are for the purposes of convenience only and are not intended to define
or limit the contents of said Sections and paragraphs.
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IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
PRO-TEC CONTAINERS, INC.
By: /s/ Treesa Spencer
-------------------------
Name: Treesa Spencer
Title: President
/s/ Treesa Spencer
-----------------------------
Treesa Spencer
PTC MERGER CORP.
By: /s/ Robert S. Huffstodt
-------------------------
Name: Robert S. Huffstodt
Title: President
LUKENS MEDICAL CORPORATION
By: /s/ Robert S. Huffstodt
-----------------------
Name: Robert S. Huffstodt
Title: President
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Exhibit 1.2
ARTICLES OF MERGER
OF
PTC MERGER CORP.
AND
PRO-TEC CONTAINERS, INC.
To the Secretary of State
State of Florida
Pursuant to the provisions of the Florida Business Corporation Act, the
domestic corporations herein named do hereby adopt the following articles of
merger.
FIRST: Annexed hereto and made a part hereof is the Plan of Merger for
merging PTC Merger Corp. with and into PRO-TEC Containers, Inc. as approved and
adopted by written consent of the shareholders of PTC Merger Corp. entitled to
vote thereon given as of May 7, 1997, in accordance with the provisions of
Section 607.0704 of the Florida Business Corporation Act, and as approved and
adopted by written consent of the sole shareholder of PRO-TEC Containers, Inc.
entitled to vote thereon given as of May 7, 1997, in accordance with the
provisions of Section 607.0704 of the Florida Business Corporation Act.
SECOND: PRO-TEC Containers, Inc. will continue its existence as the
surviving corporation under its present name pursuant to the provisions of the
Florida Business Corporation Act.
Executed on this ___ day of May, 1997.
PTC MERGER CORP.
By:_______________________________
Name:
Title:
PRO-TEC CONTAINERS, INC.
By:_______________________________
Name:
Title:
1
<PAGE>
PLAN OF MERGER adopted by PTC Merger Corp., a business corporation
organized under the laws of the State of Florida, by resolution of its Board of
Directors on May 7, 1997, and adopted by PRO-TEC Containers, Inc., a business
corporation organized under the laws of the State of Florida, by resolution of
its Board of Directors on May 7, 1997. The names of the corporations planning to
merge are PTC Merger Corp., a business corporation organized under the laws of
the State of Florida, and PRO-TEC Containers, Inc., a business corporation
organized under the laws of the State of Florida. The name of the surviving
corporation into which PTC Merger Corp. plans to merge is PRO-TEC Containers,
Inc.
1. PTC Merger Corp. and PRO-TEC Containers, Inc. shall, pursuant to the
provisions of the Florida Business Corporation Act, be merged with and into a
single corporation, to wit, PRO-TEC Containers, Inc., which shall be the
surviving corporation at the effective time and date of the merger and which is
sometimes hereinafter referred to as the "surviving corporation", and which
shall continue to exist as said surviving corporation under its present name
pursuant to the provisions of the Florida Business Corporation Act. The separate
existence of PTC Merger Corp., which is sometimes hereinafter referred to as the
"nonsurviving corporation", shall cease at the effective time and date of the
merger in accordance with the provisions of the Florida Business Corporation
Act.
2. The Articles of Incorporation of the surviving corporation at the
effective time and date of the merger shall be the Articles of Incorporation of
said surviving corporation and upon such effective date shall be amended and
restated to read in its entirety as set forth in Exhibit A hereto, and as so
amended and restated shall continue in full force and effect until amended and
changed in the manner prescribed by the provisions of the Florida Business
Corporation Act.
3. The present bylaws of the non-surviving corporation will be the
bylaws of said surviving corporation and will continue in full force and effect
until changed, altered, or amended as therein provided and in the manner
prescribed by the provisions of the Florida Business Corporation Act.
4. The directors and officers listed in the Amended and Restated
Articles of Incorporation of PRO-TEC Containers, Inc. as set forth in Exhibit A
hereto shall be the members of the Board of Directors and the officers of the
surviving corporation, all of whom shall hold their respective offices until the
election and qualification of their successors or until their tenure is
otherwise terminated in accordance with the bylaws of the surviving corporation.
5. (a) Each share of common stock, par value $1.00 per share, of the
surviving corporation (the "Original Surviving Company Stock") then issued and
outstanding shall, upon the effective date of the merger, automatically be
converted into the right to receive, upon due and proper surrender of the
certificate representing it, that number of shares of common stock, par value
$.01 per shares, of Lukens Medical Corporation ("Lukens") as shall be
determined, adjusted, and deliverable in accordance with, and subject to the
terms and conditions of, that certain Agreement of Merger and Reorganization,
among Lukens, the surviving corporation, the non-surviving corporation and
Treesa Spencer.
2
<PAGE>
(b) Each share of common stock, par value $1.00 per
share, of the nonsurviving corporation then issued and outstanding shall, upon
the effective date of the merger, be converted into, and Lukens as the holder
thereof shall receive, one share of common stock, par value $1.00 per share, of
the surviving corporation.
6. The Plan of Merger herein made and approved shall be submitted to
the shareholders of the non-surviving corporation and to the shareholders of the
surviving corporation for their approval or rejection in the manner prescribed
by the provisions of the Florida Business Corporation Act.
7. In the event that the Plan of Merger shall have been approved by the
shareholders entitled to vote of the non-surviving corporation and by the
shareholders entitled to vote of the surviving corporation in the manner
prescribed by the provisions of the Florida Business Corporation Act, the
non-surviving corporation and the surviving corporation hereby stipulate that
they will cause to be executed and filed and/or recorded any document or
documents prescribed by the laws of the State of Florida, and that they will
cause to be performed all necessary acts therein and elsewhere to effectuate the
merger.
8. The Board of Directors and the proper officers of the non-surviving
corporation and the Board of Directors and the proper officers of the surviving
corporation, respectively, are hereby authorized and empowered to do any and all
acts and things, and to make, execute, deliver, file and/or record any and all
instruments, papers, and documents which shall be or become necessary, proper,
or convenient to carry out or put into effect any of the provisions of this Plan
of Merger or of the merger herein provided for.
3
<PAGE>
EXHIBIT A
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF PRO-TEC CONTAINERS, INC.
Pursuant to the authority set forth in section 607.10025 of the Florida
Business Corporation Act, the following is the amended and restated Articles of
Incorporation of Protec Containers,Iinc.:
FIRST: The name of the corporation shall be PRO-TEC Containers, Inc.
SECOND: The principal place of business and mailing address of this
corporation shall be 3820 Academy Parkway North, NE, Albuquerque, New Mexico
87109.
THIRD: The duration of the corporation shall be perpetual.
FOURTH: The number of shares of stock that this corporation is
authorized to have outstanding at any one time is 10,000 shares of common stock,
par value $1.00 per share.
FIFTH: The names and addresses of the officers and director of the
corporation are as follows:
Director:
Robert S. Huffstodt 3820 Academy Parkway North, NE
Albuquerque, NM 87109-4409
Officers:
President Robert S. Huffstodt 3820 Academy Parkway North, NE
Albuquerque, NM 87109-4409
V.P./Asst. Secy Scott Henderson 3820 Academy Parkway North, NE
Albuquerque, NM 87109-4409
SIXTH: The name and address of the registered agent is National
Registered Agents, Inc., 526 E. Park Avenue, Tallahassee, FL 32301.
SEVENTH: The corporation shall, to the fullest extent permitted by the
provisions of the Florida General Corporation Act, as the same may be amended
and supplemented, and in the manner provided for in the By-Laws, indemnify any
and all persons whom it shall have power to indemnify under said provisions.
4
<PAGE>
Exhibit 3.2
ASSIGNMENT OF PATENT
In consideration of good and valuable consideration paid to
Treesa Spencer ("Assignor"), by Lukens Medical Corporation, a Delaware
corporation ("Assignee"), the receipt whereof is hereby acknowledged, the
undersigned Assignor by these presents hereby sells, assigns, transfers, and
sets over unto the said Assignee the entire right, title, and interest in and to
the invention or improvement of those certain patents, said patents being fully
described and/or claimed in the applications for Letters Patent referenced on
Schedule A annexed hereto, and the entire right, title, and interest in and to
the applications or Letters Patent, as the case may be, including all treaty and
convention rights and the right to sue for present, past, and future
infringement, the same to be held and enjoyed by said Assignee, its successors,
or other legal representatives, as fully and entirely as the same would have
been held and enjoyed by the undersigned if this assignment and sale had not
been made.
And by this covenant the Assignor will execute or procure any
further necessary assurance of title to said patents and Letters Patent; and at
any time, upon the request and at the expense of said Assignee, will execute and
deliver any and all papers that may be necessary or desirable to perfect the
title to said patents or any Letters Patents which may be granted therefor in
said Assignee, its successors, assigns or other legal representatives, and, upon
the request and at the expense of said Assignee, will execute any additional or
divisional applications for patents, and for the reissue of any Letters Patents
to be granted therefor, and will make all rightful oaths and do all lawful acts
requisite for procuring the same or for aiding therein, without further
compensation, but at the expense of said Assignee, its successors, assigns, or
other legal representatives.
And the Commissioner of Patents and Trademarks is hereby
authorized and requested to issue any and all Letters Patent of the United
States for said invention to said Assignee.
-------------------
TREESA SPENCER
1
<PAGE>
STATE OF )
) .SS
COUNTY OF )
Before me this ___ day of May, 1997, personally appeared
Treesa Spencer to me personally known to be the person described in and who
executed the above instrument, and acknowledged to me that she executed the same
of her own free will for the purposes therein set forth.
-------------------
Notary Public
AFFIX SEAL
2
<PAGE>
SCHEDULE A
1. Disposable Hypodermic Syringe and Needle Combination
Having Retractable, Accident Preventing Sheath
Country Patent Number Issue Date
- ------- ------------- ----------
US 4,702,738 October 27, 1987
Canada 1,268,679 May 8, 1990
US 4,801,295 January 31, 1989
2. Blood Collector Cylinder With Needle Ejector
Country Patent Number Issue Date
- ------- ------------- ----------
US 4,907,600 March 13, 1990
US 4,993,426 February 19, 1991
Canada 1,310,241 November 17, 1992
Australia 615,400 July 19, 1989
Brasil [PI 89 07570-6] [January 21, 1991]
Europe 430,978 June 28, 1995
Ireland 61,468 October 27, 1994
Japan [508246/1989] [July 19, 1989]
S.Korea [90-700609] [March 20, 1990]
Spain 2,015,739 June 27, 1990
3. Disposable Container For Syringes
Country Patent Number Issue Date
- ------- ------------- ----------
US 4,828,107 May 9, 1989
Canada 1,304,054 June 23, 1992
<PAGE>
4. Infectious Waste Container For Use In Hospitals And
Other Health Care Facilities (Design)
Country Patent Number Issue Date
- ------- ------------- ----------
US D279,417 June 25, 1985
5. Lockable Holder For Containers
Country Patent Number Issue Date
- ------- ------------- ----------
US D284,547 July 8, 1986
6. Needle Remover (Design)
Country Patent Number Issue Date
- ------- ------------- ----------
US D327,573 July 7, 1992
<PAGE>
Exhibit 3.5(c)
SHAREHOLDER AGREEMENT AND QUESTIONNAIRE
Lukens Medical Corporation
3820 Academy Parkway North NE
Albuquerque, New Mexico 87109-4409
Gentlemen:
The undersigned acknowledges that the issuance or transfer of
shares of Common Stock, par value $.01 per share (the "Shares"), of Lukens
Medical Corporation ("Lukens") to the holder of shares of common stock of
PRO-TEC Containers, Inc., pursuant to a proposed Agreement of Merger and
Reorganization among Lukens, PRO-TEC Containers, Inc. ("Company") and certain
other parties (the "Reorganization Agreement") and the merger transaction
contemplated thereby (the "Reorganization") is not being registered under the
Securities Act of 1933, as amended (the "Securities Act"), but rather is being
made privately on behalf of Lukens, in reliance upon exemptions from the
Securities Act and applicable state securities laws.
The undersigned further acknowledges that the information
contained herein is needed by Lukens in order to ensure the availability of such
exemptions and to determine (a) whether an investment in the Shares is suitable
for the undersigned and (b) whether the undersigned has such knowledge and
experience in financial and business matters that the undersigned is capable of
evaluating the merits and risks of an investment in the Shares.
The undersigned also understands that Lukens and its
representatives will rely on the information contained herein for purposes of
such determination. Accordingly, the undersigned represents and warrants to
Lukens and its representatives that the information contained herein is complete
and accurate and may be relied upon by Lukens and its representatives, and
hereby agrees to notify Lukens immediately if there is any material change in
the information provided herein occurring prior to the consummation of the
transactions contemplated by the Reorganization Agreement and to furnish to
Lukens any other information which Lukens may request in connection with the
matters contemplated hereby.
The undersigned also understands and agrees that, although
Lukens will endeavor to keep the information provided in this Agreement and
Questionnaire confidential, Lukens may present this Agreement and Questionnaire
and the information provided in answer to it to such persons or entities as it
deems advisable if called upon to establish the availability under any federal
or state securities laws of an exemption from registration of the issuance of
Shares.
1
<PAGE>
Finally, the undersigned has been advised that the
consummation of the transactions contemplated by the Reorganization Agreement
and the issuance or transfer of Shares to the undersigned pursuant thereto is
among other things conditioned upon the covenants and agreements of the
undersigned set forth herein.
Accordingly, in order to induce Lukens to enter into and
proceed with the transactions contemplated by the Reorganization Agreement and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the undersigned hereby represents, warrants, covenants and agrees,
and provides certain information, as follows:
A. The undersigned hereby represents, warrants and covenants to
Lukens as follows:
(i) The undersigned is 21 years of age or older.
(ii) The undersigned has reviewed the merits of an
investment in the Shares with legal and tax counsel and with an investment
advisor to the extent deemed advisable. The undersigned has not received or
relied on any statement, advice or representation by Lukens or any of its
representatives regarding the income tax consequences of the Reorganization, and
has consulted with his own legal and tax counsel and investment advisors
regarding such consequences.
(iii) The undersigned alone, or together with the
undersigned's Shareholder Representative indicated below, and who has completed
the Shareholder Representative Certificate attached as Exhibit A hereto, has
such knowledge and experience in financial and business matters that the
undersigned is capable of evaluating the merits and risks of an investment in
the Shares, and, if a resident of, or domiciled in, a certain state, meets any
additional suitability standards applicable to the undersigned under state law.
(iv) The undersigned has had a full opportunity to ask
questions of and to receive answers from a representative of Lukens concerning
the terms and conditions of the transactions contemplated by the Reorganization
Agreement and the business of Lukens and its subsidiaries, and in connection
therewith has been provided with *[(a) Lukens' annual report on Form 10-K for
its 1996 fiscal year, (b) Lukens' proxy statement from its 1996 Annual Meeting
of Stockholders, (c) Lukens' quarterly reports on Form 10-Q for the quarters
ended March 31, 1996, June 30, 1996, September 30, 1996 and December 31, 1996]*,
(d) Lukens' certificate of incorporation and bylaws, and (g) all such other
information as the undersigned desired in order to evaluate an investment in the
2
<PAGE>
Shares, and all such questions have been answered to the full satisfaction of
the undersigned.
(v) The undersigned has been advised and understands that
an investment in Lukens is speculative and, in connection with the matters
contemplated hereby, the undersigned has relied solely upon the information
contained in Lukens' public filings and upon independent investigations made by
the undersigned. The undersigned has not relied upon any representation or
warranty as to the period of time the undersigned may be required to hold the
Shares, or as to projected or forecasted profits or losses which may be earned
or incurred by Lukens, or any other representation or warranty from Lukens or
any of its affiliates, employees or agents. In addition, the undersigned is not
acquiring any Shares as a result of or subsequent to (a) any advertisement,
article, notice or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio or (b) any seminar or
meeting whose attendees, including the undersigned, had been invited as a result
of, subsequent to or pursuant to any of the foregoing.
(vi) The undersigned will acquire the Shares in good
faith solely for the undersigned's own account, and for investment purposes, and
not with a view to, or for, subdivision, distribution, fractionalization or
resale, or for the account, in whole or in part, of others.
*[(vii) The undersigned understands that the Shares have
not been and will not be registered under the Securities Act or the securities
laws of certain states, in reliance upon specific exemptions from registration
thereunder, and the undersigned agrees that the undersigned's Shares may not be
sold, offered for sale, transferred, pledged, hypothecated or otherwise disposed
of except in compliance with the Securities Act and applicable state securities
laws and in compliance with the provisions of Article 7 of the Reorganization
Agreement. The undersigned has been advised that Lukens has no obligation to
cause the Shares to be registered under the Securities Act or to comply with any
exemption under the Securities Act, including but not limited to that set forth
in Rule 144 promulgated under the Securities Act, which otherwise might permit
the Shares to be sold by the undersigned.]* The undersigned understands that all
certificates representing the Shares will bear legends restricting the transfer
thereof, and indicating that the holder thereof is bound the applicable terms of
the Reorganization Agreement and this Agreement and Questionnaire.
(viii) The undersigned will cause any proposed transferee
of Shares from the undersigned, other than a transferee who purchases pursuant
to an effective registration statement
3
<PAGE>
satisfying the requirements of the Securities Act or pursuant to Rule 144 under
the Securities Act to agree to take and hold such Shares subject to the
provisions and upon the conditions specified herein.
(ix) Prior to any proposed sale, transfer or other
disposition of any Shares (other than a sale, transfer or other disposition (A)
permitted under and pursuant to Rule 144(k) under the Securities Act or (B)
after the restrictive legends on the certificates representing the same shall
have been removed, the undersigned shall give written notice to Lukens of such
intention to effect such sale, transfer or other disposition. Each such notice
shall describe the manner and circumstances of the proposed sale, transfer or
other disposition in reasonable detail, and shall be accompanied by either (i)
an opinion of counsel, and in form and substance, reasonably acceptable to
Lukens, addressed to Lukens, to the effect that the proposed sale, transfer or
other disposition of such Shares may be effected without registration under the
Securities Act, or (ii) a "no action" letter, in form and substance reasonably
acceptable to Lukens, from the Securities and Exchange Commission (the "SEC") to
the effect that such sale, transfer or other disposition of such Shares without
registration will not result in a recommendation by the staff of the SEC that
action be taken with respect thereto, whereupon the undersigned shall be
entitled to transfer such Shares in accordance with the terms of such notice
delivered to Lukens, subject in all cases, however, to any other agreement with
or for the benefit of Lukens regarding the sale, transfer or other disposition
of Shares.
(x) The undersigned understands that no federal or state
agency has made any finding or determination as to the fairness of the
Reorganization, or any recommendation or endorsement of the Shares.
(xi) All information which the undersigned has provided
Lukens, including (but not limited to) the information, representations and
warranties of the undersigned contained herein, is true, correct and complete in
all respects as of the date set forth below and the undersigned agrees to
furnish any additional information which Lukens may request and to notify Lukens
immediately should any material change occur.
4
<PAGE>
B. Shareholder Information.
1. NAME AND TAX I.D. NUMBER
Name of Shareholder:
------------------------------------------------------------
Social Security or Tax I.D. Number:
---------------------------------------------
Name and Title of Person completing this Questionnaire:
- --------------------------------------------------------------------------------
2. ADDRESS AND TELEPHONE NUMBER
Address (post office box is not acceptable)
- --------------------------------------------------------------------------------
(Street)
- --------------------------------------------------------------------------------
(City) (State) (Zip Code)
- --------------------------------------------------------------------------------
Telephone Number: ( )
--------------------------------------------------------------
3. INDIVIDUAL SHAREHOLDER
(a) Type of Ownership (check as appropriate):
__ Individual
__ Joint tenants with rights of survivorship
__ Tenants in common
__ Community property
__ Other (indicate):
(b) Date of Birth:
------------------------------------------
(c) Citizenship:
--------------------------------------------
(d) State in which Registered to Vote:
----------------------
(e) Occupation or Profession:
-------------------------------
(f) Name and Address of Employer:
---------------------------
(g) Current Position or Title:
------------------------------
(h) Office Telephone Number: ( )
-------------------------------
(i) Nature of Employer's Business:
--------------------------
5
<PAGE>
(j) How long have you been employed at your current position?
- --------------------------------------------------------------------------------
(k) If you have had more than one job in the last five years,
give the same information (name and address of employer, nature of business,
position or title, principal responsibility and years of service) with respect
to each such job:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4. PARTNERSHIP, CORPORATION, TRUST OR OTHER ENTITY STOCKHOLDERS.
(a) Type of Entity:
-----------------------------------------
(b) Date of Organization or Incorporation:
------------------
(c) State or other Jurisdiction in which Organized or
Incorporated:
-------------------------------------------
(d) Was this partnership, corporation, trust or other entity
formed for the specific purpose of acquiring or holding shares of Lukens?
Yes No
------------ ------------
(e) Number of shareholders, partners or beneficiaries:
- --------------------------------------------------------------------------------
(f) Indicate whether individual shareholders, partners or
beneficiaries within the entity may elect whether to participate in each
investment of the entity.
Yes No
------------ -------------
5. INVESTMENT BACKGROUND.
(a) Qualifications (you may answer "Yes" to more than
one of the following questions)
(i) The undersigned by reason of his business or
financial experience considers himself able to protect his own interests in
connection with the investment in the Shares pursuant to the transactions
contemplated by the Reorganization Agreement.
Yes No
----------- -------------
6
<PAGE>
(ii) The undersigned by reason of the business or
financial experience of his professional advisors (including those advisors
identified below who have been consulted in connection with the transactions
contemplated by the Reorganization Agreement) has the capacity to protect his
own interests in connection with the investment in the Shares pursuant to the
transactions contemplated by the Reorganization Agreement.
Yes No
------------ -------------
Please identify the name, address and telephone number of each
professional advisor consulted with respect to the proposed investment.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(iii) The undersigned by reason of the business or
financial experience of his Shareholder Representative (if any) is capable of
evaluating the merits and risk of the investment in the Shares pursuant to the
transactions contemplated by the Reorganization Agreement.
Yes No
------------ --------------
Please identify the name, address and telephone number of the
Shareholder Representative(s), if any. Each Shareholder Representative is
required to complete the Shareholder Representative Certificate attached as
Exhibit A hereto.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(iv) The undersigned is able to bear the economic
risk of an investment in the Shares.
Yes No
------------- -------------
(v) The undersigned can afford a complete loss of his
investment in the Shares.
Yes No
------------ -------------
(vi) Please provide additional information which reflects your
overall business, investment and financial experience or knowledge (e.g.,
special training, additional investments):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7
<PAGE>
The information requested in paragraphs (B)(3) and (B)(5)
above, respectively, should be provided in regard to the individual(s) who is
(are) making investment decisions on behalf of the partnership, corporation,
trust or other entity.
C. Accredited Investor Criteria.
Lukens does not intend to rely upon the exemption from registration
afforded by Regulation D under the Securities Act. However, representations and
information as to the qualification of the undersigned under Regulation D, and
as an ACCREDITED INVESTOR (as defined in Rule 501 of Regulation D), as set forth
below, are to be made and provided by the undersigned in order for Lukens to
better determine whether the issuance or transfer of Shares may be made in light
of the requirements of Section 4(2) under the Securities Act.
For purposes of determining whether you are an Accredited Investor,
please check the applicable box below:
[ ] (a) the undersigned is a natural person whose individual net worth*, or
joint net worth* with that person's spouse, at the time of the
undersigned's purchase exceeds $1,000,000;
[ ] (b) the undersigned is a natural person who had an individual income1
in excess of $200,000 in each of the two most recent years or joint
income with that person's spouse in excess of $300,000 in each of
those years and has a reasonable expectation of reaching the same
income level in the current year;
- --------
1. For purposes of the foregoing, "net worth" means the excess of total
assets at fair market value, including home and personal property, over total
liabilities. For purposes of the foregoing, "individual income" means adjusted
gross income, as reported for federal income tax purposes, less any income
attributable to a spouse or to property owned by a spouse, increased by the
following (but not including amounts attributable to a spouse or to property
owned by a spouse): (i) the amount of tax exempt interest income received, (ii)
the amount of losses claimed as a limited partner in a limited partnership,
(iii) any deduction claimed for depletion, (iv) amounts contributed to an IRA or
Keogh retirement plan, (v) alimony paid, and (vi) any amount by which income
from long-term capital gains has been reduced in arriving at adjusted gross
income pursuant to the provisions of Section 1202 of the Internal Revenue Code.
8
<PAGE>
[ ] (c) the undersigned is (i) a bank as defined in Section 3(a)(2) of the
Securities Act, or a savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Securities Act
whether acting in its individual or fiduciary capacity; (ii) a
broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934; (iii) an insurance company as
defined in Section 2(13) of the Securities Act; (iv) an investment
company registered under the Investment Company Act of 1940 or a
business development company as defined in Section 2(a)(48) of the
Act; (v) a Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958; (vi) a plan established and
maintained by a state, its political subdivi- sions, or any agency
or instrumentality of a state of its political subdivisions for the
benefit of its employees, if such plan has total assets in excess
of $5,000,000, or (vii) an employee benefit plan within the meaning
of Title I of the Employee Retirement Income Security Act of 1974,
if the investment decision is made by a plan fiduciary, as defined
in Section 3(21) of such Act, which is either a bank, savings and
loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in excess
of $5,000,000 or if a self-directed plan, with invest- ment
decisions made solely by persons that are Accredited Investors;
[ ] (d) the undersigned is a private business development company as
defined in Section 202(a)(22) of the Investment Advisers Act of
1940;
[ ] (e) the undersigned is an organization described in Section 501(c)(3)
of the Internal Revenue Code, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific purpose
of acquiring the Shares offered, with total assets in excess of
$5,000,000;
[ ] (f) the undersigned is a trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the
Shares offered, whose purchase is directed by a person who has such
knowledge and experience in financial and business matters that he
is capable of evaluating the merits and risks of the prospective
investment;
[ ] (g) the undersigned is a entity in which all of the equity owners are
accredited investors under paragraphs (a), (b), (c), (d), (e) or
(f) above; or
[ ] (h) none of the above.
9
<PAGE>
D. The undersigned acknowledges having reviewed and agrees to be bound by and to
comply with the provisions of Article 7 of the Reorganization Agreement.
E. This Agreement and Questionnaire shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned and shall inure to
the benefit of Lukens and its successors and assigns.
F. Signature.
The undersigned has executed this Shareholder Agreement and
Questionnaire this ____ day of _____________, 199__.
- -----------------------------
Print Name
- -----------------------------
Signature
- -----------------------------
Print state of residence
If the Investor is a PARTNERSHIP, CORPORATION, TRUST or OTHER ENTITY, complete
the following:
- ----------------------------- -----------------------------
Print name of partnership, Capacity of authorized
corporation, trust or entity representative
By:__________________________ _____________________________
Signature of authorized Print jurisdiction of
representative organization or incorporation
- -----------------------------
Print name of authorized
representative
IMPORTANT: Signatures must be NOTARIZED on one of the following pages.
10
<PAGE>
[Individual Acknowledgment]
STATE OF )
) ss.:
COUNTY OF )
On the ____ day of _____________, 19__, before me personally came
____________________, to me personally known and known to me to be the
individual described in and who executed the foregoing instrument, and (s)he
duly acknowledged to me that (s)he executed the same.
Given under my hand and seal this ____ day of __________, 19__.
-----------------------------
Notary Public
[Corporate Acknowledgement]
STATE OF )
) ss.:
COUNTY OF )
On the ____ day of _______________________, 19__, before me personally
came ______________________________, to me personally known, who being by me
sworn, did depose and say that (s)he resides in ________________________; that
(s)he is of ________________, the corporation described in and which executed
the above instrument; and that (s)he signed such instrument by order of the
board of directors of said corporation.
Given under my hand and seal this ____ day of __________, 19__.
-----------------------------
Notary Public
11
<PAGE>
[Partnership Acknowledgement]
STATE OF )
) ss.:
COUNTY OF )
On the ____ day of ___________________, 19__, before me personally came
_____________________, one of the partners of __________________, to me
personally known and known to me to be the individual described in and who
executed the foregoing instrument, and (s)he duly acknowledged to me that (s)he
executed the same in the aforesaid capacity.
Given under my hand and seal this ____ day of __________, 19__.
-----------------------------
Notary Public
[Trust Acknowledgement]
STATE OF )
) ss.:
COUNTY OF )
On the ____ day of _______________, 19__, before me personally came
_____________________, trustee under ________________________ _______________,
to me personally known and known to me to be the individual described in and who
executed the foregoing instrument, and (s)he duly acknowledged to me that (s)he
executed the same in the aforesaid capacity.
Given under my hand and seal this ____ day of __________, 19__.
-----------------------------
Notary Public
12
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Exhibit A
SHAREHOLDER REPRESENTATIVE CERTIFICATE
The undersigned, does hereby represent that the responses to
the questions contained herein are complete and accurate and may be relied upon
by Lukens Medical Corporation ("Lukens") in connection with the proposed
issuance of common stock, par value $.01 per share, of Lukens (the "Lukens
Common Stock") to the below referenced person (the "Shareholder") pursuant to a
certain Agreement of Merger and Reorganization, among Lukens, PRO-TEC
Containers, (the "Company") and certain other parties (the "Agreement"), and the
merger transaction contemplated thereby. The undersigned further agrees to
notify Lukens immediately of any material change in any of the information
provided below occurring prior to any issuance or transfer of shares of Lukens
Common Stock to the below named Shareholder on whose behalf the undersigned is
acting as Shareholder Representative.
1. Name of Shareholder represented:
---------------------------------------
2. Name of Shareholder Representative:
-----------------------------------
3. Business address and telephone number
of Shareholder Representative:
----------------------------------------
----------------------------------------
----------------------------------------
Tel.:
-----------------------------------
4. Names and addresses of your employers, if any, the positions held with
such employers and the length of time such positions were or have been
held for the past five years:
EMPLOYER POSITION HELD LENGTH OF TIME
-------- ------------- --------------
- ------------------------- ---------------------- --------------------
- ------------------------- ---------------------- --------------------
- ------------------------- ---------------------- --------------------
<PAGE>
5. All licenses you hold as a broker-dealer or as an
investment adviser:
NAME OF LICENSES ISSUING AUTHORITY DATE GRANTED
- ---------------- ----------------- ------------
- ------------------------- ---------------------- --------------------
- ------------------------- ---------------------- --------------------
- ------------------------- ---------------------- --------------------
6. All memberships in professional organizations pertaining to your
occupation (e.g., the NASD, Bar Association and Committees, Accounting
Societies and Committees):
7. Please state whether or not within the past ten years:
(a) You have been convicted, indicted or investigated in connection
with any past or present criminal proceeding (excluding traffic
violations and other minor offenses)?
Yes No
----------------- ---------------
(b) You have been the subject of any order, judgment or a decree of any
court of competent jurisdiction permanently or temporarily enjoining
you from acting as an investment adviser, underwriter, broker or dealer
in securities or as an affiliated person, director or employee of an
investment company, bank, savings and loan association or insurance
company, or from engaging in or continuing any conduct or practice in
connection with any such activity, or in connection with the purchase
or sale of any security, or the subject of any order of a federal or
state authority barring or suspending your right to be engaged in any
such activity, or to be associated with persons engaged in any such
activity, which order has not been reversed?
Yes No
---------------- ----------------
(c) If yes to either (a) or (b) please describe the
circumstances more fully:
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8. Education:
COLLEGE OR DATE DEGREE
DEGREE(S) UNIVERSITY RECEIVED
- ------------------------- ---------------------- --------------------
- ------------------------- ---------------------- --------------------
- ------------------------- ---------------------- --------------------
9. What experience in financial and business matters do you believe makes
you capable of evaluating the merits and risks of the Shareholder
holding an investment in shares of Lukens Common Stock?
10. Except as set forth in subparagraph (a) below, neither the undersigned
nor any of my affiliates have any material relationship with Lukens or
the Company, or any of their respective subsidiaries or affiliates, and
no such material relationship is mutually understood to be contemplated
or has existed at any time during the previous two years.
(a)
(b) If a material relationship is disclosed in subparagraph (a) above,
indicate the amount of compensation received or to be received as a
result of such relationship:
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11. In advising the Shareholder in connection with the Shareholder's
prospective investment in shares of Lukens Common Stock, the
undersigned will be relying in part on the Shareholder's own expertise
in certain areas:
Yes__________ No__________
If yes, state the areas of expertise:
12. In advising the Shareholder in connection with the Shareholder's
prospective investment shares in Lukens Common Stock, will you be
relying in part on the expertise of an additional representative or
representatives?
Yes__________ No__________
If yes, give the name and address of such additional representative or
representatives and describe the areas where you will be relying on
their expertise:
The undersigned understands that Lukens will be relying on the accuracy and
completeness of the responses to the foregoing questions and the undersigned
further represents, warrants and certifies to Lukens as follows:
1. The undersigned has had the opportunity to and has taken such steps as
the undersigned has deemed necessary to become familiar with the
business and financial affairs of Lukens. The undersigned acknowledges
receipt of copies of *[Lukens' annual report on Form 10-K for its 1995
fiscal year, Lukens' proxy statement for its 1996 annual meeting of
stockholders and Lukens' quarterly reports on Form 10-Q for the
quarters ended March 31, 1996, June 30, 1996 and September 30, 1996 and
December 31, 1996, Lukens' Current Reports on Form 8-K dated
____________________, 1995]* and Lukens' certificate of incorporation
and bylaws, and that the undersigned has read each of them and has had
an opportunity to consult with representatives of Lukens. The
undersigned has such knowledge and experience in financial and business
matters as to be capable of evaluating on behalf of the Shareholder the
merits and risks of an investment in shares of Lukens Common Stock.
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<PAGE>
2. The undersigned is not, nor is any affiliate of the undersigned, an
affiliate, director, officer or other employee of Lukens or the
Company, or a beneficial owner of 10 percent or more of any class of
the equity securities or 10 percent or more of the equity interest in
Lukens or the Company.
3. The undersigned has such knowledge and experience in financial and
business matters that he is capable of evaluating alone, or together
with other representatives named above of the Shareholder or together
with the Shareholder, the merits and risks of an investment in shares
of Lukens Common Stock.
4. There is no material relationship between either the undersigned or any
affiliate of the undersigned and Lukens or any of the subsidiaries and
affiliates of Lukens or the Company which now exists, is mutually
understood to be contemplated, or has existed at any time during the
previous two years, and the undersigned has so advised the Shareholder.
5. The undersigned has been designated in writing by the Shareholder as
his Shareholder Representative in connection with evaluating the merits
and risks of the prospective investment in the shares of Lukens Common
Stock, such designation having been made after the disclosure referred
to in paragraph 4 above.
6. The undersigned shall not receive any compensation of any sort
whatsoever from Lukens as a result of this transaction.
Date: , 1997
--------------------------------------
Shareholder Representative's signature
5
<PAGE>
I acknowledge that the person(s) signing the foregoing portion of this
certificate has/have served as my Shareholder Representative(s) in connection
with evaluating the merits and risks of my prospective investment in the shares
of Common Stock of Lukens and that said Shareholder Representative(s) has/have
previously disclosed to me, in writing, any material relationship between the
Shareholder representative(s) (or his/her or their affiliates) and Lukens, the
Company and any of their respective subsidiaries and affiliates which now exists
or is mutually understood to be contemplated or which has existed at any time
during the previous two years, and any compensation received or to be received
as a result of such relationship.
- ----------------------------- -----------------------------
Date Shareholder's Signature
6
<PAGE>
EXHIBIT 3.5(e)
NON-COMPETITION UNDERTAKING
UNDERTAKING, dated as of May ___, 1997, by Treesa Spencer
("Shareholder"), in favor of Lukens Medical Corporation, a Delaware corporation
("Lukens"), Pro-Tec containers, Inc., a Florida corporation ("Pro-Tec") and
wholly-owned subsidiary of Lukens, and each of their direct and indirect
subsidiaries and affiliates (collectively, the "Lukens Companies").
W I T N E S S E T H:
WHEREAS, pursuant to an Agreement of Merger and
Reorganization, dated as of even date herewith (the "Merger Agreement"), a
wholly owned subsidiary of Lukens, is being merged with and into Pro-Tec
Containers, Inc., a Florida corporation ("Pro-Tec"), with the result that
Pro-Tec will be a wholly-owned subsidiary of Lukens, and Shareholder is the
president, a director and sole shareholder of Pro-Tec;
NOW, THEREFORE, for good and valuable consideration, the
receipt of which by the undersigned is hereby acknowledged, and in order to
induce Lukens to effect the Merger pursuant to the terms of the Merger
Agreement, Shareholder hereby undertakes and agrees as follows (with all
capitalized terms used herein and not otherwise defined having the meanings
ascribed to such terms in the Merger Agreement):
1. Shareholder will not for a period of eight (8) years from
the date hereof, and will not permit any Related Party for a period of two (2)
years from the date hereof (the "Limited Period") to:
(a) directly or indirectly, anywhere in the world (the
"Territory"), own, manage, operate or control, or participate in the ownership,
management, operation or control of, or be connected with or have any interest
in, whether as an employee, consultant, principal, lender, partner, officer,
director, stockholder or otherwise, or refer or exploit any customers, business
or opportunities to or with, or otherwise assist in any manner, (i) any business
which manufactures, distributes or markets specialized containers for the
disposal of used "sharps" such as needles and scalpel blades, or any other
products or services which have been sold, distributed or provided by Pro-Tec
prior to the Closing Date or which are competitive therewith or (ii) any other
person, entity or enterprise which is competitive within the Territory with the
Business heretofore conducted by Pro-Tec and/or hereafter conducted by Pro-Tec
or any of the Lukens Companies; provided that the foregoing shall not prohibit
the undersigned or
1
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any Related Party from owning less than 1% of any class of securities listed on
a national securities exchange or traded publicly in the over-the-counter
market; or
(b) without the express prior written consent of the
President of Lukens, directly or indirectly employ or attempt to employ or
knowingly arrange or solicit to have any other person or entity employ any
person, who heretofore has been, or is, on the date hereof or hereafter, in the
employ of any of the Lukens Companies; or
(c) initiate communications with, solicit, entice, or
induce any supplier, vendor, client, customer or account who presently is, or at
any time during the Limited Period shall be or shall have been, a supplier,
vendor, client, customer, or account of Pro-Tec, to become a customer or
supplier of any person or entity (other than the Lukens Companies) with respect
to any business or services of the type provided by, or competitive with, the
Business, or to terminate or otherwise limit or reduce any contractual, business
or other relationship with any of the Lukens Companies; or
(d) make any negative or other disparaging statement
concerning any of the Lukens Companies, or the management, the Board of
Directors, management decisions, operating policies or Board decisions or
actions of the Lukens Companies, whether or not libelous or defamatory.
2. Neither Shareholder, nor any Related Party will at any time
divulge or make available to any person or entity, except as expressly consented
to in writing by the President of Lukens, or use, any confidential information
or any documents, files or other papers concerning the business or financial
affairs of any of the Lukens Companies, except such disclosure which is
otherwise required by applicable law or regulations. Shareholder, on behalf of
herself and each Related Party, further agrees, during the Limited Period, to
refer to Pro-Tec prospective customers for ProTec who contact any of them.
3. In the event that any of the provisions contained herein
would be held to be invalid, prohibited or unenforceable in any jurisdiction for
any reason because of the scope, duration or area of its applicability or for
other reasons, unless narrowed by construction, such provision shall for
purposes of such jurisdiction only, be construed as if such invalid, prohibited
or unenforceable provision had been more narrowly drawn so as not to be invalid,
prohibited or unenforceable (or if such language cannot be drawn narrowly
enough, the court making any such determination shall have the power to modify,
to the extent necessary to make such provision or provisions enforceable in such
jurisdiction, such
2
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scope, duration or area or all of them, and such provision shall then be
applicable in such modified form). If, notwithstanding the foregoing, any such
provision would be held to be invalid, prohibited or unenforceable in any
jurisdiction for any reason, such provision, as to such jurisdiction only, shall
be ineffective to the extent of such invalidity, prohibition or
unenforceability, without invalidating the remaining provisions. No narrowed
construction, court-modification or invalidation of any provision shall affect
the construction, validity or enforceability of such provision in any other
jurisdiction. Subject to the foregoing, in case any one or more of the
provisions contained in this Undertaking should be invalid, illegal or
unenforceable in any respect, the validity, legality and unenforceability of the
remaining provisions contained herein shall not be affected in any way thereby.
4. Since the Lukens Companies will be irreparably damaged if
the provisions hereof are not specifically enforced, the Lukens Companies shall
be entitled to an injunction restraining any violation or attempted violation of
this Undertaking or any other appropriate decree of specific performance. Such
remedies shall not be exclusive and shall be in addition to any other remedy
which any of the Lukens Companies may have.
5. Shareholder represents to the Lukens Companies that the
enforcement of the restrictions of this Undertaking would not be unduly
burdensome to Shareholder. The representations and covenants contained in this
Undertaking on the part of Shareholder shall be construed as ancillary to and
independent of any other provision of the Merger Agreement. If Shareholder
violates any covenant contained in this Undertaking and a Lukens Company or
Lukens Companies bring a legal action for injunctive or other relief, such
Lukens Company or Lukens Companies shall not, as a result of the time involved
in obtaining the relief, be deprived of the benefit of the full period of any
such covenant. Accordingly, the duration of each such covenant of Shareholder
shall be deemed to have been extended as if the Limited Period with respect
thereto began on the date of entry by a court of competent jurisdiction of a
final judgment enforcing such covenant of Shareholder under this Undertaking.
6. This Undertaking shall inure to the benefit of the Lukens
Companies and their respective successors and assigns, and shall be binding upon
the undersigned and her heirs, personal representatives, successors and assigns,
and may not be modified or terminated orally.
3
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IN WITNESS WHEREOF, the undersigned has executed this
Undertaking as of the date set forth in the introductory paragraph hereof.
-----------------------------
TREESA SPENCER
ACKNOWLEDGED AND AGREED:
- -----------------------------
Tracy McClure Everly
- -----------------------------
Roxanne La Fontaine
4
<PAGE>
Exhibit 3.5(f)
STOCKHOLDER AGREEMENT
AGREEMENT, dated as of May ___, 1997, among Lukens Medical
Corporation, a Delaware corporation (the "Company") and Treesa Spencer
("Stockholder").
The Company has issued and transferred to Stockholder certain
shares of common stock, par value $.01 per share, of the Company ("Shares")
pursuant to a certain Agreement of Merger and Reorganization, dated as of May
___, 1997 (the "Merger Agreement"); and
The Company's obligations under the Merger Agreement are
conditioned upon the agreements of Stockholder hereinafter set forth.
Accordingly, in consideration of the transactions contemplated
by the Merger Agreement, and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows:
1. Voting, Etc. (a) During the period of five (5) years from the date
hereof, Stockholder shall not, without the prior written consent of the Company:
(i) submit any proposal for the vote of stockholders of
the Company;
(ii) become a member of a 13D Group (as hereinafter
defined);
(iii) induce or attempt to induce or give encouragement
to any other person to initiate any proposal or tender or exchange offer for
Voting Securities (as hereinafter defined) or change of control of the Company;
(iv) deposit any Voting Securities in a voting trust or
subject any Voting Securities to any arrangement or agreement with respect to
the voting of such Voting Securities; or
(v) solicit proxies or become a "participant" in a
"solicitation" (as such terms are defined in Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), or grant a proxy, in
opposition to the recommendation of the Board of Directors of the Company with
respect to any matter.
(b) Subject to the receipt of proper notice and the
absence of a preliminary or permanent injunction or other order by any United
States Federal or state court barring such action, for a period of three (3)
years from the date hereof, Stockholder will,
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as a stockholder of the Company, use her best efforts to be present in person or
be represented by proxy at all stockholder meetings of the Company so that all
Voting Securities of which she is the Beneficial Owner may be counted for the
purpose of determining the presence of a quorum at such meetings.
2. Acquiring Securities, Etc. During the period of five (5)
years from the date hereof:
(a) Stockholder shall not, directly or indirectly,
acquire Beneficial Ownership (as defined in Section 5) of any Voting Securities
(except by way of stock dividends or other distributions or offerings by the
Company made available generally to holders of Voting Securities generally)
without the prior written consent of the Company, except
(i) the foregoing shall not apply to, nor shall any
purchase of Voting Securities be prohibited if made pursuant to the exercise of
any options to purchase Voting Securities granted to Stockholder by the Company
or to acquisitions pursuant to any employee stock purchase or employee stock
ownership plan, or other employee retirement plan approved by the Board of
Directors of the Company.
(ii) Stockholder shall not be obligated to dispose of any
Voting Securities if the aggregate percentage ownership of Stockholder is
increased as a result of a recapitalization of the Company or any other action
taken by the Company.
3. Sales of Voting Securities. During the period of five (5) years from
the date hereof, without the prior written consent of the Company, Stockholder
will not sell, in one or more transactions, Voting Securities to any person or
any "group" of persons within the meaning of Section 13(d)(3) of the Exchange
Act, if such person or group owns, or would as a result of such sale would own,
directly or indirectly, in the aggregate, more than 5% of the total combined
voting power of all Voting Securities then outstanding.
4. Legends, Stop Transfer Orders and Notice. Stockholder agrees
(a) to the placement on all certificate representing
Voting Securities now or hereafter held by Stockholder the following legend:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 and may not be sold or
transferred except in compliance with such Act. The securities
represented by this certificate
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are subject to the provisions of an Agreement, dated as of May ___,
1997 among Lukens Medical Corporation and Treesa Spencer, a copy of
which is on file at the office of the Secretary of Lukens Medical
Corporation";
(b) to the entry of stop transfer orders with the
transfer agent (or agents) and the registrar (or registrars) of the Company
against the transfer other than in compliance with the requirements of this
Agreement of Voting Securities of which Stockholder from time to time is the
Beneficial Owner.
5. Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
(a) Affiliate. "Affiliate" shall have the meaning
ascribed to it in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act, as in effect on the date hereof.
(b) Beneficial Owner. A person shall be deemed a
"Beneficial Owner" of or to have "Beneficially Owned" any Voting Securities (1)
in accordance with the term "beneficial ownership" as defined in Rule 13d-3
under the Exchange Act, as in effect on the date hereof, and (2) shall also
include Voting Securities which such person or any Affiliate of such person has
the right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrant or options, or otherwise.
(c) Person. A "person" shall mean any individual, firm,
corporation, partnership or other entity.
(d) Voting Securities. "Voting Securities" includes
Shares, and any other securities of the Company entitled to vote generally for
the election of directors, and options and rights to acquire any such securities
and securities convertible into or exchangeable for such securities, in each
case now or hereafter outstanding.
(e) 13D Group. The term "13D Group" shall mean any group
of persons formed for the purpose of acquiring, holding, voting or disposing of
Voting Securities which would be required under Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder to file a statement on
Schedule 13D with the Securities and Exchange Commission if such group
beneficially owned Voting Securities representing more than 5% of the total
combined voting power of all Voting Securities then outstanding.
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6. Other Restrictions. Nothing contained in this Agreement shall be
deemed to permit the sale, transfer, pledge, hypothecation or other disposition
(collectively "Transfer") of Voting Securities, if such Transfer currently or
hereafter is or would otherwise be restricted or prohibited by any other
agreement with or for the benefit of the Company to which Stockholder is a party
or is subject or bound, or by any applicable law, rule or regulation.
7. Severability. In the event that any of the provisions of this
Agreement would be held to be invalid, prohibited or unenforceable in any
applicable jurisdiction for any reason unless narrowed by construction, this
Agreement shall, as to such jurisdiction only, be construed as if such invalid,
prohibited or unenforceable provision had been more narrowly drawn so as not to
be invalid, prohibited or unenforceable (or if such language cannot be drawn
narrowly enough, the court making any such determination shall have the power to
modify such language, but only to the extent necessary to make such provision
enforceable in such jurisdiction, and such provision shall then be applicable in
such modified form in such jurisdiction only). If, notwithstanding the
foregoing, any provision of this Agreement would be held to be invalid,
prohibited or unenforceable in any jurisdiction, such provision, as to such
jurisdiction only, shall be ineffective to the extent of such invalidity,
prohibition or unenforceability, without invalidating the remaining provisions
of this Agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
8. Specific Enforcement. The Company and Stockholder acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof, this being in addition to any other remedy to which
any party may be entitled by law or equity. The parties further agree that they
shall not be permitted to, and shall not, bring any claim, suit or proceeding
seeking to terminate or suspend performance of any provisions of this Agreement
or seeking any determination that any provision of this Agreement is invalid,
inapplicable or unenforceable.
9. Successors and Assigns. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and their respective heirs, personal
representatives, successors, assigns and Affiliates. This Agreement shall also
be binding upon any member of the immediate family of Stockholder and any trust
for the benefit of members of any such immediate family and/or the estate
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of Stockholder or any such member and/or any corporation the stockholders of
which include one or more of the above identified persons, to the extent that
they are transferees of any of the Voting Securities.
10. Notices. All notices shall be in writing and shall be deemed to
have been duly given to a party hereto on the date of such delivery, if
delivered personally, or on the fifth day after being deposited in the mail if
mailed via registered or certified mail, return receipt requested, postage
prepaid, or on the next business day after being sent by recognized national
overnight courier services, in each case, to such party, at the following
respective addresses:
If to the Company:
Lukens Medical Corporation
3820 Academy Parkway North, NE
Albuquerque, New Mexico 87109-4409
Attention: Mr. Robert S. Huffstodt
Telecopy: (505) 324-9735
If to the Stockholder:
Treesa Spencer
109 West Greentree Lane
Lake Mary, Florida 32749
or to such other address with respect to a party as such party shall notify the
other in writing.
11. Waiver. No party may waive any of the terms or conditions of this
Agreement except by a duly signed writing referring to the specific provision to
be waived.
12. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Delaware.
13. Termination. This Agreement shall terminate automatically and
without any further action on the part of any party, and be of no further force
and effect, five (5) years from the date hereof.
14. Entire Agreement. This Agreement constitutes the entire agreement,
and supersedes all other and prior agreements and understandings, both written
and oral, among the parties hereto and their Affiliates with respect to the
subject matter hereof.
5
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15. Captions. The section and paragraph captions herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not been deemed to limit or otherwise affect any of the provisions hereof.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered on the day and year first above written.
LUKENS MEDICAL CORPORATION
By:____________________________
Robert S. Huffstodt, Pres.
---------------------------------
Treesa Spencer
7
EXHIBIT 2
CONSULTING AND PROPRIETARY RIGHTS AGREEMENT
AGREEMENT, made as of the 12th day of May, 1997 by and between
Pro-Tec Containers, Inc., a Florida corporation, with offices located at 3820
Academy Parkway North, N.E., Albuquerque, New Mexico 87109 (hereinafter referred
to as the "Corporation"), and Treesa Spencer, an individual having an address at
109 West Greentree Lane, Lake Mary, Florida 32749 (hereinafter referred to as
the "Consultant").
W I T N E S S E T H :
WHEREAS, the Corporation and the Consultant are entering into
this Agreement in connection with the Agreement of Merger and Reorganization,
dated as of May 12, 1997, between Lukens Medical Corporation, a Delaware
corporation ("Lukens"), a subsidiary of Lukens, the Corporation and Consultant
(the "Merger Agreement").
NOW THEREFORE, in consideration of the premises and of the
mutual covenants hereinafter contained, the parties hereto agree as follows
(with all capitalized terms used herein and not otherwise defined having the
meanings ascribed to such terms in the Merger Agreement):
1. Retention of Consultant. The Corporation hereby retains Consultant
to perform, and Consultant hereby agrees to perform, advisory, consulting and
sales referral services for the Corporation upon the terms and conditions
hereinafter set forth.
2. Term, Duties and Extent of Services.
(a) The term (the "Term") of this Agreement shall
commence as of the date hereof and shall continue until the second anniversary
of the date hereof. Notwithstanding the foregoing, Sections 4 and 5 hereunder
shall survive the expiration of the Term.
(b) Consultant shall furnish, subject to the terms and
conditions set forth in this Agreement, consulting, advisory and sales referral
services to the Corporation, by telephone or in person, as is convenient to
Consultant, (i) on a full-time basis for the three month period following the
date of this Agreement, and (ii) on a part-time basis of not less than one day
each month for the remainder of the Term, at the request of the Chief Executive
Officer of the Corporation. Consultant shall notify the Corporation (orally or
in writing) of such business opportunities with respect to the sales or
marketing of the Company's products as she shall develop, conceive or become
aware. Unless requested by
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the Corporation, Consultant shall not approach or exploit any such opportunities
on behalf of any person (including, without limitation, on behalf of the
Corporation or the Consultant), and in any event, without the prior written
consent of the Corporation, Consultant shall not make any representations or
warranties on behalf of the Corporation or with respect to the Company's
products. Consultant shall have no authority to incur any travel or other
expenses in connection with her services to the Corporation without the prior
approval of the Chief Executive Officer of the Corporation and no reimbursements
shall be made to the Consultant by the Corporation in respect of any such
unauthorized expenses.
(c) Consultant shall, at all times, be an independent
contractor and the Corporation shall have no liability whatsoever for
withholding, collection or payment of income taxes or for taxes of any other
nature on behalf of Consultant. Under no circumstances shall Consultant have or
claim to have power or authority to bind the Corporation or to assume or to
create any obligation or responsibility, express or implied, on behalf of, or in
the name of, the Corporation, unless specifically authorized in writing.
Furthermore, under no circumstances shall Consultant make any warranty,
guarantee, representation, agreement or promise concerning the performance,
merchantability, usefulness or fitness for any particular purpose of any of the
Company's products, and any such warranty, guarantee, representation, agreement
or promise shall not be valid or binding on the Corporation unless specifically
authorized by the Corporation in writing. Nothing contained herein shall be
construed as constituting a joint venture or partnership between Consultant, on
the one hand, and the Corporation, on the other hand.
3. Remuneration. During the Term, as full compensation under and
pursuant to this Agreement, the Consultant shall receive a consulting fee (the
"Fee"), at the rate of $4,000 per month, payable monthly. Notwithstanding the
foregoing, the Fee shall be at the rate of $6,700 per month until such time as
the Registration Statement is first declared effective by the SEC.
4. Proprietary Rights. (a) Consultant hereby sells, assigns, transfers
and conveys unto the Corporation, and agrees that the Corporation shall be the
exclusive owner of, the following described assets and rights, wherever
situated, owned or controlled, directly or indirectly, by Consultant or to which
Consultant has any right, title or interest on the date hereof (it being
understood that Consultant has sold and assigned the Patents to the Corporation
pursuant to the Merger Agreement):
(i) all right, title and interest which Consultant may
have in and to all Proprietary Rights and all other rights
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necessary or desirable for the conduct of the Business, and/or the production,
manufacturing, packaging or sale of the Company's products, and owned, licensed
or possessed by Consultant (collectively referred to herein as the "Transferred
Rights"); and
(ii) the sole and exclusive right to use, assert, file,
prosecute and maintain patent, trademark, copyright and other statutory or
common law protection for or with respect to Transferred Rights or any part
thereof throughout the world and the right to make, have made, use, lease and
sell the Company's Products.
(b) Consultant will promptly disclose to the Corporation,
or any persons designated by it, all inventions, improvements, processes,
techniques, know-how, data and other developments of or related to the
Transferred Rights, the Company's products and/or the Business made, conceived
or reduced to practice or learned by Consultant, whether or not patentable,
either alone or jointly with others, during the Term hereof which are related to
or useful in the Business (all said inventions, improvements, processes,
techniques, know-how, data and other developments, shall be collectively called
"Inventions"). Consultant agrees that all Inventions shall be the sole property
of the Corporation and its assigns, and the Corporation and its assigns shall be
the sole owner of all patents, copyrights, trademarks and other rights in
connection therewith. Consultant hereby assigns to the Corporation any rights he
may have or acquire in all Inventions. It is understood that the preceding
sentence does not apply to inventions or ideas which do not in any way relate to
or complement the Business or the Company's products.
(c) At the request of the Corporation from time to time,
and without further consideration, Consultant shall execute and deliver or cause
to be executed and delivered to the Corporation such consents, assignments and
other good and sufficient instruments of conveyance, assignment and
confirmation, and shall duly execute, acknowledge, deliver and perform all such
further acts and assurances, as the Corporation may reasonably deem necessary or
desirable in order to more effectively transfer, convey and assign to and vest
in the Corporation, and to confirm the Corporation's title to, the Transferred
Rights or the Inventions, as contemplated hereby and/or by the Merger Agreement,
and to put the Corporation in exclusive possession and control thereof, and to
assist the Corporation in exercising all rights with respect thereto.
(d) At the request of the Corporation, and without
further consideration, Consultant shall cooperate with and assist the
Corporation in preparing and filing patent and other applications and applying
for, prosecuting and maintaining, and
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from time to time enforcing, in its own name, any and all patent, trademark,
copyright and other statutory or common law protection for or with respect to
the Transferred Rights or the Inventions or any aspect thereof, and in providing
testimony, evidence and other assistance for legal proceedings, including
infringement and other proceedings, relating thereto.
(e) Consultant hereby irrevocably constitutes and
appoints the Corporation and its duly authorized officers and agents her
attorney-in-fact to act for and on behalf of Consultant, execute and deliver all
applications and other documents on her behalf as may be contemplated hereby or
by the Merger Agreement, and to cause all assignments and other documents
contemplated or permitted hereunder or under the terms of the Merger Agreement
to be filed or recorded as deemed appropriate by the Corporation, with the same
legal force and effect as if executed by Consultant.
5. Confidentiality. (a) It is understood that Consultant possesses and
will continue to possess information that has been created, discovered or
developed, or has otherwise become known to the Corporation (including, without
limitation, information created, discovered, developed or made know by or to
Consultant during the Term, and/or in which property or other rights have been
assigned or otherwise conveyed to the Corporation), which information has
commercial value in the business in which the Corporation is engaged and none of
which is in the public domain except through the breach by Consultant or anyone
else of a confidentiality duty. All of the aforementioned information is
hereinafter called "Proprietary Information." By way of illustration, but not
limitation, Proprietary Information includes developments, improvements,
discoveries, trade secrets, technologies, processes, research, methods,
formulae, uses of any of the foregoing, computer software and programs, test
and/or experimental data and results, specifications, laboratory notebooks,
drawings and technical information and materials, sterilization and other
techniques, data, know-how, techniques, marketing plans and opportunities, cost
and pricing data, strategies, forecasts and customer lists. Consultant agrees to
keep in confidence and trust all Proprietary Information, and not use or
disclose any Proprietary Information without the written consent of the
Corporation, except as may be necessary in the ordinary course of performing her
duties as a consultant to the Corporation. SINCE IT IS SOMETIMES DIFFICULT TO
SEPARATE PROPRIETARY INFORMATION FROM THAT WHICH IS NOT, CONSULTANT WILL REGARD
ALL INFORMATION GAINED OR DEVELOPED AS A RESULT OF HER ASSOCIATION WITH THE
CORPORATION AS PROPRIETARY INFORMATION.
(b) In the event of the termination of this Agreement for
any reason, or any other time upon the Corporation's request, Consultant will
deliver to the Corporation all materials,
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compounds, samples, data, physical property, memoranda, notes, records,
rolodexes, customer mailing or contact lists and other documents of any nature
made or compiled by Consultant or made available to Consultant pertaining to her
work with or to the business of the Corporation, all of which shall be deemed
the property of the Corporation, and Consultant, upon any such termination,
shall not take with any documents, data or property of any description or any
reproduction of any description containing or pertaining to any Proprietary
Information and/or Inventions.
6. Relationship to Merger Agreement. This Agreement, and any and all
payments or other compensation to be made or granted to Consultant hereunder,
shall be subject to Section 8.3 of the Merger Agreement.
7. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, or by recognized
overnight courier service to the other party hereto, in the case of Consultant
at her address as set forth in the Corporation's records, and in the case of the
Corporation at its principal executive office from time to time. Any such notice
shall be deemed given five (5) days after it shall be so deposited in the mail,
when personally delivered or one (1) day after deposited with such recognized
overnight courier service. Either party may change the address(es) to which
notices, requests, demands and other communications hereunder shall be sent by
giving written notice of such change of address in the manner hereinabove
provided.
8. Assignability and Binding Effect. This Agreement shall
inure to the benefit of and shall be binding upon the heirs, executors,
administrators, successors and legal representatives of Consultant, and shall
inure to the benefit of and be binding upon the Corporation and its successors
and assigns. Consultant may not assign, transfer, pledge, encumber, hypothecate
or otherwise dispose of this Agreement, or any of her rights or obligations
hereunder, and any such attempted delegation or disposition shall be null and
void and without effect. No person not a party hereto shall be a third party
beneficiary of or entitled to benefits under or by reason of this Agreement.
9. Severability. In the event that any of the provisions of this
Agreement would be held to be invalid, prohibited or unenforceable in any
applicable jurisdiction for any reason (including, but not limited to, any
provision which would be held to be unenforceable because of the scope, duration
or area of its applicability), unless narrowed by construction, this Agreement
shall, as to such jurisdiction only, be construed as if such invalid, prohibited
or unenforceable provision had been more
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narrowly drawn so as not to be invalid, prohibited or unenforceable (or if such
language cannot be drawn narrowly enough, the court making any such
determination shall have the power to modify such scope, duration or area or all
of them, but only to the extent necessary to make such provision enforceable in
such jurisdiction, and such provision shall then be applicable in such modified
form in such jurisdiction only). If, notwithstanding the foregoing, any
provision of this Agreement would be held to be invalid, prohibited or
unenforceable in any jurisdiction, such provision, as to such jurisdiction only,
shall be ineffective to the extent of such invalidity, prohibition or
unenforceability, without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware, without regard to
principles of conflict of laws and regardless of where actually executed,
delivered or performed.
11. Complete Understanding; Counterparts. This Agreement, together with
the Merger Agreement, constitutes the complete understanding and supersedes any
and all prior agreements and understandings between the parties with respect to
its subject matter, and no statement, representation, warranty or covenant has
been made by either party with respect thereto except as expressly set forth
herein. This Agreement shall not be altered, modified, amended or terminated
except by written instrument signed by each of the parties hereto. The Section
and paragraph headings contained herein are for convenience only, and are not
part of and are not intended to define or limit the contents of said Sections
and paragraphs. This Agreement may be executed in counterparts, each of which
shall be deemed an original and all of which, when taken together, shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
PRO-TEC CONTAINERS, INC.
By: /s/ Robert S. Huffstodt
-----------------------
Robert S. Huffstodt, President
/s/ Treesa Spencer
------------------
Treesa Spencer
6
EXHIBIT 3
COPY
NON-TRANSFERABLE SUBORDINATED PROMISSORY NOTE
$133,413 May 12, 1997
FOR VALUE RECEIVED, Lukens Medical Corporation, a Delaware
corporation ("Maker"), having an address at 3820 Academy Parkway North, NE,
Albuquerque, New Mexico 87109, promises to pay to the order of Treesa Spencer
("Payee"), or assigns, in lawful money of the United States, at such place in
the United States as shall be designated in writing by Payee from time to time
to Maker, the principal sum of One Hundred Thirty Three Thousand Four Hundred
Thirteen Dollars ($133,413) (the "Principal Amount") in twelve (12) equal
monthly installments of $11,117.75 each, commencing on July 1, 1997, and as of
the first day of each of the next succeeding eleven (11) months, with the entire
unpaid balance of the Principal Amount of this Note being due and payable on
June 1, 1998, unless sooner due and payable as provided herein. From and after
the date hereof, the then outstanding Principal Amount shall bear interest at
the Prime Rate (as hereinafter defined) in effect from time to time, all then
accrued but unpaid interest being due and payable concurrently with each
installment of the Principal Amount as herein provided.
For purposes of this Note the term "Prime Rate" as in effect
on any given day shall mean the rate announced as of the first business day of
the calendar month during which such day falls by Citibank, N.A. as such bank's
prime or reference lending rate.
This Note was issued pursuant to Section 2.1 of that certain
Agreement of Merger and Reorganization (the "Merger Agreement"), among Maker,
Payee, PRO-TEC Containers, Inc. and PTC Merger Corp. This Note is
non-negotiable.
Maker will have the right at any time and from time to time to
prepay this Note, in whole or in part, without penalty or premium, but with all
accrued interest on the Principal Amount accrued on the date of prepayment.
Notwithstanding any provision of this Note to the contrary,
the indebtedness evidenced by this Note (including all interest thereon), and
all renewals, extensions and modifications thereof and hereof, is and shall
remain subordinate and junior in right of payment, to the extent set forth in
this Note, to the prior payment in full of all indebtedness (including
principal,
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interest, fees and other charges), and any other obligations, whether direct or
contingent, presently existing or hereafter incurred, of the Maker, for money
borrowed from, and/or arising out of any credit facilities and/or any loan
agreement(s) with, Sunwest Bank of Albuquerque, N.A. ("Bank") and/or to any
successor to Bank and/or to any one or more banks or other lending institutions
which shall repay a portion or all of the indebtedness or obligations of the
Maker to Bank or any such successor in the future, or which otherwise shall
become the primary institutional lenders to the Maker, and/or under guaranties
from time to time by the Maker of any of such indebtedness or obligations, all
as the same may be refinanced, restated, modified or amended from time to time
(collectively, "Senior Indebtedness"). No payments of, nor any cancellation,
set-off or discharge of, any principal or interest shall be made, given or
received hereunder or in respect of the indebtedness evidenced by this Note, nor
shall any holder of this Note be entitled to demand or accept payment of any
amount due or payable under this Note, whether by acceleration or upon demand by
reason of the occurrence of an Event of Default (as hereinafter defined), at
maturity, or otherwise, nor shall the holder hereof be entitled to declare an
acceleration or demand immediate payment of the indebtedness evidenced by this
Note, until the Senior Indebtedness shall have been paid in full, if there shall
have occurred and be continuing a default in the payment of principal and/or
interest under Senior Indebtedness, or a default under any financial covenant of
the Maker under Senior Indebtedness which shall have occurred and be continuing
or would occur or exist by reason of such payment under this Note which has not
been waived by Bank or the then holder(s) of such Senior Indebtedness. All
payments and distributions which would otherwise be payable or deliverable in
respect of this Note (but for the terms hereof) shall be paid or delivered
directly to the holders of Senior Indebtedness at the time outstanding, ratably,
until all such Senior Indebtedness shall have been paid in full. If any payment,
distribution or collateral shall be received by any holder of this Note in
contravention of any of the terms hereof and before all Senior Indebtedness
shall have been paid in full, such payment, distribution or collateral shall be
held in trust for the benefit of, and shall be paid over or delivered to, the
holders of the Senior Indebtedness at the time outstanding for application to
the payment of all Senior Indebtedness remaining unpaid, ratably, to the extent
necessary to pay all such Senior Indebtedness in full. Nothing in this paragraph
shall impair or qualify, as among the Maker and the holder hereof, the
obligation of the Maker to pay the holder hereof the principal of and interest
on this Note when and as due as set forth elsewhere herein, subject, however, to
the rights of the holders of Senior Indebtedness, and to the provisions as to
subordination, as provided herein.
In the event of any liquidation, dissolution or any other
winding up of the Maker or in the event of any receivership,
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insolvency, bankruptcy, assignment for the benefit of creditors, reorganization
or arrangement with creditors, whether or not pursuant to bankruptcy laws, or
any other marshalling of the assets or liabilities of the Maker, or any
proceeding as to any of the foregoing, (i) Senior Indebtedness shall first be
paid in full before the holder of this Note shall be entitled to receive any
moneys, dividends or assets in any such proceeding, and (ii) the holder of this
Note will at the request of the holders of the Senior Indebtedness file any
claim, proof of claim or other instrument of similar character necessary to
enforce the obligations of the Maker in respect of this Note and will hold in
trust for the holders of the Senior Indebtedness and pay over to them, in the
form received, to be applied to Senior Indebtedness, pro rata, any and all
moneys, dividends or other assets, received in any such proceeding on account of
this Note, until the Senior Indebtedness shall be paid in full. In the event
that the holder of this Note shall fail to take such action requested by the
holders of Senior Indebtedness, such holders may, as attorneys-in-fact for the
holder of this Note, and are hereby irrevocably authorized by the holder hereof
to, take such action on behalf of the holder of this Note as shall be necessary
to effect or in furtherance of the provisions of this paragraph, and without
limiting the generality of the foregoing:
(iii) to enforce claims under this Note either in their
own name or the name of the holder hereof by proof of debt, proof of claim, suit
or otherwise;
(iv) to vote in their sole discretion in connection with
any resolution, arrangement, plan of reorganization, compromise, settlement or
extension and to take all such other action, including, without limitation, the
right to participate in any composition of creditors and the right to vote this
Note at creditors' meetings; and
(v) to take generally any action in connection with any
such proceeding or meeting which the holder hereof might otherwise take.
No payment or distribution to the holder of any Senior
Indebtedness as contemplated by the provisions of this Note shall entitle the
holder hereof to exercise any rights of subrogation in respect thereof until all
Senior Indebtedness shall have been paid in full; and, for the purposes of such
subrogation, payments or distributions to the holder of any Senior Indebtedness
of any cash, property or securities to which the holder hereof would be entitled
except for the provisions of this Note shall, as between the Maker and its
creditors other than the holders of Senior Indebtedness and the holder hereof,
be deemed to be a payment by the Maker to or on account of the Senior
Indebtedness, it being understood that the provisions of this Note are for the
purpose of defining the
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relative rights of the holder hereof, on the one hand, and the holders of Senior
Indebtedness on the other hand.
The holders of the Senior Indebtedness may, at any time and
from time to time, without consent of or notice to the holder of this Note and
without impairing or releasing any of the rights of the holders of Senior
Indebtedness under this Note, effect, consent to and/or permit, and the rights
and interests of the holders of the Senior Indebtedness under this Note shall
remain in full force and effect irrespective of, any of the following:
(i) any change in the terms of the Senior Indebtedness,
including the amount, time, place, manner or terms of payment, or any amendment
or waiver of any agreement relating to Senior Indebtedness;
(ii) any sale, exchange or release of or any other
dealing with any property by whomsoever at any time pledged or mortgaged to
secure the Senior Indebtedness, other than a provision expressly prohibiting the
payment of this Note as a device to avoid the obligation hereunder to make such
payment;
(iii) any release of anyone liable in any manner for the
payment and collection of Senior Indebtedness;
(iv) any exercise or refraining from the exercise of any
rights against the Maker or others, including the holder of this Note;
(v) any application of any funds received by holders of
Senior Indebtedness by whomsoever paid or however realized to the Senior
Indebtedness; or
(vi) any other circumstance which might otherwise
constitute a defense available to any holder hereof as against any holder of
Senior Indebtedness.
The provisions of this Note as to the rights of the holders of
Senior Indebtedness and the obligations of the holder hereof with respect to the
Senior Indebtedness shall continue to be effective or be reinstated, as the case
may be, if at any time any payment of any of the Senior Indebtedness is
rescinded or must otherwise be returned by the holder thereof upon the
insolvency, bankruptcy or reorganization of any party hereto or otherwise, all
as though such payment had not been made.
The holder of this Note, by acceptance of same, absolutely
agrees to be bound by all of the provisions hereof relating to the subordination
of the indebtedness evidenced by this Note to the Senior Indebtedness and/or the
rights of the holders of Senior Indebtedness and the obligations of the holder
hereof with
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respect thereto, in each case for the benefit of the holders of such Senior
Indebtedness. Such provisions of this Note shall inure to the benefit of the
holders of the Senior Indebtedness and their respective successors and assigns
and shall be binding upon the holder hereof and its successors and assigns.
An "Event of Default" shall be deemed to have occurred
hereunder if and only if (a) the Maker shall fail to make any payment under this
Note when due and such failure shall not be cured within 30 days following
written notice thereof from the Payee to the Maker; or (b) the Maker shall
approve of, consent to or acquiesce in the appointment of a trustee, receiver,
liquidator, custodian, sequestrator or similar official (collectively,
"Custodians") for itself or substantially all of its assets; or (c) a Custodian
shall be appointed for the Maker without its consent, or for substantially all
of its assets, and such appointment shall not be terminated or stayed within 90
days; or (d) any voluntary bankruptcy proceeding shall be commenced by the
Maker, as debtor; or (e) any involuntary bankruptcy proceeding commenced against
the Maker shall not be dismissed or stayed within 90 days or an order for relief
is granted against the Maker in such proceeding.
If an Event of Default shall occur and be continuing, then the
Principal Sum under this Note and all accrued interest thereon, if any, shall,
at the election of the Payee, but subject always to the subordination provisions
hereof and/or the rights of the holders of Senior Indebtedness and the
obligations of the holder hereof with respect thereto, become due and payable
immediately, without presentment, notice of dishonor, protest and notice of
protest and nonpayment, entitlement to which is hereby waived by the Maker.
Payee shall be entitled to recover reasonable attorneys' fees incurred in the
collection of the indebtedness evidenced by this Note after the occurrence of an
Event of Default.
[BALANCE OF PAGE INTENTIONALLY BLANK]
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This Note may not be changed or terminated orally. This Note
shall be governed by the internal laws of the State of New York without regard
to principles of conflict of laws. This Note is subject to the provisions of
Section 8.3 of the Merger Agreement.
LUKENS MEDICAL CORPORATION
By: /s/ Robert S. Huffstodt
----------------------------
Robert S. Huffstodt, President
COPY
6
