SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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) March 14, 1997
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VITAL SIGNS, INC.
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(Exact name of registrant as specified in its charter)
New Jersey 0-18793 11-2279807
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(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
20 Campus Road, Totowa, New Jersey 07512
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 790-1330
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Item 5. Other Events.
On March 14, 1997, Vital Signs, Inc. (the "Company") announced that it
had entered into a definitive merger agreement with Marquest Medical Products,
Inc. ("Marquest") pursuant to which Marquest would become a wholly-owned
subsidiary of the Company. Concurrently, the Company entered into an inducement
agreement with Scherer Healthcare, Inc. ("Scherer Healthcare"), which is the
majority shareholder of Marquest, to acquire, for cash, certain product rights
previously sold by Marquest to Scherer Healthcare, and the Company entered into
an inducement agreement with Robert Scherer, Scherer's principal shareholder.
The agreements with Scherer Healthcare and Mr. Scherer also contain certain
non-competition agreements. The transactions are subject to approval by
Marquest's and Scherer Healthcare's shareholders and other customary conditions.
The foregoing summary is qualified in its entirety by reference to the Company's
Press Release, dated March 14, 1997, the Agreement and Plan of Merger, the
Scherer Healthcare Inducement Agreement and the Robert Scherer Inducement
Agreement, all of which are filed as exhibits to this Current Report on Form 8-K
and incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. 2.1 Agreement and Plan of Merger, dated March 14, 1997.
Exhibit No. 2.2 Scherer Healthcare Inducement Agreement, dated
March 14, 1997
Exhibit No. 99.1 Press Release, dated March 14, 1997
Exhibit No. 99.2 Robert Scherer Inducement Agreement, dated
March 14, 1997
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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, thereunto duly authorized.
VITAL SIGNS, INC.
By:/s/ Anthony J. Dimun
________________________
Anthony J. Dimun,
Executive Vice President
Dated: March 19, 1997
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EXHIBIT INDEX
Exhibit No. 2.1 Agreement and Plan of Merger, dated March 14, 1997.
Exhibit No. 2.2 Scherer Healthcare Inducement Agreement, dated March 14, 1997
Exhibit No. 99.1 Press Release, dated March 14, 1997
Exhibit No. 99.2 Robert Scherer Inducement Agreement, dated March 14, 1997
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of March
14, 1997, by and among VITAL SIGNS, INC., a New Jersey corporation having its
principal place of business at 20 Campus Road, Totowa, New Jersey ("VSI"), VSI
ACQUISITION CORPORATION, a Colorado corporation and a wholly-owned subsidiary of
VSI, having its principal place of business at 20 Campus Road, Totowa, New
Jersey ("Newco"), and MARQUEST MEDICAL PRODUCTS, INC., a Colorado corporation
having its principal place of business at 11039 East Lansing Circle, Englewood,
Colorado (the "Company"),
WITNESSETH THAT:
WHEREAS, the Boards of Directors of VSI, Newco and the Company, deeming
it advisable for the mutual benefit of VSI, Newco and the Company and their
respective shareholders, that VSI acquire the Company by the merger of the
Company and Newco under the terms and conditions hereinafter set forth (the
"Merger"), have approved this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, the parties hereto hereby agree
that the Company and Newco shall be merged in accordance with the terms of this
Agreement and that the terms and conditions of the Merger and the mode of
carrying the same into effect shall be as follows:
ARTICLE I
PLAN OF MERGER
SECTION 1.1 Structure. Upon performance of all of the covenants and
obligations of the parties contained herein and upon fulfillment (or waiver) of
all of the conditions to the obligations of the parties contained herein, at the
Effective Time of the Merger (as hereinafter defined) and pursuant to the
Business Corporation Act of the State of Colorado (the "BCA"), the following
shall occur:
1.1.1 Newco shall be merged with and into the Company. The
Company shall be the surviving corporation (the "Surviving Corporation") and
upon consummation of the Merger shall become a wholly-owned subsidiary of VSI.
The separate existence and corporate organization of Newco shall cease at the
Effective Time of the Merger, and thereupon the Company and Newco shall be a
single corporation, the name of which shall be Marquest Medical Products, Inc.
The Company, as the Surviving Corporation, shall succeed, insofar as permitted
by law, to all of the rights, assets, liabilities and obligations of Newco in
accordance with the BCA.
1.1.2 The Articles of Incorporation of the Company shall be
amended to contain such provisions as VSI shall determine prior to the Effective
Time of the Merger and as such shall be the Articles of Incorporation of the
Surviving Corporation until amended as provided by law.
1.1.3 The By-Laws of the Company shall be amended to contain
such provisions as VSI shall determine prior to the Effective Time of the Merger
and as such shall be the by-laws of the Surviving Corporation until amended as
provided by law.
1.1.4 Until changed in accordance with the articles of
incorporation and by-laws of the Surviving Corporation, the directors of Newco
immediately prior to the Effective Time of the Merger shall be the directors of
the Surviving Corporation.
1.1.5 Until changed in accordance with the articles of
incorporation and by-laws of the Surviving Corporation, the officers of Newco
immediately prior to the Effective Time of the Merger shall be the officers of
the Surviving Corporation.
1.1.6 As soon as practicable after the terms and conditions of
this Agreement have been satisfied, and upon consummation of the closing
referred to in Article IX hereof (the "Closing"), articles of merger consistent
with this Agreement, in the form prescribed by, and properly executed in
accordance with, the BCA and in form and substance satisfactory to the parties
hereto (the "Articles of Merger"), shall be filed with the Secretary of State of
the State of Colorado. The Merger shall become effective when the Articles of
Merger are so filed. The date and time when the Merger shall become effective is
referred to in this Agreement as the "Effective Time of the Merger".
SECTION 1.2 Common Stock of Surviving Corporation. Upon consummation of
the Merger, each of the issued and outstanding shares of common stock of Newco
shall be automatically converted into such number of shares of the common stock
of the Surviving Corporation as shall equal the "Outstanding Number". Each such
share shall be held by VSI and shall be fully paid and non-assessable. For
purposes of this Agreement, the term "Outstanding Number" shall mean the
aggregate number of shares of Company Common Stock (as hereinafter defined)
outstanding immediately prior to the Effective Time of the Merger divided by the
number of shares of common stock of Newco outstanding immediately prior to the
Effective Time of the Merger.
SECTION 1.3 Cancellation or Conversion of Company Common Stock. As of
the Effective Time of the Merger, by virtue of the Merger and without any action
on the part of any shareholder:
1.3.1 Any shares of the Company's common stock, no par value
("Company Common Stock"), held in the treasury of the Company, and any shares of
Company Common Stock issued and outstanding immediately prior to the Effective
Time of the Merger which are owned by VSI or Newco, shall be canceled and
retired. No cash, securities or other consideration shall be paid or delivered
in exchange for such Company Common Stock under this Agreement.
1.3.2 Except as provided herein with respect to Dissenting
Shares (as hereinafter defined), the following provisions shall apply with
respect to all shares of Company Common Stock outstanding immediately prior to
the Effective Time of the Merger other than the shares canceled pursuant to
Section 1.3.1 hereof:
1.3.2.1 Subject to Section 1.3.2.4 hereof, at the
Effective Time of the Merger, each such share of Company Common Stock
outstanding shall be converted, without any action by the holder thereof, into
the right to receive from VSI $0.797 in cash, without interest (the "Purchase
Price").
1.3.2.2 At the Effective Time of the Merger, (i) VSI
shall deliver to American Stock Transfer and Trust Company or such other
institution as shall be designated by VSI as exchange agent (the "Exchange
Agent") $12,497,360 in immediately available funds and (ii) the Company shall
deliver to the Exchange Agent immediately available funds equal to the amount of
consideration received by the Company after the date hereof and prior to the
Effective Time of the Merger from the exercise of options and warrants, such
amounts to be held by the Exchange Agent, to effect conversions of outstanding
Company Common Stock into cash pursuant to Section 1.3.2.1 hereof and to effect
exercises of options and warrants that remain exercisable for cash after the
Effective Time of the Merger (as described in Section 1.4 hereof), in accordance
with the terms of an exchange agency agreement between VSI and the Exchange
Agent.
1.3.2.3 At the Effective Time of the Merger and
subject to Section 1.3.2.4 hereof, each holder of an outstanding certificate or
certificates representing Company Common Stock ("Company Stock Certificates")
shall, upon surrender thereof to the Exchange Agent together with a letter of
transmittal in the form of the letter of transmittal furnished by VSI pursuant
to Section 1.3.3 hereof, be entitled to receive a cash amount equal to the
Purchase Price, without interest, in exchange for each share of Company Common
Stock surrendered. Until so surrendered, each outstanding Company Stock
Certificate shall be deemed for all purposes to represent the right to receive
the Purchase Price in cash without interest. Whether or not a Company Stock
Certificate is surrendered, from and after the Effective Time of the Merger such
certificate shall under no circumstances evidence, represent or otherwise
constitute any stock or other interest whatsoever in the Company, the Surviving
Corporation, VSI or any other person, firm or corporation.
1.3.2.4 VSI and the Exchange Agent shall not be
required to pay a fraction of a penny to any former shareholder of the Company.
In lieu of paying any such fraction, VSI and the Exchange Agent shall determine
the aggregate consideration payable to each shareholder with respect to all of
such shareholder's shares of Company Common Stock and upon tender of all such
shares in accordance with the provisions of this Agreement, shall round such
consideration up to the nearest whole penny.
1.3.3 Promptly after the Effective Time of the Merger, VSI
shall deliver to holders of Company Stock Certificates letters of transmittal
pursuant to which such certificates may be submitted to the Exchange Agent.
SECTION 1.4 Options, Warrants and Convertible Securities. The Company
covenants, warrants and represents as follows:
1.4.1 Option Plan. As of the date hereof, options covering
633,166 shares of Company Common Stock are outstanding under the Company's
Incentive and Non-Qualified Stock Option Plan (the "Stock Option Plan"). Of
these "Employee Options" (as defined in Section 2.2 hereof), options covering
297,168 shares of Company Common Stock have per share exercise prices that are
less than the Purchase Price. At least 35 days prior to the Effective Time of
the Merger, the Company shall provide to each holder of an Employee Option a
notice, in accordance with Section 4.2 of the Stock Option Plan, advising each
such holder of the terms of the Merger and describing the consequences of the
Merger to holders of Employee Options. By virtue of such notice, all outstanding
Employee Options shall become exercisable in full and all Employee Options which
are not exercised prior to the Effective Time of the Merger shall terminate as
of the Effective Time of the Merger. As a result of such termination, neither
the Company nor VSI shall have any obligation under the Employee Options at or
after the Effective Time of the Merger.
1.4.2 Director Options. Options covering 150,000 shares of
Company Common Stock granted to directors of the Company pursuant to
Non-Qualified Director Stock Option Agreements were canceled on March 14, 1997.
As a result of such cancellations, neither the Company nor VSI shall have any
obligation under any such agreements at or after the Effective Time of the
Merger.
1.4.3 Convertible Securities. Pursuant to the terms of the
"Robert Scherer Inducement Agreement" (as defined in Section 2.27 hereof),
Robert P. Scherer, Jr. has agreed to convert all principal payable under the
"Convertible Note" (as defined in Section 2.2 hereof) into a total of 1,000,000
shares of Company Common Stock prior to the Effective Time of the Merger. By
virtue of such conversion, there will be no obligation to pay any interest under
the Convertible Note to Robert P. Scherer, Jr. after the effective date of such
conversion. There are no other debt or equity instruments outstanding which are
convertible into the Company's Common Stock.
1.4.4 Scherer Healthcare Warrants. Pursuant to the terms of
the "Scherer Healthcare Inducement Agreement" (as defined in Section 2.27
hereof), Scherer Healthcare, Inc. ("Scherer") has agreed that as of the
Effective Time of the Merger, it will exchange the "First ABG Warrants" and
"Second ABG Warrants" (as defined in Section 2.2 hereof) and the "Current
Warrants" (as defined in Section 2.2 hereof) for a payment equal to $309,260
(representing the number of shares of Company Common Stock covered by the First
ABG Warrants, the Second ABG Warrants and the Current Warrants (6,580,000)
multiplied by the amount by which the Purchase Price exceeds $0.75, the per
share exercise price of the First ABG Warrants, the Second ABG Warrants and the
Current Warrants).
1.4.5 Swiss Warrants. As of the date hereof, "Swiss Warrants"
(as defined in Section 2.2 hereof) covering 1,083,317 shares of Company Common
Stock are outstanding. Pursuant to the Swiss Warrant Agreement (as defined in
Section 2.2 hereof), the Company and VSI are not required to provide the holders
of the Swiss Warrants or any other person or entity any notice describing the
consequences of the Merger to holders of Swiss Warrants. By virtue of the
provisions of the Swiss Warrant Agreement, upon consummation of the Merger, each
outstanding Swiss Warrant shall be converted, without any action by the holder
thereof, into the right to receive, upon exercise thereof pursuant to the terms
of the Swiss Warrant and the Swiss Warrant Agreement, an amount of cash equal to
the Purchase Price in lieu of each share of Company Common Stock deliverable
upon such exercise.
1.4.6 Settlement Options. Pursuant to promissory notes (the
"Settlement Notes") issued in accordance with the "Settlement Agreement" (as
defined in Section 2.2 hereof), two individuals each have an option to acquire
100,000 shares of Company Common Stock by reducing the principal amount of the
Settlement Notes. The Company shall pay the holders of the Settlements Notes all
amounts outstanding under the Settlement Notes prior to the Effective Time of
the Merger. As a result, no obligation to issue capital stock or otherwise will
exist after the Effective Time of the Merger pursuant to the Settlement Notes.
1.4.7 Consultant's Options. As of the date hereof, the Company
is obligated to issue 50,000 shares of Company Common Stock pursuant to the
Consultant's Options (as defined in Section 2.2 hereof) at an exercise price of
$0.75 per share. At least 35 days prior to the Effective Time of the Merger, the
Company shall provide to the holder of the Consultant's Option a notice, in
accordance with Section 5(b) of the agreement setting forth the terms of the
Consultant's Options, advising such holder of the terms of the Merger and
describing the consequences of the Merger to holders of Employee Options. By
virtue of such notice, all of the Consultant's Options which are not exercised
prior to the Effective Time of the Merger shall terminate as of the Effective
Time of the Merger. As a result of such termination, neither the Company nor VSI
shall have any obligation under the Consultant's Options at or after the
Effective Time of the Merger.
1.4.8 Russell Warrants. As of the date hereof, the Company is
obligated to issue 75,326 shares of Company Common Stock pursuant to the Russell
Warrants (as defined in Section 2.2 hereof) at an exercise price of $1.50 per
share. At least 15 days prior to the Effective Time of the Merger, the Company
shall provide to the holder of the Russell Warrants the notice required pursuant
to Section "e" of the Russell Warrant Agreement (as defined in Section 2.2
hereof). By virtue of the provisions of the Russell Warrant Agreement, upon
consummation of the Merger, each outstanding Russell Warrant shall be converted,
without any action by the holder thereof, into the right to receive, upon
exercise thereof pursuant to the terms of the Russell Warrant and the Russell
Warrant Agreement, an amount of cash equal to the Purchase Price in lieu of each
share of Company Common Stock deliverable upon such exercise.
1.4.9 ITT Warrants. As of the date hereof, the Company is
obligated to issue 10,000 shares of Company Common Stock pursuant to the ITT
Warrants (as defined in Section 2.2 hereof) at an exercise price of $4.00 per
share. At least 25 days prior to the Effective Time of the Merger, the Company
shall provide to the holder of the ITT Warrants the notice required pursuant to
Section 4(f) of the ITT Warrant Agreement (as defined in Section 2.2 hereof). By
virtue of the provisions of the ITT Warrant Agreement, upon consummation of the
Merger, each outstanding ITT Warrant shall be converted, without any action by
the holder thereof, into the right to receive, upon exercise thereof pursuant to
the terms of the ITT Warrant and the ITT Warrant Agreement, an amount of cash
equal to the Purchase Price in lieu of each share of Company Common Stock
deliverable upon such exercise.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
References herein to the "Disclosure Letter" shall mean the letter from
the Company to VSI, dated the date hereof, pursuant to which the Company has
made certain representations and described certain exceptions to the
representations set forth in this Article II by means of express
cross-references to the Sections hereof requiring that exceptions be made.
Except as set forth in the Disclosure Letter, the Company hereby represents,
warrants, and agrees as follows:
SECTION 2.1 Organization. The Company is a corporation, duly organized,
validly existing, and in good standing under the laws of the State of Colorado,
and has all requisite corporate power and authority to own its property and
conduct the business in which it is engaged. The Disclosure Letter contains an
accurate and complete list of the dates of filing of the Company's articles of
incorporation and all amendments thereto with the Colorado Secretary of State
and the date of the Company's current by-laws.
SECTION 2.2 Capitalization. The Company is solely authorized to issue
50,000,000 shares of Company Common Stock. As of the date hereof, there were
14,296,773 shares of Company Common Stock issued and outstanding (the
"Outstanding Common Shares"). The Outstanding Common Shares include 25,000
shares of Company Common Stock which were initially issued to Jack L. York as
restricted shares, all of which restrictions have lapsed. The Outstanding Common
Shares do not include any restricted shares issued to any other director of the
Company. If the Effective Time of the Merger occurs prior to August 31, 1997,
any restricted shares outstanding on the date hereof, other than the restricted
shares owned by Jack L. York, will, by their terms, be forfeited and deemed not
to be outstanding as of the Effective Time of the Merger. All of the Outstanding
Common Shares have been fully paid, have been validly issued, and are
nonassessable. No shares of Company Common Stock have been issued in violation
of the preemptive rights of any person or entity and the holders of Outstanding
Common Shares do not possess preemptive rights. Except with respect to (i)
options covering not more than 633,166 shares of Company Common Stock granted
pursuant to the Company's Incentive and Non-Qualified Stock Option Plan (the
"Stock Option Plan"), (ii) warrants covering up to 1,083,317 shares of Company
Common Stock which were granted to former holders of Swiss bonds at an exercise
price of $.75 per share pursuant to a warrant agreement (the "Swiss Warrant
Agreement"), dated June 15, 1993, between the Company and Chemical Trust Company
of California, as warrant agent (the "Swiss Warrants"), (iii) warrants to
purchase through March 31, 1999 up to 1,530,000 shares of Company Common Stock
at an exercise price of $.75 per share (the "First ABG Warrants"), which First
ABG Warrants were granted to Scherer pursuant to an omnibus agreement, dated
April 12, 1993, between the Company and Scherer (the "Omnibus Agreement"), (iv)
warrants to purchase through March 31, 2003 up to 4,250,000 shares of Company
Common Stock at an exercise price of $.75 per share (the "Second ABG Warrants"),
which Second ABG Warrants were granted to Scherer pursuant to the Omnibus
Agreement, (v) warrants to purchase through March 31, 1999 up to 800,000 shares
of Company Common Stock at an exercise price of $.75 per share (the "Current
Warrants"), which Current Warrants were granted to Scherer pursuant to a warrant
agreement dated April 12, 1993, (vi) a convertible secured promissory note in
the principal amount of $700,000 entitling the holder thereof to acquire up to
1,000,000 shares of Company Common Stock upon conversion thereof (the
"Convertible Note"), which Convertible Note was issued to Scherer Capital, LLC
on March 28, 1996 and which currently is owned by Robert P. Scherer, Jr., (vii)
stock options covering up to 50,000 shares of Company Common Stock granted by
the Company to David Hagelstein at an exercise price of $.75 per share (the
"Consultant Options"), the terms of which Consultant Options are reflected in an
option agreement, dated August 26, 1993, (viii) options granted pursuant to a
settlement agreement dated April 30, 1995 (the "Settlement Agreement"), which
options (the "Settlement Options") entitle the holders thereof to purchase up to
200,000 shares of Company Common Stock at an exercise price of $1.00 per share,
which price is payable by reducing amounts otherwise payable by the Company,
(ix) Warrants to purchase through September 30, 1997 up to 10,000 shares of
Company Common Stock at an exercise price of $4.00 per share (the "ITT
Warrants"), which ITT Warrants were granted to ITT Commercial Finance
Corporation pursuant to a warrant agreement dated October 1, 1992 (the "ITT
Warrant Agreement"), (x) warrants to purchase through December 20, 1997 up to
75,326 shares of Company Common Stock at an exercise price of $1.50 per share
(the "Russell Warrants"), which Russell Warrants were granted to Robert A.
Russell pursuant to a warrant agreement dated November 18, 1992 (the "Russell
Warrant Agreement"), and (xi) certain rights (the "Rights") granted pursuant to
the Company's Rights Agreement, dated as of August 8, 1991, between the Company
and Bank of America National Trust & Savings Association, as amended (the
"Rights Agreement"), the Company does not have outstanding any options or
warrants to purchase, or contracts to issue, or contracts or any other rights
entitling anyone to acquire, shares of its capital stock of any class or kind,
or securities convertible into or exchangeable for such shares. In light of
commitments made by Robert P. Scherer, Jr. and Scherer to VSI in the Inducement
Agreements with respect to the Convertible Note, the First ABG Warrants, the
Second ABG Warrants and the Current Warrants, immediately prior to the Effective
Time of the Merger the outstanding shares of Company Common Stock shall not
exceed the above-mentioned 14,296,773 Outstanding Common Shares plus (a) up to
633,166 shares of Company Common Stock which may be issued between the date
hereof and the Closing Date upon the exercise of options previously granted
pursuant to the Option Plan, (b) up to 1,083,317 shares of Company Common Stock
which may be issued between the date hereof and the Closing Date upon exercise
of the Swiss Warrants, (c) up to 800,000 shares of Company Common Stock which
may be issued by the Company upon the exercise of the Current Warrants, (d) the
1,000,000 shares of Company Common Stock to be issued upon conversion of the
Convertible Note, (e) up to 50,000 shares of Company Common Stock which may be
issued upon the exercise of the Consultant's Options, (f) up to 200,000 shares
of Company Common Stock which may be issued upon the exercise of the Settlement
Options, (g) up to 10,000 shares of Company Common Stock which may be issued
upon exercise of the ITT Warrants and (h) up to 75,326 shares of Company Common
Stock which may be issued upon exercise of the Russell Warrants. The Disclosure
Letter contains a complete and accurate schedule setting forth the names of each
holder of the options currently outstanding under the Option Plan ("Plan
Options" or "Employee Options"), the First ABG Warrants, the Second ABG
Warrants, the Current Warrants, the Convertible Note, the Consultant's Options,
the Settlement Options, the ITT Warrants and the Russell Warrants, the number of
shares of Company Common Stock currently issuable to each such holder pursuant
to such options, warrants and Convertible Note (after giving effect to the
anti-dilution provisions applicable thereto), the current exercise price of each
of such options, warrants and Convertible Note (after giving effect to the
anti-dilution provisions applicable thereto), the dates on which each such
option or warrant granted to such holder becomes exercisable (or if such option
becomes exercisable in installments, the dates and percentages applicable to
such installments) and the date on which each such option or warrant terminates.
The Company has amended its Rights Agreement in such a manner that the execution
of this Agreement and the consummation of the Merger will not cause any of the
Rights to become exercisable with or without the passage of time.
SECTION 2.3 Subsidiaries. The Company's subsidiaries (collectively, the
"Subsidiaries" and each such entity individually, a "Subsidiary") are
corporations duly organized, validly existing and in good standing under the
laws of their respective jurisdictions of incorporation, and each Subsidiary has
all requisite corporate power and authority to own its respective property and
conduct the respective business in which it is engaged. The Disclosure Letter
contains an accurate and complete list of (i) all of the Subsidiaries and (ii)
the dates of filing of each Subsidiary's articles of incorporation and all
amendments thereto with the Secretary of State of the applicable jurisdiction of
organization and the dates of the current by-laws of each such Subsidiary. The
Company has no equity interest in any corporation, partnership, limited
liability company or other entity other than its interests in the Subsidiaries.
All of the Subsidiaries are inactive.
SECTION 2.3A ABG. As set forth in the Omnibus Agreement, Scherer leases
to the Company certain equipment pursuant to the "Equipment Lease" (as such
phrase is defined in the Omnibus Agreement) and licenses to the Company certain
intellectual property pursuant to the "License of Intellectual Property" (as
such phrase is defined in the Omnibus Agreement). The assets leased and licensed
by Scherer to the Company pursuant to the Equipment Lease and the License of
Intellectual Property, together with any "Improvements" (as such term is defined
in the License of Intellectual Property), are all included within the definition
of Scheduled Assets in the Scherer Healthcare Inducement Agreement and comprise
the only assets of the blood gas collection product line marketed and sold by
the Company (such assets and Improvements being hereinafter referred to as the
"ABG Assets", such product line being hereinafter referred to as the "ABG
Product Line" and the business presently operated by the Company with respect to
the ABG Product Line being hereinafter referred to as the "ABG Business") that
are owned by any entity other than the Company. All of the equipment leased by
Scherer pursuant to the Equipment Lease is located in the Company's premises in
Englewood, Colorado. With the exception of the Terumo litigation referred to
herein, the Company is not aware of any basis or claim for material
indemnification by Scherer against the Company under the Equipment Lease or the
License of Intellectual Property.
SECTION 2.4 Qualifications. The Disclosure Letter contains an accurate
and complete list of all States in which the Company and each Subsidiary are
qualified to do business. The Company and each Subsidiary are qualified to do
business in each State and in each foreign country in which their failure to so
qualify would have a material adverse effect on the financial condition, assets,
business or operations of the Company and its Subsidiaries, taken as a whole.
SECTION 2.5 SEC Filings. Since March 30, 1994, the Company has filed
with the Securities and Exchange Commission (the "SEC") all reports and
statements (consisting solely of those reports described in the Disclosure
Letter) which it was required to file with the SEC pursuant to the Securities
Exchange Act of 1934 (the "1934 Act"). None of the reports and statements filed
by the Company with the SEC pursuant to the 1934 Act from March 30, 1994 through
the date hereof (collectively, the "Reports") contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
SECTION 2.6 Owned Real Estate. The only real estate owned by the
Company or any of its Subsidiaries is the real estate on which the Company's
principal office is located at 11039 East Lansing Circle, Englewood, Colorado.
None of the ABG Assets constitute real estate. All buildings located on such
owned real estate (the "Owned Buildings") comply in all material respects with
all municipal, state and federal statutes, ordinances, rules and regulations
applicable to the construction of such buildings and their actual use.
SECTION 2.7 Leased Real Estate. The Company and its Subsidiaries do not
lease any real estate other than pursuant to two real estate leases (the
"Leases"). The Business is conducted solely from either the Owned Buildings or
from real estate subject to the Leases. The Disclosure Letter contains an
accurate and complete list of the dates of the Leases and any amendments
thereto. The Company and the Subsidiaries are not in material default under the
Leases and the Company is not aware of any facts which, with notice and/or the
passage of time, would constitute such a default. Consent is required under both
of the Leases in connection with the Merger.
SECTION 2.8 Leased Tangible Personal Property. The Company and its
Subsidiaries do not lease any personal property other than pursuant to (i)
leases which expire on not more than 90 days notice by the Company or a
Subsidiary, (ii) leases which require annual rentals of not more than $25,000,
(iii) the "Equipment Lease" (as defined in the Omnibus Agreement) and (iv)
leases ("Personalty Leases") listed in the Disclosure Letter. Scherer is not a
lessee of any of the ABG Assets. The Company and the Subsidiaries are not in
material default under any of the Personalty Leases or the Equipment Lease and
the Company is not aware of any fact which, with notice and/or passage of time,
would constitute such a default. No consent is required under the Personalty
Leases or the Equipment Lease in connection with the Merger.
SECTION 2.9 Intentionally Omitted.
SECTION 2.10 Intangible Personal Property. The Disclosure Letter
contains an accurate and complete list of all distributorship, franchise and
license agreements (whether the Company or any of its Subsidiaries is the
grantor or grantee of such distributorship, franchise or license), and all
patents, patent applications, trademarks, trademark applications and trade names
(whether the Company or any of its Subsidiaries owns such items or is licensed
to use them) currently owned or used by the Company or, with respect to the ABG
Assets, Scherer (the "Intellectual Property"). The Company or a wholly-owned
Subsidiary of the Company, or, with respect to the ABG Assets, Scherer, is the
sole and exclusive owner of, or (in the case of the Company or any of its
Subsidiaries) is a valid licensee or lessee of, or has the right to use in the
manner currently used, each of said items of Intellectual Property and has the
right to use in the manner currently used all other items of intangible personal
property (including, without limitation, copyrights) owned or used by the
Company or any of its Subsidiaries in any of their businesses or used by
Scherer, the Company or any of its Subsidiaries with respect to the ABG Assets
or the ABG Business (together with the Intellectual Property, the "Intangible
Property"); said items of Intangible Property represent the only intangible
personal property required by the Company and its Subsidiaries in order to
operate the ABG Business and the businesses presently conducted by the Company
and its Subsidiaries; there are no claims or demands against Scherer, the
Company or any of its Subsidiaries with respect to any of such items of
Intangible Property, and no proceedings have been instituted, are pending, or to
the knowledge of the Company have been threatened to terminate or cancel any
such agreements or which challenge the right of Scherer, the Company or any of
its Subsidiaries with respect to any of said items of Intangible Property; and
there are no facts known to the Company which make it likely that any such
agreements will not be renewed at their next expiration date or which might
reasonably serve as the basis, in whole or in part, of any claim that any part
of the business carried on by the Company or any of its Subsidiaries infringes
the patent, trademark, trade name, copyright, or other rights of any other
person. With respect to the Terumo litigation referenced in the Disclosure
Letter, the Company makes no representation as to the likelihood of any ultimate
determination, whether positive or negative. Subject to the interests of the
Company's distributors in information generated by such distributors, the
Company and its Subsidiaries have the unrestricted right to use, free from any
rights or claims of others, all trade secrets and customer lists which the
Company or any of its Subsidiaries has used or which the Company or any of its
Subsidiaries is now using in connection with the sale of any and all products or
services which have been or are being sold by the Company or any of its
Subsidiaries, including assets included within the ABG Business.
SECTION 2.11 Accounts Receivable and Inventory.
2.11.1 All accounts receivable of the Company and its
Subsidiaries have originated in the ordinary course of business, are valid and
are not subject, to any material extent, to any defense, counterclaim or setoff.
2.11.2 All inventory in the possession of the Company or any
of its Subsidiaries is owned by the Company or one or more of its Subsidiaries
and recorded on such entities' books and records in accordance with generally
accepted accounting principles consistently applied. All such inventory has been
valued at the lower of cost, calculated on a FIFO method, or market. No
inventory in the possession of the Company or any of its Subsidiaries has been
consigned. The Company believes that the reserves for inventory obsolescence
contained in the Company's December 31, 1995 and September 29, 1996 consolidated
financial statements are adequate. No inventory relating to the ABG Business is
owned by Scherer.
SECTION 2.12 Title to Assets.
2.12.1 The Company and its Subsidiaries have good and
marketable title in and to all of their property reflected in the December 28,
1996 consolidated balance sheet referred to in Section 2.22.1 hereof (the
"Balance Sheet") plus all assets purchased by the Company and its Subsidiaries
since December 28, 1996, less all assets which the Company or its Subsidiaries
have disposed of in the ordinary course since such date, which property
presently owned by the Company or any of its Subsidiaries is free and clear of
all security interests, consignments, liens, judgments, encumbrances,
restrictions, or claims of any kind except (a) those items that secure
liabilities that are reflected on the Balance Sheet or that are described in the
notes thereto, (b) with respect to owned real property, title imperfections
accurately and completely noted in the title reports listed in the Disclosure
Letter, and minor title imperfections which do not, in the aggregate, adversely
affect the Company's ability to use such property as it is currently being used,
and (c) liens for current taxes or assessments not yet due or delinquent.
2.12.2 To the best of the Company's knowledge, Scherer has
good and marketable title in and to all of the ABG Assets to the extent
described in the Disclosure Letter, which property presently owned by Scherer is
free and clear of all security interests, consignments, liens, judgments,
encumbrances, restrictions, or claims of any kind except (a) Scherer's
obligations under the Equipment Lease and the License of Intellectual Property
and (b) liens for current taxes or assessments not yet due or delinquent.
SECTION 2.13 Material Contracts.
2.13.1 The Disclosure Letter accurately identifies all of the
following contracts or other obligations (and any amendments thereto) to which
the Company or any of its Subsidiaries is a party or by which the Company or any
of its Subsidiaries is bound: (a) any written contracts with or loans to any of
the Company's, or any of the Subsidiaries', shareholders (including, without
limitation, Scherer and its affiliates), officers, directors, employees,
consultants, salespersons, distributors or sales representatives; (b) any
employee benefit plan made available by the Company or any of its Subsidiaries
to any of their employees, including without limitation any medical benefits
payable to retired employees of the Company or its Subsidiaries; (c) any
collective bargaining agreement; (d) any outstanding option plans, options,
warrants, warrant agreements and rights agreements; (e) any contracts with
customers and suppliers other than purchase orders delivered in the ordinary
course of business; (f) any deeds of trust, mortgages, conditional sales
contracts, security agreements, pledge agreements, trust receipts, or any other
agreements or arrangements whereby any material amount of the assets of the
Company or any Subsidiary are subject to a lien, encumbrance, charge or other
restriction; (g) any loan agreements, letters of credit or lines of credit,
including without limitation any documents pertaining to the Company's Swiss
bonds and Swiss notes; (h) any contracts restricting the Company or any
Subsidiary from doing business in any areas or in any way limiting competition;
(i) any contracts calling for aggregate payments by the Company or any
Subsidiary in excess of $25,000 and which are not terminable without cost or
liability on notice of 90 days or less; (j) any joint venture, partnership or
limited partnership agreement or limited liability company operating agreement
involving the Company or any Subsidiary; (k) any guarantees by the Company or
any Subsidiary of the obligations of any other party except those resulting from
the endorsement of checks deposited by the Company or any Subsidiary for
collection; (l) any engagement letter relating to the Merger; (m) any other
contracts which could have a material impact on the Company's consolidated
results of operations or consolidated financial condition; and (n) any
commitments to enter into any of the types of contracts and obligations referred
to in this Section 2.13.1. The Company and its Subsidiaries are not in material
default under any of such contracts, obligations or commitments and the Company
is not aware of any facts which, with notice and/or the passage of time, would
constitute such a default and are not aware of any default by any party thereto
which would have a materially adverse effect upon the results of operations or
financial condition of the Company and its Subsidiaries taken as a whole. No
consent is required under any of the contracts, obligations and commitments
referred to in this Section 2.13.1 in connection with the Merger.
2.13.2 No purchase commitment of the Company or any of its
Subsidiaries is substantially in excess of the normal, ordinary, and usual
requirements of the business of the Company and its Subsidiaries.
2.13.3 The Company and its Subsidiaries are not a party to or
otherwise bound by any contract, agreement, plan, lease, license, commitment, or
undertaking which is materially adverse, materially onerous, or materially
harmful to any aspect of the businesses of the Company and its Subsidiaries;
provided, however, that no representation is made in this Section 2.13.3 with
respect to any agreement that has been identified in any section of the
Disclosure Letter.
2.13.4 To the best of the Company's knowledge, Scherer is not
under any material contractual obligation with respect to the ABG Product Line
other than as set forth in the Omnibus Agreement, the Equipment Lease and the
License of Intangible Property.
SECTION 2.14 Customers and Suppliers. The Disclosure Letter contains a
complete and accurate list setting forth, for the ten months ended January 25,
1997, all customers who purchased more than $100,000 in goods from the Company
and its Subsidiaries and all suppliers from whom the Company and its
Subsidiaries purchased more than $100,000 in products, the total value of
business transacted by the Company and its Subsidiaries with such customers or
suppliers during such period, and, if applicable, the reasons that any such
contracts were terminated. Except as set forth in the Disclosure Letter and
subject to arrangements agreed upon by the Company and VSI with respect to the
distribution of the Company's products subsequent to the date hereof, the
Company has not been notified that any of such customers or suppliers intends to
terminate or change significantly its relationship with the Company and its
Subsidiaries on or after the Effective Time of the Merger. None of the Company's
presently outstanding proposals to customers which are subject to competitive
bidding would, if accepted, materially adversely affect the Company's profit
margins. For the twelve months ended December 28, 1996, approximately 40% of the
Company's business was subject to competitive bidding. For the twelve months
ending December 28, 1997, the Company does not reasonably expect that more than
approximately 40% of its business will be subject to competitive bidding.
SECTION 2.15 Transactions With Directors, Officers, Employees and
Affiliates. Except as disclosed in reports filed by the Company with the SEC,
there have been no transactions since July 1, 1993 between the Company and any
director, officer, employee or affiliate (as defined in Rule 405 promulgated by
the SEC, it being agreed by the parties that Scherer and its officers, directors
and 10% shareholders shall be deemed "affiliates" of the Company for purposes of
this Agreement) of the Company, except on an arm's length basis in accordance
with normal business practices. Since July 1, 1993, none of the officers,
directors or affiliates of the Company, or any member of the immediate family of
any such persons, has been a director or officer of, or has had a material
interest in, any firm, corporation, association or business enterprise which
during such period has been a material supplier, customer or sales agent of the
Company or any of its Subsidiaries or has competed to a material extent with the
Company or any of its Subsidiaries.
SECTION 2.16 Litigation.
2.16.1 Except as disclosed in the Reports: (i) there are no
legal, administrative, arbitration or other proceedings or claims pending or to
the knowledge of the Company threatened against the Company or any of its
Subsidiaries (other than proceedings or claims which are reasonably likely not
to have a material adverse effect upon the Company's financial condition or
results of operations); (ii) the Company and its Subsidiaries are not subject to
any existing judgment; (iii) the Company and its Subsidiaries have not received
any inquiry from any agency of the federal or of any state or local government
about the transactions contemplated hereby, or about any violation or possible
violation of any law, regulation or ordinance affecting its business, its
assets, the ABG Business, the ABG Assets or the ABG Product Line; and (iv) the
Company and its Subsidiaries have not been subject to any products liability
claims during the three years ended on the date of this Agreement. During the
three year period ending on the date of this Agreement, no claim has been made,
and to the best of the knowledge of the Company, no basis exists for any claim,
by any current or former director, officer, employee or other agent of the
Company or any of its Subsidiaries seeking indemnification, whether pursuant to
statute, court rule, contract, by-law, a provision in an article of association
or otherwise, based on such person's involvement in the business of the Company
or any of its Subsidiaries.
2.16.2 To the best of the Company's knowledge, (i) there are
no legal, administrative, arbitration or other proceedings or claims pending or
threatened against Scherer with respect to the ABG Product Line or the ABG
Assets (other than proceedings or claims which, if made against the Company,
would not be reasonably likely to have a material adverse effect upon the
Company's financial condition or results of operations); (ii) Scherer is not
subject to any existing judgment which would adversely affect Scherer's
obligations to convey the ABG Assets upon exercise of the Repurchase Option (as
hereinafter defined); and (iii) Scherer has not received any inquiry from any
agency of the federal or of any state or local government about the transactions
contemplated hereby, about any exercise of the Repurchase Option or about any
violation or possible violation of any law, regulation or ordinance affecting
the ABG Assets, the ABG Business or the ABG Product Line.
SECTION 2.17 Insurance. The Disclosure Letter contains an accurate and
complete list of all insurance coverage maintained by the Company and its
Subsidiaries on the date hereof. Except as otherwise indicated in the Disclosure
Letter, such coverage applies to the Company's interests in the ABG Product
Line. The Company and its Subsidiaries have not received any notice of
cancellation with respect to any insurance policy relating to such coverage. All
premiums due under any such insurance policy have been paid in full.
SECTION 2.18 Licenses and Permits. The Company and its Subsidiaries and
the employees and agents of the Company and its Subsidiaries have all material
licenses, permits, orders, approvals and authorizations required for the conduct
of their respective businesses as presently conducted, including without
limitation the ABG Business. In all material respects, the Company and its
Subsidiaries are acting within the terms of such licenses, permits, orders,
approvals and authorizations, and, to the best knowledge of the Company, no
suspension or cancellation thereof has been threatened.
SECTION 2.19 Authority Relative to Agreement; Enforceability. The
execution, delivery and performance of this Agreement by the Company (A) are
within the legal capacity and power of the Company; (B) have been duly
authorized by all requisite corporate action on the part of the Company, other
than shareholder approval; (C) require the approval or consent of, or filing
with, no persons, entities or agencies, other than such approvals as shall be
required under the 1934 Act and state securities laws and such filings as shall
be required pursuant to the Hart Scott Rodino Antitrust Improvements Act (the
"Hart Scott Rodino Act"); and neither violate nor constitute a default under,
nor create a lien or breach under, the terms of the articles of incorporation
and by-laws of the Company or any Subsidiary or of any material agreement,
document or instrument binding upon the Company or any Subsidiary. This
Agreement is a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except insofar as the
enforcement thereof may be limited by bankruptcy, insolvency, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
subject to equitable principles limiting the availability of equitable remedies.
At the Special Meeting (as hereinafter defined), approval of the Merger by
holders of two-thirds of the shares of Company Common Stock outstanding on the
applicable record date will be sufficient to constitute shareholder approval of
the Merger under Colorado law and under the Company's articles of incorporation
and by-laws.
SECTION 2.20 Compliance With Applicable Laws; Environmental Matters.
2.20.1 The Company and its Subsidiaries and all real property
now owned by the Company and its Subsidiaries ("Company Owned Real Property")
are in compliance in all material respects with all federal, state, county, and
municipal laws, ordinances, regulations, rules, reporting requirements,
judgments, orders, decrees and requirements of common law applicable to the
conduct of the Company and its Subsidiaries and to the assets owned, used or
occupied by the Company and its Subsidiaries (collectively referred to
hereinafter as the "General Laws"), including without limitation all applicable
federal, state, county and municipal laws, ordinances, regulations, rules,
reporting requirements, judgments, orders, decrees and requirements of common
law concerning or relating to the protection of health and the environment
(collectively referred to hereinafter as the "Environmental Laws"). To the best
of the Company's knowledge, all real property owned, operated, used or leased
by, to or for the Company and its Subsidiaries, with respect to any aspect of
their businesses including, without limitation, the ABG Business, at any time
since 1990 other than the Company Owned Real Property (the "Company
Leased/Previously Owned Property"), was and is in compliance in all material
respects with the General Laws and the Environmental Laws. The Company and its
Subsidiaries have not received any notification of violation, citation,
complaint, request for information, order, directive, compliance schedule or
other similar enforcement order, or any other notice from any administrative or
governmental agency or entity, indicating that any business or operation of or
any real property owned, operated, used or leased by, to or for the Company or
any Subsidiary, was not or currently is not in compliance in all material
respects with all Environmental Laws and General Laws. To the best of the
Company's knowledge, Scherer has not received any notification of violation,
citation, complaint, request for information, order, directive, compliance
schedule or other similar enforcement order, or any other notice from any
administrative or governmental agency or entity, indicating that any aspect of
the ABG Business was not or currently is not in compliance in all material
respects with all Environmental Laws and General Laws.
2.20.2 All businesses and operations of the Company and its
Subsidiaries (including without limitation the ABG Business), the Company Owned
Real Property and, to the best of the Company's knowledge, the Company
Leased/Previously Owned Property, are in compliance in all material respects
with all: (i) judgments, orders, directives, decrees or awards of any court,
arbitrator or administrative or governmental agency or entity concerning
compliance with the Environmental Laws; and (ii) consent decrees, administrative
orders, settlement agreements or other settlement documents entered into with
any administrative or governmental agency or entity concerning compliance with
the Environmental Laws.
2.20.3 All assets owned, leased, licensed or otherwise used by
the Company or any of its Subsidiaries, including, without limitation, the
Company Owned Real Property, and, to the best of the Company's knowledge, the
Company Leased/Previously Owned Property, are free of all materials designated
as hazardous substances, wastes, hazardous materials, pollutants or contaminants
under any Environmental Law (collectively, "Hazardous Materials") and physical
conditions which violate any Environmental Laws; all storage tanks and
associated pipes, pumps and structures (whether above or below ground) located
in or on the Company Owned Real Property and, to the best of the Company's
knowledge, the Company Leased/Previously Owned Property, have been identified in
the Disclosure Letter, are in sound condition, free of corrosion, meet all
design and performance standards required by all Environmental Laws, and do not
now, and did not at any time in the past, evidence impaired integrity or
leakage. No Hazardous Materials used or generated by the Company or any of its
Subsidiaries or generated at the Company Owned Real Property or, to the best of
the Company's knowledge, generated at the Company Leased/Previously Owned
Property, have been treated, stored, transported or disposed of in violation of
any Environmental Laws; and all Hazardous Materials which have been utilized in
the business or operation of the Company or any of its Subsidiaries (including
without limitation the ABG Business) or which have been removed, released,
discharged or emitted from the Company Owned Real Property or, to the best of
the Company's knowledge, from the Company Leased/Previously Owned Property, were
and are documented, transported and disposed of in compliance in all material
respects with all Environmental Laws.
2.20.4 The Disclosure Letter lists all permits, licenses and
other authorizations issued by administrative or governmental agencies or
entities under the General Laws and the Environmental Laws which are held by the
Company or any of its Subsidiaries or which are held by Scherer with respect to
the ABG Business (the "General and Environmental Permits"). The General and
Environmental Permits include all such permits which are necessary to the
business and operations of the Company and its Subsidiaries (including without
limitation the ABG Business) and the Company, the Subsidiaries and, to the best
of the Company's knowledge, Scherer are and have been in compliance in all
material respects with the terms and conditions of the General and Environmental
Permits. Under the General Laws, the Environmental Laws and the General and
Environmental Permits, the consummation of the transactions contemplated by this
Agreement and any exercise of the Repurchase Option do not and will not: (i)
affect the validity of the General and Environmental Permits; or (ii) require
the consent of any governmental authority or third party.
SECTION 2.21 ERISA and Employment Matters.
2.21.1 The Disclosure Letter contains an accurate and complete
list of all funded or unfunded, written or oral, employee benefit plans,
contracts, agreements, incentives and salary, wage or other compensation plans
or arrangements, including but not limited to all pension and profit sharing
plans, savings plans, bonus plans, deferred compensation plans, incentive
compensation plans, stock purchase plans, supplemental retirement plans,
severance or termination pay plans, stock option plans, hospitalization plans,
medical plans, life insurance plans, dental plans, disability plans, cafeteria
plans, dependent care plans, tuition reimbursement plans, educational assistance
plans, salary continuation plans, vacation plans, supplemental unemployment
benefit plans, collective bargaining agreements, employment contracts,
consulting agreements, retiree benefits and agreements, severance agreements and
each other employee benefit program, plan, policy or arrangement (each a
"Benefit Plan") maintained, contributed to, or required to be contributed to by
the Company or any Subsidiary with respect to any current or former employees,
directors, officers, agents or consultants of the Company or any Subsidiary, or
for which the Company or any Subsidiary may be responsible or with respect to
which it may have any liability, whether or not subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). The Disclosure
Letter indicates whether each Benefit Plan is funded or unfunded, and insured or
uninsured.
2.21.2 The Disclosure Letter contains an accurate and complete
list of all documents embodying or relating to the Benefit Plans and of all
employee handbooks and policy manuals utilized by the Company or any of the
Subsidiaries within the past five years. Each of the Benefit Plans listed in the
Disclosure Letter is and has at all times been in compliance in all material
respects with all applicable provisions of ERISA, the Code, the Age
Discrimination in Employment Act of 1967, the Americans with Disabilities Act of
1990, the Family Medical Leave Act of 1993 and all other laws applicable to the
Benefit Plans.
2.21.3 Each Company "employee pension benefit plan" as defined
in ss.3(2) of ERISA (each a "Pension Plan") which is intended to meet the
requirements of Section 401(a) of the Code now meets, and since its inception
has met, the requirements for qualification under Section 401(a) of the Code and
nothing has occurred which would adversely affect the qualified status of any
such Pension Plan. The Internal Revenue Service has issued a favorable
determination letter with respect to the qualification under the Code (including
without limitation the Tax Reform Act of 1986) of each Pension Plan, the
Disclosure Letter contains an accurate and complete list of the dates of such
letters and the Internal Revenue Service has not taken any action to revoke any
such letter.
2.21.4 Each fiduciary and every plan official of each Benefit
Plan is bonded to the extent required by Section 412 of ERISA. The Company and
the Subsidiaries have not maintained, contributed to or been required to
contribute to (i) any Pension Plan under which more than one employer makes
contributions (as contemplated by Section 4064(a) of ERISA) or (ii) a
"multiemployer plan" as defined in Section 3(37)(A) and (D) of ERISA, nor have
they withdrawn from any Pension Plan as a "substantial employer" as defined in
Section 4001(a)(2) of ERISA so as to become subject to the provisions of Section
4063 of ERISA, or ceased operations at any facility so as to become subject to
the provisions of Section 4062 of ERISA. The Disclosure Letter sets forth an
accurate and complete list of all annual reports filed during the last three
years with the Internal Revenue Service, the Department of Labor or the Pension
Benefit Guaranty Corporation by or on behalf of every Benefit Plan.
2.21.5 The execution and performance of the transactions
contemplated by this Agreement will not, alone or together with any other event,
constitute an event under any Benefit Plan or individual agreement that will
result in any payment (whether of severance pay or otherwise), or acceleration,
vesting or increase in benefits, with respect to any current or former employee,
officer, consultant, agent or director of the Company or any Subsidiary.
2.21.6 Long-term disability benefits for any employee of the
Company and each Subsidiary who has become disabled (including without
limitation any individual who is disabled but has not satisfied any applicable
waiting period) and death benefits for any employee of the Company and each
Subsidiary who has died are described in the Disclosure Letter and are insured
in amounts and with insurance companies described in the Disclosure Letter.
2.21.7 Each group health plan (within the meaning of Section
5000(b)(1) of the Code) maintained by the Company or any Subsidiary has been
administered in substantial compliance with the coverage continuation
requirements contained in the Consolidated Omnibus Budget Reconciliation Act of
1985 ("COBRA") and as provided under Section 4980B of the Code and any
regulations promulgated or proposed under the Code. No current or former
employee, officer, consultant, agent or director of the Company and the
Subsidiaries, and/or their spouses or dependents, is presently entitled or may
be entitled in the future to any post-termination employment, health, dental,
disability or life insurance benefits, except to the minimum extent required by
COBRA.
2.21.8 The Company and the Subsidiaries have made all
contributions required to be made to each Benefit Plan under the terms of the
plan and applicable law, and are not in default under any Benefit Plan. No
prohibited transaction (as defined in Section 4975 of the Code or Section 406 of
ERISA) has occurred with respect to any Benefit Plan which could subject any
Benefit Plan or any related trust, the Company, any Subsidiary, the Surviving
Corporation or any director or employee of any of them to any tax or penalty
imposed under Section 4975 of the Code or Section 502(i) or 502(1) of ERISA,
either directly or indirectly, and whether by way of indemnity or otherwise. No
event or set of circumstances has occurred under which the Company, any of its
Subsidiaries, any Benefit Plan, or any fiduciary thereof, could directly or
indirectly be subject to any other liability (other than benefits payable in
accordance with the terms of such Benefit Plan and related expenses) under ERISA
(including, but not limited to, Sections 409, 510, 4062, 4064 or 4069 thereof),
the Code (including, but not limited to, Sections 4971, 4972, 4976 or 4980B
thereof), the Family Medical Leave Act of 1993 or any other applicable law.
2.21.9 The Company or the plan "administrator" (as defined in
Section 3(16) of ERISA) of each Benefit Plan has timely filed all ERISA and Code
required reporting and disclosure forms, including, but not limited to, the Form
5500 series, with the appropriate government agencies, with respect to every
Benefit Plan required to file such forms.
2.21.10 There are and there have been no inquiries,
proceedings, claims, audits or suits pending or, to the best knowledge of any
Company Party, threatened by any governmental agency or authority or by any
participant or beneficiary against the Company, any of its Subsidiaries, any of
their respective directors, officers or employees, any Benefit Plan of the
Company or any of its Subsidiaries, or any fiduciary of a Benefit Plan, with
respect to the operation of any Benefit Plan.
2.21.11 Neither the Company nor any of its Subsidiaries have
any obligation to pay medical benefits to retired employees.
2.21.12 The Disclosure Letter contains a list, as of the date
hereof, showing the names of all employees of the Company and the Subsidiaries,
their original dates of employment, their job titles and their hourly rates.
2.21.13 All employees of the Company and the Subsidiaries are
employees at will who may be terminated by the Company at any time with no
obligation to make any payment except wages to the date of termination and such
other amounts as may be required by law.
2.21.14 The Company and the Subsidiaries are in compliance in
all material respects with all federal and state laws respecting employment,
wages and hours. Such entities have not engaged in any discriminatory hiring or
employment practices or any unfair labor practices nor have any employment
discrimination or unfair labor practice complaints against such entities been
filed, or, to the knowledge of the Company, been threatened to be filed, with
any federal or state agency having jurisdiction over the labor matters of the
Company and the Subsidiaries. There are no outstanding threats by any former
employee of the Company or its Subsidiaries of any suit alleging wrongful
termination. The Company has no knowledge of facts which might form a basis for
any complaint or suit of a type described in this Section 2.21.14. The Company
and the Subsidiaries have no actual knowledge that they employ any alien who
does not have a valid permit to work in the United States of America.
2.21.15 To the best of the knowledge of the Company's
executive officers, no current employee of the Company or any of the
Subsidiaries is bound by any previous non-competition agreement (other than
agreements given to the Company) and no employee, in his or her capacity as an
agent of the Company, has violated a confidentiality agreement or non-compete
agreement with an unrelated entity.
2.21.16 With respect to each facility in which the Company or
any of its Subsidiaries does business, the Company and its Subsidiaries and each
such facility are in compliance in all material respects with the Americans With
Disabilities Act.
2.21.17 During the three years ended December 28, 1996, there
has not been any labor dispute (including a strike, slowdown or work stoppage)
or threat of a labor dispute involving the Company or any of its Subsidiaries or
any attempt or threat of an attempt by a labor union to organize any employees
of the Company or any of its Subsidiaries. No employee of the Company or any of
its Subsidiaries is a member of or represented by any labor union.
2.21.18 Intentionally omitted.
SECTION 2.22 Financial Statements.
2.22.1 Prior to the date hereof, the Company has delivered to
VSI its consolidated Balance Sheet dated December 28, 1996, its consolidated
income statement for the three months then ended and its consolidated statement
of cash flows for the three months then ended (such financial statements are
referred to herein as the "December Financial Statements"). The December
Financial Statements and the consolidated financial statements of the Company
included within the Reports filed with the SEC since January 1, 1996 fairly
present the consolidated financial position of the Company and the consolidated
results of operations of the Company as at the dates and for the periods to
which they apply; such statements have been prepared in conformity with
generally accepted accounting principles, applied on a consistent basis
throughout the periods involved, and such financial statements comply with all
applicable provisions of Regulation S-X of the SEC. The December Financial
Statements and the interim financial statements presented in such Reports
include all adjustments (subject only to normal recurring year-end adjustments)
necessary for a fair presentation of the Company's consolidated financial
position and consolidated results of operations as of the dates and for the
periods presented therein.
2.22.2 On March 30, 1996 and December 28, 1996, the Company
and its Subsidiaries had no material liabilities (whether absolute, accrued,
contingent or otherwise) which were required to be reflected in and disclosed on
the Company's March 30, 1996 audited consolidated balance sheet or the Balance
Sheet (as to December 28, 1996) or in the notes thereto pursuant to Regulation
S-X of the SEC or in accordance with generally accepted accounting principles,
consistently applied, but were not so reflected and disclosed. Since December
28, 1996, the Company and its Subsidiaries have incurred no liabilities (whether
absolute, accrued, contingent or otherwise) in addition to those reflected in or
disclosed on the Balance Sheet or the related notes, except liabilities incurred
in the ordinary course of business and the execution by the Company of this
Agreement.
2.22.3 The books, records and system of internal accounting
controls of the Company and its Subsidiaries comply in all material respects
with Section 13(b) of the 1934 Act.
2.22.4 The Disclosure Letter contains an accurate and complete
list of the most recent management letters received by the Company or any of its
Subsidiaries.
SECTION 2.23 Taxes.
2.23.1 All tax and information returns required to have been
filed by the Company and its Subsidiaries have been filed with the appropriate
authority; and all federal, state and local taxes (including without limitation
income, franchise, property, sales, use, value-added, withholding, excise,
capital or other tax liabilities), charges, assessments, penalties and interest
of the Company and its Subsidiaries ("Tax Liabilities") required to be paid on
or before December 28, 1996 were paid on or before that date or accrued on the
books of the Company and its Subsidiaries as of that date. Such returns were
correct in all material respects as filed. No assessments or additional Tax
Liabilities have been proposed or threatened against the Company or any of its
Subsidiaries or any of their assets, and neither the Company nor any of its
Subsidiaries have executed any waiver of the statute of limitations on the
assessment or collection of any Tax Liabilities. The Balance Sheet includes
adequate provision for Tax Liabilities incurred or accrued as of December 28,
1996. The Disclosure Letter contains an accurate and complete list of the dates
of filing of the Company's and each Subsidiary's most recent federal, state and
local tax returns.
2.23.2 The federal tax returns of the Company and its
Subsidiaries have been audited or examined by the Internal Revenue Service
through the dates specified in the Disclosure Letter. Adjustments, if any, to
all such returns have been agreed upon and paid by the Company or its
Subsidiaries or are being contested as indicated in the Disclosure Letter. There
are no pending investigations of the Company or any of its Subsidiaries or their
tax returns by any federal, state or local taxing authority and there are no
federal, state or local tax liens upon any of the assets of the Company or any
of its Subsidiaries. The Disclosure Letter contains an accurate and complete
description of the Company's transfer pricing policy and such transfer pricing
policy is in accordance with the specific pricing methods described in
regulations promulgated by the Internal Revenue Service under Section 482 of the
Code. To the best of the Company's knowledge, as of March 30, 1996, the Company
had net operating loss carryforwards totaling $23,084,830, of which $7,329,242
were encumbered by the restrictions under Section 382 of the Code (the
"restricted NOLs"). The "section 382 annual limitation" (within the meaning of
Section 382 of the Code) with respect to the restricted NOLs is $486,900. The
Disclosure Letter contains an accurate and complete list of (i) the years in
which the Company's net operating loss carryforwards expire, (ii) the amount of
net operating loss carryforwards which will expire in each of those years
(separately broken out to indicate the restricted NOLs and the nonrestricted
NOLs) and (iii) the extent of any "owner shift" or "equity structure shift"
(within the meaning of Section 382 of the Code) as of the date of this
Agreement.
SECTION 2.24 Business Changes. Except for the transactions contemplated
by this Agreement, since March 30, 1996 there has not been:
2.24.1 any reduction through December 28, 1996 in the
Company's "Special Treatment Sales" (as defined herein), as compared with
Special Treatment Sales during the comparable period in the immediately
preceding fiscal year (it being understood that the term "Special Treatment
Sales" shall mean all of the Company's sales other than sales made through the
Company's United States (including Puerto Rico) dealers and sales made through
distributors of the Company's medical-surgical products);
2.24.2 any damage, destruction or loss (whether or not covered
by insurance) materially and adversely affecting the business of the Company and
its Subsidiaries taken as a whole (including without limitation the ABG
Business) or any material deterioration in (x) the condition of the Owned
Buildings or the personal property owned by the Company or any of its
Subsidiaries or leased, licensed or otherwise used by the Company or any of its
Subsidiaries in their respective businesses (including without limitation the
ABG Business) or (y) the condition or operation of the heating, air
conditioning, plumbing and electrical systems of the Owned Buildings, excluding
ordinary wear and tear;
2.24.3 any disposition, mortgage, pledge, or subjection to any
lien, claim, charge, option, or encumbrance of any property or asset of the
Company or any of its Subsidiaries or, to the best of the Company's knowledge,
of any of the assets included within the ABG Product Line, or any cancellation
or compromise of any debt or claim of the Company or any of its Subsidiaries
otherwise than in the ordinary course of business;
2.24.4 any acquisition by the Company or any of its
Subsidiaries of the assets or capital stock of another business entity;
2.24.5 any distribution or disposition of the assets of the
Company or any of its Subsidiaries other than in the ordinary course of business
or any distribution by Scherer of any of the ABG Assets;
2.24.6 any action taken by the United States Food and Drug
Administration (the "FDA"), including without limitation the delivery of a
report on Form 483, which could have a material adverse effect upon the
Company's consolidated financial condition or consolidated results of
operations;
2.24.7 any statute, order, judgment, writ, injunction, decree,
permit, rule or regulation of any court or any governmental or regulatory body
adopted or entered or proposed to be adopted or entered which may materially and
adversely affect the property or business of the Company or any of its
Subsidiaries (including without limitation the ABG Business), other than those
statutes, orders, judgments, writs, injunctions, decrees, permits, rules or
regulations which are applicable to the business of health care generally or the
business of manufacturing and selling medical products generally and which do
not and will not have a disproportionate effect on the business of the Company
or any of its Subsidiaries (including without limitation the ABG Business)
relative to the effect on other entities in the business of manufacturing and
selling similar medical products; or
2.24.8 any dividend or distribution declared, set aside or
paid in respect of the Company Common Stock or any repurchase by the Company of
shares of Company Common Stock.
SECTION 2.25 Brokerage. Except as described in the Disclosure Letter,
neither the Company nor any of its Subsidiaries has engaged any broker or finder
to render services in connection with this Agreement or in connection with any
fairness opinions to be delivered in connection with this Agreement.
SECTION 2.26 Industrial Revenue Bonds. The Company and its Subsidiaries
are not indebted under any industrial revenue bonds.
SECTION 2.27 Inducement Agreements. Concurrent with the execution of
this Agreement, Scherer has delivered to VSI an inducement agreement, a copy of
which has been furnished to the Company (the "Scherer Healthcare Inducement
Agreement"), and Robert Scherer has delivered to VSI an inducement agreement, a
copy of which has been furnished to the Company (the "Robert Scherer Inducement
Agreement" and, collectively with the Scherer Healthcare Inducement Agreement,
the "Inducement Agreements"). The Company understands that the receipt of the
Inducement Agreements by VSI represents a material inducement to VSI to enter
into this Agreement and that VSI has relied upon the Inducement Agreements in
entering into this Agreement.
SECTION 2.28 Information. Any information in written or electronic
format provided or to be provided by or on behalf of the Company, Scherer or
their representatives to VSI or its representatives in connection with this
Agreement or the Merger (the "Information") has been, and will be, accurate in
all material respects. The Company has disclosed to VSI all information
regarding the Company and its Subsidiaries (including without limitation the ABG
Business) which is material to VSI's determination to execute this Agreement.
SECTION 2.29 Reorganization. The Company has not taken any action other
than relating to the consummation of the Merger, and is not aware of any actions
which have been taken or may be taken by any person, which would further limit
the Company's ability to utilize its net operating loss carryforwards under
Section 382 of the Code from the amounts described in Section 2.23.2 hereof.
SECTION 2.30 ABG Product Line. Scherer has agreed to extend the
repurchase option described in Section 2.03 of the Omnibus Agreement (the
"Repurchase Option") until June 15, 1999. The aggregate purchase price required
for the Company to exercise the Repurchase Option currently is $5,535,000, which
amount increases by $22,500 per month as of the first day of each calendar
month. The Company has delivered to VSI's counsel copies of each bill of sale,
assignment and other instrument of transfer and conveyance pursuant to which
Scherer acquired the Purchased Assets from the Company pursuant to the Omnibus
Agreement. The Disclosure Letter sets forth the calculation of all amounts paid
by the Company to Scherer by calendar year pursuant to the Equipment Lease and
the License of Intellectual Property. The Company has paid to Scherer all
amounts due to Scherer under the Equipment Lease and the License of Intellectual
Property through January 25, 1997 and the Company will have no obligation to pay
any amounts to Scherer with respect to the period from such date until the
Effective Time of the Merger other than to pay to Scherer an amount equal to
3.25% of the Company's net sales of the ABG Product Line during such period.
SECTION 2.31 FDA Matters. The Company and its Subsidiaries are in
compliance in all material respects with the United States Food, Drug and
Cosmetics Act, with all rules and regulations of the FDA applicable to the
Company or any of its Subsidiaries (including without limitation all Good
Manufacturing Practices regulations) and with all comparable state laws, rules
and regulations applicable to the Company or any of its Subsidiaries
(collectively, the "Device Laws"). The Disclosure Letter contains an accurate
and complete list of all dates of inspections of the Company or any of its
Subsidiaries made by the FDA or any similar state agencies during the six years
ended on the date of this Agreement, the dates of all correspondence between the
Company or any Subsidiary and the FDA or any such state agency with respect to
any such inspections and the dates of all reports delivered during such six year
period by any third-parties to the Company or any of its Subsidiaries with
respect to the compliance by the Company or any of its Subsidiaries with the
Device Laws. The Disclosure Letter contains an accurate and complete list of the
dates of all notices received by the Company or any of its Subsidiaries within
such six year period from the FDA or any other agency that enforces any of the
Device Laws. The Company has made available to representatives of VSI all
complaint files maintained by the Company and its Subsidiaries and all other
files maintained by the Company and its Subsidiaries with respect to compliance
with any aspect of the Device Laws. During the three years ended February 28,
1997, neither the FDA nor any comparable state agency has taken any action which
has had a material adverse effect upon the Company's consolidated financial
condition, results of operations, business or prospects.
SECTION 2.32 Full Disclosure. No representation or warranty made by the
Company in this Agreement or the Disclosure Letter, no certification furnished
or to be furnished by the Company to VSI pursuant to this Agreement, and no
document or electronic transmission delivered by the Company to VSI or its
counsel hereunder, including without limitation the Information, contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained herein or
therein not misleading. All documents delivered or to be delivered by the
Company to VSI and/or its counsel in connection with the negotiation, execution
and performance of this Agreement and the matters ancillary hereto are and will
be accurate and complete, and will contain all amendments through the date of
such delivery.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF VSI
VSI hereby represents, warrants and agrees as follows:
SECTION 3.1 Organization. VSI is a corporation, duly organized, validly
existing, and in good standing under the laws of the State of New Jersey, and
has all requisite corporate power and authority to own its property and conduct
the business in which it is engaged.
SECTION 3.2 Authority Relative to Agreement; Enforceability. The
execution, delivery and performance of this Agreement are (A) within the legal
capacity and power of VSI and Newco; (B) have been duly authorized by all
requisite corporate action on the part of VSI and Newco; (C) require the
approval or consent of, or filing with, no persons, entities or agencies, other
than the approval of one or more institutions that have extended credit to VSI
and the New Jersey Economic Development Authority and filings to be made
pursuant to the Hart Scott Rodino Act; and (D) neither violate, nor constitute a
default under, nor create a lien or breach under the terms of, the certificate
of incorporation and by-laws of VSI or Newco or any other subsidiary of VSI or
of any material agreement, document or instrument binding upon VSI or Newco or
any other subsidiary of VSI (other than loan agreements as to which appropriate
consents or waivers shall avoid any defaults). This Agreement is a legal, valid
and binding obligation of VSI and Newco enforceable against VSI and Newco in
accordance with its terms, except insofar as the enforcement thereof may be
limited by bankruptcy, insolvency, moratorium or similar laws affecting the
enforcement of creditors' rights generally and subject to equitable principles
limiting the availability of equitable remedies.
SECTION 3.3 Brokerage. VSI has not engaged any broker or finder to
render services in connection with this Agreement.
SECTION 3.4 Full Disclosure. No representation or warranty made by VSI
in this Agreement, no certification furnished or to be furnished by VSI to the
Company pursuant to this Agreement, and no document or electronic transmission
delivered by VSI to the Company or its counsel hereunder, contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or therein not
misleading.
ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.1 Regular Course of Business. Except as otherwise consented
to in writing by VSI prior to the Effective Time of the Merger or as
contemplated by this Agreement or any other agreement executed by VSI, the
Company will (and will cause each of its Subsidiaries to) carry on its business
(including without limitation the ABG Business) diligently and in the ordinary
course and use reasonable efforts to preserve its present business (including
without limitation the ABG Business) organization intact, keep available the
services of its present executive officers and preserve its present
relationships with persons having business dealings with it.
SECTION 4.2 Restricted Activities and Transactions. Except as otherwise
consented to in writing by VSI, prior to the Effective Time of the Merger the
Company will not and the Company will cause each of its Subsidiaries not to:
4.2.1 amend its articles of incorporation or by-laws;
4.2.2 issue, sell or deliver, or agree to issue, sell or
deliver, or grant, or declare any stock divided or stock split with respect to,
any shares of any class of capital stock of the Company or any securities
convertible or exchangeable into any such shares or convertible or exchangeable
into securities in turn so convertible or exchangeable, or any options, warrants
or other rights calling for the issuance, sale or delivery of any such shares or
any such convertible or exchangeable securities, except that the Company may
issue shares of Company Common Stock pursuant to the Employee Options, the
Director Options, the Swiss Warrants, the Consultant's Options, the Russell
Warrants, the ITT Warrants, the Convertible Note or the Settlement Agreement,
provided that such options, warrants or Note are exercisable by their terms on
the date of such issuance and are outstanding on the date hereof and provided
that the applicable provisions of the Convertible Note and the Settlement
Agreement remain in full force and effect on the date of such issuance;
4.2.3 except in the ordinary course of business or as required
upon exercise of directors' fiduciary duties, mortgage or pledge any of its
assets, tangible or intangible;
4.2.4 (i) borrow, or agree to borrow, any funds, other than in
the ordinary course of business pursuant to the Company's existing credit
facilities in amounts that will not preclude the Company from satisfying the
condition set forth in Section 7.6 hereof, or (ii) except in the ordinary course
of business (and consistent with past practice), voluntarily incur, assume or
become subject to, whether directly or by way of guarantee or otherwise, any
obligation or liability (absolute or contingent), (iii) except in the ordinary
course of business (and consistent with past practice), cancel or agree to
cancel any material debts of third-parties or claims against third-parties, (iv)
except in the ordinary course of business (and consistent with past practice),
lease, sell or transfer, or grant or agree to grant any preferential rights to
lease or acquire, any of its material assets, property or rights, or (v) except
in the ordinary course of business (and consistent with past practice), make or
permit any substantive amendment or termination of any material contract,
agreement, license or other right of which it is a party;
4.2.5 adopt, materially amend or terminate any employee
benefit plan or materially increase the compensation or other benefits payable
to any of its employees; provided, however, that the Company may pay fiscal
year-end bonuses to its employees in an aggregate amount up to the amount
disclosed to VSI's Chief Financial Officer immediately prior to the execution of
this Agreement;
4.2.6 acquire control of, or an ownership interest in, any
other corporation, association, joint venture, partnership, business trust,
limited liability company or other business entity, or acquire control or
ownership of all or a substantial portion of the assets of any of the foregoing,
or enter into any agreement providing for any of the foregoing;
4.2.7 directly or indirectly solicit, encourage or authorize
any individual, corporation or entity (including without limitation its
directors, officers, employees, attorneys, accountants and investment bankers)
to directly or indirectly solicit or encourage any inquiry, proposal, offer or
possible offer from a third party relating to (i) the purchase of shares of any
class of capital stock of the Company or any securities convertible or
exchangeable into any such shares or convertible or exchangeable into securities
in turn so convertible or exchangeable, or the acquisition of any option,
warrant or other right to purchase or otherwise acquire any such shares or
convertible/exchangeable securities, (ii) a tender or exchange offer for any
shares of Company Common Stock, (iii) a purchase, lease or other acquisition of
the shares of Company Common Stock owned by Scherer or all or a substantial
portion of the assets of the Company or any product line or line of business of
the Company or any of its Subsidiaries, or any other material asset of the
Company or any of its Subsidiaries, or (iv) a merger, consolidation or other
combination involving the Company (any such inquiry, proposal, offer or possible
offer being hereinafter referred to as a "Takeover Proposal"); or, subject to
the fiduciary obligations of the Company's Board of Directors, provide any
individual, corporation or other entity with information or assistance or
negotiate with any individual, corporation or entity in furtherance of any
Takeover Proposal;
4.2.8 enter into any agreement with any third-party with
respect to any of the types of transactions referred to in Section 4.2.7 hereof,
other than pursuant to the exercise by the Company's Board of Directors of its
fiduciary duties;
4.2.9 except in the ordinary course of business and consistent
with practices customary for the Company during the current fiscal year and
except for the buy-out of certain leases entered into with Finova for which the
Company has received comparable sums from Nexstar, enter into or agree to enter
into any transaction, or incur or discharge any obligation or liability,
material to the business of the Company and its Subsidiaries taken as a whole;
4.2.10 except with respect to dividend or distribution
payments made to the Company or any Subsidiary wholly-owned by the Company,
declare or pay any dividend on its capital stock in cash, stock or property, or
redeem, purchase or otherwise acquire any shares of capital stock or any options
or warrants to purchase any shares of its capital stock;
4.2.11 enter into any material licensing or marketing
arrangement or other material contract with any party other than VSI or the
Premier purchasing group;
4.2.12 settle any pending litigation in a manner that is
materially adverse to the Company or commence any material litigation; or
4.2.13 take any action, or omit to take any action, the
results of which will prevent any of the warranties and representations set
forth in Article II hereof from being true in all material respects (or, in the
case of a representation or warranty that is, by its terms, qualified as to
materiality, from being true and accurate in all respects) as of the Effective
Time of the Merger.
SECTION 4.3 No Default or Violation. Except as otherwise consented to
in writing by VSI, prior to the Effective Time of the Merger the Company will
(and will cause each of its Subsidiaries to) use its best efforts not to (i)
violate, or commit a breach of or a default under, any material contract,
obligation or commitment to which it is a party or to which any of its assets
may be subject or (ii) violate any applicable federal, state or municipal
statutes, regulations or ordinances or any injunctions, orders or judgments
binding upon the Company or its Subsidiaries, the effect of which in any such
case would be materially adverse to the business of the Company and its
Subsidiaries taken as a whole.
SECTION 4.4 Insurance. Except as otherwise consented to in writing by
VSI, prior to the Effective Time of the Merger, the Company will (and will cause
its Subsidiaries to) maintain in full force and effect all policies of insurance
in substantially the same amounts and types of coverage as are presently in
effect on the date of this Agreement or in such greater amounts or with such
expanded coverage as the Company shall determine in good faith to be
appropriate.
SECTION 4.5 Reports; Taxes; Etc. Except as otherwise consented to in
writing by VSI, prior to the Effective Time of the Merger:
4.5.1 the Company will (and will cause each of its
Subsidiaries to) duly and timely (by the due date or any duly granted extension
thereof) file all reports and returns required to be filed with all applicable
federal, state and local authorities; and
4.5.2 unless it is contesting the same in good faith and, if
appropriate, has established reasonable reserves therefor, the Company will (and
will cause each of its Subsidiaries to) (i) promptly pay all Tax Liabilities
indicated by such returns or otherwise lawfully levied or assessed upon it or
any of its properties and (ii) withhold or collect and pay to the proper
governmental authorities or hold in separate bank accounts for such payment all
taxes and other assessments which it believes in good faith to be required by
law to be so withheld or collected; provided, however, that this Section 4.5.2
shall not affect the Company's plans to pay out approximately $640,000 over time
in order to discharge certain tax liens, as described in the Disclosure Letter.
SECTION 4.6 Advice of Changes. The Company will promptly advise VSI
orally and in writing of (i) any event occurring subsequent to the date of this
Agreement which would render any representation or warranty of the Company
contained in this Agreement, if made on or as of the date of such event or the
Closing Date, untrue, inaccurate or incomplete in any material respect (or, in
the case of a representation or warranty that is, by its terms, qualified as to
materiality, untrue, inaccurate or incomplete in any respect) and (ii) any
material adverse change in the consolidated working capital, financial
condition, assets, liabilities (whether absolute, accrued contingent or
otherwise), operating profits, business or prospects of the Company and its
Subsidiaries taken as a whole.
SECTION 4.7 Notification of Takeover Proposal and Other Matters. The
Company shall promptly advise VSI orally and in writing of any Takeover Proposal
or of any inquiry or proposal which the Company has reason to believe may lead
to a Takeover Proposal. The Company shall promptly advise VSI orally and in
writing of the receipt by the Company of any notification submitted to the
Company pursuant to any law of any purchase or proposed purchase of any
securities of the Company by any person.
SECTION 4.8 Consents, Approvals and Filings. The Company will (and will
cause each of its Subsidiaries to) use its best efforts to obtain as promptly as
possible all necessary approvals, authorizations, consents, licenses, clearances
or orders of governmental and regulatory authorities and to complete all filings
required in order for the Company to perform all of its obligations hereunder.
SECTION 4.9 Access to Records and Properties. VSI may, prior to the
Effective Time of the Merger, through its employees, agents and representatives,
make or cause to be made a detailed review of the business (including without
limitation the ABG Business) and financial condition of the Company and its
Subsidiaries and make or cause to be made such investigation as it deems
necessary or advisable of the properties, assets, businesses (including without
limitation the ABG Business), books and records of the Company and its
Subsidiaries. The Company agrees (and will cause its Subsidiaries to agree) to
assist VSI in conducting such review and investigation and will provide, and
will cause its Subsidiaries and its independent public accountants to provide,
VSI and its employees, agents and representatives full access to, and complete
information concerning, all aspects of the businesses of the Company and its
Subsidiaries, including their books, records (including tax returns filed or in
preparation), personnel and premises, the audit work papers and other records of
their independent public accountants and any documents (including any documents
filed on a confidential basis) included in any report filed with the SEC.
Neither any investigation by VSI nor the receipt by VSI of any data or
information from the Company shall impair the right of VSI to terminate this
Agreement as provided in Article X hereof.
SECTION 4.10 Best Efforts. The Company shall use its best efforts (a)
to cause to be fulfilled and satisfied all of the conditions to the Closing to
be fulfilled and satisfied by the Company and (b) to cause to be performed all
of the matters required of the Company at or prior to the Closing. The Company
shall use its best efforts to make all of its warranties and representations
contained in this Agreement (except those representations and warranties
regarding the number of shares of Company Common Stock issued and outstanding on
the date hereof set forth in Section 2.2 hereof) true and correct in all
material respects as at the Closing, with the same effect as if the same had
been made and this Agreement had been dated as at the Closing.
SECTION 4.11 Maintenance of Assets. The Company shall (and shall cause
its Subsidiaries to) keep the property and assets used in its businesses
(including without limitation the ABG Business) in good order, repair and
operating condition.
SECTION 4.12 8-K. At least 10 days prior to the Effective Time of the
Merger, the Company shall furnish VSI with all such information and financial
statements as VSI may reasonably require in order for VSI to prepare a Current
Report on Form 8-K (describing the Merger pursuant to Items 2 and 7 of such
Form) for filing with the SEC promptly after the Effective Time of the Merger.
Immediately prior to the Closing, the Company shall cause its independent
accountants to provide any report of such accountants which VSI determines must
be included in such filing on Form 8-K and a consent (in form and substance
satisfactory to VSI) to the filing of any report of such accountants which VSI
determines must be included or incorporated by reference in such filing on Form
8-K.
SECTION 4.13 Shareholders' Meeting. The Company shall call a special
meeting of its shareholders (the "Special Meeting"), to be held as soon as
practicable after the Proxy Statement (as hereinafter defined) is mailed to the
Company's shareholders, for the purpose of voting upon the Merger and this
Agreement. Notwithstanding the foregoing, the Special Meeting shall not be held
until after Scherer shall have conducted a meeting of its shareholders for the
purpose of seeking approval from the shareholders of Scherer for Scherer to vote
its shares of Company Common Stock in favor of the Merger and to consummate the
transactions contemplated by the Scherer Healthcare Inducement Agreement (the
"Scherer Shareholder Approval"). In connection with the Company's meeting, the
members of the Company's Board of Directors shall recommend that the Company's
shareholders approve the Merger and this Agreement and use their best efforts to
obtain such shareholder approval, subject to the exercise by the members of such
Board of Directors of their fiduciary duties.
SECTION 4.14 Anti-Dilution. The Company shall not permit any event to
occur that will trigger the anti-dilution provisions of any option, warrant,
Convertible Note or other security (collectively, the "Subscription Securities")
in a manner that would change in any respect the number of shares of Company
Common Stock issuable pursuant to any such Subscription Securities from the
number of shares set forth with respect to such Subscription Securities in
Section 2.2 hereof and Exhibit 2.2 to the Disclosure Letter or that would change
in any respect the exercise price applicable to any such Subscription Securities
from the exercise price set forth with respect to such Subscription Securities
in Exhibit 2.2 to the Disclosure Letter.
SECTION 4.15 Rights Plan. The Company shall amend the Rights Agreement
in such a manner that the execution of this Agreement and the consummation of
the Merger will not cause any of the Rights to become exercisable with or
without the passage of time.
SECTION 4.16 SEC Reports. Between the date hereof and the Closing Date,
the Company shall timely file with the SEC (and, contemporaneously with such
filings, shall deliver to VSI a copy of) all reports and statements required to
be filed by the Company under the 1934 Act. None of such reports or statements
shall contain an untrue statement of a material fact or shall omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
SECTION 4.17 Notification Regarding Dissenters' Shares. The Company
shall give VSI (i) prompt notice of any notice of intent to demand fair value
for any shares of Company Common Stock, any withdrawals of such notices, and any
other instruments served pursuant to the Appraisal Laws and received by the
Company and (ii) the opportunity to direct any negotiations and proceedings with
respect to demands for fair value for shares of Company Common Stock under the
Appraisal Laws. The Company shall not, without the prior written consent of VSI,
voluntarily make payment with respect to any demands for fair value of shares of
Company Common Stock or offer to settle or settle any such demands.
SECTION 4.18 Separate Funds. The Company shall establish and maintain a
separate account in which it shall deposit all funds it receives between the
date hereof and the Closing Date upon the exercise of any option or warrant.
Such funds shall be held in such account until such time as they are to be
delivered to the Exchange Agent pursuant to Section 1.3.2.2 hereof.
SECTION 4.19 Intentionally Omitted.
SECTION 4.20 Repurchase Option. The Company shall not exercise the
Repurchase Option under the Omnibus Agreement at any time prior to the earlier
of the Effective Time of the Merger or the date on which this Agreement is
terminated.
ARTICLE V
COVENANTS OF VSI
SECTION 5.1 Best Efforts. VSI shall use its best efforts (a) to cause
to be fulfilled and satisfied all of the conditions to the Closing to be
fulfilled and satisfied by it, and (b) to cause to be performed all of the
matters required of it at or prior to the Closing. VSI shall use its best
efforts to make all of its warranties and representations contained in this
Agreement true and correct in all material respects as at the Closing, with the
same effect as if the same had been made and this Agreement had been dated as at
the Closing.
SECTION 5.2 Consents, Approvals and Filings. VSI will use its best
efforts to obtain as promptly as possible all necessary approvals,
authorizations, consents, licenses, clearances or orders of governmental and
regulatory authorities and to complete all filings required in order for VSI to
perform its obligations hereunder.
SECTION 5.3 Advice of Changes. VSI will promptly advise the Company
orally and in writing of (i) any event occurring subsequent to the date of this
Agreement which would render any representation or warranty of VSI contained in
this Agreement, if made on or as of the date of such event or the Closing Date,
untrue, inaccurate or incomplete in any material respect (or, in the case of a
representation or warranty that is, by its terms, qualified as to materiality,
untrue, inaccurate or incomplete in any respect).
ARTICLE VI
HART SCOTT RODINO, INTERIM BALANCE SHEET
AND PROXY STATEMENT MATTERS
SECTION 6.1 Hart Scott Rodino Filings. VSI and the Company agree to
make any required filings promptly pursuant to the Hart Scott Rodino Act, and to
use their best efforts, and to cooperate with each other in their efforts, to
effect compliance with the Hart Scott Rodino Act. If the parties should receive
a second request for information from either the Federal Trade Commission or the
United States Department of Justice, VSI and the Company shall use their best
efforts to comply promptly with such request and to persuade the agency seeking
such information to permit the parties to consummate the Merger. Notwithstanding
any provision herein to the contrary, VSI shall not be required to enter into
any consent decree or to make any divestitures, before or after Closing, of its
assets or of the assets to be acquired from the Company pursuant to this
Agreement.
SECTION 6.2 Interim Balance Sheet; Statement of Special Treatment Sales
At least ten days prior to the Closing Date, the Company shall deliver to VSI a
consolidated balance sheet of the Company as of the last day of the calendar
month immediately prior to the calendar month in which the Closing will be held,
or if the Closing is to be held within the first twenty days of a calendar
month, as of the last day of the calendar month which is two calendar months
prior to the calendar month in which the Closing will be held (the "Interim
Balance Sheet"). The Interim Balance Sheet shall be prepared in accordance with
generally accepted accounting principles, in a manner consistent with the
preparation of the Balance Sheet. Contemporaneous with the delivery of the
Interim Balance Sheet, the Company shall deliver to VSI a certificate of the
chief financial officer of the Company certifying that the Interim Balance Sheet
has been prepared in accordance with this Section 6.2 and shall provide VSI's
representatives with access to such documentation as they shall require in order
to review and evaluate the Interim Balance Sheet delivered by the Company. At
least two days prior to the Closing Date, the Company shall deliver to VSI a
statement (the "Sales Statement"), prepared in accordance with generally
accepted accounting principles consistently applied, setting forth the Company's
Special Treatment Sales (as defined in Section 2.24.1 hereof) for the period
from the date hereof through the seventh day prior to the Closing Date and for
the comparable period in 1996. Contemporaneous with the delivery of the Sales
Statement, the Company shall deliver to VSI a certificate of the chief financial
officer of the Company certifying that the Sales Statement has been prepared in
accordance with this Section 6.2 and shall provide VSI's representatives with
access to such documentation as they shall require in order to review and
evaluate the Sales Statement delivered by the Company.
SECTION 6.3. Proxy Statement. Promptly after this Agreement is
executed, VSI and the Company shall cooperate in preparing a proxy statement
(describing the Merger) for filing with the SEC and ultimately for mailing to
the Company's shareholders (the "Proxy Statement"). The Company shall not file
the Proxy Statement preliminarily or in final form unless and until VSI consents
to such filings. VSI shall not unreasonably withhold or delay any such consent.
The Proxy Statement shall contain such notifications regarding dissenters'
rights as are required by the BCA. The Company represents and warrants to, and
covenants with, VSI that the Proxy Statement will comply in all material
respects with the 1934 Act and the rules and regulations promulgated thereunder,
that the Proxy Statement will not contain any untrue statements of material fact
and will not omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
such representation, warranty and covenant shall not apply with respect to any
information regarding VSI. The Company will promptly advise VSI in writing if at
any time prior to the Effective Time of the Merger it shall obtain knowledge of
any facts that might make it necessary or appropriate to amend or supplement the
Proxy Statement in order to make the statements contained or incorporated by
reference therein not misleading or to comply with applicable law. At VSI's
request, the mailing of the Proxy Statement shall be delayed until VSI or the
Company shall have received, from such accountants as VSI shall specify, letters
of the type contemplated by Statement on Auditing Standards No. 72 and based
upon procedures carried out to such date as VSI shall reasonably specify. After
VSI consents to the mailing of the Proxy Statement and all necessary SEC filing
requirements have been satisfied, the Company shall mail the Proxy Statement to
its shareholders in accordance with all applicable federal and state securities
laws and shall use its best efforts to solicit proxies in favor of the Merger.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF
VSI AND NEWCO
The obligations of VSI and Newco under this Agreement to consummate the
Merger shall be subject to the satisfaction, or to the waiver by them in the
manner contemplated by Section 11.2 hereof, on or before the Closing Date, of
the following conditions:
SECTION 7.1 Company Representations and Warranties True. The
representations and warranties of the Company contained in this Agreement shall
be true and accurate in all material respects (or, in the case of a
representation or warranty that is, by its terms, qualified as to materiality,
shall be true and accurate in all respects) as of the date when made, and,
except as to representations and warranties (consisting solely of
representations and warranties regarding the number of shares of Company Common
Stock issued and outstanding on the date hereof set forth in Section 2.2 hereof)
which are expressly limited to a state of facts existing at a time prior to the
Closing Date, shall be true and accurate in all material respects (or, in the
case of a representation or warranty that is, by its terms, qualified as to
materiality, shall be true and accurate in all respects) at and as of the
Closing Date as if made on the Closing Date, without giving effect to any funds
received by the Company after December 28, 1996 upon the exercise of any option
or warrant or to the reduction of indebtedness resulting from the conversion of
any promissory note or other instrument convertible into shares of the Company's
capital stock.
SECTION 7.2 Performance of Covenants. The Company shall have performed
and complied in all material respects with each and every covenant, agreement
and condition required by this Agreement to be performed or complied with by the
Company prior to or on the Closing Date.
SECTION 7.3 No Governmental or Other Proceeding or Litigation. No order
of any court or administrative agency shall be in effect which restrains or
prohibits any transaction contemplated hereby or transactions contemplated by
the Inducement Agreements or which would limit or affect VSI's ownership of the
Company or any of its Subsidiaries or of the ABG Assets; no suit, action (other
than the exercise of dissenters' rights), investigation, inquiry or proceeding
by any governmental body or other person or entity shall be pending or
threatened against VSI, Newco or any subsidiary of VSI or the Company, which
challenges the validity or legality, or seeks to restrain the consummation, of
the transactions contemplated hereby or by the Inducement Agreements or which
seeks to limit or otherwise affect VSI's ownership of the Company or any of its
Subsidiaries or of the ABG Assets; and no written advice shall have been
received by VSI, Newco or the Company, or their respective counsel from any
governmental body, and remain in effect, stating that an action or proceeding
will, if the Merger is consummated or sought to be consummated, be filed seeking
to invalidate or restrain the Merger or the transactions contemplated by the
Inducement Agreements or limit or otherwise affect VSI's ownership of the
Company or any of its Subsidiaries or of the ABG Assets.
SECTION 7.4 Approvals and Consents. The approval of the shareholders of
the Company referred to in Section 8.4 hereof, the Scherer Shareholder Approval,
and all approvals of applications to public authorities, Federal, state, or
local, if any, the expiration of all waiting periods under the Hart Scott Rodino
Act and any other applicable law and all consents or approvals of any
non-governmental persons, the granting or expiration of which is necessary for
the consummation of the Merger and the consummation of the transactions
contemplated by this Agreement and the Scherer Inducement Agreements or for
preventing the termination or breach of any material real property lease, right,
privilege, license or agreement of VSI or its subsidiaries or of the Company or
its Subsidiaries or pertaining to the ABG Assets, or which is necessary for
preventing any material loss or disadvantage to VSI and its subsidiaries taken
as a whole or the Company and its Subsidiaries taken as a whole, by reason of
the Merger and the consummation of the transactions contemplated hereby and by
the Inducement Agreements, shall have been obtained; and no such consent or
approval shall have imposed a condition to such consent or approval, and no
condition shall have been imposed in connection with any filings made under the
Hart Scott Rodino Act or under any other law, which condition in the opinion of
VSI is unduly burdensome to the consolidated financial condition or operations
of VSI or to the business of the Company and its subsidiaries taken as a whole.
All conditions required to be satisfied prior to the Effective Time of the
Merger by the terms of such approvals and consents shall have been satisfied;
and all statutory waiting periods applicable to the parties hereto and the
parties to the Inducement Agreements (including without limitation all
applicable waiting periods under the Hart Scott Rodino Act) shall have expired.
SECTION 7.5 Opinion of Counsel. VSI and Newco shall have received an
opinion of LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel to the Company, dated
the Closing Date and addressed to VSI and Newco, in form and substance and
covering such matters as are reasonably agreed to by the parties. LeBoeuf, Lamb,
Greene & MacRae, L.L.P. may rely upon certificates with respect to factual
matters.
SECTION 7.6 Indebtedness. As of the Closing Date, the Company and its
Subsidiaries shall not be indebted with respect to "Debt" (as defined herein) in
an aggregate amount in excess of $6.4 million. For purposes of this Agreement,
the term "Debt" shall mean all amounts owed by the Company and its Subsidiaries
(i) to financial institutions, Scherer and affiliates of Scherer, (ii) on
capital leases, (iii) to the Internal Revenue Service and (iv) to holders of the
Company's 8.0% Notes due March 31, 1999 issued pursuant to Section 3.03 of the
Omnibus Agreement. At the Closing, the Company's chief financial officer shall
have delivered a certificate to VSI specifying the amount of such Debt as of the
Closing Date.
SECTION 7.7 Certificates. The Company shall have furnished VSI with
certificates of the Company, in form and substance satisfactory to VSI, signed
by its president or executive vice president, to the effect that the
representations and warranties of the Company contained in this Agreement are
true and correct in all material respects (or, in the case of representations or
warranties that are, by their terms, qualified as to materiality, are true and
accurate in all respects) on and as of the Closing Date as though such
representations and warranties were made at such time (except as contemplated in
Section 7.1 hereof) and that the Company has complied in all material respects
with all terms, covenants and provisions of this Agreement required to be
complied with by it prior to or on the Closing Date. Scherer shall have
furnished VSI with a certificates of Scherer, in form and substance satisfactory
to VSI, signed by its president or executive vice president, to the effect that
the representations and warranties of Scherer contained in the Scherer
Inducement Agreement are true and correct in all material respects (or, in the
case of representations or warranties that are, by their terms, qualified as to
materiality, are true and accurate in all respects) on and as of the Closing
Date as though such representations and warranties were made at such time and
that Scherer has complied in all material respects with all terms, covenants and
provisions of the Scherer Healthcare Inducement Agreement required to be
complied with by it prior to or on the date of the closings referenced to
therein.
SECTION 7.8 Exchange Agency Agreement. VSI shall have entered into an
agreement, in form and substance satisfactory to VSI, with American Stock
Transfer and Trust Company or another institution satisfactory to VSI, pursuant
to which such institution shall serve as exchange agent for the Merger in
accordance with the terms of this Agreement.
SECTION 7.9 Employment Agreement. The Company, William Thompson
("Thompson") and Scherer shall have entered into an agreement pursuant to which
Thompson's existing employment agreement with the Company (the "Employment
Agreement") shall terminate as of the Effective Time of the Merger and the
Company thereafter shall have no liabilities under the Employment Agreement.
SECTION 7.10 Rights Agreement. The Company shall have amended the
Rights Agreement in such a manner that the execution of this Agreement and the
consummation of the Merger will not cause any of the Rights to become
exercisable with or without the passage of time. Prior to the consummation of
the Closing, no Rights shall have been exercised under the Rights Agreement.
SECTION 7.11 Scherer Matters.
7.11.1 The representations and warranties of Scherer and
Robert Scherer contained in the Inducement Agreements shall be true and accurate
in all material respects (or, in the case of a representation or warranty that
is, by its terms, qualified as to materiality, shall be true and accurate in all
respects) as of the date when made, and shall be true and accurate in all
material respects (or, in the case of a representation or warranty that is, by
its terms, qualified as to materiality, shall be true and accurate in all
respects) at and as of the Closing Date as if made on the Closing Date.
7.11.2 Scherer and Robert Scherer shall have performed and
complied in all material respects with each and every covenant, agreement and
condition required by the Inducement Agreements to be performed or complied with
by such entity or person prior to or on the Closing Date and on the dates of the
closings referred to therein.
7.11.3 Scherer, Robert Scherer and VSI shall have agreed upon
the form and substance of all documents to be executed and delivered at the
closings contemplated by the Inducement Agreements.
SECTION 7.12 Closing Documentation. VSI shall have received such
additional documentation at the Closing as VSI and its counsel may reasonably
require to evidence compliance by the Company with all of their obligations
hereunder and to evidence compliance by Scherer and Robert Scherer with all of
their obligations under the Inducement Agreements.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company under this Agreement to consummate the
Merger shall be subject to the satisfaction, or to the waiver by it in the
manner contemplated by Section 11.2 hereof, on or before the Closing Date of the
following conditions:
SECTION 8.1 Representations and Warranties True. The representations
and warranties of VSI contained in this Agreement shall be true and accurate in
all material respects (or, in the case of a representation or warranty that is,
by its terms, qualified as to materiality, shall be true and accurate in all
respects) as of the date when made, and shall be true and accurate in all
material respects (or, in the case of a representation or warranty that is, by
its terms, qualified as to materiality, shall be true and accurate in all
respects) at and as of the Closing Date as if made on the Closing Date.
SECTION 8.2 Performance of Covenants. VSI and Newco shall have
performed and complied in all material respects with each and every covenant,
agreement and condition required by this Agreement to be performed or complied
with by it prior to or on the Closing Date.
SECTION 8.3 No Governmental or Other Proceedings or Litigation. No
order of any court or administrative agency shall be in effect which restrains
or prohibits any transaction contemplated hereby; no suit, action (other than
the exercise of dissenters' rights), investigation, inquiry or proceeding by any
governmental body or other person or entity shall be pending or threatened
against VSI, Newco or the Company, which challenges the validity or legality, or
seeks to restrain the consummation, of the transactions contemplated hereby; and
no written advice shall have been received by VSI, Newco or the Company or their
respective counsel from any governmental body, and remain in effect, stating
that an action or proceeding will, if the Merger is consummated or sought to be
consummated, be filed seeking to invalidate or restrain the Merger.
SECTION 8.4 Approvals. The Company's shareholders shall have approved
the Merger by the requisite vote under the BCA and the Company's articles of
incorporation, the Scherer Shareholder Approval shall have been obtained, and
all approvals of applications to public authorities, Federal, state or local,
the granting of which is necessary for the consummation of the Merger, shall
have been obtained. All conditions required to be satisfied prior to the
Effective Time of the Merger by the terms of such approvals shall have been
satisfied; and all applicable statutory waiting periods under the Hart Scott
Rodino Act and under all other laws shall have expired.
SECTION 8.5 Opinion of Counsel. The Company shall have received an
opinion of Lowenstein, Sandler, Kohl, Fisher & Boylan, P.C., counsel to VSI,
dated the Closing Date and addressed to the Company, in form and substance and
covering such matters as are reasonably agreed to by the parties. Lowenstein,
Sandler, Kohl, Fisher & Boylan, P.C. may rely upon the written opinion of Krys,
Boyle, Freedman, Scott & Sawyer with respect to matters of Colorado law and upon
certificates with respect to factual matters.
SECTION 8.6 Certificates. VSI and Newco shall have furnished the
Company with certificates of VSI and Newco, respectively, in form and substance
satisfactory to the Company, signed by their respective presidents or executive
vice presidents, to the effect that the representations and warranties of such
corporations contained in this Agreement are true and correct in all material
respects (or, in the case of representations or warranties that are, by their
terms, qualified as to materiality, are true and accurate in all respects) on
and as of the Closing Date as though such representations and warranties were
made at such time and that such corporations have complied in all material
respects with all terms, covenants and provisions of this Agreement required to
be complied with by them prior to or on the Closing Date.
SECTION 8.7 Closing Documentation. The Company shall have received such
additional documentation at the Closing as the Company and its counsel may
reasonably require to evidence compliance by VSI and Newco with all of their
obligations under this Agreement.
ARTICLE IX
CLOSING; CLOSING DATE
Unless this Agreement shall have been terminated and the Merger herein
contemplated shall have been abandoned pursuant to a provision of Article X
hereof, a closing (the "Closing") will be held on a date mutually acceptable to
VSI and the Company as soon as practicable after the latest to occur of (i) the
Special Meeting referred to in Section 4.13 hereof, (ii) the receipt of all
consents and approvals referred to in Sections 7.4 and 8.4 hereof or the waiver
thereof by VSI in the case of consents by private parties, and (iii) the
expiration of all waiting periods referred to in Sections 7.4 and 8.4 hereof, at
the offices of VSI's special Colorado counsel, Krys, Boyle, Freedman, Scott &
Sawyer, at Dominion Plaza, Suite 2700, South Tower, Denver, Colorado, commencing
at 10:00 A.M. At such time, date (the "Closing Date") and place, the documents
referred to in Articles VII and VIII hereof will be exchanged by the parties
and, promptly thereafter, the Articles of Merger will be filed by Newco and the
Company with the Secretary of State of the State of Colorado; provided, however,
that if any of the conditions provided for in Articles VII and VIII hereof shall
not have been met or waived by the date on which the Closing is otherwise
scheduled, then, subject to Section 10.1.4 hereof, the party to this Agreement
which is unable to meet such condition or conditions shall be entitled to
postpone the Closing for a reasonable period of time by notice to the other
parties until such condition or conditions shall have been met (which such
notifying party will seek to cause to happen at the earliest practicable date)
or waived.
ARTICLE X
TERMINATION
SECTION 10.1 Termination and Abandonment. This Agreement may be
terminated and the Merger may be abandoned before the Effective Time of the
Merger, notwithstanding any approval and adoption of this Agreement by the
shareholders of the Company or Newco:
10.1.1 by the mutual written consent of VSI, Newco and the
Company; or
10.1.2 by VSI or the Company, if (w) the shareholders of the
Company fail to approve the Merger at the Special Meeting, (x) the shareholders
of Scherer fail to give the Scherer Shareholder Approval at a meeting of
Scherer's shareholders convened to vote upon the Scherer Shareholder Approval,
(y) the Board of Directors of the Company shall fail to recommend or shall
withdraw or condition its recommendation that the shareholders of the Company
approve this Agreement and the Merger or shall have resolved to do so or (z) the
Board of Directors of Scherer shall fail to recommend or shall withdraw or
condition its recommendation that the shareholders of Scherer give the Scherer
Shareholder Approval or shall have resolved to do so; or
10.1.3 by VSI if there has been a misrepresentation or breach
on the part of the Company in any of the representations or warranties of the
Company set forth herein that are, by their terms, qualified as to materiality,
or if there has been a material misrepresentation or breach on the part of the
Company in any of the representations or warranties of the Company set forth
herein that are not so qualified, or if there has been any material failure on
the part of the Company to comply with its obligations hereunder, or if the
Company's Special Treatment Sales (as defined in Section 2.24.1 hereof) for the
period from December 29, 1996 through the date seven days prior to the Closing
(the "Pre-Closing Date") are less than eighty percent (80%) of the Company's
Special Treatment Sales during the period from the first day of the Company's
fiscal quarter commencing in December 1995 through the date one year prior to
the Pre-Closing Date, or if there has been a misrepresentation or breach on the
part of Scherer or Robert Scherer (collectively, the "Scherer Parties") in any
of the representations or warranties of any of the Scherer Parties set forth in
the Inducement Agreements that are, by their terms, qualified as to materiality,
or if there has been a material misrepresentation or breach on the part of any
of the Scherer Parties in any of the representations or warranties of the
Scherer Parties set forth in the Inducement Agreements that are not so
qualified, or if there has been any material failure on the part of any of the
Scherer Parties to comply with such entity's or such person's obligations under
the Inducement Agreements, or if any of the conditions to VSI's obligation to
consummate the Merger set forth in Article VII or to VSI's obligation to
consummate the transactions contemplated by the Inducement Agreements has not
been satisfied as of the Closing Date, or by the Company if there has been a
misrepresentation or breach on the part of VSI or Newco in any of the
representations or warranties of VSI or Newco set forth herein that are, by
their terms, qualified as to materiality, or if there has been a material
misrepresentation or breach on the part of VSI in any of the representations or
warranties of VSI set forth herein that are not so qualified, or if there has
been any material failure on the part of VSI or Newco to comply with their
respective obligations hereunder, or if any of the conditions to the Company's
obligation to consummate the Merger set forth in Article VIII hereof has not
been satisfied as of the Closing Date; or
10.1.4 by either the Company or VSI, at its discretion, if the
Merger is not effective by July 31, 1997, except that a party whose breach of
this Agreement has caused a delay in the consummation of the Merger shall not be
entitled to terminate this Agreement pursuant to this Section 10.1.4.
SECTION 10.2 Termination Procedures. The power of termination provided
for by this Article X will be effective only after written notice thereof,
signed on behalf of the party for which it is given by its President or other
duly authorized officer, shall have been given to the other parties hereto. If
this Agreement is terminated in accordance with this Article X, then the Merger
shall be abandoned without further action by the Company, VSI and Newco, and
their officers shall not file the Articles of Merger with the Secretary of State
of the State of Colorado.
SECTION 10.3 Liability Upon Termination. In the event of termination of
this Agreement and abandonment of the Merger pursuant to this Article X, no
party hereto shall have any liability or further obligation to any other party
hereto except as follows:
10.3.1 A party that is in breach of its representations or
warranties hereunder shall not be liable for damages incurred by the other
parties hereto as a result of such breach. A party that is in breach of its
covenants hereunder shall be liable for damages incurred by the other parties
hereto only if (i) such breach is a material breach of a material covenant and
(ii) the party asserting such breach gives the breaching party notice of such
breach and such breach is not cured within twenty days thereafter (provided,
however, that if such breach is not reasonably curable within such twenty day
period but is curable prior to the date set forth in Section 10.1.4 hereof, no
party shall be entitled to damages pursuant to this Section 10.3. if the
breaching party diligently seeks to effect such cure and does in fact effect
such cure prior to the date set forth in Section 10.1.4 hereof). If VSI
terminates this Agreement as a result of any such material breach of a covenant
and is entitled to damages pursuant to this Section 10.3.1, the Company shall be
liable to VSI only to the extent that such damages are proximately caused by
such breach. The parties acknowledge that it is not possible to calculate the
damages that the Company would suffer in the event that VSI were to materially
breach any of its material covenants hereunder. Accordingly, if the Company
terminates this Agreement as a result of one or more material breaches of
material covenants by VSI or Newco and is entitled to damages pursuant to this
Section 10.3, the parties hereby agree that the Company shall be entitled to the
sum of $800,000 (and no more) as liquidated damages with respect to such
breaches.
10.3.2 In the event that (x) this Agreement is terminated by
any party pursuant to Section 10.1.2, by VSI pursuant to Section 10.1.3 or by
VSI pursuant to Section 10.1.4, (y) prior to the date on which this Agreement is
terminated (i) an offer is made in any manner contemplating a merger with the
Company, an acquisition of the Company or its assets, a tender or exchange offer
with respect to the Company, a consolidation with the Company, a liquidation of
the Company, a recapitalization of the Company or any other Purchase Event (as
defined below) or Takeover Proposal (as defined in Section 4.2.7 hereof), (ii) a
claim is made that such offer could result in greater value to the Company's
shareholders than the value to be received by them upon consummation of the
Merger and (iii) after such offer is known to the Company or any of its officers
or directors, the shareholders of the Company do not approve the Merger, the
shareholders of Scherer fail to grant the Scherer Shareholder Approval, the
Company breaches any of its obligations hereunder or all of the conditions
precedent described in Article VII hereof are not satisfied, and (z) within
twenty-four months after the termination of this Agreement, a Purchase Event
occurs, the Company shall pay to VSI, no later than the date on which such
Purchase Event occurs, a cash fee equal to $1,500,000. For purposes of this
Agreement, the term "Purchase Event" means any of the following events:
10.3.2.1 Without VSI's prior written consent, the
Company or any of its officers or directors shall have recommended, publicly
proposed or publicly announced an intention to authorize, recommend or propose,
or entered into an agreement with any person (other than VSI or any subsidiary
of VSI) to effect (A) a merger, consolidation or similar transaction involving
the Company or any Subsidiary which would constitute a "significant subsidiary"
within the meaning of Rule 405 of the SEC (a "Significant Subsidiary") (other
than transactions solely between the Company's Subsidiaries that are not
violative of this Agreement), (B) the disposition, by sale, lease, exchange or
otherwise, of the Company or of assets of the Company or any of its Subsidiaries
representing 25% or more of the consolidated assets of the Company and its
Subsidiaries or (C) the issuance, sale or other disposition by the Company of
(including by way of merger, consolidation, share exchange or any similar
transaction) securities representing 25% or more of the voting power of the
Company or any of its Significant Subsidiaries, other than, in the case of (A),
(B) or (C), any merger, consolidation or similar transaction involving the
Company or any of its Subsidiaries in which the voting securities of the Company
outstanding immediately prior thereto continue to represent (by either remaining
outstanding or being converted into the voting securities of the surviving
entity of any such transaction) at least 75% of the combined voting power of the
voting securities of the Company or the surviving entity outstanding immediately
after the consummation of such merger, consolidation, or similar transaction
(provided any such transaction is not violative of this Agreement); or
10.3.2.2 any person (other than Scherer, affiliates
of Scherer, VSI or any subsidiary of VSI) shall have acquired beneficial
ownership (as such term is defined in Rule 13d-3 promulgated under the 1934 Act)
of or the right to acquire beneficial ownership of, or any "group" (as such term
is defined in Section 13(d)(3) of the 1934 Act), other than a group of which
Scherer, subsidiaries of Scherer, VSI or a subsidiary of VSI are the sole
members, shall have been formed which beneficially owns, or has the right to
acquire beneficial ownership of, 25% or more of the voting power of the Company
or any of its Significant Subsidiaries.
10.3.3 Notwithstanding the foregoing, the Company shall not be
obligated to pay the $1,500,000 amount set forth in Section 10.3.2 hereof in the
event that each of the following circumstances occur in the following order:
10.3.3.1 this Agreement is terminated after a public
announcement is made that a specific third-party other than Scherer (such
third-party being hereinafter referred to as the "Potential Acquirer") is
proposing one or more transactions which, if consummated, would constitute a
Purchase Event;
10.3.3.2 subsequent to the termination of this
Agreement, a public announcement is made that the Potential Acquirer no longer
intends to pursue any transactions which would constitute a Purchase Event and,
in fact, the potential purchaser does not pursue a Purchase Event;
10.3.3.3 the Company offers in writing to VSI the
opportunity to enter into an agreement and plan of merger which is, in all
substantial respects (including, without limitation, the nature and amount of
the consideration payable by VSI thereunder), identical to this Agreement and
Scherer and Robert Scherer offer in writing to VSI the opportunity to enter into
agreements which are, in all substantial respects (including, without
limitation, the amounts payable by VSI thereunder), identical to the Inducement
Agreements; and
10.3.3.4 VSI either declines in writing to pursue
such offers or fails to respond to the Company, Robert Scherer and Scherer
within 20 days after receipt of notice given in accordance with Section 11.7
hereof.
10.3.4 In addition, the Company shall not be obligated to pay
the $1,500,000 amount set forth in Section 10.3.2 hereof in the event that each
of the following circumstances occur in the following order:
10.3.4.1 this Agreement is terminated after a public
announcement is made that a Potential Acquirer other than Scherer is proposing
one or more transactions which, if consummated, would constitute a Purchase
Event;
10.3.4.2 subsequent to the termination of this
Agreement, a public announcement is made that the Potential Acquirer no longer
intends to pursue any transactions which would constitute a Purchase Event and,
in fact, the potential purchaser does not pursue a Purchase Event;
10.3.4.3 the Company offers in writing to VSI the
opportunity to enter into an agreement and plan of merger which is, in all
substantial respects (including, without limitation, the nature and amount of
the consideration payable by VSI thereunder), identical to this Agreement and
Scherer and Robert Scherer offer in writing to VSI the opportunity to enter into
agreements which are, in all substantial respects (including, without
limitation, the amounts payable by VSI thereunder), identical to the Inducement
Agreements;
10.3.4.4 the Company and VSI enter into such an
agreement and plan of merger (the "New Agreement") and VSI enters into such
inducement agreements;
10.3.4.5 subsequent to the execution of the New
Agreement, the New Agreement is terminated for reasons that would not give rise
to the payment of any sum by the Company pursuant to the section of the New
Agreement that is analogous to Section 10.3.2 hereof and at a time when Scherer
has made no public announcement of any intention to acquire the Company; and
10.3.4.6 subsequent to such termination of the New
Agreement, Scherer determines to pursue the merger of the Company with Scherer
or a wholly-owned subsidiary of Scherer and such transaction is consummated.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1 Amendment and Modification. To the fullest extent permitted
by applicable law, this Agreement may be amended, modified and supplemented with
respect to any of the terms contained herein by mutual consent of the Company,
VSI and Newco by an appropriate written instrument executed by each of such
parties at any time prior to the Effective Time of the Merger; provided,
however, that following an affirmative vote at the Special Meeting, this
Agreement may not be amended to reduce the consideration payable in the Merger
in respect of shares of Company Common Stock without obtaining the approval of
the Company's shareholders in the manner required by law.
SECTION 11.2 Waiver of Compliance. To the fullest extent permitted by
law, each of VSI, Newco and the Company may, by an instrument in writing, extend
the time for or waive the performance of any of the obligations of the other
parties hereto or waive compliance by the other parties hereto with any of the
covenants, or waive any of the conditions of its obligations, contained herein;
provided, however, that the obtaining of the approval of the Company's
shareholders referred to in Sections 7.4 and 8.4 hereof and the expiration of
all applicable waiting periods under the Hart Scott Rodino Act shall not be
waivable. No such extension of time or waiver shall operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
SECTION 11.3 Survival. The respective representations and warranties of
each party hereto contained herein shall not be deemed to be waived or otherwise
affected by any investigation made by the other parties hereto. None of the
representations or warranties of the parties hereto set forth in Articles II and
III hereof, or in any document furnished pursuant hereto, shall survive the
Merger. The terms and conditions set forth in Sections 10.3, 11.4, 11.5 and 11.6
hereof, as well as this Section 11.3, shall survive any termination of this
Agreement.
SECTION 11.4 No Third Party Rights. Except as otherwise expressly
provided in this Agreement, nothing herein expressed or implied is intended, nor
shall be construed, to confer upon or give any person, firm or corporation,
other than VSI, Newco and the Company and their respective security holders, any
rights or remedies under or by reason of this Agreement.
SECTION 11.5 Confidentiality. VSI and the Company shall honor the
confidentiality agreements previously delivered by each such party to the other
with respect to matters pertaining to the Merger.
SECTION 11.6 Expenses. Each party hereto will bear all expenses incurred
by it in connection with this Agreement and the transactions contemplated
hereby.
SECTION 11.7 Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand or when mailed by
registered or certified mail, postage prepaid, or when given by telex or
facsimile transmission (promptly confirmed in writing), as follows:
(a) If to the Company:
Marquest Medical Products, Inc.
11039 East Lansing Circle
Englewood, Colorado 80112
Attn: William Thompson
Telephone: 800-525-1882, ext. 404
Telecopy: 303-792-5028
with a copy to:
Thomas Moore, Esq.
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
633 Seventeenth Street
Suite 2800
Denver, Colorado 80202
Telephone: 303-291-2644
Telecopy: 303-297-0422
or to such other person as the Company shall designate in writing, such writing
to be delivered to VSI in the manner provided in this Section 11.7;
(b) If to VSI or Newco:
Vital Signs, Inc.
20 Campus Road
Totowa, New Jersey 07512
Attn: Mr. Anthony J. Dimun
Telephone: 201-790-1330, ext. 371
Telecopy: 201-790-3842
with a copy to:
Jay Sturm, Esq.
General Counsel
Vital Signs, Inc.
20 Campus Road
Totowa, New Jersey 07512
Telephone: 201-790-1330, ext. 372
Telecopy: 201-790-3842
and with a copy to:
Peter H. Ehrenberg, Esq.
Lowenstein, Sandler, Kohl,
Fisher & Boylan, P.C.
65 Livingston Avenue
Roseland, New Jersey 07068
Telephone: 201-992-8003
Telecopy: 201-992-5820
or to such other person as VSI shall designate in writing, such writing to be
delivered to the Company in the manner provided in this Section 11.7.
SECTION 11.8 Assignment. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other parties
hereto; provided, however, that Newco may assign this Agreement and its rights,
interests and obligations hereunder to another directly or indirectly
wholly-owned subsidiary of VSI without the consent of the Company.
SECTION 11.9 Governing Law. This Agreement and the legal relations
between the parties hereto shall be governed by and construed in accordance with
the laws of the State of New Jersey.
SECTION 11.10 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts and by the different parties hereto
on separate counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
SECTION 11.11 Headings and References. The headings of the Sections and
Articles of this Agreement are inserted for convenience of reference only and
shall not constitute a part hereof. All references herein to Sections and
Articles are to sections and articles of this Agreement, unless otherwise
indicated.
SECTION 11.12 Entire Agreement. This Agreement (including the
Disclosure Letter and the documents and agreements referred to herein, all of
which form a part hereof), any other document executed by the parties hereto
concurrently herewith, the confidentiality agreements delivered by VSI and the
Company to each other and any other document signed by the parties hereto
referencing this Section 11.12 contain the entire understanding of the parties
hereto in respect of the subject matter contained herein and supersede all prior
agreements and understandings between the parties with respect to such subject
matter.
SECTION 11.13 Publicity. Except as otherwise required by law or the
rules of the Nasdaq Stock Market, so long as this Agreement is in effect,
neither VSI nor the Company shall issue or cause the publication of any press
release with respect to the transactions contemplated by this Agreement without
the consent of the other parties hereto, which consent shall not be unreasonably
withheld or delayed.
SECTION 11.14 General Interpretive Principles. For purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
11.14.1 the terms defined in this Agreement have the meanings
assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other
genders;
11.14.2 accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles;
11.14.3 a reference to a Section or Article without further
reference to Subsections within such Section or without further reference to
Subsections or Sections within such Article shall constitute a reference to all
Subsections within such Section or all Sections and Subsections within such
Article unless the context otherwise expressly indicates;
11.14.4 the words "herein", "hereof", "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular provision;
11.14.5 the term "include" or "including" shall mean without
limitation by reason of enumeration; and
11.14.6 the parties hereto do not intend for this Agreement or
any other document prepared in connection with the Merger to be construed
against the party that drafted this Agreement or such other document merely by
virtue of the fact that such party drafted this Agreement or such other
document.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first written above.
VITAL SIGNS, INC.
By:/s/ Anthony J. Dimun
______________________________
Anthony J. Dimun,
Executive Vice President
VSI ACQUISITION CORPORATION
By:/s/ Anthony J. Dimun
______________________________
Anthony J. Dimun,
Executive Vice President
MARQUEST MEDICAL PRODUCTS, INC.
By:/s/ William Thompson
______________________________
William Thompson, President
Exhibit 2.2
SCHERER HEALTHCARE INDUCEMENT AGREEMENT
This AGREEMENT, dated this 14th day of March, 1997, by and between
SCHERER HEALTHCARE, INC., a Delaware corporation having its principal place of
business at 2589 Paces Ferry Road, Suite 300, Atlanta, Georgia ("Scherer
Healthcare"), VITAL SIGNS, INC., a New Jersey corporation having its principal
place of business at 20 Campus Road, Totowa, New Jersey ("VSI"), and MARQUEST
MEDICAL PRODUCTS, INC., a Colorado corporation having its principal place of
business at 11039 East Lansing Circle, Englewood, Colorado ( "Marquest"),
WITNESSETH THAT
WHEREAS, Scherer Healthcare is the principal shareholder of Marquest;
WHEREAS, contemporaneously with the execution of this Agreement,
Marquest and VSI have entered into an agreement of even date herewith pursuant
to which VSI will acquire Marquest by means of a cash merger (the "Merger
Agreement");
WHEREAS, Scherer Healthcare is the owner of warrants to purchase
through March 31, 1999 up to 1,530,000 shares of Marquest's common stock, no par
value (the "Marquest Common Stock"), at a purchase price of $.75 per share (the
"First ABG Warrants"), which First ABG Warrants were granted to Scherer
Healthcare pursuant to an omnibus agreement, dated April 12, 1993, between
Marquest and Scherer Healthcare (the "Omnibus Agreement");
WHEREAS, Scherer Healthcare is the owner of warrants to purchase
through March 31, 2003 up to 4,250,000 shares of Marquest Common Stock at a
purchase price of $.75 per share (the "Second ABG Warrants"), which Second ABG
Warrants were granted to Scherer Healthcare pursuant to the Omnibus Agreement;
WHEREAS, Scherer Healthcare is the owner of warrants to purchase
through March 31, 1999 up to 800,000 shares of Marquest Common Stock at an
exercise price of $.75 per share (the "Current Warrants"), which Current
Warrants were granted to Scherer Healthcare pursuant to a warrant agreement
dated April 12, 1993;
WHEREAS, Scherer Healthcare has indicated that it will not vote its
shares of Marquest Common Stock in favor of the Merger Agreement and the
transactions contemplated thereby unless the shareholders of Scherer Healthcare
authorize Scherer Healthcare to take such action and to effect the transactions
contemplated hereby (such authorization being hereinafter referred to as the
"Scherer Shareholder Approval");
WHEREAS, pursuant to the Omnibus Agreement, Scherer Healthcare
purchased from Marquest the "ABG Purchased Assets" (as defined in the Omnibus
Agreement) and then agreed to lease and license the ABG Purchased Assets back to
Marquest pursuant to an "Equipment Lease" (as defined in the Omnibus Agreement)
and a "License of Intangible Property" (as defined in the Omnibus Agreement);
WHEREAS, pursuant to the Omnibus Agreement, Scherer Healthcare has
granted to Marquest a "Repurchase Option" (as defined in the Merger Agreement)
that grants to Marquest the right to repurchase the ABG Purchased Assets and
"Improvements" (as defined in the License of Intangible Property) from Scherer
Healthcare in exchange for a cash exercise price (the "Exercise Price");
WHEREAS, Scherer Healthcare desires to sell its rights in the ABG
Purchased Assets and the Improvements in exchange for a payment equal to the
Exercise Price;
WHEREAS, upon consummation of the closing described in the Merger
Agreement, VSI is willing to purchase the ABG Purchased Assets and the
Improvements from Scherer Healthcare, subject to the Equipment Lease, the
License of Intellectual Property and the Repurchase Option, for a purchase price
equal to the Exercise Price and in accordance with the terms set forth herein,
provided that Scherer Healthcare agrees to execute the covenant against
competition described herein;
WHEREAS, Scherer Healthcare is prepared to execute such covenant
against competition, provided that it receives suitable compensation therefor;
and
WHEREAS, VSI will pay such compensation provided for herein in
accordance with the terms set forth herein, provided that Scherer Healthcare
agrees to the terms set forth herein,
NOW THEREFORE, in consideration of the mutual covenants set forth
herein, the parties hereto hereby agree as follows:
1. Certain Definitions. All capitalized terms set forth herein that are
not defined herein shall have the definitions set forth in the Merger Agreement.
2. Scherer Healthcare's Representations. Scherer Healthcare hereby
warrants and represents to VSI as follows:
2.1 Scherer Healthcare is a Delaware Corporation. Under
Delaware law and Scherer Healthcare's certificate of incorporation and by-laws,
the affirmative vote of a majority of Scherer Healthcare's outstanding shares of
Common Stock will be sufficient in order for the shareholders of Scherer
Healthcare to give the Scherer Shareholder Approval.
2.2 The Board of Directors of Scherer Healthcare has approved
resolutions, certified copies of which shall promptly be provided to VSI, (i)
authorizing Scherer Healthcare to vote Scherer Healthcare's shares of Marquest
Common Stock in favor of the Merger Agreement, subject to the receipt by the
Board of Directors of Marquest of the opinion of Hanifen, Imhoff Inc. as to the
fairness of the transactions contemplated by the Merger Agreement, from a
financial point of view, to the stockholders of record of Marquest (the
"Marquest Opinion") and the receipt by the Board of Directors of Scherer
Healthcare of the opinion of Summit Investment Corporation as to the fairness of
the transactions contemplated by the Merger Agreement and the transactions
contemplated hereby, from a financial point of view, to the stockholders of
record of Scherer Healthcare (the "Scherer Healthcare Opinion"), in the case of
the Marquest Opinion as of the date hereof and in the case of the Scherer
Healthcare Opinion as of the date hereof and as of the date of the meeting at
which Scherer Healthcare's shareholders will vote on such matters, (ii)
recommending that Scherer Healthcare's shareholders vote in favor of the Merger
Agreement and the transactions contemplated hereby and (iii) submitting such
matters to Scherer Healthcare's shareholders for their approval.
2.3 The execution, delivery and performance of this Agreement
by Scherer Healthcare (A) are within the legal capacity and power of Scherer
Healthcare; (B) have been duly authorized by all requisite corporate action on
the part of Scherer Healthcare, other than shareholder approval; and (C) require
the approval or consent of, or filing with, no persons, entities or agencies
other than (i) the Scherer Shareholder Approval, (ii) approval of certain
transactions contemplated by this Agreement and the Merger Agreement pursuant to
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and (iii) any filings
required to effect the transfer of intangible assets pursuant to this Agreement.
2.4 Scherer Healthcare has reviewed the warranties and
representations made by Marquest to VSI in the Merger Agreement. Scherer
Healthcare has no actual knowledge that any of such warranties and
representations are inaccurate in any material respect. Scherer Healthcare shall
promptly notify VSI in writing (in the manner in which Marquest is required to
notify VSI pursuant to the Merger Agreement) if, between the date hereof and the
earlier of the Effective Time of the Merger and the date on which the Merger
Agreement terminates, Scherer Healthcare discovers that any of its
representations and warranties herein are inaccurate in any material respect. It
is understood that (i) this Section 2.4 shall not survive the consummation of
the Merger, (ii) Scherer Healthcare shall not be liable for monetary damages in
the event that this Section 2.4 is inaccurate in any respect and (iii) VSI's
sole right in the event that it determines that this Section 2.4 is materially
inaccurate either at the time that this Agreement is executed or as of the time
of the closings described herein shall be for VSI to assert its rights under the
Merger Agreement to terminate the Merger Agreement (in which case the
transactions contemplated hereby will not be consummated). It is further
understood that the "actual knowledge of Scherer Healthcare" shall be deemed to
be the actual knowledge of only Robert P. Scherer, Jr. and Amy Murphy.
2.5 Scherer Healthcare owns 4,778,941 shares of Marquest
Common Stock free and clear of any security interests, consignments, liens,
judgments, encumbrances, restrictions, or claims of any kind and 2,432,251
shares of Marquest Common Stock which have been pledged by Scherer Healthcare
pursuant to the terms of the Amended and Restated Non-Negotiable Note dated as
of January 17, 1997 from Scherer Healthcare to Scherer Capital Company L.L.C.
and the related Amended and Restated Stock Pledge Agreement (the "Pledge
Agreements"), which Pledge Agreements have been assigned by Scherer Capital
Company L.L.C. to the four adult children of Robert P. Scherer, Jr.
2.6 The execution, delivery and performance of this Agreement
by Scherer Healthcare neither violates nor constitutes a default under, nor
creates a lien or breach under, the terms of the certificate of incorporation
and by-laws of Scherer Healthcare or of any material agreement, document or
instrument binding upon Scherer Healthcare. This Agreement is a legal, valid and
binding obligation of Scherer Healthcare enforceable against Scherer Healthcare
in accordance with its terms, except insofar as the enforcement thereof may be
limited by bankruptcy, insolvency, moratorium or similar laws affecting the
enforcement of creditors' rights generally and subject to equitable principles
limiting the availability of equitable remedies.
2.7 If the Closing and the Effective Time of the Merger were
to occur on the date hereof and, immediately after the Effective Time of the
Merger, the Repurchase Option were exercised, the aggregate amount of the
Exercise Price payable by such designee upon such exercise would be $5,535,000.
2.8 Scherer Healthcare has all of the right, title and
interest in and to all of the ABG Purchased Assets and Improvements described in
Schedule 2.8 hereof (the "Scheduled Assets") that it acquired from Marquest upon
Scherer's original acquisition of such assets pursuant to the Omnibus Agreement.
Scherer Healthcare has not granted to any third-party any security interest,
pledge or encumbrance with respect to any of the Scheduled Assets. Scherer
Healthcare does not have any ownership interest in any ABG Purchased Assets or
any Improvements other than the Scheduled Assets.
2.9 Scherer Healthcare has extended the exercise period of the
Repurchase Option through June 15, 1999 on the terms set forth in the Omnibus
Agreement as originally executed by the parties to the Omnibus Agreement.
2.10 The factual representations regarding Scherer Healthcare
and its equity interests in Marquest set forth in the "WHEREAS" clauses herein
are accurate in all material respects.
2.11 There are 4,314,223 shares of the Common Stock, par value
$.01 per share, of Scherer Healthcare (the "Scherer Healthcare Common Stock")
outstanding on the date hereof. Scherer Healthcare is obligated to issue a total
of an additional 218,056 shares of Scherer Healthcare Common Stock pursuant to
outstanding exercisable stock options, warrants, convertible securities and
other contractual arrangements entitling third-parties to acquire shares of
Scherer Healthcare Common Stock. There are no classes of capital stock of
Scherer Healthcare entitled to vote with respect to the Scherer Shareholder
Approval other than the Scherer Healthcare Common Stock.
3. Scherer Healthcare's Covenants. Scherer Healthcare hereby covenants
and agrees with VSI as follows:
3.1 Scherer Healthcare will not exercise the first ABG
Warrants, the Second ABG Warrants or the Current Warrants at any time on or
before the earlier of the Effective Time of the Merger or the date of the
termination of the Merger Agreement.
3.2 Intentionally omitted.
3.3 Promptly after this Agreement is executed, Scherer
Healthcare will cooperate with VSI in preparing a proxy statement (describing a
proposal to grant the Scherer Shareholder Approval)) for filing with the
Securities and Exchange Commission (the "SEC") and ultimately for mailing to
Scherer Healthcare's shareholders (the "Proxy Statement"). Scherer Healthcare
shall not file the Proxy Statement preliminarily or in final form unless and
until VSI consents to such filings. VSI shall not unreasonably withhold or delay
any such consent. Scherer Healthcare represents and warrants to VSI that the
Proxy Statement will comply in all material respects with the Securities
Exchange Act of 1934 and the rules and regulations promulgated thereunder, that
the Proxy Statement will not contain any untrue statements of material fact
regarding Scherer Healthcare and will not omit to state any material fact
regarding Scherer Healthcare required to be stated therein or necessary to make
the statements therein not misleading. Scherer Healthcare will promptly advise
VSI in writing if at any time prior to the Effective Time of the Merger it shall
obtain knowledge of any facts that might reasonably be expected to make it
necessary or appropriate to amend or supplement the Proxy Statement in order to
make the statements contained or incorporated by reference therein not
misleading or to comply with applicable law. After VSI consents to the mailing
of the Proxy Statement and all necessary SEC filing requirements have been
satisfied, Scherer Healthcare shall mail the Proxy Statement to its shareholders
in accordance with all applicable federal and state securities laws and, subject
to the exercise by the members of Scherer Healthcare's Board of Directors of
their fiduciary duties, shall use its reasonable best efforts to solicit proxies
in favor of the Scherer Shareholder Approval.
3.4 Scherer Healthcare shall call a special meeting of its
shareholders (the "Scherer Healthcare Meeting"), to be held as soon as
practicable after the Proxy Statement is mailed to Scherer Healthcare's
shareholders, for the purpose of seeking the Scherer Shareholder Approval from
the shareholders of Scherer Healthcare. In connection with the Scherer
Healthcare Meeting, the members of Scherer Healthcare's Board of Directors shall
recommend that Scherer Healthcare's shareholders grant the Scherer Shareholder
Approval, subject to the exercise by the members of Scherer Healthcare's Board
of Directors of their fiduciary duties.
3.5 Prior to the Effective Time of the Merger or the date on
which the Merger Agreement is terminated, Scherer Healthcare will not sell,
dispose, pledge, encumber or otherwise transfer any shares of Marquest Common
Stock; provided, however, that this Section 3.5 shall not preclude Scherer
Healthcare from pledging or transferring any of its shares of Marquest Common
Stock (i) pursuant to the requirements of the Pledge Agreements or (ii) to a
transferee (a "Scherer Permitted Transferee") if, prior to such pledge or
transfer, the Scherer Permitted Transferee executes an agreement, in form and
substance reasonably satisfactory to VSI, to vote such shares in favor of the
Merger and Merger Agreement.
3.6 If Scherer Healthcare's shareholders approve the Merger
Agreement and the transactions contemplated thereby and receive an updated
Scherer Opinion as of the date of the Scherer Healthcare Meeting, Scherer
Healthcare shall vote all of the shares of Marquest Common Stock that it owns in
favor of the Merger and the Merger Agreement..
3.7 Intentionally omitted.
3.8 Until the earlier of the Effective Time of the Merger and
the termination of the Merger Agreement, Scherer Healthcare shall, assuming that
it has an ability to pay, honor all of its obligations under the Pledge
Agreements.
4. Sale of the Scheduled Assets.
4.1 Marquest hereby consents to the sale of the Scheduled
Assets and the assignment of the Equipment Lease and License of Intellectual
Property by Scherer Healthcare pursuant to this Section 4 and acknowledges that
if it exercises the Repurchase Option subsequent to such sale, Marquest's rights
shall be to purchase the applicable assets from the purchaser of the Scheduled
Assets hereunder. Scherer Healthcare acknowledges that upon consummation of the
closing described in Section 4.3 hereof, Scherer Healthcare shall have no right
to acquire shares of Marquest's Common Stock pursuant to Section 2.05 of the
Omnibus Agreement.
4.2 During the week immediately prior to the Closing under the
Merger Agreement, Scherer Healthcare and VSI shall cooperate in calculating the
Exercise Price.
4.3 Provided that the conditions set forth in Section 4.4
hereof have been satisfied, then immediately after Scherer Healthcare and VSI
determine that the Merger is effective under Colorado law, Scherer Healthcare
and VSI shall conduct a closing (the "Scheduled Assets Closing") at the same
location as the location of the Closing under the Merger Agreement. Provided
that the conditions set forth in Section 4.4 hereof have been satisfied, at the
Scheduled Assets Closing:
4.3.1 VSI or a designee of VSI (for purposes hereof,
either such entity being referred to herein as the "Purchaser") shall purchase
from Scherer Healthcare, and Scherer Healthcare shall sell to the Purchaser, the
Scheduled Assets, at a price equal to the Exercise Price as of the date of the
Scheduled Assets Closing (such price being hereinafter referred to as the
"Closing Exercise Price") and in accordance with the terms set forth herein.
Scherer Healthcare shall assign to the Purchaser all of Scherer Healthcare's
rights as the lessor under the Equipment Lease and as the licensor under the
License of Intangible Property, and VSI shall assume all of Scherer Healthcare's
obligations as lessor under the Equipment Lease and licensor under the License
of Intangible Property, all pursuant to the terms of an assignment and
assumption agreement in form and substance reasonably satisfactory to VSI and
Scherer Healthcare.
4.3.2 Payment of the Closing Exercise Price shall be
by means of a certified or bank cashier's check payable to Scherer Healthcare.
4.3.3 Scherer Healthcare will transfer all of the
Scheduled Assets to the Purchaser by delivering to the Purchaser all such assets
and by evidencing such conveyance with a bill of sale and general assignment in
the form of the bill of sale and general assignment dated June 15, 1993 and
delivered by Marquest pursuant to the Omnibus Agreement and such other forms of
conveyance as either would be required by Section 3 of the Omnibus Agreement if
Marquest were exercising the Repurchase Agreement or as are reasonably requested
by the Purchaser to confer upon the Purchaser the same title to the Scheduled
Assets as Scherer Healthcare holds immediately prior to the Scheduled Assets
Closing. Scherer Healthcare will transfer such assets to such entity free and
clear of any security interests, pledges, encumbrances or restrictions that
Scherer Healthcare may have created. Thereafter, Scherer Healthcare shall
reasonably cooperate with the Purchaser in furnishing to the Purchaser such
further instruments as the Purchaser shall reasonably request to affirm the
Purchaser's ownership of such assets free and clear of all such security
interests, pledges, encumbrances and restrictions. SCHERER HEALTHCARE MAKES NO
REPRESENTATIONS, PROMISES, STATEMENTS, OR WARRANTIES, EXPRESSED OR IMPLIED, WITH
RESPECT TO THE MERCHANTABILITY, SUITABILITY, OR FITNESS FOR ANY PURPOSE OF THE
SCHEDULED ASSETS AND MAKES NO REPRESENTATION THAT SCHEDULED ASSETS ARE IN
COMPLIANCE WITH ANY APPLICABLE LAW, ORDINANCE OR OTHER GOVERNMENTAL REGULATION.
VSI agrees on behalf of itself, and on behalf of the Purchaser if VSI is not the
Purchaser, that on and after the date of the Scheduled Assets Closing, Scherer
Healthcare shall not be liable to VSI, the Purchaser or Marquest for any loss,
claim, demand, liability, cost, damage, or expense of any kind, caused or
alleged to be caused, directly or indirectly, by the condition of the Scheduled
Assets, or by any inadequacy thereof for any purpose, or by any defects therein
or in the use or maintenance thereof, or by any damage whatsoever and whosoever
caused other than damages resulting from Scherer Healthcare's failure to
transfer its ownership interest in the Scheduled Assets in the manner described
herein. VSI agrees on behalf of itself, and on behalf of the Purchaser if VSI is
not the Purchaser, that its obligations hereunder shall not in any way be
affected by any defect in the condition or failure of performance of the
Scheduled Assets. IN NO EVENT SHALL SCHERER HEALTHCARE HAVE ANY LIABILITY ON AND
AFTER THE DATE OF THE SCHEDULED ASSETS CLOSING FOR, NOR SHALL VSI, PURCHASER OR
MARQUEST HAVE ANY REMEDY ON AND AFTER THE DATE OF THE SCHEDULED ASSETS CLOSING
AGAINST SCHERER HEALTHCARE FOR, ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES, ANY
LOSS OF PROFITS OR SAVINGS, LOSS OF USE, OR ANY OTHER COMMERCIAL LOSS OF
WHATEVER NATURE ARISING FROM THE SALE OF THE SCHEDULED ASSETS.
4.3.4 Scherer Healthcare shall execute and deliver to
the Purchaser a covenant against competition in the form and substance of the
covenant against competition annexed hereto as Exhibit A.
4.3.5 In consideration for Scherer Healthcare's
executing such covenant against competition, VSI (or, if VSI is not the
Purchaser, VSI shall cause the Purchaser to) deliver to Scherer Healthcare its
certified check or a bank cashier's check in an amount equal to the amount by
which five million eight hundred and sixty thousand dollars ($5,860,000) exceeds
the Closing Exercise Price.
4.3.6 At the Scheduled Assets Closing, (i) Scherer
Healthcare shall deliver to Marquest a release, in form and substance reasonably
satisfactory to VSI and Marquest, pursuant to which Scherer shall release
Marquest from all of its obligations to provide indemnification to Scherer
Healthcare under the Equipment Lease and the License of Intangible Property and
from all of Marquest's other obligations to Scherer Healthcare arising pursuant
to the Omnibus Agreement and the agreements executed pursuant thereto and (ii)
VSI shall deliver to Scherer Healthcare an agreement, in form and substance
reasonably satisfactory to Scherer Healthcare, pursuant to which VSI shall
provide to Scherer Healthcare the indemnification provided (prior to such
release) to Scherer Healthcare under Sections 12, 13 and 14 of the License of
Intangible Property and Section 5 of the Equipment Lease; provided, however,
that the agreement furnished by VSI to Scherer Healthcare pursuant to this
Section 4.3.6 shall expressly state that the aggregate liability that VSI and
its subsidiaries (including Marquest after the Scheduled Assets Closing) shall
have to Scherer pursuant to such agreement shall not exceed two million dollars
($2,000,000) with respect to matters unrelated to the Terumo litigation
referenced in the Disclosure Letter and shall not exceed four million dollars
($4,000,000) with respect to matters related to the Terumo litigation referenced
in the Disclosure Letter, less in each such case (i.e., the $2,000,000
limitation and the $4,000,000 limitation) the attorneys' and experts' fees and
disbursements incurred by VSI and its subsidiaries subsequent to the Scheduled
Assets Closing reasonably allocable to matters undertaken on behalf of Scherer
Healthcare. It is understood that there will be no allocation of such fees and
expenses to Scherer Healthcare with respect to a matter if Scherer Healthcare is
not a party to such matter.
4.4 Notwithstanding any provision herein to the contrary, the
obligations of the parties hereto to consummate the Scheduled Assets Closing are
conditioned upon satisfaction of the following conditions:
4.4.1 The Merger shall have been consummated and
Scherer Healthcare and VSI shall have determined that the Merger is effective
under Colorado law.
4.4.2 All approvals required by law in order for
Scherer Healthcare and VSI to consummate the Scheduled Assets Closing (the "Sale
Approvals") shall have been obtained. VSI and Scherer Healthcare shall use their
respective best efforts to obtain all such Sale Approvals.
4.4.3 Each of Scherer Healthcare's representations
set forth in this Agreement shall have been true in all material respects when
made and (with the exception of the representation set forth in Section 2.7
hereof) shall be true in all material respects as of the date of the Scheduled
Assets Closing.
4.4.4 VSI shall not have discovered that Scherer
Healthcare shall have taken any action or omitted to take any action between the
date hereof and the Scheduled Assets Closing which will materially adversely
affect the title in and to the Scheduled Assets which the Purchaser will acquire
upon consummation of the Scheduled Assets Closing.
5. Cashless Exercise of Warrants. If the Merger is consummated, then
immediately after the Effective Time of the Merger, (i) Scherer Healthcare shall
tender the Current Warrants, the First ABG Warrants and the Second ABG Warrants
to VSI or the Exchange Agent and shall deliver to VSI or the Exchange Agent any
letter of transmittal reasonably requested by VSI and (ii) VSI shall, upon
receipt of such tender, deliver or cause the Exchange Agent to deliver to
Scherer Healthcare a check in an amount equal to the "Excess Amount" (as defined
herein) multiplied by the number of shares of Marquest Common Stock covered by
the First ABG Warrants, Second ABG Warrants and Current Warrants so tendered.
For purposes of this Agreement, the term "Excess Amount" shall mean the amount
by which the "Purchase Price" (as such term is defined in the Merger Agreement)
exceeds seventy-five cents ($.75). Thereafter, Scherer Healthcare shall have no
rights with respect to the First ABG Warrants, Second ABG Warrants or Current
Warrants other than to receive payment therefor in accordance with this Section
5.
6. VSI's Representations. VSI hereby warrants and represents as
follows:
6.1 The execution, delivery and performance of this Agreement
by VSI (A) are within the legal capacity and power of VSI; (B) have been duly
authorized by all requisite corporate action on the part of VSI; and (C) require
the approval or consent of, or filing with, no persons, entities or agencies
other than (i) approval of certain transactions contemplated by this Agreement
and the Merger Agreement pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1986 and approvals of the type required by VSI to consummate
the Merger Agreement and (ii) any filings required to effect the transfer of
intangible assets pursuant to this Agreement.
6.2 The, execution, delivery and performance of this Agreement
by VSI neither violates nor constitutes a default under, nor creates a lien or
breach under, the terms of the certificate of incorporation and by-laws of VSI
or, subject to the receipt of any necessary approvals, of any material
agreement, document or instrument binding upon VSI. This Agreement is, and the
indemnification agreement referenced in Section 4.3.6 will be, a legal, valid
and binding obligation of VSI enforceable against VSI in accordance with its
terms, except insofar as the enforcement thereof may be limited by bankruptcy,
insolvency, moratorium or similar laws affecting the enforcement of creditors'
rights generally and subject to equitable principles limiting the availability
of equitable remedies.
7. VSI's Covenants With Respect to the Proxy Statement. Promptly after
this Agreement is executed, VSI will cooperate with Scherer Healthcare in
preparing the Proxy Statement. VSI shall not unreasonably withhold or delay any
consent requested by Scherer Healthcare pursuant to Section 3.3 hereof. VSI
represents and warrants to Scherer Healthcare that the information to be
supplied by VSI to Scherer Healthcare for the Proxy Statement with respect to
VSI (excluding Marquest) will not contain any untrue statements of material fact
and will not omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. VSI will promptly
advise Scherer Healthcare in writing if at any time prior to the Effective Time
of the Merger it shall obtain knowledge of any facts that might reasonably be
expected to make it necessary or appropriate to amend or supplement the Proxy
Statement in order to make the statements contained or incorporated by reference
therein not misleading or to comply with applicable law.
8. Repurchase Option. Scherer and Marquest hereby confirm to VSI that
the Repurchase Option has been extended until June 15, 1999 upon the terms
originally set forth in the Omnibus Agreement.
9. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand or when mailed by registered or certified
mail, postage prepaid, or when given by telex or facsimile transmission
(promptly confirmed in writing), as follows:
(a) If to Scherer Healthcare, to:
Scherer Healthcare, Inc.
2589 Paces Ferry Road
Suite 300
Atlanta, Georgia 30339
Telephone: 770-333-0066
Telecopy: 770-333-0068
with a copy to:
David M. Calhoun, Esq.
Long Aldridge Norman LLP
Suite 5300
One Peachtree Center
303 Peachtree Street
Atlanta, Georgia 30308
Telephone: 404-527-4947
Telecopy: 404-527-4198
or to such other persons as Scherer Healthcare shall designate in writing, such
writing to be delivered to VSI in the manner provided in this Section 9;
(b) If to VSI, to:
Vital Signs, Inc.
20 Campus Road
Totowa, New Jersey 07512
Attn: Mr. Anthony J. Dimun
Telephone: 201-790-1330, ext. 371
Telecopy: 201-790-3842
with a copy to:
Jay Sturm, Esq.
General Counsel
Vital Signs, Inc.
20 Campus Road
Totowa, New Jersey 07512
Telephone: 201-790-1330, ext. 372
Telecopy: 201-790-3842
and with a copy to:
Peter H. Ehrenberg, Esq.
Lowenstein, Sandler, Kohl,
Fisher & Boylan, P.C.
65 Livingston Avenue
Roseland, New Jersey 07068
Telephone: 201-992-8700
Telecopy: 201-992-5820
or to such other persons as VSI shall designate in writing, such writing to be
delivered to Scherer Healthcare in the manner provided in this Section 9.
10. Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties
hereto.
11. Governing Law. This Agreement and the legal relations between the
parties hereto shall be governed by and construed in accordance with the laws of
the State of Delaware.
12. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts and by the different parties hereto on separate
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13. Headings and References. The headings of the Sections of this
Agreement are inserted for convenience of reference only and shall not
constitute a part hereof. All references herein to Sections are to sections of
this Agreement, unless otherwise indicated.
14. Interpretation. The parties hereto do not intend for this Agreement
to be construed against the party that drafted this Agreement merely by virtue
of the fact that such party drafted this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date set forth above.
SCHERER HEALTHCARE, INC.
By: /s/ Robert P. Scherer, Jr.
__________________________
Robert P. Scherer, Jr.
Chief Executive Officer
VITAL SIGNS, INC.
By: /s/Anthony J. Dimun
___________________________
Anthony J. Dimun, Executive
Vice President
MARQUEST MEDICAL PRODUCTS, INC.
By:/s/William Thompson
___________________________
William Thompson, President
EXHIBIT 99.1
NEWS RELEASE
FOR IMMEDIATE RELEASE
VITAL SIGNS, INC.,
MARQUEST MEDICAL PRODUCTS, INC. AND SCHERER HEALTHCARE, INC.
ANNOUNCE THE SIGNING OF A DEFINITIVE MERGER AGREEMENT
TOTOWA, NEW JERSEY, ENGLEWOOD, COLORADO and ATLANTA, GEORGIA, March 14,
1997 -- VITAL SIGNS, INC. (NASDAQ: VITL), MARQUEST MEDICAL PRODUCTS, INC.
(NASDAQ: MMPI) and SCHERER HEALTHCARE, INC. (NASDAQ: SCHR) announced today that
Vital Signs and Marquest have executed a definitive merger agreement providing
for Vital Signs to acquire Marquest. In the transaction, Marquest would become a
wholly-owned subsidiary of Vital Signs and Vital Signs would pay Marquest
shareholders $0.797 per share for each outstanding share of Marquest common
stock. Separately, Vital Signs entered into an agreement with Scherer
Healthcare, which is the majority shareholder of Marquest, to acquire for cash
certain product rights previously sold by Marquest to Scherer. The aggregate
cash payments to Marquest's shareholders will be approximately $12.6 million.
The payment to Scherer Healthcare and related parties with respect to the
acquisition of product rights and certain covenants against competition will be
$6 million. These transactions are subject to certain approvals by the
shareholders of Marquest and Scherer Healthcare, and to other standard
conditions. Closing of these transactions is planned to take place in June,
1997.
Additionally Vital Signs entered into a two year distribution agreement
effective March 14, 1997 to distribute Marquest's products through the Vital
Signs sales force on a national basis. Under this agreement Vital Signs will
have the right to sell Marquest products to all hospitals in the United States
except for relationships where Marquest sells under a private label or as an OEM
supplier.
Terry Wall, President and Chief Executive Officer of Vital Signs stated:
"We are excited about the opportunities that this acquisition presents to Vital
Signs. The combination of Marquest's established product line within the
anesthesia, respiratory and critical care market and Vital Signs' highly focused
direct sales force is the compelling logic for our acquisition. The merger of
Vital Signs and Marquest is our first significant steps towards consolidating
the anesthesia, respiratory and critical care elements of the healthcare market.
Marquest's strong product line in respiratory should enable Vital Signs to be an
attractive partner for national group purchasing organizations, integrated
health networks and investor owned hospitals. In addition, the Marquest product
line will complement our expanding international sales."
Bill Thompson, President and Chief Operating Officer of Marquest and
President of Scherer Healthcare, commented: "The merger is beneficial to the
shareholders of Marquest as it recognizes the value of the Marquest business
which Marquest could not develop alone due to resource limitations. The Marquest
product line will benefit from the additional resources that will be available
through Vital Signs which will ultimately enhance customer satisfaction and
distribution in the marketplace. Vital Signs should immediately benefit from
Marquest's diversified products, providing Vital Signs with an expanded and
enhanced product offering."
The statements in this press release regarding the timing of the closing
and post-closing performance constitute Forward-Looking Statements under the
Private Securities Litigation Reform Act of 1995. Actual results may differ
materially from the companies' expectations as a result of a number of factors,
including the time required to obtain the necessary approvals, market
conditions, competitive responses and the degree to which Vital Signs is able to
successfully integrate the two companies.
Vital Signs, Inc. and its subsidiaries design, manufacture and market
single-use medical products for anesthesia and critical care, achieving the
number one market share position in six of eight major product categories and
second in the other two categories. For the third time in five years, the
Company was recognized by Forbes magazine as one of "The 200 Best Small
Companies in America". Vital Signs is distinguished as one of a select number of
medical device firms to have received ISO 9001 certification.
Scherer Healthcare provides healthcare products and services, including
medical waste management services and consumer healthcare products.
FOR FURTHER INFORMATION, CONTACT: Terence D. Wall, President, Vital Signs, Inc.
or
Tony Dimun, Chief Financial Officer,
Vital Signs, Inc. (201) 790-1330
EXHIBIT 99.2
ROBERT SCHERER INDUCEMENT AGREEMENT
This AGREEMENT, dated this 14th day of March, 1997, is given by ROBERT
P. SCHERER, JR., a Georgia resident ("Scherer"), to VITAL SIGNS, INC., a New
Jersey corporation having its principal place of business at 20 Campus Road,
Totowa, New Jersey ("VSI"),
WITNESSETH THAT
WHEREAS, Scherer is the principal shareholder of Scherer Healthcare,
Inc. ("Scherer Healthcare");
WHEREAS, Scherer Healthcare is the principal shareholder of Marquest
Medical Products, Inc. ("Marquest");
WHEREAS, Marquest is in the process of negotiating an agreement with
VSI pursuant to which VSI would acquire Marquest by means of a cash merger (the
"Merger Agreement");
WHEREAS, Scherer is the owner of a promissory note of Marquest in the
principal amount of $700,000, which promissory note is convertible into a total
of 1,000,000 shares of Marquest Common Stock (the "Promissory Note");
WHEREAS, Scherer Healthcare has indicated that it will not vote its
shares of Marquest Common Stock in favor of the Merger Agreement, the merger
contemplated thereby (the "Merger") and the other transactions contemplated by
the Merger Agreement unless the shareholders of Scherer Healthcare authorize
Scherer Healthcare to take such action and a related action involving the sale
of a product line by Scherer Healthcare to VSI (such authorization being
hereinafter referred to as the "Scherer Shareholder Approval");
WHEREAS, VSI has advised Scherer that VSI will not enter into the
Merger Agreement unless Scherer executes and delivers this Inducement Agreement;
WHEREAS, Scherer desires to induce VSI to enter into the Merger
Agreement and acknowledges that VSI will rely upon this Inducement Agreement in
entering into the Merger Agreement; and
WHEREAS, contemporaneous with the execution of this Agreement, it is
contemplated that Scherer Healthcare, Marquest and VSI will enter into an
agreement, captioned the "Scherer Healthcare Inducement Agreement" (the "Scherer
Healthcare Inducement Agreement"), pursuant to which the parties thereto will
make certain representations and covenants relating primarily to the Merger,
other matters contemplated by the Merger Agreement and a sale of assets to VSI,
NOW THEREFORE, to provide VSI with the inducements that it requires,
Scherer hereby warrants and covenants to VSI as follows:
1. Representations of Scherer. Scherer hereby warrants and represents
to VSI as follows:
1.1 Scherer has (i) the sole power to vote and dispose of
1,688,361.5 shares of the Common Stock, par value $.01 per share, of Scherer
Healthcare (the "Scherer Healthcare Common Stock") and (ii) the sole power to
vote and shared power to dispose of 562,594.5 shares of Scherer Healthcare
Common Stock, which shares are owned by the four adult children of Scherer and
are subject to a Voting Trust dated as of February 23, 1997 for which Scherer
acts as the sole trustee (the "Voting Trust"). The shares described in clause
(i) above include 1,244,378.5 shares owned by RPS Investments, Inc., a
corporation wholly-owned by Scherer.
1.2 Scherer has not entered into any agreement which would
preclude or otherwise affect in any respect Scherer's ability to provide the
representations set forth in this Section 1 or the covenants set forth in
Section 2 hereof. Scherer has not pledged or otherwise encumbered any of the
shares of Scherer Healthcare Common Stock, or options or warrants to purchase
Scherer Healthcare Common Stock, that he owns. Scherer has the authority to
execute this Agreement with respect to all of the shares referenced in the first
sentence of Section 1.1 hereof.
1.3 Intentionally omitted.
1.4 Scherer owns the Promissory Note free and clear of any
security interests, consignments, liens, judgments, encumbrances, restrictions,
or claims of any kind.
1.5 Each of the factual representations regarding Scherer set
forth in the "WHEREAS" clauses of this Agreement are accurate.
1.6 Scherer has no actual knowledge that any of the warranties
and representations made by Marquest to VSI in the Merger Agreement are
inaccurate in any material respect. It is understood that (i) this Section 1.6
shall not survive the consummation of the Merger, (ii) Scherer shall not be
liable for monetary damages in the event that this Section 1.6 is inaccurate in
any respect and (ii) VSI's sole right in the event that it determines that this
Section 1.6 is materially inaccurate either at the time that this Agreement is
executed or as of the time of the closing described in the Merger Agreement
shall be for VSI to assert its rights under the Merger Agreement to terminate
the Merger Agreement (in which case the transactions contemplated by the Scherer
Healthcare Inducement Agreement will not be consummated).
2. Covenants of Scherer. Scherer hereby covenants and agrees with VSI
as follows:
2.1 At the meeting of Scherer Healthcare's shareholders
called to vote upon the Scherer Shareholder Approval, Scherer will, subject to
his fiduciary obligations as a director of Scherer Healthcare, as a majority
shareholder of Scherer Healthcare and as a trustee of the Voting Trusts and
subject to the receipt by the Board of Directors of Scherer Healthcare of the
"Scherer Opinion" (as defined in the Scherer Healthcare Inducement Agreement) at
the times contemplated by the Scherer Healthcare Inducement Agreement, vote all
of the shares of Scherer Healthcare Common Stock referenced in the first
sentence of Section 1.1 hereof and any other shares of Scherer Healthcare Common
Stock that he may acquire subsequent to the date hereto in favor of granting the
Scherer Shareholder Approval.
2.2 Prior to the earlier of the Effective Time of the Merger
(as defined in the Merger Agreement) or the date of the termination of the
Merger Agreement, Scherer will not sell, dispose, pledge, encumber or otherwise
transfer any of the shares of Scherer Healthcare Common Stock referenced in
Section 1.1 hereof or any other shares of Scherer Healthcare Common Stock that
he may acquire subsequent to the date hereof or any right to acquire such stock;
provided, however, that this Section 2.2 shall not preclude Scherer from (a)
disposing of shares of Scherer Healthcare Common Stock if, after such transfer,
the outstanding shares of Scherer Healthcare Common Stock that he and his
"Permitted Transferees" (as defined herein) continue to own represent more than
50% of the outstanding Scherer Healthcare Common Stock calculated on a fully
diluted basis (after taking into account all shares of Scherer Healthcare Common
Stock issuable pursuant to outstanding stock options, warrants, convertible
securities and other contractual arrangements entitling third-parties to acquire
shares of Scherer Healthcare Common Stock) and (b) transferring any of his
shares of Scherer Healthcare Common Stock to a transferee (a "Permitted
Transferee") if, prior to such transfer, such Permitted Transferee executes an
agreement, in form and substance reasonably satisfactory to VSI, to vote such
shares in favor of the Scherer Shareholder Approval.
2.3 Scherer will not sell, give, devise, encumber, pledge or
otherwise transfer the Promissory Note or any interest therein unless and until
the Merger Agreement is terminated.
2.4 Scherer will not demand payment under the Promissory Note
unless and until the Merger Agreement is terminated.
2.5 At the Closing under the Merger but prior to the Effective
Time of the Merger, Scherer will convert the Promissory Note in the aggregate
principal amount of $700,000 into a total of 1,000,000 shares of Marquest Common
Stock.
2.6 Upon consummation of the "Scheduled Asset Closing" (as
such term is defined in an agreement of even date herewith (captioned as the
Scherer Healthcare Inducement Agreement) executed by Scherer Healthcare,
Marquest and VSI and referred to herein as the "Scherer Healthcare Inducement
Agreement"), Scherer agrees to execute and deliver to VSI a covenant against
competition in the form of the covenant against competition annexed hereto as
Exhibit A in exchange for a payment of one hundred and forty thousand dollars
($140,000).
3. Notices. Any notices, requests, demands and other communications to
VSI required or permitted hereunder shall be in writing and shall be deemed to
have been duly given when delivered by hand or when mailed by registered or
certified mail, postage prepaid, or when given by telex or facsimile
transmission (promptly confirmed in writing), as follows:
Vital Signs, Inc.
20 Campus Road
Totowa, New Jersey 07512
Attn: Mr. Anthony J. Dimun
Telephone: 201-790-1330, ext. 371
Telecopy: 201-790-3842
with a copy to:
Jay Sturm, Esq.
General Counsel
Vital Signs, Inc.
20 Campus Road
Totowa, New Jersey 07512
Telephone: 201-790-1330, ext 372
Telecopy: 201-790-3842
and with a copy to:
Peter H. Ehrenberg, Esq.
Lowenstein, Sandler, Kohl,
Fisher & Boylan, P.C.
65 Livingston Avenue
Roseland, New Jersey 07068
Telephone: 201-992-8700
Telecopy: 201-992-5820
or to such other persons as VSI shall designate to Scherer in writing.
4. Assignment. This Agreement and all of the provisions hereof shall be
binding upon Scherer and shall inure to the benefit of VSI and its successors
and permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by VSI without the prior
written consent of Scherer.
5. Governing Law. This Agreement and the legal relations between the
parties hereto shall be governed by and construed in accordance with the laws of
the State of Delaware.
6. Headings and References. The headings of the Sections of this
Agreement are inserted for convenience of reference only and shall not
constitute a part hereof. All references herein to Sections are to sections of
this Agreement, unless otherwise indicated.
7. Interpretation; Definitions. Scherer does not intend for this
Agreement to be construed against VSI merely by virtue of the fact that VSI's
representatives drafted this Agreement. Capitalized terms not defined herein
shall have the definitions given to such terms in the Merger Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date first set forth above.
/s/ Robert P. Scherer, Jr.
___________________________
Robert P. Scherer, Jr.
By execution of this Agreement, Vital Signs, Inc. agrees only that (i)
upon consummation of the Scheduled Asset Closing and delivery by Robert P.
Scherer, Jr. of the covenant against competition provided for in Section 2.6 of
this Agreement, Vital Signs, Inc. shall deliver to Robert P. Scherer, Jr. a
certified or bank cashier's check in an amount equal to one hundred and forty
thousand dollars ($140,000) and (ii) the limitations on VSI's rights described
in Section 1.6 of this Agreement are accepted by Vital Signs, Inc.
VITAL SIGNS, INC.
By:/s/Anthony J. Dimun
__________________
Anthony J. Dimun,
Executive Vice President
<PAGE>
The undersigned agrees that its shares of Scherer Healthcare Common
Stock shall be voted in the manner, and subject to the conditions, described in
Section 2.1 of this Agreement.
RPS INVESTMENTS, INC.
By:/s/Robert P. Scherer, Jr.
__________________________
Robert P. Scherer, Jr.
