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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 10, 1997.
UNIVERSAL HOSPITAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
Minnesota 0-20086 41-0760940
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number Identification No.)
1250 Northland Plaza, 3800 West 80th Street, Bloomington, MN 55431-4442
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 893-3200
Not Applicable
(Former name or former address, if changed since last report.)
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The undersigned registrant hereby amends its Current Report on Form
8-K filed on February 18, 1997.
ITEM 5. OTHER EVENTS
On February 10, 1997, Universal Hospital Services, Inc. ("Universal")
entered into a definitive agreement for MEDIQ Incorporated ("MEDIQ") to acquire
Universal for $17.50 per share of Common Stock, $.01 par value, of Universal.
The acquisition is structured as a cash merger that is expected to close in late
March or early April 1997 and is subject to approval by a majority of
Universal's shareholders and Hart-Scott-Rodino clearance. Including the
assumption of debt, the total purchase price is approximately $138 million.
This Form 8-K/A amends the Form 8-K, filed on February 18, 1997, by
attaching as Exhibit 2 to this Form 8-K/A, the Agreement and Plan of Merger
dated as February 10, 1997 by and among MEDIQ Incorporated, PRN Merger
Corporation and Universal Hospital Services, Inc.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(C) EXHIBITS
2 Agreement and Plan of Merger dated as February 10, 1997 by and among
MEDIQ Incorporated, PRN Merger Corporation and Universal Hospital
Services, Inc.
99 Press Release dated February 11, 1997 (Previously filed)
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SIGNATURE
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, hereto duly authorized.
Date: February 27, 1997
UNIVERSAL HOSPITAL SERVICES, INC.
By /s/ David E. Dovenberg
-------------------------------------
David E. Dovenberg
Vice President, Finance and
Chief Financial Officer
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EXHIBIT INDEX
-------------
PAGE NO. IN SEQUENTIALLY
EXHIBIT DESCRIPTION OF EXHIBIT NUMBERED COPY
- ------- ---------------------- ------------------------
2 Agreement and Plan of Merger
dated as February 10, 1997 by
and among MEDIQ Incorporated,
PRN Merger Corporation and
Universal Hospital Services, Inc.
99 Press Release dated February 11, 1997 (Previously filed)
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Exhibit 2
================================================================================
AGREEMENT AND PLAN OF MERGER
DATED AS OF
February 10, 1997
by and among
MEDIQ INCORPORATED,
PRN MERGER CORPORATION
and
UNIVERSAL HOSPITAL SERVICES, INC.
================================================================================
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TABLE OF CONTENTS
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Page
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ARTICLE I--THE MERGER....................................................... 1
Section 1.1. The Merger............................................. 1
Section 1.2. Effective Date and Time................................ 1
Section 1.3. Effect of the Merger................................... 1
Section 1.4. Subsequent Actions..................................... 1
Section 1.5. Articles of Incorporation; Bylaws; Directors
and Officers........................................... 2
Section 1.6. Cancellation of Company Shares......................... 2
Section 1.7. Dissenting Shares...................................... 3
Section 1.8. Company Plans.......................................... 3
Section 1.9. Surrender of Securities; Funding of Payments;
Stock Transfer Books................................... 3
ARTICLE II--REPRESENTATIONS AND WARRANTIES OF THE COMPANY................... 5
Section 2.1. Corporate Organization and Authorization............... 5
Section 2.2. Capitalization......................................... 6
Section 2.3. Noncontravention....................................... 7
Section 2.4. SEC Filings............................................ 7
Section 2.5. No Material Adverse Changes............................ 8
Section 2.6. Legal Proceedings...................................... 8
Section 2.7. No Dividends or Distributions.......................... 8
Section 2.8. Fairness Opinion....................................... 8
Section 2.9. Tax Matters............................................ 8
Section 2.10. Absence of Undisclosed Liabilities..................... 9
Section 2.11. Compliance with Laws; Permits.......................... 9
Section 2.12. Contracts and Commitments.............................. 10
Section 2.13. No Brokers or Finders.................................. 10
Section 2.14. Employee Benefit Plans................................. 10
Section 2.15. Rights Agreement....................................... 12
Section 2.16. Disclosure............................................. 13
Section 2.17. State Takeover Laws.................................... 13
Section 2.18. Intellectual Property.................................. 13
Section 2.19. Certain Business Practices............................. 13
Section 2.20. Insurance.............................................. 13
Section 2.21. Properties; Environmental Matters...................... 13
Section 2.22. Vote Required.......................................... 15
Section 2.23. Information in Proxy Statement......................... 15
ARTICLE III--REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND NEWCO........... 15
Section 3.1. Corporate Organization and Authorization............... 15
Section 3.2. Capitalization......................................... 16
Section 3.3. Noncontravention....................................... 16
Section 3.4. Approvals or Consents.................................. 16
Section 3.5. SEC Filings............................................ 16
Section 3.6. No Material Adverse Changes............................ 16
Section 3.7. Legal Proceedings...................................... 16
Section 3.8. Financing.............................................. 16
Section 3.9. Disclosure............................................. 17
Section 3.10. Information in Proxy Statement......................... 17
ARTICLE IV--COVENANTS....................................................... 17
Section 4.1. Conduct of the Company Prior to the Effective
Time................................................... 17
Section 4.2. Additional Covenants of Acquiror, Newco and
the Company............................................ 19
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ARTICLE V--CONDITIONS TO ACQUIROR'S OBLIGATIONS............................. 22
Section 5.1. Representations and Warranties.......................... 22
Section 5.2. Performance............................................. 22
Section 5.3. Officer's Certificate................................... 22
Section 5.4. Shareholder Approvals................................... 22
Section 5.5. HSR Waiting Period...................................... 22
Section 5.6. No Injunction........................................... 22
Section 5.7. Rights Agreement........................................ 23
ARTICLE VI--CONDITIONS TO THE COMPANY'S OBLIGATIONS......................... 23
Section 6.1. Representations and Warranties.......................... 23
Section 6.2. Performance............................................. 23
Section 6.3. Officer's Certificate................................... 23
Section 6.4. Shareholder Approvals................................... 23
Section 6.5. HSR Waiting Period...................................... 23
Section 6.6. No Injunction............................................ 23
ARTICLE VII--SURVIVAL OF REPRESENTATIONS.................................... 23
Section 7.1. No Survival of Representations.......................... 23
Section 7.2. Exclusive Remedy........................................ 23
ARTICLE VIII--TERMINATION OF AGREEMENT...................................... 24
Section 8.1. Termination of Agreement Prior to the Effective Time.... 24
Section 8.2. Effect of Termination................................... 24
ARTICLE IX--MISCELLANEOUS................................................... 25
Section 9.1. Waiver of Compliance.................................... 25
Section 9.2. Expenses................................................ 25
Section 9.3. Assignability; Parties in Interest...................... 25
Section 9.4. Specific Performance.................................... 25
Section 9.5. Agreement; Amendments................................... 25
Section 9.6. Headings................................................ 26
Section 9.7. Severability............................................ 26
Section 9.8. Notices................................................. 26
Section 9.9. Law Governing........................................... 26
Section 9.10. Counterparts........................................... 26
Section 9.11. Announcements.......................................... 26
Section 9.12. Representations........................................ 27
</TABLE>
Schedule 2.1(c)
Schedule 2.2
Schedule 2.3
Schedule 2.5
Schedule 2.6
Schedule 2.12
Schedule 2.14
Schedule 2.18
Schedule 2.20
Schedule 2.21
Schedule 3.1(b)
Schedule 4.1(b)
Schedule 4.2
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of February
10, 1997, is by and among MEDIQ INCORPORATED a Delaware corporation
("Acquiror"), PRN MERGER CORPORATION., a Minnesota corporation and an indirect
wholly owned subsidiary of Acquiror ("Newco"), and UNIVERSAL HOSPITAL SERVICES,
INC., a Minnesota corporation (the "Company").
WHEREAS, Acquiror, Newco and the Company desire to effect a business
combination by means of a merger of Newco with and into the Company; and
WHEREAS, the Boards of Directors of Acquiror, Newco and the Company have
approved, and deem it advisable and in the best interests of their respective
shareholders to consummate, the merger of Newco with and into the Company upon
the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
ARTICLE I
THE MERGER
----------
Section 1.1. The Merger. Subject to the satisfaction or waiver of the
----------
conditions set forth in Articles V and VI herein, on a date within five business
days following expiration or termination of the applicable waiting period
required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "HSR Act"), Newco will
merge with and into the Company (the "Merger"). The Company shall be the
corporation surviving in the Merger and in such capacity is sometimes referred
to herein as the "Surviving Corporation." The Merger will be effected pursuant
to the provisions of, and with the effect provided in, the Minnesota Business
Corporation Act (the "MBCA").
Section 1.2. Effective Date and Time. As promptly as practicable after
-----------------------
the satisfaction or waiver of the conditions set forth in Articles V and VI
herein, the parties hereto shall cause the Merger to be consummated by
delivering to the Secretary of State of Minnesota articles of merger ("Articles
of Merger"), in such form or forms as may be required by, and executed and
acknowledged in accordance with, the relevant and applicable provisions of the
MBCA. Subject to Section 1.1, the parties hereto shall cause the effective date
of the Merger (the "Effective Date") to occur on the date that the Articles of
Merger are filed with the Secretary of State of the State of Minnesota in
accordance with the relevant provisions of the MBCA (or at such later time,
which shall be as soon as reasonably practicable, as may be specified in the
Articles of Merger). The time on the Effective Date when the Merger shall
become effective is referred to as the "Effective Time."
Section 1.3. Effect of the Merger. At the Effective Time, the separate
--------------------
corporate existence of Newco shall cease and the Surviving Corporation shall
continue its corporate existence under the laws of the State of Minnesota.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers, immunities and
franchises of Newco and the Company shall vest in the Surviving Corporation, and
all debts, liabilities, obligations and duties of Newco and the Company shall
become the debts, liabilities, obligations and duties of the Surviving
Corporation.
Section 1.4. Subsequent Actions. If, at any time after the Effective
------------------
Time, the Acquiror or the Surviving Corporation shall consider or be advised
that any deeds, bills of sale, assignments, assurances or any other actions or
things are necessary or desirable to vest, perfect or confirm of record or
otherwise in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of either of the Company or Newco
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger or otherwise to carry out this Agreement, the
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of either the Company or Newco,
all such deeds, bills of sale, assignments and assurances and to take, in the
name and on behalf of each of such corporations or otherwise, all such other
actions and things as may be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and under such rights,
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properties or assets in the Surviving Corporation or otherwise to carry out the
transactions contemplated by this Agreement.
Section 1.5. Articles of Incorporation; Bylaws; Directors and Officers.
---------------------------------------------------------
(a) Subject to Section 4.2(c), at the Effective Time, the Articles of
Incorporation of Newco, as in effect immediately before the Effective Time,
shall be the Articles of Incorporation of the Surviving Corporation until
thereafter amended as provided by the MBCA and the provisions of such Articles
of Incorporation.
(b) Subject to Section 4.2(c), the Bylaws of Newco, as in effect
immediately before the Effective Time, shall become the Bylaws of the Surviving
Corporation until thereafter amended as provided by the MBCA, the provisions of
the Articles of Incorporation of the Surviving Corporation and such Bylaws.
(c) The directors and officers of Newco immediately before the Effective
Time shall be the initial directors and officers of the Surviving Corporation in
each case until their successors are elected or appointed and qualified. If, at
the Effective Time, a vacancy shall exist on the Board of Directors or in any
office of the Surviving Corporation, such vacancy shall thereafter be filled in
the manner provided by the MBCA, the Articles of Incorporation and Bylaws of the
Surviving Corporation.
Section 1.6. Cancellation of Company Shares. Upon the terms and subject
------------------------------
to the conditions of this Agreement, at the Effective Time, automatically by
virtue of the Merger and without any further action on the part of Acquiror, the
Company, the Surviving Corporation or the holders of any of the following
securities:
(a) Each share (a "Share") of the common stock of the Company, $.01 par
value (the "Common Stock"), together with the associated rights to purchase
shares of Series A Junior Participating Preferred Stock, par value $.01 per
share (the "Rights"), pursuant that certain Rights Agreement dated as of
November 8, 1996 between the Company and Norwest Bank Minnesota N.A., as
Rights Agent (the "Rights Agreement"), issued and outstanding immediately
prior to the Effective Time, other than Shares cancelled pursuant to this
Section 1.6(b) and Dissenting Shares (as defined in Section 1.7(b)), shall be
cancelled, extinguished and converted into and become a right to receive
$17.50 in net cash per Share without any interest thereon (the "Merger
Consideration"), subject to adjustment for any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange occurring
before the Effective Time.
(b) Each Share (including the associated Rights) that is issued and
outstanding immediately prior to the Effective Time and owned by Acquiror or
any direct or indirect subsidiary or affiliate of Acquiror or by the Company
or any direct or indirect subsidiary of the Company, shall be cancelled,
extinguished and retired, and no payment of any consideration shall be made
with respect thereto.
(c) Each share of Newco's capital stock issued and outstanding
immediately prior to the Effective Time shall be converted into one share of
common stock of the Surviving Corporation.
(d) As a result of their conversion pursuant to this Section 1.6(a), all
Shares (including any associated Rights, but excluding any Dissenting Shares
and any Shares described in this Section 1.6(b) issued and outstanding
immediately before the Effective Time shall cease to be outstanding and shall
automatically be canceled and retired, and each certificate ("Certificate")
previously evidencing such Shares (other than Dissenting Shares and Shares
described in this Section 1.6(b) ("Converted Shares") shall thereafter solely
represent the right to receive the Merger Consideration pursuant to this
Section 1.6(a) of this Agreement. The holders of Certificates shall cease to
have any rights with respect to such Converted Shares except as otherwise
provided herein or by law.
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Section 1.7. Dissenting Shares.
-----------------
(a) Notwithstanding any provision of this Agreement to the contrary, any
Shares held by a holder (a "Dissenting Shareholder") who has demanded and
perfected his demand for appraisal of his Shares in accordance with Sections 471
and 473 of the MBCA and as of the Effective Time has neither effectively
withdrawn nor lost his right to such appraisal shall not represent a right to
receive the aggregate Merger Consideration for such Shares pursuant to
Section 1.6 above, but in lieu thereof the holder thereof shall be entitled to
only such rights as are granted by the MBCA. Acquiror shall make any and all
payments to holders of Shares with respect to such demands.
(b) Notwithstanding the provisions of Section 1.7(a) above, if any
Dissenting Shareholder demanding appraisal of such Dissenting Shareholder's
Shares ("Dissenting Shares") under the MBCA shall effectively withdraw or lose
(through failure to perfect or otherwise) his right to appraisal, then as of the
Effective Time or the occurrence of such event, whichever later occurs, such
Dissenting Shares shall automatically be converted into and represent only the
right to receive the Merger Consideration as provided in Section 1.6 above upon
surrender of the certificate or certificates representing such Dissenting
Shares.
(c) The Company shall give Acquiror prompt notice of any demands by a
Dissenting Shareholder for payment, or notices of intent to demand payment
received by the Company under Sections 473 of the MBCA and Acquiror shall have
the right to participate in all negotiations and proceedings with respect to
such demands. The Company shall not, except with the prior written consent of
Acquiror (which will not be unreasonably withheld or delayed) or as otherwise
required by law, make any payment with respect to, or settle, or offer to
settle, any such demands.
Section 1.8. Company Plans.
-------------
(a) Stock Options. Upon the consummation of the Merger, each option to
-------------
acquire Shares outstanding immediately prior to the Effective Time under the
Company's 1992 Long-Term Incentive and Stock Option Plan, as amended (the "ISO
Plan") and the Company's 1992 Directors' Stock Option Plan, as amended (the
"Directors' Plan"), whether vested or unvested (each, an "Option," collectively,
the "Options"), shall automatically become immediately vested and exercisable
and each holder of an Option shall have the right to receive from Acquiror a
cash payment (less applicable withholding taxes) in an aggregate amount equal to
the difference between the Merger Consideration less the exercise price per
Share applicable to such Option for all Shares subject to the Option as
expressly stated in the applicable stock option agreement or other agreement
(the "Option Consideration"). The Company shall take such other actions
(including, without limitation, giving requisite notices to holders of Options
advising them of such accelerated vesting and rights pursuant to this Section
1.8) as are necessary to fully advise holders of Options of their rights under
this Agreement and the Options and to facilitate their timely exercise of such
rights. From and after the Effective Time, other than as expressly set forth in
this Section 1.8, no holder of an Option shall have any other rights in respect
thereof other than to receive payment for his Options equal to the Option
Consideration, and the Surviving Corporation shall take all reasonably necessary
actions to terminate the Company's stock option plans and similar arrangements.
(b) Employee Stock Purchase Plan. Outstanding purchase rights under the
----------------------------
Company's 1992 Employee Stock Purchase Plan, as amended (the "ESPP"), shall be
exercised upon the earlier of (i) the next scheduled purchase date under the
ESPP or (ii) immediately prior to the Effective Time, and each participant in
the ESPP shall accordingly be issued Shares at that time which shall be
cancelled at the Effective Time and converted into the right to receive the
Merger Consideration for those Shares. The ESPP shall terminate with such
exercise date, and no purchase rights shall be subsequently granted or exercised
under the Company ESPP.
Section 1.9. Surrender of Securities; Funding of Payments; Stock
---------------------------------------------------
Transfer Books.
--------------
(a) Pursuant to an agreement reasonably satisfactory to the Company and
Acquiror entered before the Effective Time, the Company shall designate a bank
or trust company reasonably acceptable to Acquiror to act as agent for the
holders of the Shares and Options (the "Exchange Agent") for the purpose
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of exchanging Certificates for the Merger Consideration and documents
representing Options (the "Option Agreements") for the Option Consideration. The
fees and expenses of the Exchange Agent shall be paid by Acquiror and Acquiror
shall indemnify the Exchange Agent and the Company against actions taken by the
Exchange Agent pursuant hereto other than for acts or omissions which constitute
willful misconduct or gross negligence, pursuant to the agreement with the
Exchange Agent.
(b) At the Effective Time, Acquiror shall remit to the Exchange Agent an
amount equal to (i) the aggregate Merger Consideration and Option Consideration
necessary to pay the holders of the Converted Shares and Options (collectively,
the "Payment Fund").
(c) Acquiror agrees that, as soon as practicable after the Effective Time
and in no event later than five business days thereafter, the Surviving
Corporation shall cause the distribution to holders of record of the
Certificates and Option Agreements (as of the Effective Time) of a form of
letter of transmittal and other appropriate materials and instructions for use
in effecting the surrender of the Certificates for payment of the Merger
Consideration therefor and in effecting the surrender of the Option Agreements
for payment of the Option Consideration therefor. In the event any Certificate
or Option Agreement shall have been lost or destroyed, the Exchange Agent,
subject to such other conditions as the Surviving Corporation may reasonably
impose (including the posting of an indemnity bond or other surety in favor of
the Surviving Corporation with respect to the Certificate alleged to be lost or
destroyed), shall be authorized to accept an affidavit from the record holder of
such Certificate or Option Agreement in a form reasonably satisfactory to
Acquiror. Upon the surrender of each such Certificate formerly representing
Shares, together with such letter of transmittal, duly completed and validly
executed in accordance with the instructions thereto, the Exchange Agent shall
pay to holders of such Certificates out of the Payment Fund the Merger
Consideration multiplied by the number of Converted Shares represented by such
Certificates, less any amounts required to be held pursuant to applicable tax
laws. Upon the surrender of each such Option Agreement formerly representing
Options, together with a letter of transmittal, duly completed and validly
executed in accordance with the instructions thereto, the Exchange Agent shall
pay such holders the Option Consideration multiplied by the number of Shares for
which such Options were exercisable as of the Effective Time, less any amounts
required to be withheld pursuant to applicable tax laws.
(d) If any portion of the Merger Consideration or Option Consideration is
to be paid to a person other than the person in whose name a Certificate or
Option Agreement is registered, it shall be a condition to such payment that
such Certificate or Option Agreement shall be surrendered and shall be properly
endorsed or shall be otherwise in proper form for transfer and that the person
requesting such payment shall have paid any transfer and other taxes required by
reason of such payment in a name other than that of the registered holder of the
certificate or instrument surrendered or shall have established to the
satisfaction of Acquiror and the Exchange Agent that such tax either has been
paid or is not payable.
(e) At the Effective Time, the stock transfer books of the Company shall
be closed and there shall not be any further registration of transfers of Shares
thereafter on the records of the Company.
(f) To the extent not immediately required for payment on surrendered
Shares and Options, proceeds in the Payment Fund shall be invested by the
Exchange Agent, as directed by the Surviving Corporation (as long as such
directions do not impair the rights of holders of Shares or Options), in direct
obligations of the United States of America, obligations for which the faith and
credit of the United States of America is pledged to provide for the payment of
principal and interest, commercial paper rated of the highest investment quality
by Moody's Investors Service, Inc. or Standard & Poor's Ratings Group, or
certificates of deposit issued by a commercial bank having at least $5 billion
in assets, and any net earnings with respect thereto shall be paid to the
Surviving Corporation as and when requested by the Surviving Corporation.
(g) After the Effective Time, no dividends, interest or other
distributions shall be paid to the holder of any unsurrendered Certificates.
(h) After the Effective Time, holders of Certificates shall cease to have
any rights as shareholders of the Company, except as provided herein or under
applicable state corporation law. No
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interest shall be paid on any Merger Consideration or Option Consideration
payable to former holders of Shares or Options.
(i) Promptly following the one-year anniversary date of the Effective
Date, the Exchange Agent shall return to the Surviving Corporation all of the
remaining Payment Fund, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a Certificate or an Option Agreement may surrender
the same to the Surviving Corporation and upon such surrender (subject to
applicable abandoned property, escheat or similar laws) shall receive the
applicable aggregate Merger Consideration and/or Option Consideration, as
applicable. Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to any former holder of Shares or Options for any
amount delivered to a public official pursuant to applicable escheat or similar
law.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to Acquiror that:
Section 2.1. Corporate Organization and Authorization.
----------------------------------------
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Minnesota and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business, and to enter into this Agreement and to carry out the
transactions contemplated hereby.
(b) (i) The Company has all requisite governmental authorizations,
certificates, licenses, consents and approvals required to carry on its
business as presently conducted, except where the failure to possess such
authorizations, certificates, licenses, consents and approvals (either
individually or in the aggregate) would not have a Material Adverse Effect on
the Company (as defined in Section 2.1(b)(ii)). The Company is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the character of the property owned or leased by it
or the nature of the activities conducted by it makes such qualification
necessary, except where the failure to so qualify or to maintain such good
standing (either in one jurisdiction or in the aggregate) would not have a
Material Adverse Effect.
(ii) For purposes of this Agreement, "Material Adverse Effect" shall
mean with respect to the Company or Acquiror, as applicable, any effect that
individually or when taken together with all similar effects (i) is material
and adverse to the prospects, assets, financial position, results of
operations or business of the Company and the Subsidiary taken as a whole, or
Acquiror and its subsidiaries taken as a whole, respectively, or (ii) would
materially impair the ability of the Company or Acquiror, respectively, to
perform its obligations under this Agreement or otherwise materially threaten
or materially impede the consummation of the Merger and the other
transactions contemplated by this Agreement; provided, however, that Material
Adverse Effect shall not be deemed to include the impact of (a) actions or
omissions of the Company or Acquiror taken with the prior written consent of
the Company or Acquiror, as applicable, in contemplation of the transactions
contemplated hereby, and (b) the effects of the Merger (or any announcement
with respect thereto) and compliance with the provisions of this Agreement on
the operating performance or prospects of such party and its subsidiaries,
including without limitation, with respect to the Company, any loss of
customer relationships or employees following the announcement of the Merger.
(c) The Company's only subsidiary is Biomedical Equipment Rental & Sales,
Inc., (the "Subsidiary") and since 1992 the Company has not had any subsidiary
other than the Subsidiary. For purposes of this section, "subsidiary" means any
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the Board of Directors or other persons performing
similar functions are directly or indirectly owned by the Company. Neither the
Company nor the Subsidiary (i) directly or indirectly owns, (ii) has agreed to
purchase or otherwise acquire or (iii) holds any interest convertible into or
exchangeable or exercisable for, 5% or more of the capital stock or other
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equity interest of any corporation, partnership, company, joint venture or other
business association or entity (other than the Company's ownership of the
capital stock of the Subsidiary). Except as set forth in Schedule 2.1(c), and
for any agreements, arrangements or commitments solely between the Company and
the Subsidiary, there are no agreements, arrangements or commitments of any
character (contingent or otherwise) pursuant to which any person is or may be
entitled to receive any payment based on the revenues or earnings, or calculated
in accordance therewith, of the Company or the Subsidiary. There are no voting
trusts, proxies or other agreements or understandings to which the Company or
the Subsidiary is a party or by which the Company or the Subsidiary is bound
with respect to the voting of any shares of capital stock of the Company or the
Subsidiary.
(d) The Subsidiary is a corporation duly organized, validly existing and
in good standing under the laws of North Carolina and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business, and has all governmental authorizations, certificates,
licenses, consents and approvals required to carry on its business as presently
conducted, except where the failure to possess such authorizations,
certificates, licenses, consents and approvals (either individually or in the
aggregate) would not have a Material Adverse Effect on the Company. The
Subsidiary is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where the character of the property owned or
leased by it or the nature of the activities conducted by it makes such
qualification necessary, except where the failure to so qualify or to maintain
such good standing (either in one jurisdiction or in the aggregate) would not
have a Material Adverse Effect on the Company.
(e) All of the outstanding capital stock of the Subsidiary (i) has been
validly issued, is fully paid and nonassessable and is not subject to preemptive
or similar rights and all such shares of capital stock were issued in material
compliance with all applicable federal and state securities laws, and (ii) is
owned by the Company free and clear of any lien or other encumbrance. There are
no outstanding (i) securities of the Subsidiary convertible into or exchangeable
for shares of capital stock or other voting securities or ownership interests in
the Subsidiary or (ii) options or other rights to acquire from the Company or
the Subsidiary, and no other obligation of the Company or the Subsidiary to
issue, any capital stock, voting securities or other ownership interests in, or
any securities convertible into or exchangeable for, any capital stock, voting
securities or ownership interests in the Subsidiary (items in clauses (i) and
(ii) being referred to collectively as the "Subsidiary Securities"). There are
no outstanding obligations of the Company or the Subsidiary to repurchase,
redeem or otherwise acquire any outstanding Subsidiary Securities.
(f) This Agreement has been duly authorized by the Board of Directors of
the Company, has been duly executed and delivered by the Company and, except for
obtaining the approval of the Company's shareholders at the Company Special
Meeting (as defined herein), no further corporate authorization on the part of
the Company is necessary to consummate the transactions contemplated by this
Agreement.
(g) This Agreement constitutes a valid and binding agreement of the
Company and is enforceable against the Company in accordance with its terms,
except to the extent enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally and general equitable principles (whether considered
in a proceeding in equity or in law).
(h) The copies of the respective Articles of Incorporation and Bylaws,
and all amendments thereto, of the Company and the Subsidiary heretofore
delivered to Acquiror are complete and true copies of such documents as in
effect on the date hereof.
Section 2.2. Capitalization. The authorized capital stock of the
--------------
Company consists of 10,000,000 shares of Common Stock, 100,000 shares of Series
A Junior Participating Preferred Stock, par value $.01 per share (the "Junior
Preferred Stock"), and 4,900,000 shares of undesignated preferred stock, par
value $.01 per share ("Undesignated Stock"). As of the date of this Agreement,
(a) 5,372,221 Shares were issued and outstanding, all of which have been duly
authorized, and are validly issued and outstanding, fully paid and
nonassessable; (b) no shares of Junior Preferred Stock were issued and
outstanding; (c) 540,867 Shares were reserved for issuance pursuant to
outstanding Options heretofore
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<PAGE>
granted under the ISO Plan and the Directors' Plan. Schedule 2.2 sets forth as
of the date of this Agreement a schedule showing (i) each outstanding Option and
the date it was granted; (ii) the number of Shares subject thereto as of the
Effective Date (assuming full acceleration of vesting as provided in such
Options and Section 1.8); (iii) the exercise price; and (iv) the method by which
the number of Shares issuable pursuant to Section 1.8(b) under the ESPP may be
determined. All of the Shares were issued in material compliance with all
applicable federal and state securities laws and none of the Shares were issued
in violation of any preemptive or similar rights. Except as described in this
Section 2.2 (including shares reserved under the ESPP), no shares of the capital
stock of the Company are reserved for issuance for any purpose. Except as set
forth above or in the Rights Agreement, there are no other shares of capital
stock or other equity securities, instruments or other rights of the Company
outstanding and no other outstanding options, warrants, rights to subscribe to
(including any preemptive rights), calls or commitments of any character
whatsoever to which the Company or the Subsidiary is a party or may be bound
requiring the issuance, transfer or sale of any shares of capital stock or other
equity securities of the Company or any securities or rights convertible into or
exchangeable or exercisable for any such shares or equity securities, and there
are no contracts, commitments, understandings or arrangements by which the
Company or the Subsidiary is or may become bound to issue additional shares of
its capital stock options, warrants or rights to purchase, redeem or acquire any
additional shares of its capital stock or securities convertible into or
exchangeable or exercisable for any such shares or other securities.
Section 2.3. Noncontravention.
----------------
(a) Subject to the expiration or termination of the applicable waiting
period required by the HSR Act, neither the execution or delivery of this
Agreement nor the consummation of the transactions contemplated hereby:
(i) violates, conflicts with, or constitutes a default under, the
Articles of Incorporation or Bylaws, as amended, of any of the Company or the
Subsidiary; or
(ii) assuming that all consents, approvals, orders or authorizations
contemplated by subsection (b) below have been obtained and all filings
described therein have been made, (A) violates or will violate any statute or
law or any rule, regulation, order, judgment or decree of any court or
governmental authority to which the Company or the Subsidiary is subject or
(B)(with or without notice or lapse of time or both), except as disclosed on
Schedule 2.3(a) hereto, constitutes a default or breach under, or gives to
others any rights of termination, acceleration or modification of, any note,
bond, mortgage, indenture, deed of trust, license, lease or other material
agreement, instrument or obligation to which the Company or the Subsidiary is
a party or by which either of them is bound.
(b) Except for the expiration or termination of the applicable waiting
period under the HSR Act, and in connection with the MBCA, the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), state securities or
"Blue Sky" laws or regulations (the "Blue Sky laws") and the Nasdaq Stock
Market, there is no other consent, approval, order or authorization of, or
filing with, or any permit from, or any notice to, any federal, governmental,
regulatory or administrative authority required to be obtained by the Company or
the Subsidiary for the execution of this Agreement by the Company and the
consummation of the transactions contemplated hereby.
Section 2.4. SEC Filings.
-----------
(a) Prior to the execution of this Agreement, the Company has delivered
or made available to Acquiror complete and accurate copies of (i) the Company's
Annual Reports on Form 10-K for the years ended December 31, 1995, 1994 and
1993, as amended (the "Company 10-K Reports"), as filed under the Exchange Act
with the United States Securities and Exchange Commission (the "SEC"), (ii) all
Company proxy statements and annual reports to shareholders used in connection
with meetings of Company shareholders held since January 1, 1994 (the "Annual
Proxy Statements"), (iii) the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996 (the "Company 10-Q Report"), as filed under the
Exchange Act with the SEC (such Company 10-K Reports, Annual Proxy Statements
and the Company 10-Q Report, together with all subsequent documents filed by the
Company with the SEC after December
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31, 1996 and prior to the Effective Date, are referred to herein as the "Company
Public Reports"), and (iv) the Company's unaudited financial statements for the
year ended December 31, 1996 (the "Interim Financial Statements"). As of their
respective dates, the Company Public Reports (x) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and (y) complied as to
form in all material respects with the applicable laws and rules and regulations
of the SEC. Since January 1, 1993, the Company has filed in a timely manner all
reports that it was required to file with the SEC pursuant to the Exchange Act.
(b) The Company financial statements (including any footnotes thereto)
contained in the Company Public Reports and the Interim Financial Statements
were prepared in accordance with the published rules and regulations of the SEC
and generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may be otherwise indicated therein and
except that the Interim Financial Statements do not contain any footnotes
thereto) and fairly presented the consolidated financial position of the Company
and the Subsidiary as of the dates thereof and the consolidated results of
operations, changes in shareholders' equity and cash flows for the periods then
ended, except that any unaudited financial statements contained therein are
subject to normal and recurring year-end adjustments.
Section 2.5. No Material Adverse Changes. Since December 31, 1996,
---------------------------
there has been no material adverse change in, and no event, loss, occurrence or
development in the business of the Company or the Subsidiary, taken as a whole,
that, taken together with other events, occurrences and developments with
respect to such business, has had or would reasonably be expected to have a
Material Adverse Effect on the Company. Except as disclosed in the Company
Public Reports filed prior to the date of this Agreement or as contemplated in
this Agreement, since December 31, 1996, the Company and the Subsidiary have
conducted their respective businesses only in the ordinary course and in a
manner consistent with past practice.
Section 2.6. Legal Proceedings. Except as set forth on Schedule 2.6
-----------------
attached hereto, there are no, and since January 1, 1995 there have not been
any, claims, actions, suits, proceedings (arbitration or otherwise) or
investigations pending or, to the Company's knowledge, threatened by or against,
the Company or the Subsidiary. Except as set forth on Schedule 2.6, no such
claims, actions, suits, proceedings or investigations are (i) seeking to enjoin,
prohibit, restrain or otherwise prevent the transactions contemplated hereby or
(ii) reasonably likely to result in a Material Adverse Effect on the Company if
adversely determined. There are no judgments, decrees or orders issued by any
court, board or other governmental or administrative agency presently
outstanding and unsatisfied against the Company or the Subsidiary.
Section 2.7. No Dividends or Distributions. Since December 31, 1996,
-----------------------------
there has not been any declaration, setting aside or payment of any dividend or
any other distribution with respect to the Company's or the Subsidiary's capital
stock or any redemption, purchase or other acquisition of any of the Company's
securities.
Section 2.8. Fairness Opinion. The Board of Directors of the Company
----------------
has received the written opinion of Piper Jaffray Inc., financial advisor to the
duly appointed and acting special committee of the Board of Directors of the
Company (the "Special Committee"), dated as of the date hereof to the effect
that the consideration to be received by the Company's shareholders in the
Merger is fair to the shareholders of the Company from a financial point of
view, and such opinion is in a form and substance reasonably satisfactory to the
Special Committee.
Section 2.9. Tax Matters.
-----------
(a) Each of the Company and the Subsidiary has filed all Tax Returns
required to be filed by any of them on or prior to the Effective Date and has
paid (or the Company has paid on its behalf), or has set up an adequate reserve
for the payment of, all Taxes required to be paid in respect of the periods
covered by such returns (except where the failure to pay would not have a
Material Adverse Effect on the Company). The information contained in such Tax
Returns is true, complete and accurate in all material
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respects. Neither the Company nor the Subsidiary is delinquent in the payment of
any tax, assessment or governmental charge, except where such delinquency would
not have a Material Adverse Effect on the Company. There are no Tax liens upon
the assets of the Company or the Subsidiary except liens for Taxes not yet due
or being contested in good faith through appropriate proceedings. No deficiency
for any Taxes has been proposed, asserted or assessed against the Company or the
Subsidiary that has not been resolved or paid in full. No audits or other
administrative proceedings or court proceedings are presently pending with
regard to any material Taxes or Tax Returns of the Company or the Subsidiary. No
amount that could be received (whether in cash or property or the vesting of
property) as a result of any of the transactions contemplated by this Agreement
by any employee, officer or director of the Company or any of its affiliates who
is a "disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance or termination
agreement, other compensation arrangement or company benefit plan currently in
effect would be an "excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Code). Neither the Company nor the Subsidiary has made
an election under section 341(f) of the Code. Neither the Company nor the
Subsidiary is required to make any adjustments under Section 481(a) of the code.
Neither the Company nor the Subsidiary is a party to any tax-sharing, allocation
or indemnification agreement with any party other than the Company. Neither the
Company nor the Subsidiary has been a United States real property holding
corporation within the meaning of Section 897(c)(2) during the past five years.
(b) For Purposes of this Agreement:
(i) "Tax or Taxes" means any federal, state, county, local or foreign
------------
taxes, charges, fees, levies, or other assessments, including all net income,
gross income, sales and use, ad valorem, transfer, gains, profits, excise,
franchise, real and personal property, gross receipts, capital stock,
production, business and occupation, disability, employment, payroll,
license, estimated, stamp, custom duties, severance or withholding taxes or
charges imposed by any governmental entity, and includes any interest and
penalties (civil or criminal) on or additions to any such taxes; and
(ii) "Tax Return" means a report, return or other information
----------
required to be supplied to a governmental entity with respect to Taxes
including, where permitted or required, combined or consolidated returns for
a group of entities.
Section 2.10. Absence of Undisclosed Liabilities. All of the
----------------------------------
obligations or liabilities (whether accrued, absolute, contingent, unliquidated
or otherwise, whether due or to become due, and regardless of when asserted,
including Taxes (as defined in Section 2.9)) with respect to or based upon
transactions or events heretofore occurring ("Liabilities"), required to be
reflected on the latest balance sheet delivered to Acquiror pursuant to Section
2.4 (the "Latest Balance Sheet") in accordance with generally accepted
accounting principles have been so reflected. The Company and the Subsidiary
have no Liabilities which are, in the aggregate, material to the business,
assets, operation, prospects or financial condition of the Company and the
Subsidiary, taken as a whole, except (a) as reflected on the Latest Balance
Sheet, (b) Liabilities which arose prior to the date of the Latest Balance Sheet
in the ordinary course of business and not required under generally accepted
accounting principals to be reflected on the Latest Balance Sheet, (c) current
Liabilities which have arisen after the date of the Latest Balance Sheet in the
ordinary course of business, and (d) as otherwise disclosed on Schedule 2.10.
Section 2.11. Compliance with Laws; Permits. Each of the Company and
-----------------------------
the Subsidiary has complied with all applicable laws and regulations of foreign,
federal, state and local governments and all agencies thereof ("Laws") which
affect the business or any leased properties of the Company and the Subsidiary
and to which the Company or the Subsidiary may be subject (including, without
limitation, any state or federal acts (including rules and regulations
thereunder) regulating or otherwise affecting, equal employment opportunity,
employee health and safety or the environment), except where the failure to so
comply would not, individually or in the aggregate, have a Material Adverse
Effect on the Company; and no claims have been filed by any such governments or
agencies against the Company or the Subsidiary alleging such a violation of any
such law or regulation which have not been resolved to the satisfaction of such
governments or agencies. Since December 31, 1994, neither the Company nor any
of its subsidiaries has received from any governmental entity any written
notification with respect to possible conflicts, defaults or violations of Laws,
except for written notices relating to possible conflicts, defaults or
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<PAGE>
violations that have not had and could not reasonably be expected to have a
Material Adverse Effect on the Company. Each of the Company and the Subsidiary
holds all of the permits, licenses, certificates and other authorizations of
foreign, federal, state and local governmental agencies required for the conduct
of its business ("Permits"), except where failure to obtain such authorizations
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company.
Section 2.12. Contracts and Commitments.
-------------------------
(a) Except as set forth on Schedule 2.12, neither the Company or the
Subsidiary (i) is a party to any collective bargaining agreement or contract
with any labor union, (ii) is a party to any written or oral contract for the
employment of any officer, individual employee or other person on a full-time or
consulting basis, or relating to severance pay for any such person, (iii) is a
party to any (A) written or oral agreement or understanding to repurchase assets
previously sold (or to indemnify or otherwise compensate the purchaser in
respect of such assets) or (B) agreement for the sale of any capital asset, (iv)
is a party to any contract, arrangement, commitment or understanding (whether
written or oral) which provides for future payments by the Company or the
Subsidiary in excess of $50,000 and is not terminable by the Company within 60
days without payment of a penalty or premium, other than employment contracts,
benefit plans and leases otherwise disclosed in Schedule 2.12 or in another
Schedule to this Agreement or listed as an exhibit in the Company Public
Reports, (v) is a party to any contract, arrangement, commitment or
understanding which is a material contract (as defined in Item 601(b)(10) of
Regulation S-K of the SEC) to be performed after the date of this Agreement that
has not been filed or incorporated by reference in the Company Public Reports,
(vi) is a party to any confidentiality agreement or any agreement which
prohibits the Company or the Subsidiary from freely engaging in any business
anywhere in the world, (vii) is a party to any agreement or indenture relating
to the borrowing of money or to mortgaging, pledging or otherwise placing a lien
on any of the assets of the Company or the Subsidiary, (viii) has guaranteed any
obligation for borrowed money, and (ix) is a party to any agreement or contract
that obligates Company or the Subsidiary to pay a customer consequential
damages.
(b) Except as disclosed on Schedule 2.12, each of the Company and the
Subsidiary has performed all obligations required to be performed by it prior to
the date hereof in connection with the contracts or commitments set forth on
Schedule 2.12, and neither the Company nor the Subsidiary is in receipt of any
claim of default under any contract or commitment set forth on Schedule 2.12,
except for any failures to perform, breaches or defaults which would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
(c) Prior to the date of this Agreement, Acquiror has been given an
opportunity to review a true and correct copy of each written contract or
commitment, and a written description of each oral contract or commitment, set
forth on Schedule 2.12, together with all amendments, waivers or other changes
thereto.
Section 2.13. No Brokers or Finders. Except for the letter agreements
---------------------
dated November 7, 1996, November 13, 1996 and January 3, 1997 between the
Company and Piper Jaffray, Inc., true and correct copies of which have been
delivered to Acquiror, there are no claims for brokerage commissions, finders'
fees, investment advisory fees or similar compensation in connection with the
transactions contemplated by this Agreement, based on any arrangement,
understanding, commitment or agreement made by or on behalf of the Company,
obligating the Company or Acquiror to pay such claim.
Section 2.14. Employee Benefit Plans.
----------------------
(a) Definitions. For the purpose of this Section 2.14, "ERISA" means the
-----------
Employee Retirement Income Security Act of 1974, as amended, and the term "plan"
means every plan, fund, contract, program and arrangement (whether written or
not) which is maintained or contributed to by the Company for the benefit of
present or former employees or directors of the Company or the Subsidiary,
including those intended to provide: (a) medical, surgical, health care,
hospitalization, dental, vision, life insurance, death, disability, legal
services, severance, sickness or accident benefits (whether or not defined in
Section 3(1) of ERISA), (b) pension, profit sharing, stock bonus, retirement,
supplemental retirement or deferred compensation benefits (whether or not tax
qualified and whether or not defined in
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<PAGE>
Section 3(2) of ERISA), (c) bonus, incentive compensation, stock option, stock
appreciation right, phantom stock or stock purchase benefits, or (d) salary
continuation, unemployment, supplemental unemployment, termination pay, vacation
or holiday benefits (whether or not defined in Section 3(3) of ERISA).
The term "plan" shall also include every such plan, fund, contract,
program and arrangement: (a) which the Company has committed to implement,
establish, adopt or contribute to in the future, (b) for which the Company is or
may be financially liable as a result of the direct sponsor's affiliation to the
Company or its owners (whether or not such affiliation exists at the date of
this Agreement and notwithstanding that the plan is not maintained by the
Company for the benefit of its employees or former employees), (c) which is in
the process of terminating (but such term does not include any arrangement that
has been terminated and completely wound up prior to the date of this Agreement
such that the Company has no present or potential liability with respect to such
arrangement), or (d) for or with respect to which the Company is or may become
liable under any common law successor doctrine, express successor liability
provisions of law, provisions of a collective bargaining agreement, labor or
employment law or agreement with a predecessor employer. Notwithstanding the
foregoing, the term "plan" shall not include any arrangement or program mandated
by federal, state or local law, such as social security benefits.
(b) Disclosure of Plans and Other Information. Schedule 2.14 sets forth
-----------------------------------------
all plans, other than the Directors' Plan, by name and brief description
identifying: (i) the type of plan, (ii) the funding arrangements for the plan,
(iii) the sponsorship of the plan, and (iv) the participating employers in the
plan. Schedule 2.14 also sets forth the identity of each corporation, trade or
business (separately for each category below that applies): (i) which is (or was
during the preceding five years) under common control with the Company within
the meaning of Section 414(b) or (c) of the Code; (ii) which is (or was during
the preceding five years) in an affiliated service group with the Company within
the meaning of Section 414(m) of the Code; and (iii) which is (or was during the
preceding five years) the legal employer of persons providing services to the
Company as leased employees within the meaning of Section 414(n) of the Code as
in effect for each plan.
The Company has furnished Acquiror with true and complete copies of: (i)
the most recent determination letter, if any, received by the Company from the
Internal Revenue Service regarding each qualified plan; (ii) the most recent
financial statements and annual report or return, if any, for each plan; (iii)
the most recent actuarial valuation reports, if any, for each plan; and (iv) all
documents, trust agreements, insurance contracts, service agreements and all
related contracts and documents (including any employee summaries and material
employee communications) with respect to each plan.
Schedule 2.14 identifies each employee of the Company who is: (i) absent
from active employment due to short or long term disability; (ii) absent from
active employment due to a leave pursuant to the Family and Medical Leave Act or
a comparable state law; (iii) absent from active employment due to other leave
or approved absence; (iv) absent from active employment due to military service
(under conditions that give the employee rights to re-employment); or (v) an
employee with an employment contract that requires more than 31 days termination
notice.
With respect to continuation rights arising under federal or state law as
applied to plans that are group health plans (as defined in Section 601 et. seq.
of ERISA), Schedule 2.14 identifies: (i) each employee, former employee or
qualifying beneficiary who has elected continuation; and (ii) each employee,
former employee or qualifying beneficiary who has not elected continuation
coverage but is still within the period in which such election may be made as of
February 1, 1997.
(c) Compliance With Law. Except as disclosed on Schedule 2.14: (i) all
-------------------
plans intended to be tax qualified under Section 401(a) or Section 403(a) of the
Code are so qualified (subject to amendments to reflect changes where
retroactive amendments are allowed, such as Public Law 104-188, the Small
Business Job Protection Act of 1996); (ii) all trusts established in connection
with plans which are intended to be tax exempt under Section 501(a) or (c) of
the Code are so tax exempt; (iii) to the extent required either as a matter of
law or to obtain the intended tax treatment and tax benefits, all plans comply
in all material respects with the requirements of ERISA and the Code; (iv) all
plans have been administered in material compliance with the documents and
instruments governing the plans except in cases where changes in the law require
compliance with the laws for periods preceding the date plans are required to
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<PAGE>
be amended with retroactive effect; (v) all reports and filings with
governmental agencies (including but not limited to the Department of Labor,
Internal Revenue Service, Pension Benefit Guaranty Corporation and the
Securities and Exchange Commission) required in connection with each plan have
been timely made; (vi) all material disclosures and notices required by law or
plan provisions to be given to participants and beneficiaries in connection with
each plan have been properly and timely made; and (vii) the Company has made a
good faith effort to comply with the reporting and taxation requirements for
FICA taxes with respect to any deferred compensation arrangements under Section
3121(v) of the Code. For purposes of this Section 2.14(c), any failure to comply
with the requirements of ERISA or the Code resulting in a fine or penalty of
more than $5,000 shall be deemed to be "material."
(d) Funding. Except as disclosed on Schedule 2.14: (i) all
-------
contributions, premium payments and other payments required to be made in
connection with the plans as of the date of this Agreement have been made; (ii)
proper accrual has been made on the books of the Company for all contributions,
premium payments and other payments due in the current fiscal year but not made
as of the date of this Agreement; (iii) no contribution, premium payment or
other payment has been made in support of any plan that is in excess of the
allowable deduction for federal income tax purposes for the year with respect to
which the contribution was made (whether under Section 162, Section 280G,
Section 404, Section 419, Section 419A of the Code or otherwise); and (iv) with
respect to each plan that is subject to Section 301 et. seq. of ERISA or Section
412 of the Code, such plan has met the minimum funding standard for the 1996
plan year.
(e) Absence of Certain Claims. Except as disclosed on Schedule 2.14 or
-------------------------
as otherwise contemplated by this Agreement: (i) no action, suit, charge,
complaint, proceeding, hearing, investigation or claim is pending with regard to
any plan other than routine uncontested claims for benefits; (ii) the
consummation of the transactions contemplated by this Agreement will not cause
any plan to increase benefits payable to any participant or beneficiary; (iii)
the consummation of the transactions contemplated by this Agreement will not:
(A) entitle any current or former employee of the Company to severance pay,
unemployment compensation or any other payment, benefit or award under the
plans, or (B) accelerate or modify the time of payment or vesting, or increase
the amount of any benefit, award or compensation due any such employee under the
plans; (iv) no plan is currently under examination or audit by the Department of
Labor, the Internal Revenue Service, the Pension Benefit Guaranty Corporation or
the Securities and Exchange Commission; (v) the Company has no actual or
potential liability arising under Title IV of ERISA as a result of any plan that
has terminated or is in the process of terminating; (vi) the Company has no
actual or potential liability under Section 4201 et. seq. of ERISA for either a
complete withdrawal or a partial withdrawal from a multiemployer plan; and (vii)
with respect to the plans, the Company has no liability (either directly or as a
result of indemnification) for (and the transaction contemplated by this
Agreement will not cause any liability for): (A) any excise taxes under Section
4971 through Section 4980B, Section 4999 or Section 5000, or (B) any penalty
under Section 502(i), Section 502(l), Part 6 of Title I or any other provision
of ERISA, or (C) any excise taxes, penalties, damages or equitable relief as a
result of any prohibited transaction, breach of fiduciary duty or other
violation under ERISA or any other applicable law.
(f) Post-Separation Benefits. Except as disclosed on Schedule 2.14 (i)
------------------------
all accruals required under FAS 106 have been properly accrued on the financial
statements of the Company and (ii) the Company has no liability for life
insurance, death or medical benefits after separation from employment other
than: (A) such death benefits under the plans identified on Schedule 2.14, (B)
health care continuation benefits described in Section 4980B of the Code, or (C)
as may be required under other federal, state or local law.
Section 2.15. Rights Agreement. The Company has taken all action
----------------
(including, if required, redeeming all of the outstanding Rights issued pursuant
to the Rights Agreement) so that the entering into of this Agreement and the
consummation of the transactions contemplated hereby do not and will not, with
or without the passage of time, result in (i) the grant of any rights to any
person under the Rights Agreement or enable or require the Company's outstanding
rights to be exercised, distributed or triggered, (ii) Acquiror or Merger Sub
becoming an "Acquiring Person" (as defined in the Rights Agreement), or (iii) a
"Distribution Date" (as defined in the Rights Agreement).
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<PAGE>
Section 2.16. Disclosure. The representations and warranties of the
----------
Company contained in this Agreement are true and correct in all material
respects, and such representations and warranties do not omit any material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
Section 2.17. State Takeover Laws. The Board of Directors of the
-------------------
Company and a special committee thereof satisfying the requirements of Section
673(d) of the MBCA has approved the execution of this Agreement and authorized
and approved the Merger prior to the execution by the Company of this Agreement
in accordance with the Section 673 of the MBCA, so that such Section will not
apply to this Agreement contemplated hereby. The Board of Directors of the
Company has taken all such action required to be taken by it to provide that
this Agreement and the transactions contemplated hereby and thereby shall be
exempt from the requirements of any "moratorium," "control share," "fair price"
or other anti-takeover laws or regulations of any state (including without
limitation Section 671 of the MBCA).
Section 2.18. Intellectual Property. Schedule 2.18 sets forth a true
---------------------
and complete list of each fictitious business name, tradename, registered and
unregistered trademark, service mark and related application, patent, patent
right and patent application, copyright in published and material unpublished
works and all software other than generally available software (such as Excel,
WordPerfect and the like) in each case owned, used, filed by, granted to or
licensed by the Company or the Subsidiary and which is material to the Company's
or the Subsidiary's business (collectively, the "Intellectual Property").
Except as otherwise disclosed on Schedule 2.18: (i) the Company owns or has the
exclusive perpetual right to use, without payment to any other party, all
Intellectual Property; (ii) no other person has any rights in or to any of the
Intellectual Property (including, without limitation, any rights to royalties or
other payments with respect to, or rights to market or distribute any of, the
Intellectual Property); (iii) the rights of company in and to any of the
Intellectual Property will not be limited or otherwise affected by reason of any
of the transactions contemplated hereby; (iv) the Intellectual Property is
sufficient for the conduct of Company's business as such is presently conducted;
(v) none of the Intellectual Property infringes or is alleged to infringe any
trademark, copyright, patent or other proprietary right of any person.
Section 2.19. Certain Business Practices. None of the Company, the
--------------------------
Subsidiary or any directors, officers, agent or employees of the Company or the
Subsidiary has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any unlawful payment to foreign or domestic governmental officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, (iii)
consummated any transaction, made any payment, entered into any agreement or
arrangement or taken any other action in violation of Section 1128B(b) of the
Social Security Act, as amended, or (iv) made any other unlawful payment.
Section 2.20. Insurance. Set forth in Schedule 2.20 is a complete and
---------
correct list of all insurance policies and programs (other than welfare benefit
insurance policies and programs disclosed in Schedule 2.14), including self-
insurance programs, maintained by the Company and/or the Subsidiary.
Section 2.21. Properties; Environmental Matters.
---------------------------------
(a) The only real property owned by the Company is the Company's district
office located at 2438 27th Avenue South, Minneapolis, Minnesota, and the
Company has owned no other real property since 1987. Schedule 2.21 sets forth
by office location all real property used or occupied by the Company or the
Subsidiary that is held under lease or sub-lease by the Company or the
Subsidiary (the "Leases"). Except for the properties subject to the Leases and
as set forth on Schedule 2.21, the Company and the Subsidiary have good title,
free and clear of all liens, mortgages, claims, restrictions, pledges, or other
claims or encumbrances to all their material tangible properties and tangible
assets reflected on the Latest Balance Sheet or acquired since the date thereof,
except for (i) liens for current Taxes not yet due and payable, (ii) assets
disposed of since the date of the Latest Balance Sheet in the ordinary course of
business, (iii) liens imposed by law and incurred in the ordinary course of
business for obligations not yet due to carriers, warehousemen, laborers and
materialmen, (iv) liens in respect of pledges or deposits under workers'
compensation laws, and (v) liens and encumbrances which do not affect
marketability of title or
A-13
<PAGE>
the use being made of such properties or immaterial title defects which can be
corrected or cured at no cost, all of which, individually and in the aggregate,
do not have a Material Adverse Effect on the Company. The Leases are in full
force and effect, and the Company or the Subsidiary holds a valid existing
leasehold interest under each of the Leases on the terms set forth in such
Leases. The Company has delivered to Acquiror complete and accurate copies of
each of the Leases, and none of the Leases has been modified in any material
respect, except to the extent such modifications are disclosed by the copies
delivered to Acquiror. All rent and other sums and charges payable by the
Company or the Subsidiary under the Leases are current, and no termination event
or condition or default of a material nature on the part of the Company or the
Subsidiary exists under any such Lease.
(b) All of the buildings, machinery, equipment and other tangible assets
necessary for the conduct of the Company's business as currently being conducted
are in good condition and repair, ordinary wear and tear excepted, and are
usable in the ordinary course of business. The Company owns, or leases under
valid leases, all buildings, machinery, equipment and other tangible assets
necessary for the conduct of its business as currently being conducted. All
rental equipment and disposable medical care products inventory reflected on the
Latest Balance Sheet is in the possession or under the control of the Company or
the Subsidiary, except for rental equipment inventory which is (i) currently
being rented or held by a customer and therefore is in the possession or control
of a customer, or (ii) in transit with a common carrier for delivery to or from
a customer.
(c) The Company and the Subsidiary are and at all times have been in
compliance in all material respects with all Environmental Laws and all Permits.
(d) Neither the Company nor the Subsidiary (i) has received written
notice of any person, including but not limited to, a governmental entity,
alleging that the Company or any subsidiary is in violation of any Permit or
applicable Environmental Law or otherwise may be liable under any Permit or
applicable Environmental Law, including but not limited to, liability in
connection with a Cleanup, which violation or liability is unresolved, (ii)
knows of any event or circumstance that exists which (A) may constitute or
result in a violation by the Company or the Subsidiary of, or the failure on the
part of the Company or the Subsidiary to comply with such Permits or
Environmental Laws, or (B) may give rise to any obligation on the part of the
Company or the Subsidiary to undertake, or to bear all or any portion of the
cost of any Cleanup which, in the case of clauses (A) or (B), could have a
Material Adverse Effect on the Company.
(e) To the knowledge of the Company, there have been no release, spills
or discharges of Regulated Materials on or underneath any location which is
owned, leased or otherwise operated by the Company or the Subsidiary
("Properties"), which release, spills or discharges could have a Material
Adverse Effect on the Company. There are no pending or, to the knowledge of the
Company or the Subsidiary, threatened, claims, liens, encumbrances or other
restrictions of any nature, resulting from Environmental Laws, with respect to
or affecting any of the Properties.
(f) For the purposes of this Agreement the following terms shall have the
following meanings:
"Cleanup" means all actions required to: (a) cleanup, remove, treat or
remediate Regulated Materials; (ii) prevent the release of Regulated Materials
so that they do not migrate, endanger or threaten to endanger public health or
welfare or the environment; (iii) perform pre-remedial studies and
investigations and post-remedial monitoring and care; (iv) respond to any
government or private party requests for information or documents in any way
relating to cleanup, removal, treatment or remediation or potential cleanup,
removal, treatment or remediation of Regulated Materials in the environment; or
(v) any legal or administrative proceeding related to items (1) through (iv)
including, but not limited to, actions brought by third parties to recover costs
incurred with respect to Cleanup.
"Environmental Laws" shall mean all federal, state, local laws, statutes,
ordinances, codes, rules and regulations related to the protection of the
environment, natural resources, or the handling, use, recycle, generation,
treatment, storage, transportation or disposal of Regulated Materials.
A-14
<PAGE>
"Regulated Materials" shall mean any pollutants, contaminants, toxic,
hazardous or extremely hazardous substances, materials, wastes, constituents,
compounds, chemicals, natural or man-made elements or forces that are regulated
by, or may now or in the future form the basis of liability under, any
Environmental Laws.
Section 2.22. Vote Required. The only votes of the holders of any
-------------
class or series of Company capital stock necessary to approve the Merger are the
affirmative votes of the holders of a majority of the outstanding Shares.
Section 2.23. Information in Proxy Statement. The Proxy Statement (as
------------------------------
defined herein), will, at the date mailed to the Company's shareholders and at
the time of the Special Meeting (as defined herein), not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statement therein, in light of
the circumstances under which they are made, not misleading, except that no
representation is made by the Company with respect to statements made therein
based on information supplied by Acquiror or Newco.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND NEWCO
----------------------------------------------------
Each of Acquiror and Newco represents and warrants to the Company that:
Section 3.1. Corporate Organization and Authorization.
----------------------------------------
(a) Acquiror is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has all requisite
corporate power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby. Newco is a corporation duly organized,
validly existing and in good standing under the laws of the State of Minnesota,
and has all requisite corporate power and authority to enter into this Agreement
and to carry out the transactions contemplated hereby.
(b) Each of Acquiror and Newco has all requisite corporate power and
authority and all governmental authorizations, certificates, licenses, consents
and approvals required to carry on its respective business as presently
conducted, except where the failure to possess such authorizations,
certificates, licenses, consents and approvals (either individually or in the
aggregate) would not have a Material Adverse Effect on Acquiror or Newco. Each
of Acquiror and Newco is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of the activities conducted by it makes such
qualification necessary, except where the failure to so qualify or to maintain
such good standing (either in one jurisdiction or in the aggregate) would not
have a Material Adverse Effect on Acquiror.
(c) This Agreement has been duly executed and delivered by each of
Acquiror and Newco, and no further corporate authorization on the part of
Acquiror or Newco is necessary to consummate the transactions contemplated by
this Agreement.
(d) This Agreement constitutes a valid and binding agreement of each of
Acquiror and Newco, enforceable against each of Acquiror and Newco in accordance
with its terms, except to the extent enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affect creditors' rights generally and general equitable principles (whether
considered in a proceeding in equity or in law).
(e) The copies of the Articles of Incorporation and Bylaws, and all
amendments thereto, of each of Acquiror and Newco delivered to the Company are
complete and true copies of such documents as in effect on the date hereof.
A-15
<PAGE>
Section 3.2. Capitalization. The authorized capital stock of Acquiror
--------------
consists of 40,000,000 shares of common stock, $1.00 par value, and 20,000,000
shares of preferred stock, $.50 par value, all of which shares of preferred
stock have been designated Series A Preferred Stock. As of January 27, 1997
there were 18,511,394 shares of Common Stock issued and outstanding and
6,300,501 shares of Series A Preferred Stock outstanding. All outstanding
shares of capital stock of Acquiror have been duly authorized and validly issued
and are fully paid and nonassessable.
Section 3.3. Noncontravention. Subject to the expiration or termination
----------------
of the applicable waiting period required by the HSR Act, neither the execution
or delivery of this Agreement nor the consummation of the transactions
contemplated hereby (i) violates, conflicts with, or constitutes a default
under, the Articles of Incorporation or Bylaws, as amended, of Acquiror or
Newco, or (ii) assuming all consents, approvals, orders or authorizations
contemplated by Section 3.4 have been obtained and all filings described therein
have been made, (y) violates or will violate any statute or law or any rule,
regulation, order, judgment or decree of any court or governmental authority to
which Acquiror or Newco is subject or (z) (with or without notice or lapse of
time or both) constitutes a default under any material contract or agreement of
any kind to which Acquiror or Newco is a party or by which it is bound which
default has or would have a Material Adverse Effect on Acquiror.
Section 3.4. Approvals or Consents. Except for the expiration or
---------------------
termination of the applicable waiting period under the HSR Act, and in
connection with the MBCA, the Exchange Act, the Blue Sky laws, the Nasdaq Stock
Market, there is no other consent, approval, order or authorization of, or
filing with, or any permit from, or any notice to, any federal, governmental,
regulatory or administrative authority required to be obtained by Acquiror for
the execution of this Agreement by Acquiror and the consummation of the
transactions contemplated hereby.
Section 3.5. SEC Filings. Prior to the execution of this Agreement,
-----------
Acquiror has delivered or made available to the Company complete and accurate
copies of the Acquiror's Annual Reports on Form 10-K for the years ended
September 31, 1996, 1995 and 1994, as amended (the "Acquiror 10-K Reports"), as
filed under the Exchange Act with the SEC, (ii) all Acquiror proxy statements
and annual reports to shareholders used in connection with meetings of Acquiror
shareholders held since January 1, 1994 (the "Acquiror Proxy Statements") (such
Acquiror 10-K Reports and Acquiror Proxy Statements, together with all
subsequent documents filed by Acquiror with the SEC after December 31, 1996 and
prior to the Effective Date (the "Acquiror Public Reports"). As of their
respective dates, the Acquiror Public Reports (x) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and (y) complied as to
form in all material respects with the applicable laws and rules and regulations
of the SEC.
Section 3.6. No Material Adverse Changes. Since the date of most recent
---------------------------
balance sheet contained in Acquiror Public Reports, there has been no material
adverse change in, and no event, occurrence or development in the business of
Acquiror and its subsidiaries, taken as a whole, that, taken together with other
events, occurrences and developments with respect to such business, has had or
would reasonably be expected to have a Material Adverse Effect on Acquiror.
Section 3.7. Legal Proceedings. Except as disclosed in the Acquiror 10-
-----------------
K Reports, there are no claims, actions, suits, proceedings or investigations
pending or, to the Acquiror's knowledge, threatened by or against, Acquiror or
any of its subsidiaries (i) seeking to enjoin, prohibit, restrain or otherwise
prevent the transactions contemplated hereby or (ii) which, if adversely
determined, are reasonably likely to materially impair the ability of Acquiror
or Newco to fulfil their respective obligations under this Agreement or
materially impede or threaten to impede the consummation of the transactions
contemplated hereby. There are no judgments, decrees or orders issued by any
court, board or other governmental or administrative agency presently
outstanding and unsatisfied against Acquiror or any or its subsidiaries.
Section 3.8. Financing. Acquiror has executed agreements with financial
---------
institutions for any financing required by Acquiror to consummate the Merger,
and have delivered true, correct and complete copies of such agreements to the
Company. At the Effective Time, Acquiror shall have all funds necessary
A-16
<PAGE>
to consummate the Merger including, but not limited to, paying an aggregate
Merger Consideration and Option Consideration to all holders of Shares and
Options.
Section 3.9. Disclosure. The representations and warranties of Acquiror
----------
contained in this Agreement are true and correct in all material respects, and
such representations and warranties do not omit any material fact necessary to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading.
Section 3.10. Information in Proxy Statement. None of the information
------------------------------
supplied by Acquiror or Newco specifically for inclusion or incorporation by
reference in the Proxy Statement will, at the date mailed to shareholders and at
the time of the Special Meeting, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
ARTICLE IV
COVENANTS
---------
Section 4.1. Conduct of the Company Prior to the Effective Time.
--------------------------------------------------
(a) No Solicitation; Other Offers.
-----------------------------
(i) From the date hereof until the termination of this Agreement or
the Effective Date, whichever first occurs, the Company will not, and will
cause the Subsidiary not to, and will use its best efforts to cause the
officers, directors, employees, representatives and agents of the Company and
the Subsidiary not to, directly or indirectly, solicit, initiate or encourage
any inquiry, proposal, offer or indication of interest from any person that
constitutes or would reasonably be expected to lead to any Acquisition
Proposal (as hereinafter defined) or enter into discussions or negotiate with
any person or entity in furtherance of any such inquiries or to obtain or
approve any Acquisition Proposal, or agree to or endorse any Acquisition
Proposal, and the Company shall immediately notify Acquiror of all relevant
terms of any such inquiries or proposals received by the Company or the
Subsidiary or by any such officer, director, employee, representatives, or
agents, relating to any of such matters, any material change in the details
(including any amendments or proposed amendments) of any such inquiries or
proposals, the identity of each of the persons or entities making such
inquiries or proposals, and, if such inquiry or proposal is in writing, the
Company shall immediately deliver or cause to be delivered to Acquiror a copy
of such inquiry or proposal; provided, however, that if, prior to the
-------- -------
Effective Time, the Company shall receive an unsolicited Acquisition Proposal
that the Board of Directors of the Company, based upon the advice of its
legal counsel, reasonably believes that it has a fiduciary duty to consider,
then the Company, without violating this Agreement, may thereafter furnish
information to and enter into discussions or negotiations with such third
party. Nothing contained in this Section 4.1(a) or any other provision of
this Agreement shall prevent the Board of Directors of the Company or the
Special Committee, after receiving an opinion of outside counsel to the
effect that the Board of Directors is required to do so in order to discharge
properly its fiduciary duties, from considering, negotiating, approving and
recommending to the shareholders of the Company an unsolicited, bona fide
written Acquisition Proposal which the Board of Directors of the Company
determines in good faith (after consultation with its financial advisors) (A)
would result in a transaction more favorable to the Company's shareholders
than the transaction contemplated by this Agreement and (B) is made by a
person financially capable of consummating such Acquisition Proposal (any
such Acquisition Proposal being referred to herein as a "Superior Proposal").
If the Board of Directors of the Company shall have resolved to accept or
accepted a Superior Proposal then upon written notice to Acquiror, the
Company may pursuant to Section 8.1(d) terminate this Agreement and the
transactions contemplated hereby. For purposes hereof, "Acquisition
Proposal" means any proposal for a merger, consolidation or other business
combination involving the Company or the acquisition of any equity interest
in, or a substantial portion of the assets of the Company or the Subsidiary,
other than the transactions contemplated by this Agreement.
A-17
<PAGE>
(ii) Upon any termination by the Company of this Agreement permitted
by Section 4.1(a)(i), the Company shall pay to Acquiror the sum of $3,000,000
(the "Break-Up Fee"). In such circumstances, the Break-Up Fee shall be
deemed to include all costs and expenses of Acquiror.
(b) Conduct of the Company's Business and Operations. Except as
------------------------------------- ----------
expressly provided in this Agreement or as agreed in writing by Acquiror, from
the date hereof to the Effective Date, the Company covenants and agrees that:
(i) The Company shall, and shall cause the Subsidiary to, carry on
their respective businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted, and shall, and shall
cause the Subsidiary to, use their reasonable efforts to preserve intact
their present business organizations, keep available the services of their
present officers and employees and preserve their relationships with
customers, suppliers and others having business dealings with them. The
Company shall, and shall cause the Subsidiary to: (A) maintain insurance
coverages and its books, accounts and records in the usual manner consistent
with prior practices; (B) comply in all material respects with all laws,
ordinances and regulations of governmental entities applicable to the Company
and the Subsidiary; (C) maintain and keep its properties and equipment in
good repair, working order and condition, ordinary wear and tear excepted;
and (D) perform in all material respects its obligations under all contracts
and commitments to which it is a party or by which it is bound, in each case
other than where the failure to so maintain, comply or perform, either
individually or in the aggregate, would result in a Material Adverse Effect
on the Company;
(ii) The Company shall not and shall not propose to: (A) sell or
pledge or agree to sell or pledge any capital stock owned by it in the
Subsidiary; (B) amend its Articles of Incorporation or Bylaws; (C) split,
combine or reclassify its outstanding capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of capital stock of the Company, or declare, set
aside or pay any dividend or other distribution payable in cash, stock or
property; or (D) directly and/or indirectly redeem, purchase or otherwise
acquire or agree to redeem, purchase or otherwise acquire any shares of the
Company's capital stock;
(iii) The Company shall not, nor shall it permit the Subsidiary to:
(A) except as required by this Agreement and pursuant to Option Agreements
outstanding on the date hereof or under the ESPP as in effect on the date
hereof, issue, deliver or sell or agree to issue, deliver or sell any
additional shares of, or rights of any kind to acquire any shares of, its
capital stock of any class, any indebtedness or any options, rights or
warrants to acquire, or securities convertible into, shares of capital stock;
(B) acquire, lease or dispose or agree to acquire, lease or dispose of any
capital assets or any other assets other than in the ordinary course of
business; (C) incur additional indebtedness or encumber or grant a security
interest in any asset or enter into any other material transaction other than
in each case in the ordinary course of business (and in the case of incurring
additional indebtedness, in any event in an amount not more than $600,000 in
excess of the amount reflected on the Latest Balance Sheet) in the aggregate;
(D) acquire or agree to acquire by merging or consolidating with, or by
purchasing a equity interest in, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof, or otherwise acquire or agree to acquire any assets of any
other person (other than the purchase or lease of assets from suppliers or
vendors in the ordinary course of business consistent with past practice); or
(E) enter into any contract, agreement, commitment or arrangement with
respect to any of the foregoing;
(iv) Except as disclosed on Schedule 4.1(b), the Company shall not,
nor shall it permit the Subsidiary to (except as required to comply with
applicable law): (A) adopt, enter into, terminate or amend any bonus, profit
sharing, compensation, severance, termination, stock option, pension,
retirement, deferred compensation, employment or other employee benefit plan,
agreement, trust, fund or other arrangement for the benefit or welfare of any
director, officer or current or former employee; (B) increase in any manner
the compensation or fringe benefit of any director, officer or employee
(except for normal increases in the ordinary course of business that are
consistent with past practice and that, in the aggregate, do not result in a
material increase in such employee's benefits or compensation relative to the
level in effect prior to such amendment); (C) pay any benefit not
A-18
<PAGE>
provided under any existing plan or arrangement; (D) grant any awards under
any bonus, incentive, performance or other compensation plan or arrangement
or employee benefit plan (including, without limitation, the grant of stock
options, stock appreciation rights, stock based or stock related awards,
performance units or restricted stock, or the removal of existing
restrictions in any benefit plans or agreements or awards made thereunder)
(other than such plans and arrangements which are made in the ordinary course
of business consistent with past practice); (E) take any action to fund or in
any other way secure the payment of compensation or benefits under any
employee plan, agreement, contract or arrangement or employee benefit plan
other than in the ordinary course of business consistent with past practice;
or (F) adopt, enter into, amend or terminate any contract, agreement,
commitment or arrangement to do any of the foregoing;
(v) The Company shall not, nor shall it permit the Subsidiary to,
enter into or amend any agreements pursuant to which any other party is
granted exclusive marketing, distribution or manufacturing rights of any type
or scope for any period extending beyond the Effective Time with respect to
any products or services of the Company or the Subsidiary;
(vi) the Company shall not, nor shall it permit the Subsidiary to,
release any third party from its obligations under any existing standstill
agreement or arrangement relating to any Acquisition Proposal or otherwise
under any confidentiality, non-competition or other similar agreement;
(vii) the Company shall not, nor shall it permit the Subsidiary to,
(A) change any of its methods of accounting in effect at December 31, 1995,
or (B) make or rescind any express or deemed election relating to Taxes or
make any election relating to Taxes, or change any of its methods of
reporting income or deductions for federal income tax purposes from those
employed in the preparation of the federal income tax returns for the taxable
year ending December 31, 1995, except, in the case of clause (A) or clause
(B), as may be required by Law or generally accepted accounting principles,
or (C) settle or compromise any material claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy.
Section 4.2. Additional Covenants of Acquiror, Newco and the Company.
-------------------------------------------------------
(a) Employee Benefits. As of the Effective Time, the employees of the
-----------------
Company and the Subsidiary (the "Company Employees") shall continue employment
with the Surviving Corporation and its subsidiaries, respectively, in the same
positions and at the same level of wages and/or salary and without having
incurred a termination of employment or separation from service; provided,
however, except as may be specifically required by applicable law or any
contract, the Surviving Corporation and its subsidiaries shall not be obligated
to continue any employment relationship with any Company Employee for any period
of time. Acquiror, Newco and the Company agree that Company Employees will be
entitled to the policies and programs set forth on Schedule 4.2, to the extent
provided therein, and that Company Employees whose employment is terminated on
or after the Effective Date or within 12 months thereafter will receive
severance payments to the extent provided pursuant to policy attached hereto as
Schedule 4.2. Acquiror agrees that Company Employees who remain employed by the
Surviving Corporation following the Merger shall be eligible to participate in
all plans, programs or policies then afforded to similarly situated employees of
Acquiror and its affiliated companies. To the extent any employee benefit
plan, program or policy of Acquiror or its affiliates is made available to the
employees of the Surviving Corporation or its subsidiaries: (i) service with
the Company and the Subsidiary by any Company Employee prior to the Effective
Time shall be credited in determining such employee's eligibility, vesting and
benefit levels (but not for accrual of benefits), and (ii) with respect to any
welfare benefit plans to which such employees may become eligible, Acquiror
shall cause such plans to provide credit for any co-payments or deductibles by
such employees and waive all pre-existing condition exclusions and waiting
periods, other than limitations or waiting periods that have not been satisfied
under any welfare plans maintained by the Company and the Subsidiary for Company
Employees prior to the Effective Time.
(b) Confidentiality. Prior to the Effective Time and after any
---------------
termination of this Agreement, each party will hold, and will use its best
efforts to cause its officers, directors, employees,
A-19
<PAGE>
accountants, counsel, consultants, advisors and agents to hold, in confidence,
unless compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning the
other party furnished in connection with the transactions contemplated by this
Agreement, except to the extent that such information can be shown to have been
(i) previously known on a nonconfidential basis by such party (ii) in the public
domain through no fault of such party or (iii) later lawfully acquired by such
party from sources other than the other party; provided that such party may
--------
disclose such information to its officers, directors, employees, accountants,
counsel, consultants, advisors and agents in connection with the transactions
contemplated by this Agreement and, in the case of Acquiror, to its lenders in
connection with obtaining the financing for the transactions contemplated by
this Agreement so long as such persons are informed by such party of the
confidential nature of such information and are directed by such party to treat
such information confidentially. Each party's obligation to hold any such
information in confidence shall be satisfied if it exercises the same care with
respect to such information as it would take to preserve the confidentiality of
its own similar information. If this Agreement is terminated, each party will,
and will cause its subsidiaries, to use its best efforts to cause their
respective officers, directors, employees, accountants, counsel, consultants,
advisors and agents to, destroy or deliver to the other party, upon request, all
documents and other materials, and all copies thereof, obtained by such party or
on its behalf from the other party in connection with this Agreement that are
subject to such confidence.
(c) Indemnification; Directors' and Officers' Insurance. Newco will
---------------------------------------------------
(i) until the later of the six year anniversary date of the Effective Date or
the respective termination or expiration date of any existing Company or
Subsidiary indemnification agreement or arrangement, cause its Articles of
Incorporation and Bylaws to continue to provide indemnification provisions for
the benefit of those individuals who have served as directors or officers of the
Company or the Subsidiary at any time prior to the Effective Date which are
comparable to such provisions as are currently contained in the Company's or the
Subsidiary's, as applicable, Articles of Incorporation and Bylaws and
(ii) subject to the occurrence of the Effective Date, Acquiror hereby guarantees
unconditionally full payment and performance of the indemnification obligations
set forth in (i) above. In the event the Surviving Corporation or any of its
successors or assigns (A) consolidates with or merges into any other person and
the Surviving Corporation shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (B) transfers all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successors and assigns of the
Surviving Corporation shall assume the obligations set forth in this Section
4.2(c). Acquiror shall, or shall cause the Surviving Corporation to, obtain and
maintain in effect for not less than six years after the Effective Date, the
current directors' and officers' liability insurance policies maintained by the
Company (provided that Acquiror or the Surviving Corporation may substitute
therefore a policy or policies of at least the same coverage containing similar
terms and conditions so long as no lapse in coverage occurs as a result of such
substitution) with respect to all matters, including the transactions
contemplated hereby, occurring prior to, and including the Effective Date;
provided that in no event shall Acquiror or the Surviving Company be required to
expend more than 250% of the current annual premiums paid by the Company for
such coverage (the "Maximum Premium"); and provided, further, that if Acquiror
or the Surviving Corporation is unable to obtain the amount of insurance
required by this Section 4.2(c) for such aggregate premium, Acquiror of the
Surviving Corporation shall obtain as much insurance as can be obtained for an
annual premium not in excess of the Maximum Premium. Acquiror will, promptly
after the Effective Time, confirm to each such officer and director in writing
that it has undertaken to perform such obligations.
(d) Conduct of Business Pending the Merger. Prior to the Effective Date,
--------------------------------------
unless otherwise contemplated or permitted by this Agreement: (a) each of the
Company and Acquiror shall not, and shall cause its subsidiaries not to take, or
agree in writing or otherwise to take, any actions that would (i) make any
representation or warranty of the Company or Acquiror, respectively, or its
subsidiaries contained in this Agreement untrue or incorrect so as to cause the
conditions set forth in Articles V and VI hereof not to be fulfilled as of the
Effective Date or (ii) result in any of the other conditions of this Agreement
not being satisfied as of the Effective Date. The Company's sole remedy (except
as otherwise expressly provided in this Merger Agreement) for any breach of this
Section 4.2(d) shall be injunctive relief.
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<PAGE>
(e) Access to Information. The Company will (and will cause each of its
---------------------
respective representatives to) afford to Acquiror (or representatives of
Acquiror, including without limitation directors, officers and employees of the
Acquiror and their affiliates and counsel, accountants and other professionals
retained by Acquiror) such access throughout the period prior to the earlier of
the termination of this Agreement or the Effective Time to books, records
(including without limitation tax returns and work papers of independent
auditors), agreements, properties (including for the purpose of making any
reasonable environmental investigation), personnel, suppliers and franchisees as
Acquiror reasonably requests from the Company.
(f) HSR Act. The Company and Acquiror shall use their best efforts to
-------
file as soon as reasonably practicable notifications under the HSR Act in
connection with the Merger and the transactions contemplated hereby and to
respond as promptly as practicable to any inquiries received from the Federal
Trade Commission (the "FTC") or the Antitrust Division of the Department of
Justice (the "Antitrust Division") for additional information or documentation
and to respond as promptly as practicable to all inquiries and requests received
from any State Attorney General or any court, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign (each, a "Governmental Entity"), in connection with antitrust matters.
The Company and Acquiror shall take such actions as are necessary to overcome
any objections which may be raised by the FTC or Antitrust Division.
(g) Best Efforts. Acquiror and the Company will each use its best
------------
efforts to perform its obligations under this Agreement, to satisfy the
conditions set forth in Articles V and VI, and to consummate the Merger on the
terms and conditions set forth in this Agreement.
(h) Certain Filings. The Company and Acquiror shall use their best
---------------
efforts to cooperate with one another in determining whether any action by or in
respect of, or filing with, any governmental body, agency or official, or
authority is required, or any actions, consents, approvals or waivers are
required to be obtained from parties to any material contracts, in connection
with the consummation of the transactions contemplated by this Agreement and in
seeking to timely obtain any such actions, consents, approvals or waivers, or
making any such filings or furnishing information required in connection
therewith.
(i) Public Announcements. The initial press release relating to this
--------------------
Agreement shall be a joint press release and thereafter Acquiror and the Company
will consult with each other before issuing any press release or making any
public statement with respect to this Agreement and the transactions
contemplated hereby and, will not issue any such press release or make any such
public statement without the prior consent of the other party, which consent
shall not be unreasonably withheld; provided, however, that a party may, without
the prior consent of the other party, issue such press release or make such
public statement as may upon the advice of counsel be required by law, any
securities exchange or the National Association of Securities Dealers, Inc. if
it has used all reasonable efforts to consult with the other party.
(j) Special Meeting. The Company shall take all action necessary, in
---------------
accordance with applicable law and its Articles of Incorporation and Bylaws, to
convene a special meeting of the holders of the Shares ("Special Meeting") as
promptly as practicable for the purpose of considering and taking action upon
this Agreement, unless the Board of Directors of the Company shall have accepted
a Superior Proposal and determined pursuant to Section 4.1(a), in the exercise
of its fiduciary duties, not to recommend that holders of the Shares approve the
Merger and this Agreement and shall have paid to Acquiror the Break-Up Fee. The
Board of Directors of the Company and the Special Committee will, subject to its
fiduciary obligations, recommend that holders of the Shares vote in favor of and
approve the Merger and this Agreement at the Special Meeting.
(k) Proxy Statement.
---------------
(i) As soon as practicable after the date hereof, the Company shall
prepare and file with the SEC a proxy statement and a form of proxy, in
connection with the vote of the Company's shareholders to be held at the Special
Meeting with respect to this Agreement (such proxy statement, together with any
amendments thereof or supplements thereto, in each case in the form or forms
mailed to the Company's shareholders, being the "Proxy Statement") and shall use
its best efforts to respond promptly to any
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<PAGE>
comments of the SEC or its staff and to cause the Proxy Statement to be mailed
to the Company's shareholders as promptly as practicable after responding to all
such comments to the satisfaction of the staff of the SEC. Acquiror and Newco
shall furnish such information concerning Acquiror and Newco as is necessary to
cause the Proxy Statement, insofar as it relates to Acquiror and Newco, to be
prepared in accordance with the Rules and Regulations of the SEC. The Company
shall notify Acquiror promptly of the receipt of any comments from the SEC or
its staff and of any request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional information and will supply
Acquiror with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Proxy Statement or the Merger. Prior to filing the Proxy
Statement with the SEC, the Company shall provide reasonable opportunity for
Acquiror to review and comment upon the contents of the Proxy Statement and
shall not include therein or omit therefrom any information to which counsel to
Acquiror shall reasonably object. The Proxy Statement shall include the
recommendation of the Company's Board of Directors in favor of the Merger.
(ii) If at any time prior to the Special Meeting any event or
circumstances relating to the Company, Acquiror or Newco or any of their
respective affiliates, or their respective officers or directors, should be
discovered by the Company, Acquiror or Newco that should be set forth in an
amendment or supplement to the Proxy Statement, the Company shall promptly
inform Acquiror and Newco, and Acquiror and Newco shall promptly inform the
Company, as the case may be, and the Company shall prepare, file with the SEC,
and mail such amendment or supplement to the shareholders of the Company in
accordance with the procedures (including the procedures relating to review and
comment by Acquiror) set forth in Section 4.2(l)(i).
(l) Completion of Audit and SEC Filings. Prior to the Effective Date,
-----------------------------------
the Company agrees that it shall complete an audit of the Interim Financial
Statements and that it will continue to make all filings required by the SEC
under the Exchange Act.
ARTICLE V
CONDITIONS TO ACQUIROR'S OBLIGATIONS
------------------------------------
All obligations of Acquiror under this Agreement are subject to the
fulfillment or waiver, prior to or at the Effective Time, of each of the
following conditions:
Section 5.1. Representations and Warranties. Each of the
------------------------------
representations and warranties made by the Company in this Agreement shall be
true and correct in all material respects on the date of this Agreement and as
of the Effective Time; provided that, any such representation or warranty which
is qualified by materiality shall then be true and correct in all respects.
Section 5.2. Performance. The Company shall have performed and complied
-----------
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or before the Effective
Time.
Section 5.3. Officer's Certificate. The Company shall have delivered to
---------------------
Acquiror a certificate of a duly authorized officer of the Company in such
person's capacity as an officer and without personal liability, dated the
Effective Date, certifying as to the fulfillment of the conditions specified in
Sections 5.1 and 5.2 hereof.
Section 5.4. Shareholder Approvals. This Agreement and the Merger shall
---------------------
have received the necessary shareholder approval of the Company's shareholders.
Section 5.5. HSR Waiting Period. The applicable waiting period under
------------------
the HSR Act, if any, shall have expired or terminated.
Section 5.6. No Injunction. No preliminary or permanent injunction or
-------------
other order by any federal or state court in the United States which prevents
the consummation of the Merger shall have been
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<PAGE>
issued and remain in effect (the Company and Acquiror agreeing to use their
reasonable best efforts to have any such injunction lifted).
Section 5.7. Rights Agreement. The Rights shall not have become
----------------
nonredeemable, exercisable, distributed or triggered pursuant to the terms of
the Rights Agreement.
ARTICLE VI
CONDITIONS TO THE COMPANY'S OBLIGATIONS
---------------------------------------
All obligations of the Company under this Agreement are subject to the
fulfillment or waiver, prior to or at the Effective Time, of each of the
following conditions:
Section 6.1. Representations and Warranties. Each of the
------------------------------
representations and warranties made by Acquiror in this Agreement shall have
been true and correct in all material respects on the date of this Agreement and
as of the Effective Time; provided that, any such representation or warranty
which is qualified by materiality shall then be true and correct in all
respects.
Section 6.2. Performance. Acquiror shall have performed and complied in
-----------
all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or before the Effective
Time.
Section 6.3. Officer's Certificate. Acquiror shall have delivered to
---------------------
the Company a certificate of a duly authorized officer in such person's capacity
as an officer and without personal liability, dated the Effective Date,
certifying as to the fulfillment of the conditions specified in Sections 6.1 and
6.2 hereof.
Section 6.4. Shareholder Approvals. This Agreement and the Merger shall
---------------------
have received the necessary approval of the Company's shareholders.
Section 6.5. HSR Waiting Period. The applicable waiting period under
------------------
the HSR Act shall have expired or been otherwise terminated.
Section 6.6. No Injunction. No preliminary or permanent injunction or
-------------
other order by any federal or state court in the United States which prevents
the consummation of the Merger shall have been issued and remain in effect (the
Company and Acquiror agreeing to use their reasonable best efforts to have any
such injunction lifted).
ARTICLE VII
SURVIVAL OF REPRESENTATIONS
---------------------------
Section 7.1. No Survival of Representations. The representations,
------------------------------
warranties, covenants and agreements made by the Company, Acquiror and Newco in
this Agreement or in any instrument delivered pursuant to this Agreement shall
terminate on, and shall have no further force or effect after, the Effective
Time, except for those covenants and agreements contained herein or therein
which by their terms apply in whole or in part after the Effective Time. In the
event of a breach of any of such representations, warranties, covenants or
agreements, the party to whom such representations, warranties, covenants or
agreements have been made shall have all rights and remedies for such breach
available to it under the provisions of this Agreement, regardless of any
disclosure to, or investigation made by or on behalf of, such party on or before
the Effective Date.
Section 7.2. Exclusive Remedy.
----------------
(a) Acquiror and Newco hereby waive, from and after the Effective Date
to the fullest extent permitted under applicable law, any and all rights, claims
and causes of action it or any of its
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<PAGE>
affiliates may have against the Company or the Subsidiary relating to the
subject matter of this Agreement arising under or based upon any federal, state,
local or foreign statute, law, ordinance, rule or regulation or otherwise.
(b) Acquiror further acknowledges and agrees that (i) other than the
representations and warranties of the Company and the Subsidiary specifically
contained in this Agreement, there are no representations or warranties of the
Company or the Subsidiary either expressed or implied with respect to the
Company, the Subsidiary or their respective assets, liabilities and businesses,
and (ii) other than as incorporated or repeated in the representations and
warranties of the Company made in this Agreement, it shall have no claim or
right to indemnification with respect to any information (whether written or
oral), documents or material furnished by the Company, the Subsidiary or any of
their respective officers, directors, employees, agents or advisors to Acquiror,
including any information, documents or material made available to Acquiror in
certain "data rooms," management presentations or any other form in expectation
of the transactions contemplated by this Agreement.
ARTICLE VIII
TERMINATION OF AGREEMENT
------------------------
Section 8.1. Termination of Agreement Prior to the Effective Time.
----------------------------------------------------
This Agreement may be terminated and the Merger contemplated hereby may be
abandoned at any time, notwithstanding approval thereof by the shareholders of
the Company, but prior to the Effective Time:
(a) By mutual written consent of each of the Boards of Directors of
Acquiror and the Company;
(b) By either the Acquiror or the Company, if any of the conditions to
such party's obligation to consummate the transactions contemplated in this
Agreement shall have become impossible to satisfy;
(c) By either the Acquiror or the Company, if the Merger has not been
consummated on or before August 30, 1997 (unless the failure to consummate
the Merger by such date shall be due to the action or failure to act of the
party seeking to terminate this Agreement in breach of such party's
obligations under this Agreement);
(d) By the Company pursuant to Section 4.1(a) or 4.2(j) hereof, upon
payment of the Break-Up Fee; or
(e) By the Acquiror, if the Board of Directors of the Company or the
Special Committee (i) withdraws, modifies or changes its recommendation
regarding the approval of this Agreement, or the Merger in a manner adverse
to the Acquiror; (ii) shall have recommended to the shareholders of the
Company any Acquisition Proposal; (iii) shall have taken any action under the
Rights Agreement to exclude any person or entity (other than Acquiror, Newco
or any affiliate of Acquiror or Newco) from the definition of "Acquiring
Person" (as defined in the Rights Agreement) or to redeem the Rights; (iv)
shall have taken any action under Section 673 of the MBCA to approve any
"business combination" (as defined in the MBCA) with an "interested
shareholder" (as defined in the MBCA) (other than Acquiror, Newco or any
affiliate of Acquiror or Newco) prior to such shareholder's "share
acquisition date" (as defined in the MBCA) or the acquisition of Shares by
such shareholder; (v) shall have taken any action to provide that an
Acquisition Proposal shall be exempt from the provisions of Section 671 of
the MBCA; or (vi) shall have resolved to do any of the foregoing.
Any party desiring to terminate this Agreement shall give written notice
of such termination and the reasons therefor to the other parties.
Section 8.2. Effect of Termination. In the event this Agreement is
---------------------
terminated pursuant to Section 8.1 above, this Agreement shall become void and
of no effect and no party hereto will have any liability to the other for costs,
expenses, loss of anticipated profits or otherwise, except that (i) the
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<PAGE>
agreements contained in this Section 8.2 and Sections 4.1(a)(ii), 4.2(b) and 9.2
shall survive the termination hereof, and (ii) nothing herein shall relieve any
party from its obligations with respect to any breach of this Agreement
occurring prior to a termination. The right of any party hereto to terminate
this Agreement pursuant to Section 8.1 shall remain operative and in full force
and effect regardless of any investigation made by or on behalf of any party
hereto, any person controlling any such party or any of their respective
officers, directors, employees, accountants, consultants, legal counsel, agents
or other representatives, whether prior to or after the execution of this
Agreement.
ARTICLE IX
MISCELLANEOUS
-------------
Section 9.1. Waiver of Compliance. Except for any regulatory approval
--------------------
required hereunder, any failure of a party to comply with any obligation,
covenant, agreement or condition herein may be expressly waived in writing by
the other party hereto, but such waiver will not operate as a waiver of, or
estopped with respect to, any subsequent or other failure.
Section 9.2. Expenses. Each party will bear its respective expenses,
--------
fees and costs incurred or arising in connection with the negotiation and
preparation of this Agreement and any documents related hereto, and the parties
will have no liability between or among themselves for such expenses, fees or
costs. Notwithstanding the foregoing, if (i) this Agreement is terminated
because of a failure to receive the requisite shareholder approval of the Merger
and, prior to the Special Meeting, the Company shall have entered into
discussions or negotiations with, any person or entity with respect to an
Acquisition Proposal involving the Company or the Subsidiary and the Board of
Directors of the Company shall not have reaffirmed its recommendation to the
shareholders of the Company with respect to the transactions contemplated by
this Agreement by the time of the Special Meeting; (ii) Acquiror terminates this
Agreement pursuant to Section 8.1(e) or (iii) (A) Company or Acquiror terminates
this Agreement pursuant to Section 8.1(b) or 8.1(c) at a time that a Company
Breach exists, and (B) within 12 months after such termination, a merger,
consolidation or other business combination involving the Company or an
acquisition of 50% or more of an equity interest in the Company is consummated
with any other person or entity, then in any such case the Company shall
promptly pay to Acquiror the Break-up Fee. As used herein, a "Company Breach"
means a willful breach by the Company of any representation, warranty, covenant
or agreement set forth herein, such that the conditions set forth in Sections
5.1 or 5.2 would not be satisfied.
Section 9.3. Assignability; Parties in Interest. Neither this Agreement
----------------------------------
nor any of the rights or obligations hereunder may be assigned by either of the
parties hereto without the prior written consent of the other party. All the
terms and provisions of this Agreement will be binding upon, inure to the
benefit of and be enforceable by, the respective successors and permitted
assigns of the parties hereto. Notwithstanding the foregoing, Section 4.2(c) of
this Agreement shall inure to the benefit of the persons identified therein.
Section 9.4. Specific Performance. The parties hereto agree that if for
--------------------
any reason any party hereto shall have failed to perform its obligations under
this Agreement, then any other party hereto seeking to enforce this Agreement
against such nonperforming party shall, in addition to all other remedies
available to it, be entitled to specific performance and injunctive and other
equitable relief, and the parties hereto further agree to waive any requirement
for the securing or posting of any bond in connection with the obtaining of any
such injunctive or other equitable relief.
Section 9.5. Agreement; Amendments.
---------------------
(a) This Agreement, including the exhibits, schedules, and other
documents delivered pursuant hereto, contains the entire understanding of the
parties. This Agreement may be amended only by a written instrument duly signed
by the parties hereto or their respective successors or assigns.
(b) No discussions regarding or exchange of drafts or comments in
connection with the transactions contemplated herein shall constitute an
agreement among the parties hereto. Any agreement among the parties shall exist
only when the parties have fully executed and delivered this Agreement.
Section 9.6. Headings. The Article and Section headings contained in
--------
this Agreement are for reference purposes only and will not affect in any way
the meaning or interpretation of any provision of this Agreement.
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<PAGE>
Section 9.7. Severability. The invalidity of any term or terms of this
------------
Agreement will not affect any other term of this Agreement, which will remain in
full force and effect.
Section 9.8. Notices. All notices, requests and other communications to
-------
any party hereunder shall be in writing (including telecopy or similar writing)
and shall be given,
if to the Company, to: 1250 Northland Plaza
3800 West 80th Street
Bloomington, Minnesota 55431-4442
Attention: Thomas A. Minner
Chief Executive Officer
Telephone #: (612) 893-3200
Facsimile #:
with a copy to: Dorsey & Whitney LLP
Pillsbury Center South
220 South Sixth Street
Minneapolis, Minnesota 55402
Attention: Elizabeth C. Hinck, Esq.
Telephone #: (612) 340-8877
Facsimile #: (612) 340-8738
if to Acquiror, to: MEDIQ Incorporated
One MEDIQ Plaza
Pennsauken, New Jersey 08110
Attention: Thomas E. Carroll
President and Chief Executive Officer
Telephone #: (609) 662-3200
Facsimile #: (609) 661-0958
with a copy to: Drinker Biddle & Reath
1345 Chestnut Street
Philadelphia, Pennsylvania 19107
Attention: F. Douglas Raymond, III
Telephone #: (215) 988-2700
Facsimile #: (215) 988-2757
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective (i) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section and the
appropriate answerback is received or (ii) if given by any other means, when
delivered at the address specified in this Section.
Section 9.9. Law Governing. This Agreement shall be governed by,
-------------
construed and enforced in accordance with the laws of the State of Minnesota,
without regard to its conflict of laws rules.
Section 9.10. Counterparts. This Agreement may be executed
------------
simultaneously in several counterparts, each of which shall be deemed an
original, but all counterparts so executed will constitute one and the same
agreement.
Section 9.11. Announcements. No party will make any announcement or
-------------
press release respecting the subject matter of this Agreement without the prior
written consent of the other party, except that
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<PAGE>
either party may make such announcement or other disclosure if required by any
law or governmental regulation.
Section 9.12. Representations. No representation or warranty in this
---------------
Agreement shall be deemed to be violated by a party hereto if the information
therein required to be disclosed shall be furnished by such party in response to
any other representation or warranty in this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed on behalf of
each of the parties hereto as of the day and year first above written.
MEDIQ INCORPORATED
By: /s/Thomas E. Carroll
----------------------------------------------
Thomas E. Carroll, President
PRN MERGER CORPORATION
By: /s/Thomas E. Carroll
----------------------------------------------
Thomas E. Carroll, President
UNIVERSAL HOSPITAL SERVICES, INC.
By: /s/Thomas A. Minner
----------------------------------------------
Thomas A. Minner, Chief Executive
Officer
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