AGREEMENT
AND PLAN OF REORGANIZATION
among
MEDIQUIP
HOLDINGS, INC.
DEEP
DOWN, INC.
and
THE
MAJORITY SHAREHOLDERS OF DEEP DOWN, INC.
Dated
as of November 22, 2006
TABLE
OF CONTENTS
PAGE
ARTICLE
I THE EXCHANGE
SECTION
1.01. The Exchange
SECTION
1.02. Effective Time; Closing
SECTION
1.03. Effect of the Exchange
SECTION
1.04. Directors and Officers
ARTICLE
II DELIVERY OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION
2.01. Delivery of Securities
SECTION
2.02. Exchange of Certificates
SECTION
2.03. Stock Transfer Books
ARTICLE
III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION
3.01. Organization and Qualification; Subsidiaries
SECTION
3.02. Certificate of Incorporation and By-Laws
SECTION
3.03. Capitalization
SECTION
3.04. Authority Relative to This Agreement
SECTION
3.05. No Conflict; Required Filings and Consents
SECTION
3.06. Permits; Compliance; Deep Down Products; Regulation
SECTION
3.07. Absence of Certain Changes or Events
SECTION
3.08. Absence of Litigation
SECTION
3.09. Employee Benefit Plans; Labor Matters
SECTION
3.10. Contracts
SECTION
3.11. Environmental Matters
SECTION
3.12. Trademarks, Patents and Copyrights
SECTION
3.13. Taxes
SECTION
3.14. State Takeover Statutes
SECTION
3.15. Brokers
ARTICLE
IV REPRESENTATIONS AND WARRANTIES OF MEDIQUIP
SECTION
4.01. Organization and Qualification; Subsidiaries
SECTION
4.02. Certificate of Incorporation and By-Laws
SECTION
4.03. Capitalization
SECTION
4.04. Authority Relative to This Agreement
SECTION
4.05. No Conflict; Required Filings and Consents
SECTION
4.06. Permits; Compliance
SECTION
4.07. Stock Option Plan
SECTION
4.08. Absence of Certain Changes or Events
SECTION
4.09. Absence of Litigation
SECTION
4.10. Employee Benefit Plans
SECTION
4.11. Contracts
SECTION
4.12. Environmental Matters
SECTION
4.13. Trademarks, Patents and Copyrights
SECTION
4.14. Taxes
SECTION
4.15. Accounting and Tax Matters
SECTION
4.16. Brokers
ARTICLE
V CONDUCT OF BUSINESSES PENDING THE REORGANIZATION
SECTION
5.01. Conduct of Business by Deep Down Pending the Exchange
SECTION
5.02. Conduct of Business by MediQuip Pending the Exchange
ARTICLE
VI ADDITIONAL AGREEMENTS
SECTION
6.01. Filing of Form 8-K
SECTION
6.02. Preparation of Disclosure Statement
SECTION
6.03. Access to Information; Confidentiality
SECTION
6.04. Obligations of MediQuip
SECTION
6.05. Obligations of Securityholder
SECTION
6.06. Application to Standard & Poor’s
SECTION
6.06. Filing of Amended Form 8-K
SECTION
6.07. Further Action; Consents; Filings
SECTION
6.08. Reorganization of Deep Down
SECTION
6.09. Agreement to Deliver Shares
SECTION
6.10. Plan of Exchange
SECTION
6.11. Board of Directors of MediQuip
SECTION
6.12. Public Announcements
SECTION
6.13. Conveyance Taxes
ARTICLE
VII CONDITIONS TO THE REORGANIZATION
SECTION
7.01. Conditions to the Obligations of Each Party
SECTION
7.02. Conditions to the Obligations of MediQuip
SECTION
7.03. Conditions to the Obligations of Deep Down
ARTICLE
VIII TERMINATION, AMENDMENT AND WAIVER
SECTION
8.01. Termination
SECTION
8.02. Effect of Termination
SECTION
8.03. Amendment
SECTION
8.04. Waiver
SECTION
8.05. Expenses
ARTICLE
IX GENERAL
PROVISIONS
SECTION
9.01. Non-Survival of Representations, Warranties and Agreements
SECTION
9.02. Notices
SECTION
9.03. Certain Definitions
SECTION
9.04. Severability
SECTION
9.05. Assignment; Binding Effect; Benefit
SECTION
9.06. Incorporation of Exhibits
SECTION
9.07. Specific Performance
SECTION
9.08. Governing Law; Forum
SECTION
9.09. Headings
SECTION
9.10. Counterparts
SECTION
9.11. Entire Agreement
EXHIBITS
A
-
Certificates to be Exchanged
B
-
Material Contracts of Deep Down
C
-
Material Contracts of MediQuip
D
- Form
of Merger Agreement among SubSea, SOS and Deep Down
E
- Form
of Officer’s Certificate of MediQuip concerning accuracy
F
- Form
of Officer’s Certificate of Deep Down concerning accuracy
G
- Form
of Investment Agreement
H
-
Exceptions to Representations and Warranties of Deep Down
AGREEMENT
AND PLAN OF REORGANIZATION
AGREEMENT
AND PLAN OF REORGANIZATION
dated as
of November 22, 2006 (this “Agreement”) among MEDIQUIP HOLDINGS, INC., a Nevada
corporation (“MediQuip”), DEEP DOWN, INC., a Delaware corporation (formerly
SubSea Acquisition Corporation, a Texas corporation ) (“Deep Down”) and the
undersigned majority securityholders of Deep Down (collectively, the
“Shareholder”).
W
I T N E S S E T H
WHEREAS,
upon the terms and subject to the conditions of this Agreement, all
securityholders of Deep Down will exchange all of the shares of Deep Down’s
common stock for a specified number of shares of MediQuip’s common stock to be
issued and MediQuip will acquire all of the issued and outstanding securities
of
Deep Down, making Deep Down a wholly-owned subsidiary of MediQuip;
WHEREAS,
the Exchange shall qualify as a transaction in securities exempt from
registration or qualification under the Securities Act of 1933, as amended,
and
under the applicable securities laws of each state or jurisdiction where
securityholders of Deep Down reside;
WHEREAS,
for federal income tax purposes, the Exchange is intended to qualify as
a
reorganization under the provisions of section 368(a)(1)(B) of the United
States
Internal Revenue Code of 1986, as amended (the “Code”); and
NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements herein contained, and intending to be legally bound hereby,
MediQuip,
Deep Down and Shareholder hereby agree as follows:
ARTICLE
ITHE EXCHANGE
SECTION
1.01. The
Exchange.
Upon
the terms and subject to the conditions set forth in Article VII, at the
Effective Time (as defined below in Section 1.02), as a result of the Exchange,
Deep Down will become a wholly owned subsidiary of MediQuip.
SECTION
1.02. Effective
Time; Closing.
As
promptly as practicable and in no event later than the 14th
day of
December, 2006 and following the satisfaction or, if permissible, waiver
of the
conditions set forth in Article VII (or such other date as may be agreed
in
writing by each of the parties hereto), the parties hereto shall cause
the
Exchange to be consummated by Shareholder delivering to MediQuip, or its
representatives, the certificates representing all of the outstanding Deep
Down
Securities (as defined below in Section 2.01 (c)), duly endorsed (or with
duly
executed stock powers) so as to make MediQuip the sole owner thereof free
and
clear of all claims and encumbrances except as specifically assumed by
MediQuip.
The term “Effective Time” means the date and time of the Closing (or such later
time as may be agreed in writing by each of the parties hereto) to be held
at
the offices of Sonfield & Sonfield, Houston, Texas (or such other place as
the parties may agree).
SECTION
1.03. Effect
of the Exchange.
At the
Effective Time, the effect of the Exchange shall be Deep Down becoming
a wholly
owned subsidiary of MediQuip.
SECTION
1.04. Directors
and Officers.
The
initial officers and directors of MediQuip shall be the persons designated
by
Deep Down immediately prior to the Effective Time, in each case until their
respective successors are duly elected or appointed and qualified. In connection
with such election, MediQuip shall have provided its securityholders with
an
Information Statement pursuant to Section 14f of the Exchange Act and Securities
Exchange Commission (“SEC”) Rule 14f-1.
ARTICLE
IIDELIVERY OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION
2.01. Delivery
of Securities.
At the
Effective Time, by virtue of the Exchange:
(a) (i)
85,000,000 shares of common stock, par value $0.001 per share, of MediQuip
(the
“MediQuip Common Stock”) shall be issued in exchange for all outstanding shares
of common stock of Deep Down (the “Deep Down Common Stock”), (ii) 5,000 shares
of Series D Redeemable Convertible Preferred Stock and 3,000 shares of
Series F
Redeemable Convertible Preferred Stock of Mediquip will be exchanged for
a like
number and designation of Redeemable Convertible Preferred Stock of Deep
Down
issued and outstanding immediately prior to the Effective Time, except
the
conversion price will be reduced from $1.45 per share to $0.1933 per share,
(iii) 5,000 shares of Series E Redeemable Exchangeable Preferred Stock
and 1,000
shares of Series G Redeemable Exchangeable Preferred Stock will be exchanged
for
a like number and designation of Redeemable Exchangeable Preferred Stock
of Deep
Down issued and outstanding immediately prior to the Effective Time. The
Deep
Down Common Stock and the several series of Deep Down preferred stock are
collectively referred to as the “Deep Down Securities”). Each share of Deep Down
Common Stock shall be converted, subject to Section 2.02(e), into the right
to
receive a ratable portion of 85,000,000 shares (the “Exchange Ratio”) of
MediQuip Common Stock; provided, however, that, if between the date of
this
Agreement and the Effective Time the outstanding shares of MediQuip Common
Stock
shall have been changed from into a different number of shares or a different
class, by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the Exchange
Ratio
shall be correspondingly adjusted to the extent appropriate to reflect
such
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares (all such shares of MediQuip Common Stock
being herein referred to as the “MediQuip Securities” or the “Exchange
Consideration”); and
(b) each
Share held in the treasury of Deep Down and each Share owned by MediQuip
or any
direct or indirect wholly owned subsidiary of MediQuip or of Deep Down
immediately prior to the Effective Time shall be cancelled and extinguished
without any conversion thereof and no payment or distribution shall be
made with
respect thereto.
SECTION
2.02. Exchange
of Certificates.
(a) At
the
Closing, Shareholder shall deliver to MediQuip all certificates representing
Deep Down Securities (the “Certificates”) delivered to it (together with any
stock transfer tax stamps required by reason of the payment of the Exchange
Consideration to a person other than the registered holder of the Certificate
surrendered), together with such other customary documents as may reasonably
be
required by MediQuip, in exchange for the Exchange Consideration. Certificates
representing the Exchange Consideration shall be issued to the persons
and in
the amounts described in Exhibit A. Any shareholder of Deep Down whose
Certificates are not delivered at the Closing shall receive the Exchange
Consideration with respect to such Certificates upon delivery to MediQuip
after
the Closing of such Certificates and the other items required pursuant
to the
first sentence of this Section 2.02(a).
(b) No
dividends or other distributions declared or made after the Effective Time
with
respect to the MediQuip Common Stock with a record date after the Effective
Time
shall be paid to the holder of any unsurrendered Certificate with respect
to the
shares of MediQuip Common Stock represented thereby, and no cash payment
in lieu
of any fractional shares shall be paid to any such holder pursuant to Section
2.02(d), until the holder of such Certificate shall surrender such
Certificate.
(c) All
shares of MediQuip Common Stock issued upon conversion of Deep Down Securities
in accordance with the terms hereof (including any cash paid pursuant to
Section
2.02(b) or (d)) shall be deemed to have been issued in full satisfaction
of all
rights pertaining to such Deep Down Securities.
(d) No
certificate or scrip representing fractional shares of MediQuip Common
Stock
shall be issued upon the surrender for exchange of Certificates, and such
fractional share interests will not entitle the owner thereof to vote or
to any
other rights of a shareholder of MediQuip. Each holder of a fractional
share
interest shall be paid an amount in cash (without interest) equal to the
product
obtained by multiplying (i) such fractional share interest to which such
holder
(after taking into account all fractional share interests then held by
such
holder) would otherwise be entitled by (ii) the average of the per share
closing
prices on the OTC Bulletin Board (the “OTC “) of shares of MediQuip Common Stock
during the 20 consecutive trading days ending on (and including) the trading
day
immediately preceding the date of the Effective Time. As promptly as practicable
after the determination of the amount of cash, if any, to be paid to holders
of
fractional share interests, the MediQuip shall forward payments to such
holders
of fractional share interests subject to and in accordance with the terms
of
Sections 2.02(b).
(e) Neither
MediQuip nor Deep Down shall be liable to any holder of Shares for any
such
Shares (or dividends or distributions with respect thereto), or cash delivered
to a public official pursuant to any abandoned property, escheat or similar
Law.
(f) Each
of
Deep Down and MediQuip shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder
of
Shares such amounts as it is required to deduct and withhold with respect
to the
making of such payment under the Code, or any provision of state, local
or
foreign tax law. To the extent that amounts are so withheld by the Surviving
Corporation or MediQuip, as the case may be, such withheld amounts shall
be
treated for all purposes of this Agreement as having been paid to the holder
of
Shares in respect of which such deduction and withholding was made by the
Surviving Corporation or MediQuip, as the case may be.
(g) If
any
Certificate shall have been lost, stolen or destroyed, upon the making
of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by MediQuip, the posting by such person
of
a bond, in such reasonable amount as MediQuip may direct, as indemnity
against
any claim that may be made against it with respect to such Certificate,
the
MediQuip will issue in exchange for such lost, stolen or destroyed Certificate
the Exchange Consideration, any cash in lieu of fractional shares of MediQuip
Common Stock to which the holders thereof are entitled pursuant to Section
2.02(d) and any dividends or other distributions to which the holders thereof
are entitled pursuant to Section 2.02(f).
SECTION
2.03. Stock
Transfer Books.
At the
Effective Time, the stock transfer books of Deep Down shall be closed and
there
shall be no further registration of transfers of Shares thereafter on the
records of Deep Down. From and after the Effective Time, the holders of
Certificates representing Shares outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such Shares, except
as
otherwise provided in this Agreement or by Law.
ARTICLE
IIIREPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except
as
set forth in this Agreement, Deep Down hereby represents and warrants to
MediQuip that:
SECTION
3.01. Organization
and Qualification; Subsidiaries.
Each of
Deep Down and each subsidiary of Deep Down (the “Deep Down Subsidiaries”) is a
corporation duly incorporated, validly existing and in good standing under
the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and to own, lease and operate its properties and to carry on its
business
as it is now being conducted, except where the failure to be so organized,
existing or in good standing or to have such corporate power, have not
had, and
could not reasonably be expected to have, individually or in the aggregate,
a
Deep Down Material Adverse Effect (as defined below). Each of Deep Down
and Deep
Down Subsidiaries is duly qualified or licensed as a foreign corporation
to do
business, and is in good standing, in each jurisdiction where the character
of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures
to be
so qualified or licensed and in good standing that have not had, and could
not
reasonably be expected to have, individually or in the aggregate, a Deep
Down
Material Adverse Effect. The term “Deep Down Material Adverse Effect” means any
change in or effect on the business of Deep Down and Deep Down Subsidiaries
that
is materially adverse to the financial condition or results of operations
of
Deep Down and Deep Down Subsidiaries taken as a whole, except for any such
changes or effects resulting from or arising in connection with (i) this
Agreement or the transactions contemplated by this Agreement or the announcement
hereof, (ii) any changes in economic, regulatory or political conditions
or
(iii) any issue or condition otherwise known to MediQuip prior to the date
of
this Agreement.
SECTION
3.02. Certificate
of Incorporation and By-Laws.
Deep
Down has heretofore made available to MediQuip a complete and correct copy
of
the Certificate of Incorporation and the By-Laws of Deep Down. Such Certificate
of Incorporation and By-Laws are in full force and effect. Deep Down is
not in
violation of any of the provisions of its Certificate of Incorporation
or
By-Laws.
SECTION
3.03. Capitalization.
Except
as indicated on Exhibit A, all Deep Down Securities will be issued and
outstanding and will be validly issued, fully paid and non-assessable and
(ii)
no shares are reserved for future issuance pursuant to Deep Down Stock
Options
and Warrants. All shares of Deep Down Securities subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and non-assessable. There are no outstanding
contractual obligations of Deep Down or any Deep Down Subsidiary to repurchase,
redeem or otherwise acquire any shares of Deep Down Securities or any capital
stock of any Deep Down Subsidiary. Each outstanding share of capital stock
of
each Deep Down Subsidiary is duly authorized, validly issued, fully paid
and
non-assessable and each such share owned by Deep Down or another Deep Down
Subsidiary is free and clear of all security interests, liens, claims,
pledges,
options, rights of first refusal, agreements, limitations on Deep Down’s or such
other Deep Down Subsidiary’s voting rights, charges and other encumbrances of
any nature whatsoever, except where failure to own such shares free and
clear
would not, individually or in the aggregate, have a Deep Down Material
Adverse
Effect. There are no material outstanding contractual obligations of Deep
Down
or any Deep Down Subsidiary to provide funds to, or make any investment
(in the
form of a loan, capital contribution or otherwise) in, any Deep Down Subsidiary
or any other person.
SECTION
3.04. Authority
Relative to This Agreement.
Deep
Down has all necessary corporate power and authority to execute and deliver
this
Agreement and to perform its obligations hereunder and to consummate the
Exchange and the other transactions contemplated by this Agreement. The
execution and delivery of this Agreement by Deep Down and the consummation
by
Deep Down of the Exchange and the other transactions contemplated by this
Agreement have been duly and validly authorized by all necessary corporate
action and no other corporate proceedings on the part of Deep Down are
necessary
to authorize this Agreement or to consummate the Exchange and the other
transactions contemplated by this Agreement. This Agreement has been duly
and
validly executed and delivered by Deep Down and, assuming the due authorization,
execution and delivery by MediQuip, constitutes a legal, valid and binding
obligation of Deep Down, enforceable against Deep Down in accordance with
its
terms.
SECTION
3.05. No
Conflict; Required Filings and Consents.
(a)
Except as described on Exhibit H, the execution and delivery of this Agreement
by Deep Down does not, and the performance of this Agreement by Deep Down
will
not, (i) conflict with or violate the Certificate of Incorporation or By-laws
of
Deep Down or any equivalent organizational documents of any Deep Down
Subsidiary, (ii) assuming that all consents, approvals, authorizations
and other
actions described in Section 3.05(b) have been obtained and all filings
and
obligations described in Section 3.05(b) have been made, to the best knowledge
of Deep Down after inquiry, conflict with or violate any foreign or domestic
law, statute, ordinance, rule, regulation, order, judgment or decree (“Law”)
applicable to Deep Down or any Deep Down Subsidiary or by which any property
or
asset of Deep Down or any Deep Down Subsidiary is bound or affected, or
(iii)
result in any breach of or constitute a default (or an event which with
notice
or lapse of time or both would become a default) under, or give to others
any
right of termination, amendment, acceleration or cancellation of, or result
in
the creation of a lien or other encumbrance on any property or asset of
Deep
Down or any Deep Down Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation, except, with respect to clause (iii), for any
such
conflicts, violations, breaches, defaults or other occurrences that have
not
had, and could not reasonably be expected to have, individually or in the
aggregate, a Deep Down Material Adverse Effect, and that could not reasonably
be
expected to prevent or materially delay the consummation of the transactions
contemplated by this Agreement.
(b) Except
as
described on Exhibit H, the execution and delivery of this Agreement by
Deep
Down does not, and the performance of this Agreement by Deep Down will
not,
require any consent, approval, authorization or permit of, or filing with
or
notification to, any domestic or foreign governmental or regulatory authority
(“Governmental Entity”), except (i) for applicable requirements, if any, of
state securities or “blue sky” laws (“Blue Sky Laws”), state takeover laws and
(ii) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, has not had, and could
not
reasonably be expected to have, individually or in the aggregate, a Deep
Down
Material Adverse Effect, and could not reasonably be expected to prevent
or
materially delay the consummation of the transactions contemplated by this
Agreement.
SECTION
3.06. Permits;
Compliance.
(a)
Each of Deep Down and Deep Down Subsidiaries is in possession of all franchises,
grants, authorizations, licenses, permits, easements, variances, exceptions,
consents, certificates, approvals and orders of any Governmental Entity
necessary for Deep Down or any Deep Down Subsidiary to own, lease and operate
its properties or to carry on its business as it is now being conducted
(the
“Deep Down Permits”), except where the failure to have, or the suspension or
cancellation of, any of Deep Down Permits has not had, and could not reasonably
be expected to have, individually or in the aggregate, a Deep Down Material
Adverse Effect, and, as of the date of this Agreement, no suspension or
cancellation of any of Deep Down Permits is pending or, to the knowledge
of Deep
Down, threatened, except where the failure to have, or the suspension or
cancellation of, any of Deep Down Permits has not had, and could not reasonably
be expected to have, individually or in the aggregate, a Deep Down Material
Adverse Effect.
(b) To
the
best knowledge of Deep Down after inquiry, neither Deep Down nor any Deep
Down
Subsidiary is in conflict with, or in default or violation of, (i) any
Law
applicable to Deep Down or any Deep Down Subsidiary or by which any property
or
asset of Deep Down or any Deep Down Subsidiary is bound or affected, (ii)
any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Deep Down or any Deep
Down
Subsidiary is a party or by which Deep Down or any Deep Down Subsidiary
or any
property or asset of Deep Down or any Deep Down Subsidiary is bound or
affected
or (iii) any Deep Down Permits, except, in the case of each of (i), (ii)
and
(iii), for any such conflicts, defaults or violations that have not had,
and
could not reasonably be expected to have, individually or in the aggregate,
a
Deep Down Material Adverse Effect.
SECTION
3.07. Absence
of Certain Changes or Events.
Since
the date of its organization, except as contemplated by or as disclosed
in this
Agreement, Deep Down has conducted its businesses only in the ordinary
course
and in a manner consistent with past practice and, since such date, there
has
not been (a) any material change by Deep Down in its accounting methods,
principles or practices, (b) any declaration, setting aside or payment
of any
dividend or distribution in respect of the Commons Stock or any redemption,
purchase or other acquisition of any of Deep Down’s securities or (c) any
increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other
employee
benefit plan, or any other increase in the compensation payable or to become
payable to any executive officers of Deep Down, except in the ordinary
course of
business.
SECTION
3.08. Absence
of Litigation.
Except
as set forth on Section 3.08 of Deep Down Disclosure Schedule, as of the
date of
this Agreement, there is no litigation, suit, claim, action, proceeding
or
investigation pending or, to the knowledge of Deep Down, threatened against
Deep
Down, or any property or asset of Deep Down, before any court, arbitrator
or
governmental entity, domestic or foreign, which (i) has had, or could reasonably
be expected to have, individually or in the aggregate, a material adverse
effect
on Deep Down or (ii) seeks to delay or prevent the consummation of any
other
material transaction contemplated by this Agreement. As of the date of
this
Agreement, neither Deep Down nor any property or asset of Deep Down is
subject
to any continuing order of, consent decree, settlement agreement or other
similar written agreement with, or, to the knowledge of Deep Down, continuing
investigation by, any governmental entity, or any order, writ, judgment,
injunction, decree, determination or award of any governmental entity or
arbitrator having, individually or in the aggregate, a material adverse
effect
on Deep Down.
SECTION
3.09. Employee
Benefit Plans; Labor Matters.
With
respect to each employee benefit plan, program, arrangement and contract
(including, without limitation, any “employee benefit plan”, as defined in
section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended
(“ERISA”)) maintained or contributed to by Deep Down or any Deep Down
Subsidiary, or with respect to which Deep Down or any Deep Down Subsidiary
could
incur liability under section 4069, 4212(c) or 4204 of ERISA (the “Deep Down
Benefit Plans”), Deep Down has made available to the MediQuip a true and correct
copy of (i) the most recent annual report (Form 5500) filed with the Internal
Revenue Service (the “IRS”), (ii) a complete copy of such Deep Down Benefit
Plan, (iii) each trust agreement relating to such Deep Down Benefit Plan,
(iv)
the most recent summary plan description for each Deep Down Benefit Plan
for
which a summary plan description is required, (v) the most recent actuarial
report or valuation relating to a Deep Down Benefit Plan subject to Title
IV of
ERISA and (vi) the most recent determination letter, if any, issued by
the IRS
with respect to any Deep Down Benefit Plan qualified under section 401(a)
of the
Code.
SECTION
3.10. Contracts.
(a)
Exhibit B lists each of the following written contracts and agreements
of Deep
Down (such contracts and agreements being “Material Contracts”):
(i) each
contract and agreement for the purchase or lease of personal property with
any
supplier or for the furnishing of services to Deep Down that in each case
involves annual payment in excess of US$50,000, or British sterling
equivalent;
(ii) all
broker, exclusive dealing or exclusivity, distributor, dealer, manufacturer’s
representative, franchise, agency, sales promotion and market research
agreements involving annual payments in excess of US$100,000,or British
sterling
equivalent, to which Deep Down is a party or any other material contract
that
compensates any person other than employees based on any sales by Deep
Down;
(iii) all
leases and subleases of real property;
(iv) all
contracts and agreements relating to indebtedness for borrowed money other
than
trade indebtedness of Deep Down;
(v) all
contracts and agreements involving annual payments in excess of $100,000
with
any Governmental Entity to which Deep Down is a party; and
(vi) any
other
material agreement of Deep Down which is terminable upon or prohibits a
change
of ownership or control of Deep Down.
(b) Each
Material Contract: (i) is valid and binding on Deep Down and, to the knowledge
of Deep Down, on the other parties thereto, and is in full force and effect,
and
(ii) upon consummation of the transactions contemplated by this Agreement,
shall
continue in full force and effect without material penalty or other material
adverse consequence. Deep Down is not in material breach of, or material
default
under, any Material Contract and, to the knowledge of Deep Down, no other
party
to any Material Contract is in material breach thereof or material default
thereunder.
SECTION
3.11. Environmental
Matters.
Except
as would not, individually or in the aggregate, have a Deep Down Material
Adverse Effect:
(a) Deep
Down
and Deep Down Subsidiaries (i) are in compliance with all applicable
Environmental Laws (as defined below), (ii) hold all Environmental Permits
(as
defined below) and (iii) are in compliance with their respective Environmental
Permits.
(b) None
of
Deep Down or any Deep Down Subsidiary has received any written request
for
information, or been notified that it is a potentially responsible party,
under
CERCLA (defined below) or any similar Law of any state, locality or any
other
jurisdiction.
(c) None
of
Deep Down or any Deep Down Subsidiary has entered into or agreed to any
consent
decree or order or is subject to any judgment, decree or judicial order
relating
to compliance with Environmental Laws, Environmental Permits or the
investigation, sampling, monitoring, treatment, remediation, removal or
cleanup
of Hazardous Materials (defined below) and, to the knowledge of Deep Down,
no
investigation, litigation or other proceeding is pending or threatened
in
writing with respect thereto.
(d) None
of
the real property owned or leased by Deep Down or any Deep Down Subsidiary
is
listed or, to the knowledge of Deep Down, proposed for listing on the “National
Priorities List” under CERCLA, as updated through the date of this Agreement, or
any similar list of sites in the United States or any other jurisdiction
requiring investigation or cleanup.
For
purposes of this Agreement:
“CERCLA”
means
the Comprehensive Environmental Response, Compensation and Liability Act
of
1980, as amended as of the date hereof.
“Environmental
Laws”
means
any federal, state or local statute, law, ordinance, regulation, rule,
code or
order of the United States, or any other jurisdiction and any enforceable
judicial or administrative interpretation thereof, including any judicial
or
administrative order, consent decree or judgment, relating to pollution
or
protection of the environment or natural resources, including, without
limitation, those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge of Hazardous Materials, as in effect
as
of the date of this Agreement.
“Environmental
Permits”
means
any permit, approval, identification number, license and other authorization
required under any applicable Environmental Law.
“Hazardous
Materials”
means
(a) any petroleum, petroleum products, by-products or breakdown products,
radioactive materials, asbestos-containing materials or polychlorinated
biphenyls or (b) any chemical, material or substance defined or regulated
as
toxic or hazardous or as a pollutant or contaminant or waste under any
applicable Environmental Law.
SECTION
3.12. Trademarks,
Patents and Copyrights.
Except
as would not, individually or in the aggregate, have a Deep Down Material
Adverse Effect, Deep Down and Deep Down Subsidiaries own or possess adequate
licenses or other valid rights to use all patents, patent rights, trademarks,
trademark rights, trade names, trade dress, trade name rights, copyrights,
service marks, trade secrets, applications for trademarks and for service
marks,
know-how and other proprietary rights and information used or held for
use in
connection with the business of Deep Down and Deep Down Subsidiaries as
currently conducted, and Deep Down has no knowledge of any assertion or
claim
challenging the validity of any of the foregoing. To the knowledge of Deep
Down,
the conduct of the business of Deep Down and Deep Down Subsidiaries as
currently
conducted does not and will not conflict in any way with any patent, patent
right, license, trademark, trademark right, trade dress, trade name, trade
name
right, service mark or copyright of any third party that has had, or could
reasonably be expected to have, individually or in the aggregate, a Deep
Down
Material Adverse Effect. To the knowledge of Deep Down, there are no
infringements of any proprietary rights owned by or licensed by or to Deep
Down
or any Deep Down Subsidiary that have had, or could reasonably be expected
to
have, individually or in the aggregate, a Deep Down Material Adverse
Effect.
SECTION
3.13. Taxes.
Except
as for such matters that could not reasonably be expected to have a Deep
Down
Material Adverse Effect, (a) Deep Down and each of Deep Down Subsidiaries
have
timely filed or will timely file all returns and reports required to be
filed by
them with any taxing authority with respect to Taxes for any period ending
on or
before the Effective Time, taking into account any extension of time to
file
granted to or obtained on behalf of Deep Down and Deep Down Subsidiaries,
(b)
all Taxes shown to be payable on such returns or reports that are due prior
to
the Effective Time have been paid or will be paid, (c) as of the date of
this
Agreement, no deficiency for any material amount of Tax has been asserted
or
assessed by a taxing authority against Deep Down or any of Deep Down
Subsidiaries and (d) Deep Down and each of Deep Down Subsidiaries have
provided
adequate reserves in their financial statements for any Taxes that have
not been
paid in accordance with generally accepted accounting principles, whether
or not
shown as being due on any returns. As used in this Agreement, “Taxes” shall mean
any and all taxes, fees, levies, duties, tariffs, imposts and other charges
of
any kind (together with any and all interest, penalties, additions to tax
and
additional amounts imposed with respect thereto) imposed by any government
or
taxing authority, including, without limitation: taxes or other charges
on or
with respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers’ compensation, unemployment compensation or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer,
value
added or gains taxes; license, registration and documentation fees; and
customers’ duties, tariffs and similar charges.
SECTION
3.14. State
Takeover Statutes.
The
Board of Directors of Deep Down has taken all action necessary to ensure
that
any restrictions on business combinations will not apply to the Exchange
and the
other transactions contemplated by this Agreement. To the knowledge of
Deep
Down, no other state takeover statute is applicable to the Exchange or
the other
transactions contemplated by this Agreement.
SECTION
3.15. Brokers.
No
broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the Exchange or the other
transactions contemplated by this Agreement based upon arrangements made
by or
on behalf of Deep Down.
ARTICLE
IVREPRESENTATIONS AND WARRANTIES OF MEDIQUIP
MediQuip
hereby represents and warrants to Deep Down that:
SECTION
4.01. Organization
and Qualification; Subsidiaries.
Each of
MediQuip and each subsidiary of MediQuip (the “MediQuip Subsidiaries”) is a
corporation duly incorporated, validly existing and in good standing under
the
laws of the jurisdiction of its incorporation and has all corporate requisite
power and authority and all necessary governmental approvals to own, lease
and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or in
good
standing or to have such corporate power, authority and governmental approvals
have not had, and could not reasonably be expected to have, individually
or in
the aggregate, a MediQuip Material Adverse Effect (as defined below). Each
of
MediQuip and the MediQuip Subsidiaries is duly qualified or licensed as
a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated
by
it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and
in good
standing that have not had, and could not reasonably be expected to have,
individually or in the aggregate, a MediQuip Material Adverse Effect. The
term
“MediQuip Material Adverse Effect” means any change in or effect on the business
of MediQuip and the MediQuip Subsidiaries that is materially adverse to
the
financial condition or results of operations of MediQuip and the MediQuip
Subsidiaries taken as a whole, except for any such changes or effects resulting
from or in connection with (i) this Agreement or the transactions contemplated
by this Agreement or the announcement hereof, (ii) any changes in economic,
regulatory or political conditions or (iii) any issue or condition otherwise
known to Deep Down prior to the date of this Agreement.
SECTION
4.02. Certificate
of Incorporation and By-Laws.
MediQuip has heretofore made available to Deep Down a complete and correct
copy
of the Certificate of Incorporation and the By-Laws of MediQuip. Such
Certificates of Incorporation and By-Laws are in full force and effect.
MediQuip
is not violation of any of the provisions of its Certificate of Incorporation
or
By-Laws.
SECTION
4.03. Capitalization.
The
authorized capital stock of MediQuip consists of (a) 490,000,000 shares
of
MediQuip Common Stock, $.001 par value, and (b) 10,000,000 shares of preferred
stock, $.001 par value. As of the date of this Agreement, (i) 39,221,421
shares
of MediQuip Common Stock are issued and outstanding, and 22,000 shares
of
MediQuip preferred stock are issued and outstanding, all of which are validly
issued, fully paid and non-assessable, (ii) in addition to the shares reserved
for issuance under the terms of the Plan referred to and defined in Section
4.07, no shares of MediQuip Common Stock are held in the treasury of MediQuip
or
by MediQuip Subsidiaries and (iii) 4,400,000 shares are reserved for future
issuance upon conversion of the outstanding preferred stock. Immediately
prior
to closing, there will exist only 7,870,171 shares of MediQuip Common Stock
issued and outstanding and 22,000 shares of MediQuip preferred stock
(convertible into a maximum of 4,400,000 shares of common stock of MediQuip)
issued and outstanding. There are no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the
issued
or unissued capital stock of MediQuip or any MediQuip Subsidiary or obligating
MediQuip or any MediQuip Subsidiary to issue or sell any shares of capital
stock
of, or other equity interests in, MediQuip or any MediQuip Subsidiary.
All
shares of MediQuip Common Stock subject to issuance as aforesaid, upon
issuance
on the terms and conditions specified in the instruments pursuant to which
they
are issuable, will be duly authorized, validly issued, fully paid and
non-assessable. There are no outstanding contractual obligations of MediQuip
or
any MediQuip Subsidiary to repurchase, redeem or otherwise acquire any
shares of
MediQuip Common Stock or any capital stock of any MediQuip Subsidiary.
Each
outstanding share of capital stock of each MediQuip Subsidiary is duly
authorized, validly issued, fully paid and non-assessable and each such
share
owned by MediQuip or another MediQuip Subsidiary is free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on MediQuip’s or such other MediQuip Subsidiary’s voting
rights, charges and other encumbrances of any nature whatsoever, except
where
failure to own such shares free and clear would not, individually or in
the
aggregate, have a MediQuip Material Adverse Effect. There are no material
outstanding contractual obligations of MediQuip or any MediQuip Subsidiary
to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any MediQuip Subsidiary or any other person.
The
shares of MediQuip Common Stock to be issued pursuant to the Exchange in
accordance with Section 2.01 (i) will be duly authorized, validly issued,
fully
paid and non-assessable and not subject to preemptive rights created by
statute,
the MediQuip’s Certificate of Incorporation or By-Laws or any agreement to which
the MediQuip is a party or is bound and (ii) will, when issued, be exempt
from
registration under the Securities Act of 1933, as amended (together with
the
rules and regulations promulgated thereunder, the “Securities Act”) and the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the “Exchange Act”) and exempt from
registration under applicable Blue Sky Laws. The shares of MediQuip Common
Stock
to be issued pursuant to the Exchange in accordance with Section 2.01 will
bear
a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such MediQuip
Securities):
“The
Securities represented by this certificate have not been registered under
the
Securities Act of 1933, as amended. The Securities may not be sold, transferred
or assigned in the absence of an effective registration statement for the
Securities under said Act, or an opinion of counsel, in form, substance
and
scope customary for opinions of counsel in comparable transactions, that
registration is not required under said Act.”
SECTION
4.04. Authority
Relative to This Agreement.
MediQuip has all necessary corporate power and authority to execute and
deliver
this Agreement and to perform its obligations hereunder and to consummate
the
Exchange and the other transactions contemplated by this Agreement. The
execution and delivery of this Agreement by MediQuip and the consummation
by
MediQuip of the Exchange and the other transactions contemplated by this
Agreement have been duly and validly authorized by all necessary corporate
action and no other corporate proceedings on the part of MediQuip are necessary
to authorize this Agreement or to consummate the Exchange and the other
transactions contemplated by this Agreement. This Agreement has been duly
and
validly executed and delivered by MediQuip and, assuming the due authorization,
execution and delivery by Deep Down, constitutes a legal, valid and binding
obligation of MediQuip, enforceable against MediQuip in accordance with
its
terms.
SECTION
4.05. No
Conflict; Required Filings and Consents.
(a) The
execution and delivery of this Agreement by MediQuip does not, and the
performance of this Agreement by MediQuip will not, (i) conflict with or
violate
the Certificate of Incorporation or By-laws of MediQuip, (ii) assuming
that all
consents, approvals, authorizations and other actions described in Section
4.05(b) have been obtained and all filings and obligations described in
Section
4.05(b) have been made, conflict with or violate any Law applicable to
MediQuip
or any MediQuip Subsidiary or by which any property or asset of MediQuip
or any
MediQuip Subsidiary is bound or affected, or (iii) result in any breach
of or
constitute a default (or an event which with notice or lapse of time or
both
would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of
a lien
or other encumbrance on any property or asset of MediQuip or any MediQuip
Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation,
except, with respect to clause (iii), for any such conflicts, violations,
breaches, defaults, or other occurrences that have not had, and could not
reasonably be expected to have, individually or in the aggregate, a MediQuip
Material Adverse Effect, and that could not reasonably be expected to prevent
or
materially delay the consummation of the transactions contemplated by this
Agreement.
(b) The
execution and delivery of this Agreement by MediQuip does not, and the
performance of this Agreement by MediQuip will not, require any consent,
approval, authorization or permit of, or filing with or notification to,
any
Governmental Entity, except (i) for applicable requirements, if any, of
the
Exchange Act, Blue Sky Laws, the Securities Act, the OTC, and state takeover
laws; and (ii) where failure to obtain such consents, approvals, authorizations
or permits, or to make such filings or notifications, has not had, and
could not
reasonably be expected to have, individually or in the aggregate, a MediQuip
Material Adverse Effect, and could not reasonably be expected to prevent
or
materially delay the consummation of the transactions contemplated by this
Agreement.
SECTION
4.06. Permits;
Compliance.
(a)
Each of MediQuip and the MediQuip Subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any Governmental
Entity necessary for MediQuip or any MediQuip Subsidiary to own, lease
and
operate its properties or to carry on its business as it is now being conducted
(the “MediQuip Permits”), except where the failure to have, or the suspension or
cancellation of, any of MediQuip Permits has not had, and could not reasonably
be expected to have, individually or in the aggregate, a MediQuip Material
Adverse Effect, and, as of the date of this Agreement, no suspension or
cancellation of any of MediQuip Permits is pending or, to the knowledge
of
MediQuip, threatened, except where the failure to have, or the suspension
or
cancellation of, any of MediQuip Permits has not had, and could not reasonably
be expected to have, individually or in the aggregate, a MediQuip Material
Adverse Effect.
(b) Neither
MediQuip nor any MediQuip Subsidiary is in conflict with, or in default
or
violation of, (i) any Law applicable to MediQuip or any MediQuip Subsidiary
or
by which any property or asset of MediQuip or any MediQuip Subsidiary is
bound
or affected, (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to
which
MediQuip or any MediQuip Subsidiary is a party or by which MediQuip or
any
MediQuip Subsidiary or any property or asset of MediQuip or any MediQuip
Subsidiary is bound or affected or (iii) any MediQuip Permits, except,
in the
case of each of (i), (ii) and (iii), for any such conflicts, defaults or
violations that have not had, and could not reasonably be expected to have,
individually or in the aggregate, a MediQuip Material Adverse
Effect.
SECTION
4.07. Divestiture of Westmeria Health Care Limited MediQuip shall have
divested
all of its interest in its wholly owned subsidiary, Westmeria Health Care
Limited, a private limited company incorporated in England and Wales, and
shall
have paid or discharged any MediQuip obligations of any kind or character,
direct or contingent, such that there are no outstanding liabilities whatsoever.
The consideration received by MediQuip for the divestiture of Westmeria
shall be
the cancellation of 31,351,250 outstanding common stock equivalents of
MediQuip.
Upon the closing of the divestiture of Westmeria Health Care Limited, there
will
exist only 7,870,171 shares of MediQuip Common Stock issued and outstanding
and
22,000 shares of MediQuip preferred stock (convertible into a maximum of
4,400,000 shares of common stock of MediQuip) issued and outstanding.
SECTION
4.08. Absence
of Certain Changes or Events.
Since
the date of the filing of the Annual Report on Form 10-KSB (the “Annual
Report”), except as contemplated by or as disclosed in this Agreement, or as
disclosed in any amendment to the Annual Report, MediQuip and MediQuip
Subsidiaries have conducted their businesses only in the ordinary course
and in
a manner consistent with past practice and, since such date, there has
not been
(a) any MediQuip Material Adverse Effect, (b) any material change by MediQuip
in
its accounting methods, principles or practices, (c) any declaration, setting
aside or payment of any dividend or distribution in respect of the Shares
or any
redemption, purchase or other acquisition of any of MediQuip’s securities or (d)
any increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other
employee
benefit plan, or any other increase in the compensation payable or to become
payable to any executive officers of MediQuip or any MediQuip Subsidiary,
except
in the ordinary course of business consistent with past practice.
SECTION
4.09. Absence
of Litigation.
As of
the date of this Agreement, there is no litigation, suit, claim, action,
proceeding or investigation pending or, to the knowledge of MediQuip, threatened
against MediQuip or any MediQuip Subsidiary, or any property or asset of
MediQuip or any MediQuip Subsidiary, before any court, arbitrator or
Governmental Entity, domestic or foreign, which (i) has had, or could reasonably
be expected to have, individually or in the aggregate, a MediQuip Material
Adverse Effect or (ii) seeks to delay or prevent the consummation of the
Exchange or any other material transaction contemplated by this Agreement.
As of
the date of this Agreement, neither MediQuip nor any MediQuip Subsidiary
nor any
property or asset of MediQuip or any MediQuip Subsidiary is subject to
any
continuing order of, consent decree, settlement agreement or other similar
written agreement with, or, to the knowledge of MediQuip, continuing
investigation by, any Governmental Entity, or any order, writ, judgment,
injunction, decree, determination or award of any Governmental Entity or
arbitrator having, individually or in the aggregate, a MediQuip Material
Adverse
Effect.
SECTION
4.10. Employee
Benefit Plans.
MediQuip and MediQuip Subsidiary presently do not have any employees. MediQuip
and MediQuip Subsidiary presently do not, and have never in the past, maintained
or contributed to any employee benefit plan, program, arrangement and contract
(including, without limitation, any “employee benefit plan”, as defined in
section 3(3) of ERISA).
SECTION
4.11. Contracts.
(a)
Exhibit C lists each of the following written contracts and agreements
of
MediQuip (such contracts and agreements being “Material
Contracts”):
(i) each
contract and agreement for the purchase or lease of personal property with
any
supplier or for the furnishing of services to MediQuip;
(ii) all
broker, exclusive dealing or exclusivity, distributor, dealer, manufacturer’s
representative, franchise, agency, sales promotion and market research
agreements, to which MediQuip is a party or any other material contract
that
compensates any person other than employees based on any sales by
MediQuip;
(iii) all
leases and subleases of real property;
(iv) all
contracts and agreements relating to indebtedness for borrowed money other
than
trade indebtedness of MediQuip;
(v) all
contracts and agreements involving annual payments in excess of $100,000
with
any Governmental Entity to which MediQuip is a party; and
(iv) any
other
material agreement of MediQuip which is terminable upon or prohibits a
change of
ownership or control of MediQuip..
(b) Each
Material Contract: (i) is valid and binding on MediQuip and, to the knowledge
of
MediQuip, on the other parties thereto, and is in full force and effect,
and
(ii) upon consummation of the transactions contemplated by this Agreement,
shall
continue in full force and effect without material penalty or other material
adverse consequence. MediQuip is not in material breach of, or material
default
under, any Material Contract and, to the knowledge of MediQuip, no other
party
to any Material Contract is in material breach thereof or material default
thereunder.
SECTION
4.12. Environmental
Matters.
Except
as disclosed in the Annual Report or as would not, individually or in the
aggregate, have a MediQuip Material Adverse Effect:
(a) MediQuip
and the MediQuip Subsidiaries (i) are in compliance with all applicable
Environmental Laws, (ii) hold all Environmental Permits and (iii) are in
compliance with their respective Environmental Permits.
(b) None
of
MediQuip or any MediQuip Subsidiary has received any written request for
information, or been notified that it is a potentially responsible party,
under
CERCLA or any similar Law of any state, locality or any other
jurisdiction.
(c) None
of
MediQuip or any MediQuip Subsidiary has entered into or agreed to any consent
decree or order or is subject to any judgment, decree or judicial order
relating
to compliance with Environmental Laws, Environmental Permits or the
investigation, sampling, monitoring, treatment, remediation, removal or
cleanup
of Hazardous Materials and, to the knowledge of MediQuip, no investigation,
litigation or other proceeding is pending or threatened in writing with
respect
thereto.
(d) None
of
the real property owned or leased by MediQuip or any MediQuip Subsidiary
is
listed or, to the knowledge of MediQuip, proposed for listing on the “National
Priorities List” under CERCLA, as updated through the date of this Agreement, or
any similar list of sites in the United States or any other jurisdiction
requiring investigation or cleanup.
SECTION
4.13. Trademarks,
Patents and Copyrights.
Except
as would not, individually or in the aggregate, have a MediQuip Material
Adverse
Effect, MediQuip and the MediQuip Subsidiaries own or possess adequate
licenses
or other valid rights to use all patents, patent rights, trademarks, trademark
rights, trade names, trade dress, trade name rights, copyrights, service
marks,
trade secrets, applications for trademarks and for service marks, know-how
and
other proprietary rights and information used or held for use in connection
with
the business of MediQuip and the MediQuip Subsidiaries as currently conducted,
and MediQuip has no knowledge of any assertion or claim challenging the
validity
of any of the foregoing. To the knowledge of MediQuip, the conduct of the
business of MediQuip and the MediQuip Subsidiaries as currently conducted
does
not and will not conflict in any way with any patent, patent right, license,
trademark, trademark right, trade dress, trade name, trade name right,
service
mark or copyright of any third party that has had, or could reasonably
be
expected to have, individually or in the aggregate, a MediQuip Material
Adverse
Effect. To the knowledge of MediQuip, there are no infringements of any
proprietary rights owned by or licensed by or to MediQuip or any MediQuip
Subsidiary that have had, or could reasonably be expected to have, individually
or in the aggregate, a MediQuip Material Adverse Effect.
SECTION
4.14. Taxes.
Except
for such matters that would not have a MediQuip Material Adverse Effect,
(a)
MediQuip and each of the MediQuip Subsidiaries have timely filed or will
timely
file all returns and reports required to be filed by them with any taxing
authority with respect to Taxes for any period ending on or before the
Effective
Time, taking into account any extension of time to file granted to or obtained
on behalf of MediQuip and the MediQuip Subsidiaries, (b) all Taxes shown
to be
payable on such returns or reports that are due prior to the Effective
Time have
been paid or will be paid, (c) as of the date of this Agreement, no deficiency
for any material amount of Tax has been asserted or assessed by a taxing
authority against MediQuip or any of the MediQuip Subsidiaries and (d)
MediQuip
and each of the MediQuip Subsidiaries have provided adequate reserves in
their
financial statements for any Taxes that have not been paid in accordance
with
generally accepted accounting principles, whether or not shown as being
due on
any returns.
SECTION
4.15. Accounting
and Tax Matters.
To the
knowledge of MediQuip, neither MediQuip nor any of its affiliates has taken
or
agreed to take any action that would prevent the Exchange from constituting
a
transaction qualifying under Section 368(a) of the Code. MediQuip is not
aware
of any agreement, plan or other circumstance that would prevent the Exchange
from qualifying under Section 368(a) of the Code.
SECTION
4.16. Brokers.
No
broker, finder or investment banker is entitled to any brokerage, finder’s or
other fee or commission in connection with the Exchange or the other
transactions contemplated by this Agreement based upon arrangements made
by or
on behalf of MediQuip.
ARTICLE
VCONDUCT OF BUSINESSES PENDING THE REORGANIZATION
SECTION
5.01. Conduct
of Business by Deep Down Pending the Exchange.
Deep
Down agrees that, between the date of this Agreement and the Effective
Time,
except as contemplated by any other provision of this Agreement, unless
MediQuip
shall otherwise consent in writing:
(a)
the
businesses of Deep Down and Deep Down Subsidiaries shall be conducted only
in,
and Deep Down and Deep Down Subsidiaries shall not take any action except
in,
the ordinary course of business and in a manner consistent with past practice;
and
(b)
Deep
Down
shall use its reasonable best efforts to preserve substantially intact
its
business organization, to keep available the services of the current officers,
employees and consultants of Deep Down and Deep Down Subsidiaries and to
preserve the current relationships of Deep Down and Deep Down Subsidiaries
with
customers, suppliers and other persons with which Deep Down or any Deep
Down
Subsidiary has significant business relations.
By
way of
amplification and not limitation, except as contemplated by this Agreement,
neither Deep Down nor any Deep Down Subsidiary shall, between the date
of this
Agreement and the Effective Time, directly or indirectly, do, or propose
to do,
any of the following without the prior written consent of MediQuip:
(a) amend
or
otherwise change its Certificate of Incorporation or By-Laws or equivalent
organizational documents;
(b) issue,
sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale,
pledge, disposition, grant or encumbrance of, (i) any shares of its capital
stock of any class, or any options, warrants, convertible securities or
other
rights of any kind to acquire any shares of such capital stock, or any
other
ownership interest (including, without limitation, any phantom interest),
of
Deep Down or any Deep Down Subsidiary or (ii) any material assets of Deep
Down
or any Deep Down Subsidiary, except in the ordinary course of business
and in a
manner consistent with past practice;
(c) declare,
set aside, make or pay any dividend or other distribution, payable in cash,
stock, property or otherwise, with respect to any of its capital
stock;
(d) reclassify,
combine, split, subdivide or redeem, purchase or otherwise acquire, directly
or
indirectly, any of its capital stock;
(e) (i) acquire
(including, without limitation, by Exchange, consolidation, or acquisition
of
stock or assets) any interest in any corporation, partnership, other business
organization or any division thereof or any assets, other than acquisitions
of
assets in the ordinary course of business consistent with past
practice;
(ii)
incur
any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible
for,
the obligations of any person, or make any loans or advances, except for
indebtedness incurred in the ordinary course of business and consistent
with
past practice;
(iii)
enter
into any contract or agreement material to the business, results of operations
or financial condition of Deep Down and Deep Down Subsidiaries taken as
a whole
other than in the ordinary course of business, consistent with past practice;
or
(iv)
enter
into or amend any contract, agreement, commitment or arrangement that,
if fully
performed, would not be permitted under this Section 5.01(e);
(f) increase
the compensation payable or to become payable to its employees, except
for
increases in accordance with past practices, or grant any severance or
termination pay to, or enter into any employment or severance agreement
with,
any director or employee of Deep Down or any Deep Down Subsidiary, except
for
employment or severance agreements in accordance with past practice, or
establish, adopt, enter into or amend any collective bargaining, bonus,
profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or
other
plan, agreement, trust, fund, policy or arrangement for the benefit of
any
director or employee; or
(g) take
any
action, other than reasonable and usual actions in the ordinary course
of
business and consistent with past practice, with respect to accounting
policies
or procedures.
SECTION
5.02. Conduct
of Business by MediQuip Pending the Exchange.
MediQuip agrees that, between the date of this Agreement and the Effective
Time,
except as contemplated by any other provision of this Agreement, unless
Deep
Down shall otherwise consent in writing (such consent not to be unreasonably
withheld or delayed):
(a)
the
business of the MediQuip and the MediQuip Subsidiaries shall be conducted
only
in, and MediQuip and the MediQuip Subsidiaries shall not take any action
except
in the ordinary course of business and in a manner consistent with past
practice; and
(b)
MediQuip
shall use its reasonable best efforts to preserve substantially intact
its
business organization, to keep available the services of the current officers,
employees and consultants of MediQuip and the MediQuip Subsidiaries and
to
preserve the current relationships of MediQuip and the MediQuip Subsidiaries
with customers, suppliers and other persons with which MediQuip or any
MediQuip
Subsidiary has significant business relations.
By
way of
amplification and not limitation, except as contemplated by this Agreement,
neither MediQuip nor any MediQuip Subsidiary shall, between the date of
this
Agreement and the Effective Time, directly or indirectly, do, or propose
to do,
any of the following without the prior written consent of Deep Down (such
consent not to be unreasonably withheld):
(a) amend
or
otherwise change its Certificate of Incorporation or By-Laws or equivalent
organizational documents;
(b) issue,
sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale,
pledge, disposition, grant or encumbrance of, (i) any shares of its capital
stock of any class, or any options, warrants, convertible securities or
other
rights of any kind to acquire any shares of such capital stock, or any
other
ownership interest (including, without limitation, any phantom interest),
of
MediQuip or any MediQuip Subsidiary (except for the issuance of shares
of
MediQuip Common Stock issuable pursuant to the MediQuip Stock Options
outstanding on the date of this Agreement or the issuance in the ordinary
course
of business and consistent with past practice, or (ii) any material assets
of
MediQuip or any MediQuip Subsidiary, except in the ordinary course of business
and in a manner consistent with past practice;
(c) declare,
set aside, make or pay any dividend or other distribution, payable in cash,
stock, property or otherwise, with respect to any of its capital
stock;
(d) reclassify,
combine, split, subdivide or redeem, purchase or otherwise acquire, directly
or
indirectly, any of its capital stock;
(e) (i) acquire
(including, without limitation, by Exchange, consolidation, or acquisition
of
stock or assets) any interest in any corporation, partnership, other business
organization or any division thereof or any assets, other than acquisitions
of
assets in the ordinary course of business consistent with past
practice;
(ii) incur
any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible
for,
the obligations of any person, or make any loans or advances, except for
indebtedness incurred in the ordinary course of business and consistent
with
past practice;
(iii) enter
into any contract or agreement material to the business, results of operations
or financial condition of MediQuip and the MediQuip Subsidiaries taken
as a
whole other than in the ordinary course of business, consistent with past
practice; or
(iv) enter
into or amend any contract, agreement, commitment or arrangement that,
if fully
performed, would not be permitted under this Section 5.02(e);
(f) increase
the compensation payable or to become payable to its officers or employees,
except for increases in accordance with past practices in salaries or wages
of
employees of MediQuip or any MediQuip Subsidiary who are not officers of
MediQuip, or grant any severance or termination pay to, or enter into any
employment or severance agreement with, any director, officer or other
employee
of MediQuip or any MediQuip Subsidiary, or establish, adopt, enter into
or amend
any collective bargaining, bonus, profit sharing, thrift, compensation,
stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy
or arrangement for the benefit of any director, officer or employee;
or
(g) take
any
action, other than reasonable and usual actions in the ordinary course
of
business and consistent with past practice, with respect to accounting
policies
or procedures.
ARTICLE
VIADDITIONAL AGREEMENTS
SECTION
6.01. Filing
of Form 8-K.
Unless
adequately disclosed in a periodic report filed with the Securities and
Exchange
Commission by MediQuip, immediately after the Effective Time, new management
of
Deep Down will procure the prompt preparation and file with the Securities
and
Exchange Commission appropriate notice describing this transaction on Form
8-K
or other applicable form, and otherwise comply with the provisions of the
Securities Exchange Act of 1934.
SECTION
6.02. Preparation
of Disclosure Statement.
Immediately after the Effective Time, new management of Deep Down will
procure
the preparation of a disclosure statement containing the necessary information
to comply with Rule 15(c)2(11) promulgated by the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934 and file such
forms
with one or more firms who are members of the National Association of Securities
Dealers, Inc. (“NASD”) and with NASD as are necessary to effect the quotation of
MediQuip’s securities in the NASD Electronic Bulletin Board System.
SECTION
6.03. Access
to Information; Confidentiality.
Except
as required pursuant to any confidentiality agreement or similar agreement
or
arrangement to which MediQuip or Deep Down or any of their respective
subsidiaries is a party or pursuant to applicable Law, from the date of
this
Agreement to the Effective Time, MediQuip and Deep Down shall (and shall
cause
their respective subsidiaries to): (i) provide to the other (and its officers,
directors, employees, accountants, consultants, legal counsel, agents and
other
representatives, collectively, “Representatives”) access at reasonable times
upon prior notice to the officers, employees, agents, properties, offices
and
other facilities of the other and its subsidiaries and to the books and
records
thereof and (ii) furnish promptly such information concerning the business,
properties, contracts, assets, liabilities, personnel and other aspects
of the
other party and its subsidiaries as the other party or its Representatives
may
reasonably request.
SECTION
6.04. Obligations
of MediQuip.
MediQuip shall take all action necessary to cause MediQuip to perform its
obligations under this Agreement and to consummate the Exchange on the
terms and
subject to the conditions set forth in this Agreement.
SECTION
6.05. Obligations
of Shareholder.
Shareholder, on behalf of new management of MediQuip, unconditionally agree:
(i)
to refrain from the issuance of any securities pursuant to a registration
statement on Form S-8 for a period of 12 months from and after the Effective
Time (ii) not to change the number of issued or outstanding shares of capital
stock of MediQuip by a stock split, stock dividend, combination,
reclassification, reverse stock split, combination or reclassification
of shares
or other similar event for a period of 12 months from and after the Effective
Time, and except as a condition to a listing of common stock on a national
exchange, in which event the limitation period will be 6 months (iii) not
to
issue any equity securities to any person, firm or corporation for any
purpose
whatsoever for consideration less than the fair market value applicable
to the
nature of the transaction of such securities, and (iv) not to file a
registration statement with the Securities and Exchange Commission on Form
SB-2
or other similar form covering secondary offering of and class of equity
securities prior to the expiration of 6 months from and after the Effective
Time.
SECTION
6.06. Application
to Standard & Poor’s.
New
management of Deep Down shall promptly make application to the Standard
&
Poor’s editorial board to approve your corporation for a full description in
Standard & Poor’s Standard Corporation Manual, Standard & Poor’s Daily
News Section, coverage of MediQuip as part of the S&P Market Access Program
and coverage on Standard & Poor’s Internet Site, www.advisorinsight.com, as
well as S&P Marketscope and the S&P Stock Guide database.
SECTION
6.06. Filing
of Amended Form 8-K.
Within
4 days after the original report on Form 8-K must be filed, new management
of
Deep Down will prepare and file with the SEC an amendment to the Form 8-K
described in Section 6.02 above that includes the financial statements
and pro
forma financial information prepared pursuant to Regulation S-X for the
periods
specified in Rule 3.05(b).
SECTION
6.07. Further
Action; Consents; Filings.
Upon
the terms and subject to the conditions hereof, each of the parties hereto
shall
use its reasonable best efforts to (i) take, or cause to be taken, all
appropriate action and do, or cause to be done, all things necessary, proper
or
advisable under applicable law or otherwise to consummate and make effective
the
Exchange and the other transactions contemplated by this Agreement, (ii)
obtain
from Governmental Entities any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained or made by MediQuip or
Deep
Down or any of their subsidiaries in connection with the authorization,
execution and delivery of this Agreement and the consummation of the Exchange
and the other transactions contemplated by this Agreement and (iii) make
all
necessary filings, and thereafter make any other required submissions,
with
respect to this Agreement, the Exchange and the other transactions contemplated
by this Agreement required under (A) the Exchange Act and the Securities
Act and
the rules and regulations thereunder and any other applicable federal or
state
securities laws and (B) any other applicable Law. The parties hereto shall
cooperate with each other in connection with the making of all such filings,
including by providing copies of all such documents to the non-filing party
and
its advisors prior to filing and, if requested, by accepting all reasonable
additions, deletions or changes suggested in connection therewith.
SECTION
6.08. Reorganization
of Deep Down..
As
soon as practicable, but in no event more than 15 days after the execution
of
this Agreement Shareholder shall cause SubSea Acquisition Corporation,
a Texas
corporation, (“SubSea”) to acquire all the issued and outstanding capital stock
of Deep Down, Inc., a Delaware corporation, for equity securities of SubSea
substantially on the terms set out in the agreement executed by and among
SubSea, Deep Down and their respective shareholders. At or about the time
of the
consummation of the acquisition of Deep Down by SubSea, Shareholder shall
cause
SubSea to acquire all the issued and outstanding capital stock of Strategic
Offshore Services Corporation, a Texas corporation (“SOS”), for equity
securities of SubSea substantially on the terms set out in the agreement
executed by and among SubSea, SOS and their respective shareholders. Following
the consummation of the acquisition of Deep Down by SubSea and the acquisition
of SOS by SubSea, SubSea and SOS shall merge with and into Deep Down with
Deep
Down as the survivor of the merger as a Delaware corporation. The merger
shall
be consummated substantially on the terms set out in the Agreement and
Plan of
Merger attached as Exhibit D. The surviving Delaware corporation and the
majority shareholders of the surviving Delaware corporation are the parties
to
this Agreement.
SECTION
6.09. Agreement
to Deliver Shares. As
the
owner of a majority of the shares of Deep Down Securities, Shareholder
agrees to
vote his shares of Deep Down Securities in favor of approving this Agreement
and
the transactions contemplated hereby and not to approve or support any
competing
transaction,
SECTION
6.10. Plan
of Exchange.
This
Agreement is intended to constitute a “plan of reorganization” within the
meaning of section 1.368-2(g) of the income tax regulations promulgated
under
the Code. From and after the date of this Agreement and until the Effective
Time, each party hereto shall use its reasonable best efforts to cause
the
Exchange to qualify, and will not knowingly take any action, cause any
action to
be taken, fail to take any action or cause any action to fail to be taken
which
action or failure to act could prevent the Exchange from qualifying, as
a
reorganization under the provisions of section 368(a) of the Code. Following
the
Effective Time, neither MediQuip nor any of its affiliates shall knowingly
take
any action, cause any action to be taken, fail to take any action or cause
any
action to fail to be taken, which action or failure to act could cause
the
Exchange to fail to qualify as a reorganization under section 368(a) of
the
Code.
SECTION
6.11. Board
of Directors of MediQuip.
Immediately after the Effective Date, the present Directors of MediQuip
shall
have caused the appointment of the persons designated by the Shareholder,
to the
Board of Directors of MediQuip followed by the resignation of all other
officers
and directors. In connection with such election, MediQuip shall have provided
its securityholders with an Information Statement pursuant to Section 14f
of the
Exchange Act and SEC Rule 14f-1.
SECTION
6.12. Public
Announcements.
The
initial press release relating to this Agreement shall be a joint press
release
the text of which has been agreed to by each of MediQuip and Deep
Down.
SECTION
6.13. Conveyance
Taxes.
MediQuip shall be liable for and shall hold Deep Down and the holders of
Deep
Down Securities who are holders of Deep Down Securities immediately prior
to the
Effective Time harmless against any real property transfer or gains, sales,
use,
transfer, value added, stock transfer or stamp taxes, any transfer, recording
registration, and other fees, and any similar Taxes which become payable
in
connection with the transactions contemplated by this Agreement. The parties
acknowledge that this Section 6.14 is specifically intended to benefit
the
holders of Deep Down Securities who are holders of Deep Down Securities
immediately prior to the Effective Time.
ARTICLE
VIICONDITIONS TO THE REORGANIZATION
SECTION
7.01. Conditions
to the Obligations of Each Party.
The
obligations of Deep Down, MediQuip and Shareholder to consummate the Exchange
are subject to the satisfaction or waiver (where permissible) of the following
conditions:
(a) this
Agreement and the issuance of the Exchange Consideration pursuant to the
terms
of the Exchange, as the case may be, contemplated hereby shall have been
approved and adopted by the requisite affirmative vote of (i) the shareholders
of Deep Down in accordance with the General Corporation Law of Delaware
and Deep
Down’s Certificate of Incorporation and (ii) the board of directors of MediQuip
in accordance with the rules of the OTC, the Nevada Revised Statutes and
MediQuip’s Articles of Incorporation;
(b) no
Governmental Entity or court of competent jurisdiction located or having
jurisdiction in the United States shall have enacted, issued, promulgated,
enforced or entered any law, rule, regulation, judgment, decree, executive
order
or award (an “Order”) which is then in effect and has the effect of making the
Exchange illegal or otherwise prohibiting consummation of the Exchange;
and
(c) all
consents, approvals and authorizations legally required to be obtained
to
consummate the Exchange shall have been obtained from and made with all
Governmental Entities.
SECTION
7.02. Conditions
to the Obligations of MediQuip .
The
obligations of MediQuip to consummate the Exchange are subject to the
satisfaction or waiver (where permissible) of the following additional
conditions:
(a) to
the
best of Deep Down’s knowledge and belief, each of the representations and
warranties of Deep Down contained in this Agreement shall be true and correct
as
of the Effective Time as though made on and as of the Effective Time, except
where failure to be so true and correct would not have a Deep Down Material
Adverse Effect, and except that those representations and warranties which
address matters only as of a particular date shall remain true and correct
as of
such date, except where failure to be so true and correct would not have
a Deep
Down Material Adverse Effect, and MediQuip shall have received a certificate
of
the Managing Director of Deep Down substantially in the form of Exhibit
F to
such effect;
(b) Deep
Down
shall have performed or complied with all agreements and covenants required
by
this Agreement to be performed or complied with by it on or prior to the
Effective Time, except where the failure to so comply would not have a
Deep Down
Material Adverse Effect, and MediQuip shall have received a certificate
of the
Managing Director of Deep Down substantially in the form of Exhibit F;
(c) MediQuip
shall have received an investment representation from each Deep Down Shareholder
substantially in the form of Exhibit G.
(d) The
consummation of the transactions contemplated by this Agreement shall have
been
approved at or before the Closing by the affirmative vote of the holders
of not
less than a majority of Deep Down’s common stock, and shall have received any
other shareholder approval necessary to the consummation of the transactions
contemplated by this Agreement.
(e) MediQuip
shall have received on the Closing Date an opinion, dated the Closing Date,
of
counsel for Deep Down in form and substance satisfactory to counsel for
the
MediQuip, to the effect that:
(i) Deep
Down
is a corporation validly existing and in good standing under the laws of
its
jurisdiction of organization with all requisite power and authority to
own,
lease, license, and use their respective properties and assets and to carry
on
the business in which each is now engaged.
(ii) All
necessary proceedings of Deep Down have been duly taken to authorize the
execution, delivery, and performance of this Agreement by Deep
Down.
(iii) Deep
Down
has all requisite corporate power and authority to execute, deliver, and
perform
this Agreement, and this Agreement has been duly authorized, executed,
and
delivered by Deep Down, constitutes the legal, valid, and binding obligation
of
Deep Down, and (subject to applicable bankruptcy, insolvency, and other
laws
affecting the enforceability of creditors’ rights generally) is enforceable as
to Deep Down in accordance with its terms.
(iv) The
execution, delivery, and performance of this Agreement by Deep Down will
not
violate or result in a breach of any term of Deep Down’s charter document or
by-laws; and the execution, delivery, and performance of this Agreement
by Deep
Down will not violate, result in a breach of, conflict with, or (with or
without
the giving of notice or the passage of time or both) entitle any party
to
terminate or call a default under any terms of any agreement to which Deep
Down
are a party.
(v) After
reasonable investigation, such counsel has no actual knowledge of any consent,
authorization, approval, order, license, certificate, or permit of or from,
or
declaration or filing with, any federal, state, local, or other governmental
authority or any court or other tribunal which is required of Deep Down
for the
execution, delivery, or performance of this Agreement by Deep Down.
(vi) After
reasonable investigation, such counsel has no actual knowledge of any
litigation, arbitration, governmental or other proceeding (formal or informal),
or investigation pending or threatened with respect to Deep Down, or any
of its
business, properties, or assets that (i) can reasonably be expected to
result in
any materially adverse change in the financial condition, results of operations,
business, properties, liabilities, or future prospects of Deep Down taken
as a
whole or (ii) seeks to prohibit or otherwise challenge the consummation
of the
transactions contemplated by this Agreement, or to obtain substantial damages
with respect thereto, except as disclosed in this Agreement.
(vii) The
consummation of the transactions contemplated by this Agreement has been
approved at or before the Closing by the affirmative vote of the holders
of not
less than a majority of Deep Down’s common stock, and has received any other
shareholder approval necessary to the consummation of the transactions
contemplated by this Agreement.
In
giving
such opinions counsel may state that their opinion and belief are based
upon
their participation in the preparation of the Agreement and any amendments
or
supplements thereto and documents incorporated therein by reference and
review
and discussion of the contents thereof, but is without independent check
or
verification except as specified.
SECTION
7.03. Conditions
to the Obligations of Deep Down.
The
obligations of Deep Down to consummate the Exchange are subject to the
satisfaction or waiver (where permissible) of the following additional
conditions:
(a) each
of
the representations and warranties of MediQuip contained in this Agreement
shall
be true and correct as of the Effective Time, as though made on and as
of the
Effective Time, except where the failure to be so true and correct would
not
have a MediQuip Material Adverse Effect, and except that those representations
and warranties which address matters only as of a particular date shall
remain
true and correct as of such date, except where the failure to be so true
and
correct would not have a MediQuip Material Adverse Effect, and Deep Down
shall
have received a certificate of the Chief Executive Officer or Chief Financial
Officer of MediQuip substantially in the form of Exhibit E to such effect;
(b) MediQuip
shall have performed or complied with all agreements and covenants required
by
this Agreement to be performed or complied with by it on or prior to the
Effective Time, except where the failure to comply would not have a MediQuip
Material Adverse Effect, and Deep Down shall have received a certificate
of the
Chief Executive Officer or Chief Financial Officer of MediQuip substantially
in
the form of Exhibit E to that effect;
(c) Deep
Down
shall have received on the Closing Date an opinion, dated the Closing Date,
of
Sonfield & Sonfield, counsel for the MediQuip in form and substance
satisfactory to counsel for Deep Down, to the effect that:
(i) MediQuip
is a corporations validly existing and in good standing under the laws
of the
States of Nevada with all requisite power and authority to own, lease,
license,
and use their respective properties and assets and to carry on the business
in
which each is now engaged.
(ii) All
necessary proceedings of MediQuip have been duly taken to authorize the
execution, delivery, and performance of this Agreement by MediQuip.
(iii) MediQuip
have all requisite corporate power and authority to execute, deliver, and
perform this Agreement, and this Agreement has been duly authorized, executed,
and delivered by MediQuip, constitutes the legal, valid, and binding obligation
of MediQuip, and (subject to applicable bankruptcy, insolvency, and other
laws
affecting the enforceability of creditors’ rights generally) is enforceable as
to MediQuip in accordance with its terms.
(iv) The
execution, delivery, and performance of this Agreement by MediQuip will
not
violate or result in a breach of any term of MediQuip’s certificate of
incorporation or by-laws; and the execution, delivery, and performance
of this
Agreement by MediQuip will not violate, result in a breach of, conflict
with, or
(with or without the giving of notice or the passage of time or both) entitle
any party to terminate or call a default under any terms of any agreement
to
which MediQuip is a party.
(v) After
reasonable investigation, such counsel has no actual knowledge of any consent,
authorization, approval, order, license, certificate, or permit of or from,
or
declaration or filing with, any federal, state, local, or other governmental
authority or any court or other tribunal which is required of MediQuip
for the
execution, delivery, or performance of this Agreement by MediQuip.
(vi) After
reasonable investigation, such counsel has no actual knowledge of any
litigation, arbitration, governmental or other proceeding (formal or informal),
or investigation pending or threatened with respect to MediQuip, or any
of their
respective business, properties, or assets that (i) can reasonably be expected
to result in any materially adverse change in the financial condition,
results
of operations, business, properties, liabilities, or future prospects of
MediQuip taken as a whole or (ii) seeks to prohibit or otherwise challenge
the
consummation of the transactions contemplated by this Agreement, or to
obtain
substantial damages with respect thereto, except as disclosed in this
Agreement.
(vii) the
Shares to be issued by the MediQuip hereunder have been duly authorized
and,
when issued and when delivered to Deep Down Shareholders as provided by
this
Agreement, will be validly issued, fully paid and non-assessable, and the
issuance of such Shares will not be subject to any preemptive or similar
rights;
In
giving
such opinions Sonfield & Sonfield may state that their opinion and belief
are based upon their participation in the preparation of the Agreement
and any
amendments or supplements thereto and documents incorporated therein by
reference and review and discussion of the contents thereof, but is without
independent check or verification except as specified.
ARTICLE
VIIITERMINATION, AMENDMENT AND WAIVER
SECTION
8.01. Termination.
This
Agreement may be terminated and the Exchange and the other transactions
contemplated by this Agreement may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of
this
Agreement and the transactions contemplated by this Agreement, as
follows:
(a) by
mutual
written consent duly authorized by the Boards of Directors of each of MediQuip
and Deep Down;
(b) by
either
MediQuip or Deep Down if the Effective Time shall not have occurred on
or before
December 14, 2006 provided, however, that the right to terminate this Agreement
under this Section 8.01(b) shall not be available to any party whose failure
to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Effective Time to occur on or before such date;
(c) there
shall be any Order which is final and non-appealable preventing the consummation
of the Exchange;
(d) by
MediQuip upon a breach of any material representation, warranty, covenant
or
agreement on the part of Deep Down set forth in this Agreement, or if any
representation or warranty of Deep Down shall have become untrue, in either
case
such that the conditions set forth in Section 7.02(a) and Section 7.02(b)
would
not be satisfied (“Terminating Deep Down Breach”); provided, however, that, if
such Terminating Deep Down Breach is curable by Deep Down through the exercise
of its best efforts and for so long as Deep Down continues to exercise
such best
efforts, MediQuip may not terminate this Agreement under this Section
8.01(d).
(e) by
Deep
Down upon a breach of any material representation, warranty, covenant or
agreement on the part of MediQuip set forth in this Agreement, or if any
representation or warranty of MediQuip shall have become untrue, in either
case
such that the conditions set forth in Section 7.03(a) and Section 7.03(b)
would
not be satisfied (“Terminating MediQuip Breach”); provided, however, that, if
such Terminating Deep Down Breach is curable by MediQuip through the exercise
of
its best efforts and for so long as MediQuip continues to exercise such
best
efforts, Deep Down may not terminate this Agreement under this Section
8.01(e).
SECTION
8.02. Effect
of Termination.
Except
as provided in Section 9.01, in the event of termination of this Agreement
pursuant to Section 8.01, this Agreement shall forthwith become void, there
shall be no liability under this Agreement on the part of MediQuip or Deep
Down
or any of their respective officers or directors, and all rights and obligations
of each party hereto shall cease, provided, however, that nothing herein
shall
relieve any party from liability for the willful breach of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
SECTION
8.03. Amendment.
This
Agreement may be amended by the parties hereto by action taken by or on
behalf
of their respective Boards of Directors at any time prior to the Effective
Time;
provided, however, that, after the approval of this Agreement by the
shareholders of Deep Down, no amendment may be made which would reduce
the
amount or change the type of consideration into which each Share shall
be
converted upon consummation of the Exchange. This Agreement may not be
amended
except by an instrument in writing signed by the parties hereto.
SECTION
8.04. Waiver.
At any
time prior to the Effective Time, any party hereto may (a) extend the time
for
the performance of any obligation or other act of any other party hereto,
(b)
waive any inaccuracy in the representations and warranties contained herein
or
in any document delivered pursuant hereto, and (c) waive compliance with
any
agreement or condition contained herein. Any such extension or waiver shall
be
valid if set forth in an instrument in writing signed by the party or parties
to
be bound thereby.
SECTION
8.05. Expenses.
All
Expenses (as defined below) incurred in connection with this Agreement
and the
transactions contemplated by this Agreement shall be paid by the party
incurring
such expenses, whether or not the Exchange or any other transaction is
consummated. “Expenses” as used in this Agreement shall include all reasonable
out-of-pocket expenses (including, without limitation, all fees and expenses
of
counsel, accountants, investment bankers, experts and consultants to a
party
hereto and its affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation, negotiation, execution
and
performance of this Agreement and all other matters related to the closing
of
the Exchange and the other transactions contemplated by this
Agreement.
ARTICLE
IX
GENERAL
PROVISIONS
SECTION
9.01. Non-Survival
of Representations, Warranties and Agreements.
The
representations, warranties and agreements in this Agreement and in any
certificate delivered pursuant hereto shall terminate at the Effective
Time or
upon the termination of this Agreement pursuant to Section 8.01, as the
case may
be, except that the agreements set forth in Articles I and II and Sections
6.01,
6.02, 6.05, 6.06 and this Article IX shall survive the Effective Time and
those
set forth in Sections 8.02 and 8.05 and this Article IX shall survive
termination.
SECTION
9.02. Notices.
All
notices, requests, claims, demands and other communications hereunder shall
be
in writing and shall be given (and shall be deemed to have been duly given
upon
receipt) by delivery in person, by cable, telecopy, facsimile, telegram
or telex
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties at the following addresses (or at such other
address
for a party as shall be specified in a notice given in accordance with
this
Section 9.02):
if
to
MediQuip:
MediQuip,
Inc.
Kelsey
House, 77 High Street
Beckenham
Kent BR3 1AN
Facsimile:
011 44 208 658 9870
with
a copy to (which shall not constitute notice to such party):
Loughran
& Co.
38
Hertford Street
London
W1Y 7TG
Attn:
James A. Loughran, Esq.
Facsimile:
(44)
207 355
4975
if
to
Deep Down:
Deep
Down, Inc.
15473
East Freeway
Channelview,
Delaware 77530
Attn:
John C. Siedhoff, CFO
Facsimile:
(281) 862-2522
with
a copy to (which shall not constitute notice to Deep Down):
Robert
L.
Sonfield, Jr., Esq.
Sonfield
& Sonfield
770
South
Post Oak Lane, Suite 435
Houston,
Texas 77056-1937
Facsimile:
(713) 877-1547
SECTION
9.03. Certain
Definitions.
For
purposes of this Agreement, the term:
(a) “affiliate”
of
a
specified person means a person who directly or indirectly through one
or more
intermediaries controls, is controlled by, or is under common control with
such
specified person;
(b) “control”
(including the terms “controlled
by”
and
“under
common control with”)
means
the possession, directly or indirectly or as trustee or executor, of the
power
to direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, as trustee or executor,
by
contract or credit arrangement or otherwise;
(c) “knowledge”
means,
with respect to any matter in question, that the executive officers of
Deep Down
or MediQuip, as the case may be, have actual knowledge of such matter;
(d) “person”
means
an individual, corporation, partnership, limited partnership, syndicate,
person
(including, without limitation, a “person” as defined in section 13(d)(3) of the
Exchange Act), trust, association or entity or government, political
subdivision, agency or instrumentality of a government; and
(e) “subsidiary”
or
“subsidiaries”
of
any
person means any corporation, partnership, joint venture or other legal
entity
of which such person (either alone or through or together with any other
subsidiary) owns, directly or indirectly, more than 50% of the stock or
other
equity interests, the holders of which are generally entitled to vote for
the
election of the board of directors or other governing body of such corporation
or other legal entity.
SECTION
9.04. Severability.
If any
term or other provision of this Agreement is invalid, illegal or incapable
of
being enforced by any rule of Law or public policy, all other conditions
and
provisions of this Agreement shall nevertheless remain in full force and
effect
so long as the economic or legal substance of the transactions contemplated
by
this Agreement is not affected in any manner materially adverse to any
party.
Upon such determination that any term or other provision is invalid, illegal
or
incapable of being enforced, the parties hereto shall negotiate in good
faith to
modify this Agreement so as to effect the original intent of the parties
as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated by this Agreement be consummated as originally
contemplated to the fullest extent possible.
SECTION
9.05. Assignment;
Binding Effect; Benefit.
Neither
this Agreement nor any of the rights, interests or obligations hereunder
shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. Subject
to
the preceding sentence, this Agreement shall be binding upon and shall
inure to
the benefit of the parties hereto and their respective successors and assigns.
SECTION
9.06. Incorporation
of Exhibits.
Deep
Down Disclosure Schedule, the MediQuip Disclosure Schedule and all Exhibits
attached hereto and referred to herein are hereby incorporated herein and
made a
part hereof for all purposes as if fully set forth herein.
SECTION
9.07. Specific
Performance.
The
parties hereto agree that irreparable damage would occur in the event any
provision of this Agreement was not performed in accordance with the terms
hereof and that the parties shall be entitled to specific performance of
the
terms hereof, in addition to any other remedy at law or in equity.
SECTION
9.08. Governing
Law; Forum.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of Delaware.
SECTION
9.09. Headings.
The
descriptive headings contained in this Agreement are included for convenience
of
reference only and shall not affect in any way the meaning or interpretation
of
this Agreement.
SECTION
9.10. Counterparts.
This
Agreement may be executed and delivered (including by facsimile transmission)
in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed and delivered shall be deemed
to be an
original but all of which taken together shall constitute one and the same
agreement.
SECTION
9.11. Entire
Agreement.
This
Agreement (including the Exhibits) constitutes the entire agreement among
the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings among the parties with respect thereto. No
addition to or modification of any provision of this Agreement shall be
binding
upon any party hereto unless made in writing and signed by all parties
hereto.
THE
REMAINDER OF THIS PAGE INTENIONALLY LEFT BLANK
AGREEMENT
AND PLAN OF REORGANIZATION
among
MEDIQUIP
HOLDINGS, INC.
DEEP
DOWN, INC.
and
THE
MAJORITY SHAREHOLDERS OF DEEP DOWN, INC.
EXECUTION
PAGE
IN
WITNESS WHEREOF, MediQuip, Shareholder and Deep Down have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
| |
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|
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| /s/ Nicola
Rodker |
|
|
/s/ |
|
|
|
|
Name:
Nicola
Rodker
Title: Secretary |
|
|
Name:
David
Francis
Title: President |
DEEP
DOWN, INC.
| |
|
|
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| /s/ Daniel
L.
Ritz, Jr. |
|
|
/s/ Robert
E.
Chamberlain, Jr. |
|
|
|
|
Name:
Daniel L.
Ritz, Jr.
Title: Secretary |
|
|
Name:
Robert E.
Chamberlain, Jr.
Title: Chairman &
CEO |
| |
|
|
|
| /s/ Daniel
L.
Ritz, Jr. |
|
|
/s/ Robert
E.
Chamberlain, Jr. |
|
|
|
|
Name:
Daniel L.
Ritz, Jr.
Title: Shareholder |
|
|
Name:
Robert E. Chamberlain, Jr.
Title:
Shareholder
|
| |
|
|
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| /s/ John
C.
Siedhoff |
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|
|
|
|
Name:
John C.
Siedhoff
Title: Shareholder |
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