EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CAREMARK RX, INC.,
COUGAR MERGER CORPORATION
AND
ADVANCEPCS
DATED AS OF SEPTEMBER 2, 2003
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AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
PAGE
Article I THE MERGER..............................................................................................2
Section 1.1. The Merger.............................................................................2
Section 1.2. Effective Time; Closing................................................................2
Section 1.3. Effect of the Merger...................................................................2
Section 1.4. Certificate of Incorporation and Bylaws................................................3
Section 1.5. Directors and Officers.................................................................3
Article II CONVERSION OF SECURITIES; EXCHANGE PROCEDURES..........................................................3
Section 2.1. Conversion of Shares...................................................................3
Section 2.2. Dissenting Shares......................................................................4
Section 2.3. Stock Options..........................................................................5
Section 2.4. Employee Stock Purchase Plan...........................................................6
Section 2.5. Warrants...............................................................................6
Section 2.6. Parent Rights Plan.....................................................................7
Section 2.7. Exchange of Certificates...............................................................7
Section 2.8. Stock Transfer Books..................................................................10
Article III REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................................................10
Section 3.1. Organization and Standing.............................................................11
Section 3.2. Capitalization........................................................................11
Section 3.3. Authority for Agreement...............................................................12
Section 3.4. No Conflict...........................................................................13
Section 3.5. Required Filings and Consents.........................................................14
Section 3.6. Compliance............................................................................14
Section 3.7. SEC Filings, Company Financial Statements.............................................14
Section 3.8. Absence of Certain Changes or Events..................................................16
Section 3.9. Taxes.................................................................................16
Section 3.10. Change of Control Agreements..........................................................17
Section 3.11. Litigation............................................................................18
Section 3.12. Contracts and Commitments.............................................................18
Section 3.13. Information Supplied..................................................................19
Section 3.14. Employee Benefit Plans................................................................20
Section 3.15. Labor and Employment Matters..........................................................22
Section 3.16. Environmental Compliance and Disclosure...............................................23
Section 3.17. Intellectual Property.................................................................24
Section 3.18. Brokers...............................................................................25
Section 3.19. Transactions with Affiliates..........................................................25
Section 3.20. Stockholders' Rights Agreement........................................................26
Section 3.21. Regulatory Compliance.................................................................26
Section 3.22. Ethical Business Practices............................................................27
Article IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB...............................................28
Section 4.1. Organization and Standing.............................................................28
Section 4.2. Capitalization........................................................................28
Section 4.3. Authority for Agreement...............................................................30
Section 4.4. No Conflict...........................................................................31
Section 4.5. Required Filings and Consents.........................................................32
Section 4.6. Compliance............................................................................32
Section 4.7. SEC Filings, Parent Financial Statements..............................................32
Section 4.8. Absence of Certain Changes or Events..................................................34
Section 4.9. Taxes.................................................................................34
Section 4.10. Change of Control Agreements..........................................................35
Section 4.11. Litigation............................................................................35
Section 4.12. Contracts and Commitments.............................................................36
Section 4.13. Information Supplied..................................................................37
Section 4.14. Employee Benefit Plans................................................................37
Section 4.15. Labor and Employment Matters..........................................................39
Section 4.16. Environmental Compliance and Disclosure...............................................40
Section 4.17. Intellectual Property.................................................................41
Section 4.18. Brokers...............................................................................41
Section 4.19. Transactions with Affiliates..........................................................41
Section 4.20. Regulatory Compliance.................................................................42
Section 4.21. Ethical Business Practices............................................................43
Section 4.22. Ownership of Company Common Stock.....................................................43
Section 4.23. Financing.............................................................................44
Article V COVENANTS..............................................................................................44
Section 5.1. Conduct of the Company's Business Pending the Merger..................................44
Section 5.2. Conduct of Parent's Business Pending the Merger.......................................46
Section 5.3. Access to Information; Confidentiality................................................47
Section 5.4. Notification of Certain Matters.......................................................49
Section 5.5. HSR Filings; Best Efforts; Further Assurances.........................................50
Section 5.6. No Solicitation.......................................................................53
Section 5.7. Stockholder Litigation................................................................58
Section 5.8. Indemnification; D&O Insurance........................................................58
Section 5.9. Public Announcements..................................................................59
Section 5.10. Registration Statement; Joint Proxy Statement.........................................59
Section 5.11. Stockholders' Meetings................................................................60
Section 5.12. Composition of Board of Directors of Parent...........................................61
Section 5.13. Undertakings of Parent................................................................61
Section 5.14. NYSE Listing..........................................................................61
Section 5.15. Employee Plans and Benefits and Employment Contracts..................................61
Section 5.16. Certain Tax Matters...................................................................62
Section 5.17. Accountant Letters....................................................................63
Article VI CONDITIONS............................................................................................64
Section 6.1. Conditions to the Obligation of Each Party............................................64
Section 6.2. Conditions to Obligations of Parent and Merger Sub to Effect the Merger...............64
Section 6.3. Conditions to Obligations of the Company to Effect the Merger.........................65
Article VII TERMINATION, AMENDMENT AND WAIVER....................................................................66
Section 7.1. Termination...........................................................................66
Section 7.2. Effect of Termination.................................................................68
Section 7.3. Amendments............................................................................70
Section 7.4. Waiver................................................................................70
Article VIII GENERAL PROVISIONS..................................................................................71
Section 8.1. No Third Party Beneficiaries..........................................................71
Section 8.2. Entire Agreement......................................................................71
Section 8.3. Succession and Assignment.............................................................71
Section 8.4. Counterparts..........................................................................71
Section 8.5. Headings..............................................................................71
Section 8.6. Governing Law.........................................................................71
Section 8.7. Severability..........................................................................71
Section 8.8. Specific Performance..................................................................72
Section 8.9. Construction..........................................................................72
Section 8.10. Non-Survival of Representations and Warranties and Agreements.........................72
Section 8.11. Certain Definitions...................................................................72
Section 8.12. Fees and Expenses.....................................................................74
Section 8.13. Notices...............................................................................74
Exhibit A Certificate of Incorporation
Exhibit B Material Terms of Retention Plan
Exhibit C Company Quarterly Financial and Operating Data
Exhibit D Changed Contracts Information
Exhibit E Parent Quarterly Financial and Operating Data
Exhibit F Revenue and Earnings Thresholds
DEFINED TERM...... SECTION
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INDEX OF DEFINED TERMS
DEFINED TERM...... SECTION
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Agreement..................................................................................................Preamble
Acquisition Agreement....................................................................................5.6(a)(ii)
Acquisition Proposal......................................................................................5.6(a)(i)
Amended Parent Certificate of Incorporation..................................................................5.2(d)
Antitrust Laws...............................................................................................5.5(b)
Cash Percentage..............................................................................................2.1(a)
Certificate..................................................................................................2.1(a)
Certificate of Merger...........................................................................................1.2
Closing.........................................................................................................1.2
Code.........................................................................................Preliminary Statements
Company....................................................................................................Preamble
Company Alternative Transaction..........................................................................5.6(a)(ii)
Company Benefit Plan........................................................................................3.14(a)
Company Bylaws..................................................................................................3.1
Company Certificate of Incorporation............................................................................3.1
Company Change in Recommendation.........................................................................5.6(a)(ii)
Company Changed Contracts....................................................................................5.3(a)
Company Class A Common Stock.................................................................Preliminary Statements
Company Class B-1 Common Stock...............................................................Preliminary Statements
Company Class B-2 Common Stock...............................................................Preliminary Statements
Company Common Stock.........................................................................Preliminary Statements
Company Disclosure Letter...............................................................................Article III
Company Expenses.............................................................................................7.2(c)
Company Financial Statements.................................................................................3.7(b)
Company Independent Advisors.................................................................................3.3(c)
Company Intellectual Property Rights........................................................................3.17(c)
Company Material Adverse Effect.............................................................................8.11(b)
Company Material Contract...................................................................................3.12(a)
Company Options..............................................................................................2.3(a)
Company Pension Plan........................................................................................3.14(a)
Company Preferred Stock......................................................................................3.2(a)
Company SEC Reports..........................................................................................3.7(a)
Company Series A-1 Preferred Stock...........................................................................3.2(a)
Company Series A-2 Preferred Stock...........................................................................3.2(a)
Company Series B Preferred Stock.............................................................................3.2(a)
Company Stockholders' Meeting...............................................................................5.10(a)
Company Stock Option Plans...................................................................................2.3(a)
Company Subsequent Determination.........................................................................5.6(a)(ii)
Company Subsidiaries.........................................................................................3.2(b)
Company Voting Debt..........................................................................................3.2(a)
Company Warrant..............................................................................................2.5(a)
Company Welfare Plan........................................................................................3.14(a)
Compliance Plan.............................................................................................3.21(d)
Concerted Action............................................................................................3.15(a)
Confidentiality Agreement....................................................................................5.3(a)
DGCL.........................................................................................Preliminary Statements
Dissenting Shares............................................................................................2.2(a)
D&O Insurance................................................................................................5.8(b)
Effective Time..................................................................................................1.2
Environmental Claim.........................................................................................3.16(c)
Environmental Laws..........................................................................................3.16(c)
ERISA.......................................................................................................3.14(a)
Exchange Act.................................................................................................2.3(c)
Exchange Agent...............................................................................................2.7(a)
Exchange Ratio...............................................................................................2.1(a)
Exchange Fund................................................................................................2.7(a)
Executive Officer..........................................................................................8.11(f)
GAAP.........................................................................................................3.7(b)
Governmental Entity.............................................................................................3.5
Hazardous Materials.........................................................................................3.16(c)
Healthcare Information Laws.................................................................................3.21(d)
HSR Act.........................................................................................................3.5
Indemnified Parties..........................................................................................5.8(a)
Intellectual Property Rights................................................................................3.17(c)
Joint Proxy Statement.......................................................................................5.10(a)
King & Spalding.................................................................................................1.2
Law.............................................................................................................3.4
Liens........................................................................................................3.2(b)
Litigation..................................................................................................3.11(a)
Material Acquisition Proposal................................................................................7.2(d)
Merger.......................................................................................Preliminary Statements
Merger Consideration.........................................................................................2.1(a)
Merger Sub.................................................................................................Preamble
Merger Sub Common Stock......................................................................................2.1(c)
NLRB........................................................................................................3.15(a)
NYSE.........................................................................................................2.1(a)
Outside Date.................................................................................................7.1(c)
Parent.....................................................................................................Preamble
Parent Alternative Transaction...........................................................................5.6(b)(ii)
Parent Benefit Plan.........................................................................................4.14(a)
Parent Bylaws...................................................................................................4.1
Parent Certificate of Incorporation.............................................................................4.1
Parent Change in Recommendation..........................................................................5.6(b)(ii)
Parent Changed Contracts.....................................................................................5.3(b)
Parent Common Stock..........................................................................................2.1(a)
Parent Disclosure Letter.................................................................................Article IV
Parent Expenses..............................................................................................7.2(b)
Parent Financial Statements..................................................................................4.7(b)
Parent Intellectual Property Rights.........................................................................4.17(c)
Parent Independent Advisors..................................................................................4.3(d)
Parent Material Adverse Effect..............................................................................8.11(c)
Parent Material Contract....................................................................................4.12(a)
Parent Pension Plan.........................................................................................4.14(a)
Parent Preferred Stock.......................................................................................4.2(a)
Parent Options...............................................................................................4.2(a)
Parent Rights................................................................................................4.2(a)
Parent Rights Agreement.........................................................................................2.6
Parent SEC Reports...........................................................................................4.7(a)
Parent Series C Preferred Stock..............................................................................4.2(a)
Parent Stockholders' Meeting................................................................................5.10(a)
Parent Stock Option Plans....................................................................................4.2(a)
Parent Subsequent Determination..........................................................................5.6(b)(ii)
Parent Subsidiaries..........................................................................................4.2(c)
Parent Voting Debt...........................................................................................4.2(a)
Parent Welfare Plan.........................................................................................4.14(a)
Permits.....................................................................................................3.21(a)
Per Share Cash Amount........................................................................................2.1(a)
Purchase Plan...................................................................................................2.4
Registration Statement......................................................................................5.10(a)
Release.....................................................................................................3.16(c)
Representatives..............................................................................................5.3(a)
Retention Plan...............................................................................................5.1(c)
Xxxxxxxx-Xxxxx Act...........................................................................................3.7(a)
SEC..........................................................................................................2.3(c)
Securities Act..................................................................................................3.5
Shares.......................................................................................................2.1(a)
Xxxxxxx Xxxx.................................................................................................2.3(c)
Stock Percentage.............................................................................................2.1(a)
Substitute Option............................................................................................2.3(a)
Substitute Warrant...........................................................................................2.5(a)
Superior Proposal........................................................................................5.6(a)(ii)
Surviving Corporation...........................................................................................1.1
Tax, Taxes...................................................................................................3.9(a)
Tax Return...................................................................................................3.9(a)
Termination Fee..............................................................................................7.2(b)
Transition Period...........................................................................................5.15(a)
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of the
2nd day of September, 2003, is by and among CAREMARK RX, INC., a Delaware
corporation ("Parent"), COUGAR MERGER CORPORATION, a Delaware corporation
("Merger Sub") and a direct wholly owned subsidiary of Parent, and ADVANCEPCS, a
Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of this Agreement
and in accordance with the General Corporation Law of the State of Delaware (the
"DGCL"), Parent and the Company will enter into a business combination
transaction pursuant to which Merger Sub will merge with and into the Company
(the "Merger");
WHEREAS, the Board of Directors of the Company has (i) determined that
the Merger is consistent with and in furtherance of the long-term business
strategy of the Company and in the best interests of the Company and the holders
of the Class A common stock, par value $0.01 per share, of the Company (the
"Company Class A Common Stock"), the holders of the Class B-1 common stock, par
value $0.01 per share, of the Company (the "Company Class B-1 Common Stock"),
and the holders of the Class B-2 common stock, par value $0.01 per share, of the
Company (the "Company Class B-2 Common Stock," and, collectively with the
Company Class A Common Stock and the Company Class B-1 Common Stock, the
"Company Common Stock"), and has approved and adopted this Agreement and
declared its advisability and approved the Merger and the other transactions
contemplated by this Agreement and (ii) has recommended that the stockholders of
the Company approve and adopt this Agreement and the Merger;
WHEREAS, the Board of Directors of Parent (i) has determined that the
Merger is consistent with and in furtherance of the long-term business strategy
of Parent and in the best interests of Parent and its stockholders and has
approved and adopted this Agreement, the Merger and the other transactions
contemplated by this Agreement and (ii) has recommended that the stockholders of
Parent approve and adopt the Amended Parent Certificate of Incorporation and
approve the issuance of Parent Common Stock in connection with the Merger and
the other transactions contemplated hereby;
WHEREAS, the Board of Directors of Merger Sub (i) has determined that
the Merger is consistent with and in furtherance of the long-term business
strategy of Merger Sub and in the best interests of Merger Sub and its
stockholder and has approved and adopted this Agreement, the Merger and the
other transactions contemplated by this Agreement and (ii) has recommended that
Parent approve and adopt this Agreement and the Merger;
WHEREAS, Parent, in its capacity as sole stockholder of Merger Sub, has
approved and adopted this Agreement and the Merger by unanimous written consent
in accordance with the requirements of the DGCL; and
WHEREAS, for federal income tax purposes, it is intended by Parent,
Merger Sub and the Company that the Merger shall qualify as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and that this Agreement shall constitute a plan of
"reorganization";
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained in this
Agreement and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the conditions
of this Agreement, and in accordance with the DGCL, at the Effective Time,
Merger Sub shall be merged with and into the Company. As a result of the
Merger, the separate corporate existence of Merger Sub shall cease and the
Company shall continue as the surviving corporation following the Merger (the
"Surviving Corporation"). The corporate existence of the Company shall continue
unaffected and unimpaired by the Merger and, as the Surviving Corporation, it
shall be governed by the laws of the State of Delaware.
Section 1.2. Effective Time; Closing. As promptly as practicable (and
in any event within two business days) after the satisfaction or waiver of the
conditions set forth in Article VI hereof (other than those conditions that by
their nature are to be satisfied at the Closing), the parties hereto shall
cause the Merger to be consummated by filing a certificate of merger (the
"Certificate of Merger"), with the Secretary of State of the State of Delaware
and by making all other filings or recordings required under the DGCL in
connection with the Merger, in such form as is required by, and executed in
accordance with the relevant provisions of, the DGCL. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware, or at such other time as the
parties hereto agree and as shall be specified in the Certificate of Merger
(the date and time the Merger becomes effective, the "Effective Time"). On the
date of such filing, a closing (the "Closing") shall be held at 10:00 a.m.,
Eastern Standard Time, at the offices of King & Spalding LLP ("King &
Spalding"), 000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000, or at such other time
and location as the parties hereto shall otherwise agree.
Section 1.3. Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions of the DGCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, except as otherwise provided herein, all the property, rights,
privileges, powers and franchises of the Company and Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities, obligations,
restrictions, disabilities and duties of the Company and Merger Sub shall
become the debts, liabilities, obligations, restrictions, disabilities and
duties of the Surviving Corporation.
Section 1.4. Certificate of Incorporation and Bylaws.
(a) The Certificate of Incorporation, as amended, of the Surviving
Corporation shall be amended in the Merger to read as set forth in Exhibit A,
until the same shall thereafter be altered, amended or repealed in accordance
with applicable Law and such Certificate of Incorporation.
(b) The Bylaws of Merger Sub as of the Effective Time shall be the
Bylaws of the Surviving Corporation, until the same shall thereafter be
altered, amended or repealed in accordance with applicable Law, the Certificate
of Incorporation of the Surviving Corporation and such Bylaws.
Section 1.5. Directors and Officers. From and after the Effective
Time, until the earlier of their resignation or removal or until their
respective successors are duly elected or appointed and qualified in accordance
with applicable Law, (i) the directors of Merger Sub at the Effective Time
shall be the directors of the Surviving Corporation and (ii) the officers of
Merger Sub at the Effective Time shall be the officers of the Surviving
Corporation.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE PROCEDURES
Section 2.1. Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Merger Sub, the
Company or the holders of any of the following securities:
(a) Subject to the other provisions of this Section 2.1, each share of
Company Class A Common Stock, Company Class B-1 Common Stock and Company Class
B-2 Common Stock (collectively, the "Shares") issued and outstanding
immediately prior to the Effective Time (other than Shares canceled pursuant to
Section 2.1(b) and Dissenting Shares, if any) shall be canceled and, subject to
Section 2.2, shall by virtue of the Merger and without any action on the part
of the holder thereof be converted automatically into the right to receive (A)
shares of common stock, par value $0.001 per share, of Parent ("Parent Common
Stock") in an amount equal to the product of 2.15 (the "Exchange Ratio") and
0.90 (the "Stock Percentage") and (B) an amount in cash equal to the Per Share
Cash Amount, issuable and payable, without interest, upon surrender of the
certificate that formerly evidenced such Share (a "Certificate") in the manner
provided in Section 2.7 (together, the "Merger Consideration"). At the
Effective Time, all Shares converted pursuant to this Section 2.1(a) shall no
longer be outstanding and shall automatically be canceled and cease to exist,
and each holder of a Certificate shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration in accordance
with this Section 2.1(a). Notwithstanding anything contained herein to the
contrary, if either (i) the tax opinion delivered to Parent referred to in
Section 6.2(d) cannot be rendered (as reasonably determined by counsel to
Parent) or (ii) the tax opinion delivered to the Company referred to in Section
6.3(d) cannot be rendered (as reasonably determined by counsel to the Company),
in either case as a result of the Merger potentially failing to satisfy the
"acquisition of control" requirement under Section 368(a)(2)(E) of the Code,
the Cash Percentage shall be reduced and the Stock Percentage shall be
correspondingly increased to the minimum extent necessary to enable the
relevant tax opinion or opinions, as the case may be, to be rendered.
As used in this Agreement, the "Per Share Cash Amount" shall be equal
to ten percent (the "Cash Percentage") of the product of (x) the Exchange Ratio
and (y) the average of the per share closing sales prices of shares of Parent
Common Stock as reported on the New York Stock Exchange (the "NYSE") Composite
Transactions reporting system (as reported in The Wall Street Journal or, in
absence thereof, by another authoritative source) during the five consecutive
trading day period that shares of Parent Common Stock are traded on the NYSE
ending on (and including) the fifth trading day immediately prior to the
Effective Time.
(b) Each Share held in treasury of the Company and each Share owned by
Merger Sub, Parent or any direct or indirect wholly owned subsidiary of Parent
or of the Company immediately prior to the Effective Time shall be canceled
without any conversion thereof, and no payment or distribution shall be made
with respect thereto.
(c) Each share of common stock, par value $0.001 per share, of Merger
Sub (the "Merger Sub Common Stock") issued and outstanding immediately prior to
the Effective Time shall be converted into and become one validly issued, fully
paid and nonassessable share of common stock, par value $0.001 per share, of
the Surviving Corporation and shall constitute the only outstanding shares of
capital stock of the Surviving Corporation.
Section 2.2. Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the contrary, Shares
that are issued and outstanding immediately prior to the Effective Time and
that are held by the Company's stockholders who have demanded and perfected
their demands for appraisal of such Shares in the time and manner provided in
Section 262 of the DGCL and, as of the Effective Time, have neither effectively
withdrawn nor lost their rights to such appraisal and payment under the DGCL
(the "Dissenting Shares") shall not be converted into or represent the right to
receive the Merger Consideration as described in Section 2.1(a), but shall, by
virtue of the Merger, be entitled to only such rights as are granted by Section
262 of the DGCL; provided, however, that if such holder shall have failed to
perfect or shall have effectively withdrawn or lost such holder's right to
appraisal and payment under the DGCL, such holder's Shares shall be deemed to
have been converted at the Effective Time into the right to receive the Merger
Consideration as described in Section 2.1(a), without any interest thereon.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal pursuant to Section 262 of the DGCL received by the Company,
withdrawals of such demands, and any other instruments served pursuant to the
DGCL and received by the Company in connection with such demands and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
demands for appraisal under the DGCL prior to the Effective Time. The Company
shall not, except with the prior written consent of Parent or as otherwise
required by applicable Law, make any payment with respect to any such demands
for appraisal or offer to settle or settle any such demands.
Section 2.3. Stock Options.
(a) All stock options (the "Company Options") outstanding, whether or
not exercisable and whether or not vested, at the Effective Time under that
certain AdvancePCS Amended and Restated Incentive Stock Option Plan, dated
August 1, 1993, as amended by Amendment No. 1, dated December 7, 2000, and
Amendment No. 2, dated November 1, 2001, that certain AdvancePCS Amended and
Restated 1997 Nonstatutory Stock Option Plan, dated May 1, 1997, as amended by
Amendment No. 1, dated November 1, 2001 and that certain AdvancePCS 2003
Incentive Compensation Plan, effective as of August 1, 2003 (collectively, the
"Company Stock Option Plans"), shall remain outstanding following the Effective
Time notwithstanding anything to the contrary set forth in the Company Stock
Option Plans. At the Effective Time, all of the Company Options shall, by
virtue of the Merger and without any further action on the part of the Company
or the holder thereof, be assumed in full by Parent. Parent and the Company
agree that the consummation of the Merger shall constitute a change in control,
change of control, change in control transaction, vesting transaction or sale
of substantially all of the common stock of the Company or similar transaction
for purposes of the agreements governing any Company Options that contain
accelerated vesting provisions and the Company Stock Option Plans and that
immediately prior to the consummation of the Merger, all such Company Options
(other than Company Options listed in Section 2.3(a) of the Company Disclosure
Letter as not accelerating prior to the consummation of the Merger) so subject
to accelerated vesting provisions shall all vest and become fully exercisable.
From and after the Effective Time, all references to the Company in the Company
Stock Option Plans and the applicable stock option agreements issued thereunder
shall be deemed to refer to Parent, which shall have assumed the Company Stock
Option Plans as of the Effective Time by virtue of this Agreement and without
any further action by Parent. Each Company Option assumed by Parent (each, a
"Substitute Option") shall be converted automatically into options to purchase
shares of Parent Common Stock upon the same terms and conditions as are in
effect immediately prior to the Effective Time with respect to such Company
Option, except that (i) such Substitute Options shall remain outstanding and,
to the extent provided above, become fully vested and exercisable
notwithstanding the terms and conditions of such Company Option and Company
Stock Option Plans and (ii) (A) each such Substitute Option shall be
exercisable for, and represent the right to acquire, that whole number of
shares of Parent Common Stock (rounded to the nearest whole share) equal to the
number of shares of Company Common Stock subject to such Company Option
multiplied by the Exchange Ratio and (B) the option price per share of Parent
Common Stock under each Substitute Option shall be an amount equal to the
option price per share of Company Common Stock subject to the related Company
Option in effect immediately prior to the Effective Time divided by the
Exchange Ratio (the option price per share, as so determined, being rounded to
the nearest full cent). Such Substitute Option shall otherwise be subject to
the same terms and conditions as such Company Option. Section 2.3(a) of the
Company Disclosure Letter sets forth a list of all Company Options as of the
date hereof, including the name of the holder of each such Company Option, the
number of shares of Company Common Stock subject thereto, the exercise price
thereof and whether vesting of such Company Option will be accelerated
immediately prior to the consummation of the Merger (either alone or in
conjunction with any other event).
(b) As soon as practicable after the Effective Time, Parent shall
deliver, or cause to be delivered, to each holder of a Substitute Option an
appropriate notice setting forth such holder's rights pursuant thereto, and
such Substitute Option shall continue in effect on the same terms and
conditions (including any antidilution provisions, and subject to the
adjustments required by this Section 2.3 after giving effect to the Merger).
Parent shall comply with the terms of all such Substitute Options and ensure
that the conversion and assumption provided in this Section 2.3 with respect to
any Company Option that qualifies as an "incentive stock option" (as defined in
Section 422 of the Code) shall be effected in a manner consistent with the
requirements of Section 424(a) of the Code. The Company has heretofore taken or
shall take all actions with respect to the Company Stock Option Plans and the
Company Options that are necessary to implement the provisions of this Section
2.3 and the other matters noted in Section 2.3 of the Company Disclosure
Letter. Parent has heretofore taken or shall take all actions with respect to
the Company Stock Option Plans and the Company Options that are necessary to
implement the provisions of this Section 2.3, including, without limitation,
all corporate action necessary to reserve for issuance a sufficient number of
shares of Parent Common Stock for delivery upon exercise of Substitute Options
pursuant to the terms set forth in this Section 2.3. As soon as practicable,
but in no event later than five business days after the Effective Time, Parent
shall register the shares of Parent Common Stock subject to Substitute Options
by filing an effective registration statement on Form S-8 (or any successor
form) or another appropriate form, and Parent shall use commercially reasonable
efforts to maintain the effectiveness of such registration statement or
registration statements and maintain the current status of the prospectus with
respect thereto for so long as Substitute Options remain outstanding.
(c) On or after the date of this Agreement and prior to the Effective
Time, each of Parent and the Company shall take all necessary action such that,
with respect to each member of the Board of Directors of the Company and each
employee of the Company (including each such person who will become a director
or officer of Parent) who is subject to Section 16 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), the acquisition by such person of
Parent Common Stock or Substitute Options pursuant to the transactions
contemplated by this Agreement and the disposition by any such person of
Company Common Stock or Company Options pursuant to the transactions
contemplated by this Agreement shall be exempt from the short-swing profit
liability rules of Section 16(b) of the Exchange Act pursuant to Rule 16b-3
promulgated thereunder. Such actions shall be consistent with all current
applicable interpretation and guidance of the United States Securities and
Exchange Commission (the "SEC"), including, but not limited to, the No-Action
Letter dated January 12, 1999, issued by the SEC to Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP ("Xxxxxxx Xxxx").
Section 2.4. Employee Stock Purchase Plan. With respect to the
AdvancePCS Employee Stock Purchase Plan, dated May 14, 2002 (the "Purchase
Plan"), the offering period in progress as of the trading date immediately
preceding the Effective Time shall be shortened by setting a new exercise date
which shall be the trading date immediately preceding the Effective Time. The
Purchase Plan shall terminate immediately following the purchase of shares of
Company Common Stock at the Effective Time.
Section 2.5. Warrants.
(a) At the Effective Time, the obligation to honor each outstanding
warrant to purchase Company Class A Common Stock (a "Company Warrant") shall be
deemed assumed by Parent. At and after the Effective Time: (i) each Company
Warrant then outstanding shall entitle the holder thereof to acquire the number
(rounded to the nearest whole share) of shares of Parent Common Stock
determined by multiplying the number of shares of Company Class A Common Stock
subject to such Company Warrant immediately prior to the Effective Time by the
Exchange Ratio and (ii) the exercise price per share of Parent Common Stock
subject to any such Company Warrant at and after the Effective Time shall be an
amount equal to the exercise price per share of Company Class A Common Stock
subject to such Company Warrant prior to the Effective Time divided by the
Exchange Ratio (the warrant exercise price, as so determined, being rounded to
the nearest full cent) (the "Substitute Warrants"). Other than as provided
above, as of and after the Effective Time, each Substitute Warrant shall be
subject to the same terms and conditions of the Company Warrants as in effect
immediately prior to the Effective Time.
(b) The Company shall (i) take all corporate action and (ii) use
prompt and reasonable commercial efforts to obtain such consents, in each case,
as are necessary to cause the Company Warrants outstanding at the Effective
Time to be treated in accordance with Section 2.5(a) and be assumed by Parent
at the Effective Time. Parent shall (i) take all corporate action and (ii) use
prompt and reasonable commercial efforts to obtain such consents, in each case,
as are necessary to cause the Company Warrants outstanding at the Effective
Time to be treated in accordance with Section 2.5(a) and be assumed by Parent
at the Effective Time, including, without limitation, all corporate action
necessary to reserve for issuance a sufficient number of shares of Parent
Common Stock for delivery upon exercise of Substitute Warrants pursuant to the
terms set forth in this Section 2.5. Following the Effective Time and after
receipt of any necessary consents, no holder of a Company Warrant shall have
any rights to acquire Company Class A Common Stock.
Section 2.6. Parent Rights Plan. References in this Agreement to
Parent Common Stock shall include the associated Parent Rights distributed to
holders of Parent Common Stock pursuant to that certain Second Amended and
Restated Rights Agreement, dated as of March 11, 2002, between Parent and First
Union National Bank (the "Parent Rights Agreement").
Section 2.7. Exchange of Certificates.
(a) Exchange Agent. At or prior to the Effective Time, Parent shall
deposit, or shall cause to be deposited, with Wachovia Bank, N.A. or such other
bank or trust company that is reasonably acceptable to the Company and may be
designated by Parent (the "Exchange Agent"), for the benefit of the holders of
Shares, for exchange in accordance with this Article II through the Exchange
Agent, (i) certificates representing the shares of Parent Common Stock issuable
pursuant to this Article II, (ii) cash sufficient to make the cash payments
payable pursuant to this Article II and (iii) cash from time to time as
required to make payments in lieu of any fractional shares pursuant to Section
2.7(e) (such cash and certificates for shares of Parent Common Stock, together
with any dividends or distributions with respect thereto, being hereinafter
referred to as the "Exchange Fund"). The Exchange Agent shall, pursuant to
irrevocable instructions, deliver the shares of Parent Common Stock and cash
contemplated to be issued pursuant to Section 2.1(a) out of the Exchange Fund.
Except as contemplated by Section 2.7(g) hereof, the Exchange Fund shall not be
used for any other purpose.
(b) Exchange Procedures. As promptly as practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to each person
who was, at the Effective Time, a holder of record of Shares entitled to
receive the Merger Consideration pursuant to Section 2.1(a): (i) a letter of
transmittal (which shall be in customary form and shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Exchange Agent) and (ii)
instructions for use in effecting the surrender of the Certificates pursuant to
such letter of transmittal. Upon surrender to the Exchange Agent of a
Certificate for cancellation, together with such letter of transmittal, duly
completed and validly executed in accordance with the instructions thereto, and
such other documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefore:
(A) a certificate representing that number of whole shares of Parent Common
Stock which such holder has the right to receive in respect of such holder's
Shares formerly represented by such Certificate, and (B) a check for the cash
which such holder has the right to receive in respect of such holder's Shares
formerly represented by such Certificate and for cash in lieu of any fractional
shares of Parent Common Stock to which such holder is entitled pursuant to
Section 2.7(e) and any dividends or other distributions to which such holder is
entitled pursuant to Section 2.7(c), and the Certificate so surrendered shall
forthwith be cancelled. No interest will be paid or will accrue on any cash
payable pursuant to Section 2.1(a), 2.7(c) or 2.7(e). In the event of a
transfer of ownership of Shares that is not registered in the transfer records
of the Company, a certificate representing the proper number of shares of
Parent Common Stock which such holder has the right to receive in respect of
such holder's Shares formerly represented by such Certificate and a check for
cash which such holder has the right to receive in respect of such holder's
Shares formerly represented by such Certificate, for cash in lieu of any
fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 2.7(e) and for any dividends or other distributions to
which such holder is entitled pursuant to Section 2.7(c) may be issued to a
transferee if the Certificate representing such Shares is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have
been paid. Until surrendered as contemplated by this Section 2.7, each
Certificate shall be deemed at all times after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration, the
cash in lieu of any fractional shares of Parent Common Stock to which such
holder is entitled pursuant to Section 2.7(e) and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.7(c).
(c) Distributions with Respect to Unexchanged Shares of Parent Common
Stock. No dividends or other distributions declared or made after the Effective
Time with respect to Parent 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 Parent Common Stock represented thereby until the holder of
such Certificate shall surrender such Certificate. Subject to the effect of
escheat, tax or other applicable Laws, following surrender of any such
Certificate, there shall be paid to the holder of the certificates representing
whole shares of Parent Common Stock issued in exchange therefor, without
interest, (i) promptly, the amount of dividends or other distributions with a
record date after the Effective Time and theretofore paid with respect to such
whole shares of Parent Common Stock, and (ii) at the appropriate payment date,
the amount of dividends or other distributions, with a record date after the
Effective Time but prior to surrender and a payment date occurring after
surrender, payable with respect to such whole shares of Parent Common Stock.
(d) No Further Rights in Company Common Stock. All cash paid and
shares of Parent Common Stock issued upon conversion of the Shares in
accordance with the terms of this Article II (including any cash paid pursuant
to Section 2.7(c) or (e)) shall be deemed to have been paid and issued in full
satisfaction of all rights pertaining to such Shares.
(e) No Fractional Shares. No certificates or script representing
fractional shares of Parent 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 stockholder of Parent.
Each holder of Shares exchanged pursuant to the Merger who would otherwise be
entitled to receive a fraction of a share of Parent Common Stock shall receive,
upon surrender of such holder's Certificates in accordance with this Section
2.7, 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 sales
prices of shares of Parent Common Stock as reported on the NYSE Composite
Transactions reporting system (as reported in The Wall Street Journal or in the
absence thereof, by another authoritative source) during the five 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 Exchange Agent shall so notify Parent, and
Parent shall deposit such amount with the Exchange Agent and shall cause the
Exchange Agent to forward payments to such holders of fractional share
interests subject to and in accordance with the terms of Section 2.7(b).
(f) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect appropriately the effect of any stock split, reverse stock
split, stock dividend (including any dividend or distribution of securities
convertible into Parent Common Stock or Company Common Stock), extraordinary
cash dividends, reorganization, recapitalization, reclassification,
combination, exchange of shares or other like change with respect to Parent
Common Stock or Company Common Stock occurring on or after the date hereof and
prior to the Effective Time.
(g) Termination of Exchange Fund. Any portion of the Exchange Fund
(including any interest received with respect thereto) that remains
undistributed to the holders of the Company Common Stock one year after the
Effective Time shall be delivered to Parent, upon demand, and any holders of
the Company Common Stock who have not theretofore complied with this Article II
shall thereafter look solely to Parent with respect to the Merger Consideration
payable or issuable upon due surrender of their Certificates, and any other
cash amounts payable pursuant to this Article II, without any interest thereon.
Any portion of the Exchange Fund remaining unclaimed by holders of Shares as of
a date which is immediately prior to such times as such amounts would otherwise
escheat to or become property of any government entity shall, to the extent
permitted by applicable Law, become the property of Parent free and clear of
any claims or interest of any person previously entitled thereto.
(h) No Liability. Neither the Exchange Agent nor any party hereto
shall be liable to any holder of Certificates for any shares of Parent Common
Stock (or dividends or distributions with respect thereto), or cash delivered
to a public official pursuant to any abandoned property, escheat or similar
Law.
(i) Withholding Rights. Each of the Surviving Corporation, Parent and
the Exchange Agent shall be entitled to deduct and withhold from the Merger
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, Parent or the Exchange Agent, 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 the Shares in respect to which such deduction and withholding
was made by the Surviving Corporation, Parent or the Exchange Agent, as the
case may be.
(j) Lost Certificates. 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
the Surviving Corporation, the posting by such person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration, any cash in lieu of fractional shares of
Parent Common Stock to which the holders thereof are entitled pursuant to
Section 2.7(e) and any dividends or other distributions to which the holders
thereof are entitled pursuant to Section 2.7(c).
Section 2.8. Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of Shares thereafter on the records of the Company.
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. On or after the Effective Time, any Certificates presented
to the Exchange Agent or Parent for any reason shall be converted into the
right to receive the Merger Consideration, any cash in lieu of fractional
shares of Parent Common Stock to which the holders thereof are entitled
pursuant to Section 2.7(e) and any dividends or other distributions to which
the holders thereof are entitled pursuant to Section 2.7(c).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of the other parties hereto
(except as set forth in the written disclosure letter delivered by the Company
to Parent and Merger Sub in connection with the execution and delivery of this
Agreement (the "Company Disclosure Letter") or in the Company SEC Reports filed
on or before the date of this Agreement; it being understood and agreed that any
matter set forth in any Section of the Company Disclosure Letter or in the
Company SEC Reports filed on or before the date of this Agreement shall be
deemed to be a disclosure for all purposes of this Agreement to which such
matter could reasonably be expected to be pertinent, but shall expressly not be
deemed to constitute an admission by the Company, or otherwise imply, that any
such matter is material for purposes of this Agreement) as follows:
Section 3.1. Organization and Standing. Each of the Company and each
Company Subsidiary (a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization, (b)
has full corporate (or similar) power and authority to own, lease and operate
its properties and assets and to conduct its business as presently conducted,
(c) has all necessary governmental approvals to own, lease and operate its
properties and assets and to conduct its business as presently conducted and
(d) is duly qualified or licensed to do business as a foreign corporation or
organization 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, licensing or good standing necessary, except, in the
case of clause (a), where the failure of any Company Subsidiary to be duly
organized, validly existing and in good standing does not have, or would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect or, in the case of clauses (c) and (d), where the
failure to have such approvals or to be so qualified or licensed or be in good
standing does not have, or would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. The
Company has furnished or made available to Parent true and complete copies of
its Certificate of Incorporation (including any certificates of designations
attached thereto, the "Company Certificate of Incorporation") and Bylaws (the
"Company Bylaws") and the Certificate of Incorporation and Bylaws (or
equivalent organizational documents) of each Company Subsidiary, each as
amended to date. Such Certificates of Incorporation, Bylaws or equivalent
organizational documents are in full force and effect, and neither the Company
nor any Company Subsidiary is in material violation of any provision of its
Certificate of Incorporation, Bylaws or equivalent organizational documents.
Section 3.2. Capitalization.
(a) The authorized capital stock of the Company consists of (i)
186,999,000 shares of Company Class A Common Stock, (ii) 13,000,000 shares of
Company Class B-1 Common Stock, (iii) 1,000 shares of Company Class B-2 Common
Stock and (iv) 5,000,000 shares of preferred stock, par value $0.01 per share
(the "Company Preferred Stock"), of which 65,854 shares have been designated as
Series A-1 11% preferred stock (the "Company Series A-1 Preferred Stock"),
125,000 shares have been designated as Series A-2 11% preferred stock (the
"Company Series A-2 Preferred Stock") and 84,146 shares have been designated as
Series B convertible preferred stock (the "Company Series B Preferred Stock").
As of the close of business on August 28, 2003, (A) 79,155,226 shares of
Company Class A Common Stock, 12,913,334 shares of Company Class B-1 Common
Stock and 200 shares of Company Class B-2 Common Stock were issued and
outstanding, all of which are duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights (except for preemptive rights
relating to the Company Class B-1 Common Stock and the Company Class B-2 Common
Stock as provided in the Company Certificate of Incorporation), (B) 5,322,028
shares of Company Common Stock were held in the treasury of the Company, (C)
13,003,675 shares of Company Common Stock were subject to Company Options
issued pursuant to the Company Stock Option Plans and 4,336,742 shares of
Company Common Stock were authorized and reserved for future issuance pursuant
to the Company Stock Option Plans, the Purchase Plan and the Company Warrants,
(D) no shares of Company Preferred Stock were issued and outstanding and (E)
760,144 shares of Company Common Stock were subject to Company Warrants. No
bonds, debentures, notes or other indebtedness of the Company having a right to
vote on any matters on which the holders of capital stock of the Company may
vote (the "Company Voting Debt") are issued and outstanding. Section 3.2(a) of
the Company Disclosure Letter sets forth a true and complete list, as of August
29, 2003, of the outstanding Company Options with the exercise prices thereof.
Except as set forth above or in Section 3.2(a) of the Company Disclosure
Letter, there are no options, warrants, convertible securities, subscriptions,
stock appreciation rights, phantom stock plans or stock equivalents or other
rights, agreements, arrangements or commitments (contingent or otherwise) of
any character issued or authorized by the Company or any Company Subsidiary
relating to the issued or unissued capital stock of the Company or any Company
Subsidiary or obligating the Company or any Company Subsidiary to issue or sell
any shares of capital stock of, or options, warrants, convertible securities,
subscriptions or other equity interests in, the Company or any Company
Subsidiary. All shares of Company 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 nonassessable. Except as set forth in Section
3.2(a) of the Company Disclosure Letter, there are no outstanding contractual
obligations of the Company or any Company Subsidiary to repurchase, redeem or
otherwise acquire any shares of Company Common Stock or any capital stock of
any Company Subsidiary or to pay any dividend or make any other distribution in
respect thereof or to provide funds to, or make any investment (in the form of
a loan, capital contribution or otherwise) in, any person.
(b) Exhibit 21.1 to the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 2003 includes all the subsidiaries of the Company
which as of the date of this Agreement are Significant Subsidiaries (as defined
in Rule 1-02 of Regulation S-X of the SEC) (the "Company Subsidiaries"). All
the outstanding shares of capital stock of, or other equity interests in, each
such Company Subsidiary have been duly authorized and validly issued and are
fully paid and nonassessable and are, except as set forth in Section 3.2(b) of
the Company Disclosure Letter, owned directly or indirectly by the Company,
free and clear of all pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever (collectively, "Liens"),
other than statutory Liens for Taxes not yet due and payable and Liens set
forth in Section 3.2(b) of the Company Disclosure Letter, and free of any other
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other ownership interests), except for
restrictions imposed by applicable securities laws. Except as set forth in
Section 3.2(b) of the Company Disclosure Letter, as of the date of this
Agreement, neither the Company nor any of the Company Subsidiaries directly or
indirectly owns any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any corporation, partnership, joint
venture or other business association or entity (other than the Company
Subsidiaries) that is or would reasonably be expected to be material to the
Company and the Company Subsidiaries, taken as a whole.
Section 3.3. Authority for Agreement.
(a) The Company has all necessary power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and, subject to
obtaining necessary stockholder approval in connection with this Agreement and
the Merger, to consummate the Merger and the other transactions contemplated by
this Agreement. The execution, delivery and performance by the Company of this
Agreement, and the consummation by the Company of the Merger and the other
transactions contemplated by this Agreement, have been duly authorized by all
necessary corporate action on the part of the Company, and no other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the Merger or the other transactions contemplated by
this Agreement (other than the approval and adoption of this Agreement and the
Merger by the affirmative votes of the holders of a majority of the outstanding
shares of Company Common Stock, voting as a single class, and the holders of
two-thirds of the outstanding Company Class B-1 Common Stock and Company Class
B-2 Common Stock, voting as a single class, and the filing and recordation of
appropriate merger documents as required by the DGCL). This Agreement has been
duly executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Parent and Merger Sub, constitutes a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar Laws relating to or affecting
the rights and remedies of creditors generally and the effect of general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law). The affirmative votes of the holders of a
majority of the outstanding Company Common Stock, voting as a single class, and
the holders of two-thirds of the outstanding Company Class B-1 Common Stock and
Company Class B-2 Common Stock, voting as a single class, entitled to vote at a
duly called and held meeting of the Company's stockholders are the only votes
of the holders of capital stock of the Company necessary to approve and adopt
this Agreement and the Merger.
(b) At a meeting duly called and held on September 2, 2003, the Board
of Directors of the Company unanimously (i) determined that this Agreement and
the other transactions contemplated hereby, including the Merger, are advisable
and in the best interests of the Company and the Company's stockholders, (ii)
approved and adopted this Agreement and the transactions contemplated hereby,
including the Merger and (iii) resolved to recommend approval and adoption of
this Agreement and the Merger by the Company's stockholders. The actions taken
by the Board of Directors of the Company constitute approval of the Merger,
this Agreement and the other transactions contemplated hereby by the Board of
Directors of the Company under the provisions of Section 203 of the DGCL such
that Section 203 of the DGCL does not apply to this Agreement or the
transactions contemplated hereby.
(c) Each of Banc of America Securities LLC and Xxxxxxx Lynch, Pierce,
Xxxxxx & Xxxxx Incorporated (the "Company Independent Advisors") has delivered
to the Board of Directors of the Company its opinion, dated the date of this
Agreement, to the effect that, as of such date and based on and subject to the
assumptions, qualifications and limitations contained therein, the Merger
Consideration to be received by the Company's stockholders in the Merger is
fair to such stockholders from a financial point of view. The Company will
deliver to Parent a copy of each such opinion solely for informational purposes
after receipt thereof by the Company.
Section 3.4. No Conflict. The execution and delivery of this Agreement
by the Company do not, and the performance of this Agreement by the Company and
the consummation of the Merger and the other transactions contemplated by this
Agreement will not, (a) conflict with or violate the Company Certificate of
Incorporation or Company Bylaws or the equivalent organizational documents of
any of the Company Subsidiaries, (b) subject to Section 3.5, conflict with or
violate any United States federal, state or local or any foreign statute, law,
rule, regulation, ordinance, code, order, judgment, decree or any other
requirement or rule of law (a "Law") applicable to the Company or any of the
Company Subsidiaries or by which any property or asset of the Company or any of
the Company Subsidiaries is bound or affected, or (c) except as set forth in
Section 3.4 of the Company Disclosure Letter, result in a breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, give to others any right of termination,
amendment, acceleration or cancellation of any payment or other obligation
pursuant to, or result in the creation of a Lien on any property or asset of
the Company or any of the Company Subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation or Company Material Contract to which the
Company or any of the Company Subsidiaries is a party or by which the Company
or any of the Company Subsidiaries or any property or asset of any of them is
bound or affected, except, in the case of clauses (b) and (c) above, for any
such conflicts, violations, breaches, defaults or other occurrences that do not
have and would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
Section 3.5. Required Filings and Consents. Except as set forth in
Section 3.5 of the Company Disclosure Letter, the execution and delivery of
this Agreement by the Company do not, and the performance of this Agreement by
the Company will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any United States federal, state or
local or any foreign government or any court, administrative or regulatory
agency or commission or other governmental authority or agency, domestic or
foreign (a "Governmental Entity"), except (i) for applicable requirements, if
any, of the Securities Act of 1933, as amended (the "Securities Act"), the
Exchange Act, state securities or "blue sky" laws and filing and recordation of
appropriate merger documents as required by the DGCL, (ii) for those required
by the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act") and (iii) for such other consents, approvals, authorizations,
permits, filings or notifications the failure of which to be made or obtained
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
Section 3.6. Compliance. Except as set forth in Section 3.6 of the
Company Disclosure Letter or as disclosed in the Company SEC Reports filed on
or before the date of this Agreement, since April 1, 2000, each of the Company
and the Company Subsidiaries (i) has been operated at all times in compliance
in all material respects with all Laws applicable to the Company or any of the
Company Subsidiaries or by which any property, business or asset of the Company
or any of the Company Subsidiaries is bound or affected and (ii) is not in
default or violation of any notes, bonds, mortgages, indentures, contracts,
agreements, leases, licenses, permits, franchises, or other instruments or
obligations to which the Company or any of the Company Subsidiaries is a party
or by which the Company or any of the Company Subsidiaries or any property or
asset of the Company or any of the Company Subsidiaries is bound or affected,
other than, in the case of clauses (i) and (ii) above, failures to comply,
defaults or violations that do not have and would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
Section 3.7. SEC Filings, Company Financial Statements.
(a) Except as set forth in Section 3.7(a) of the Company Disclosure
Letter, the Company and each Company Subsidiary have filed all forms, reports,
schedules, statements and documents required to be filed with the SEC by the
Company or such Company Subsidiary since April 1, 2000 (such documents, as
supplemented and amended, the "Company SEC Reports"), each of which has
complied in all material respects with the applicable requirements of the
Securities Act and the rules and regulations promulgated thereunder and the
Exchange Act and the rules and regulations promulgated thereunder, each as in
effect on the date so filed (and, in the case of registration statements and
proxy statements, on the dates of effectiveness and the dates of mailing,
respectively, and in the case of any Company SEC Reports amended or superseded
by a filing prior to the date of this Agreement, then on the date of such
amending or superseding filing). Except as set forth in Section 3.7(a) of the
Company Disclosure Letter, none of the Company SEC Reports (including any
financial statements or schedules included or incorporated by reference
therein) contained when filed (and, in the case of registration statements and
proxy statements, on the dates of effectiveness and the dates of mailing,
respectively, and in the case of any Company SEC Reports amended or superseded
by a filing prior to the date of this Agreement, then on the date of such
amending or superseding filing) any untrue statement of a material fact or
omitted to state a material fact required to be stated therein (or incorporated
by reference therein) or necessary in order to make the statements therein (or
incorporated by reference therein), in light of the circumstances under which
they were made, not misleading. Except as set forth in Section 3.7(a) of the
Company Disclosure Letter, the principal executive officer of the Company and
the principal financial officer of the Company (and each former principal
executive officer of the Company and each former principal financial officer of
the Company, as applicable) have made the certifications required by Sections
302 and 906 of the Xxxxxxxx-Xxxxx Act of 2002 (the "Xxxxxxxx-Xxxxx Act"), and
the rules and regulations of the SEC promulgated thereunder with respect to the
Company's filings pursuant to the Exchange Act. For purposes of the preceding
sentence, "principal executive officer" and "principal financial officer" shall
have the meanings given to such terms in the Xxxxxxxx-Xxxxx Act.
(b) Except as set forth in Section 3.7(b) of the Company Disclosure
Letter or as disclosed in the Company SEC Reports filed on or before the date
of this Agreement, all of the financial statements included in the Company SEC
Reports filed on or before the date of this Agreement, in each case, including
any related notes thereto, as filed with the SEC (collectively, the "Company
Financial Statements"), have been prepared in all material respects in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited statements, as may be permitted
by Form 10-Q of the SEC and subject, in the case of such unaudited statements,
to normal, recurring adjustments that would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect) and fairly
present in all material respects the consolidated financial position of the
Company and the Company Subsidiaries at the respective dates thereof and the
consolidated results of its operations and cash flows for the periods
indicated.
(c) Except as set forth in Section 3.7(c) of the Company Disclosure
Letter, there are no liabilities of the Company or any of the Company
Subsidiaries of any kind whatsoever, whether or not accrued and whether or not
contingent or absolute, other than (i) liabilities disclosed or provided for in
the consolidated balance sheet of the Company and the Company Subsidiaries at
March 31, 2003, including the notes thereto, and liabilities incurred in the
ordinary course of business since Xxxxx 00, 0000, (xx) liabilities disclosed in
the Company SEC Reports filed on or before the date of this Agreement, (iii)
liabilities incurred on behalf of the Company in connection with this Agreement
and the contemplated Merger, and (iv) liabilities that would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
Section 3.8. Absence of Certain Changes or Events.
(a) Except as contemplated by this Agreement, as disclosed in the
Company SEC Reports filed on or before the date of this Agreement or as
disclosed in Section 3.8(a) of the Company Disclosure Letter, since March 31,
2003, the Company and the Company Subsidiaries have conducted their respective
businesses in all material respects in the ordinary course of business, and
there has not been any event or occurrence of any condition that has had or
would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
(b) Except as contemplated by this Agreement, as disclosed in the
Company SEC Reports filed on or before the date of this Agreement or as
disclosed in Section 3.8(b) of the Company Disclosure Letter, between March 31,
2003 and the date of this Agreement, the Company and the Company Subsidiaries
have conducted their respective businesses in all material respects in the
ordinary course of business, and there has not been (i) any declaration,
setting aside or payment of any dividend or any other distribution with respect
to any of the capital stock of the Company or any Company Subsidiary, (ii) any
material change in accounting methods, principles or practices employed by the
Company or (iii) any action of the type described in Sections 5.1(b)(ii) or
5.1(c)(i) and (xiii) which, had such action been taken after the date of this
Agreement, would be in material violation of any such Section.
(c) Except as contemplated by this Agreement, as disclosed in the
Company SEC Reports filed on or before the date of this Agreement or as
disclosed in Section 3.8(c) of the Company Disclosure Letter, since March 31,
2003, no action has been taken by or on behalf of the Company or any Company
Subsidiary (i) to accelerate the vesting of any Company Options, (ii) to adopt,
amend or terminate, or agree to adopt, amend or terminate, in any material
respect any Company Benefit Plan, (iii) to increase the salary, incentive
compensation, deferred compensation or other benefits of any director or
Executive Officer of the Company or any Company Subsidiary, or to agree to any
such increase in the future, (iv) to enter into, amend or modify any written
obligation to provide a financial accommodation to any Executive Officer or
director of the Company or any Company Subsidiary or to agree in writing to
provide, amend or modify any such accommodation in the future or (v) to amend
or modify any employment agreement or policy (whether written or oral) relating
to any Executive Officer or director of the Company or any Company Subsidiary,
or to agree to any such amendment or modification in the future.
Section 3.9. Taxes.
(a) Except as set forth in Section 3.9(a) of the Company Disclosure
Letter and except as does not have or would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, (i) the
Company and each of the Company Subsidiaries have timely filed all Tax Returns
required to be filed by any of them and all such Tax Returns are true, correct
and complete, (ii) all Taxes of the Company and each of the Company
Subsidiaries which are (A) shown as due on such Tax Returns, (B) otherwise due
and payable or (C) claimed or asserted by any taxing authority to be due, have
been paid, except for those Taxes being contested in good faith and for which
adequate reserves have been established in the financial statements included in
the Company SEC Reports filed on or before the date of this Agreement in
accordance with GAAP, (iii) there are no Liens for any Taxes upon the assets of
the Company or any of the Company Subsidiaries, other than statutory Liens for
Taxes not yet due and payable and Liens for real estate Taxes being contested
in good faith and (iv) neither the Company nor any of the Company Subsidiaries
has waived any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency. Except as set
forth in Section 3.9(a) of the Company Disclosure Letter, the Company has not
received written notice of any proposed or threatened Tax claims or assessments
which, if upheld, would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
For purposes of this Agreement, (i) "Tax" (and, with correlative
meaning, "Taxes") means any federal, state, local or foreign income, gross
receipts, property, sales, use, license, excise, franchise, employment, payroll,
premium, withholding, alternative or added minimum, ad valorem, transfer or
excise tax, or any other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
penalty or addition thereto, whether disputed or not, imposed by any
Governmental Entity, and (ii) "Tax Return" means any return, report or similar
statement required to be filed with respect to any Tax (including any attached
schedules), including any information return, claim for refund, amended return
or declaration of estimated Tax.
(b) Neither the Company nor any of the Company Subsidiaries has taken
or agreed to take any action, has failed to take any action or knows of any
fact, agreement, plan or other circumstance that is reasonably likely to
prevent the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
(c) The Company has made available to Parent correct and complete
copies of (i) all federal and other material Tax Returns of the Company and the
Company Subsidiaries relating to the taxable periods ending since December 31,
1999, which have been filed and (ii) any audit report within the last five
years relating to any material Taxes due from or with respect to the Company or
any of the Company Subsidiaries.
Section 3.10. Change of Control Agreements. Except as contemplated by
this Agreement or set forth in Section 3.10 of the Company Disclosure Letter
and except for the Merger Consideration, neither the execution and delivery of
this Agreement nor the consummation of the Merger or the other transactions
contemplated by this Agreement will (either alone or in conjunction with any
other event) (i) cause the accelerated vesting of any Company Options, (ii)
result in any material payment or benefit to any employee of the Company or any
Company Subsidiary or (iii) result in any payment or benefit to any director or
officer of the Company or any Company Subsidiary.
Section 3.11. Litigation.
(a) Except for the matters disclosed in Section 3.11(a) of the Company
Disclosure Letter or the Company SEC Reports filed on or before the date of
this Agreement, on the date of this Agreement, there are no claims, suits,
actions, investigations, indictments, or administrative, arbitration or other
similar proceedings ("Litigation") pending or, to the knowledge of the Company,
threatened against the Company, any of the Company Subsidiaries or any of their
executive officers or directors that, if determined adversely to the Company,
would reasonably be expected to involve fines, penalties, payments, costs or
expenses in excess of $1 million in the case of any single matter or $3 million
in the case of any group of related matters. Section 3.11(a) of the Company
Disclosure Letter or the Company SEC Reports filed on or before the date of
this Agreement identify all Litigation pending on the date of this Agreement,
that, if determined adversely to the Company, would reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
(b) Except for the matters disclosed in Section 3.11(b) of the Company
Disclosure Letter or the Company SEC Reports filed on or before the date of
this Agreement, there is no Litigation pending or, to the knowledge of the
Company, threatened against the Company, any of the Company Subsidiaries or any
of their executive officers or directors, other than Litigation that, if
determined adversely to the Company, would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
Section 3.12. Contracts and Commitments.
(a) Section 3.12(a) of the Company Disclosure Letter sets forth as of
the date hereof a true, correct and complete list of the following contracts
(including every written amendment, modification or supplement to the foregoing
or other material amendment, modification or supplement to the foregoing that
is binding on the Company or any Company Subsidiary) to which the Company or a
Company Subsidiary is a party: (i) any contract that is a "material contract"
(as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC), (ii)
contracts that collectively represent at least 80% of the amounts received by
the Company and the Company Subsidiaries, taken as a whole, as rebates or
administrative fees from pharmaceutical manufacturers during the Company's last
fiscal year, (iii) revenue-generating contracts that collectively represent the
top 50 contracts for pharmacy benefit management services and the top 5 rebate
utility contracts, in each case, based on the annualized number of claims
adjudicated for the Company and the Company Subsidiaries during the Company's
quarter ended March 31, 2003, (iv) contracts that collectively represent the
top 10 retail pharmacy agreements based on the annualized number of claims
adjudicated for the Company and the Company Subsidiaries during the Company's
quarter ended March 31, 2003, (v) contracts (other than contracts described in
clause (ii) above without regard to any threshold contained therein) to provide
services to pharmaceutical manufacturers that collectively represent the top 15
revenue-generating relationships with pharmaceutical manufacturers during the
Company's last fiscal year, (vi) any contract (other than a contract described
in one of the other provisions of this Section 3.12(a) without regard to any
threshold contained therein) that involves annual expenditures during the
Company's last fiscal year by the Company or any Company Subsidiary in excess
of $5 million and is not otherwise cancelable by the Company or any Company
Subsidiary without any financial or other penalty on 90-days' or less notice,
(vii) any contract (other than a contract described in one of the other
provisions of this Section 3.12(a) without regard to any threshold contained
therein) that involves annual revenue during the Company's last fiscal year to
the Company or any Company Subsidiary in excess of $5 million, (viii) any
contract that contains any express material restriction on the ability of the
Company or any Company Subsidiary to compete for or to provide services in any
market segment and/or any geographic area or (ix) any contract that is a
contract, agreement or arrangement under which the Company or any Company
Subsidiary has (A) incurred any indebtedness for borrowed money that is
currently owing or (B) given any guarantee in respect of indebtedness for
borrowed money, in each case under clauses (A) and (B) above, having an
aggregate principal amount in excess of $2.5 million (each contract referenced
above in clauses (i) through (ix) individually, a "Company Material Contract"
and collectively, "Company Material Contracts"); provided that, with respect to
Company Material Contracts described above in clauses (ii), (iii), (iv), (v),
(vi), (vii), (viii) and (ix), such list shall not identify the parties thereto,
but shall identify the date of such contract, the range of revenues or
expenditures during the Company's last fiscal year or for the quarter ended
March 31, 2003, as applicable, pursuant to such contract, the stated expiration
date of such contract, whether such contract is up for renewal or re-bid in
calendar year 2003 or calendar year 2004, any communications (written or, to
the knowledge of the Company, oral) received by the Company or the Company
Subsidiaries from any party to such contract or on behalf of any such party
that such party intends to cancel, terminate, seek re-bidding of or fail to
renew such contract and whether such contract permits termination by the other
party without cause and, if so, the required notice period prior to
termination. Except as set forth in Section 3.12(a) of the Company Disclosure
Letter and in the proviso in the preceding sentence, the Company has delivered
or made available true, correct and complete copies of all such agreements,
arrangements and commitments to counsel to Parent.
(b) Except as set forth in Section 3.12(b) of the Company Disclosure
Letter, the Company Material Contracts are valid, binding and enforceable in
accordance with their respective terms with respect to the Company and, to the
knowledge of the Company, with respect to each other party to any of such
Company Material Contracts, except as such validity, binding nature and
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar Laws relating to or affecting the rights and remedies of
creditors generally and the effect of general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law). Except as set forth in Section 3.12(b) of the Company Disclosure Letter,
to the knowledge of the Company, there are no existing material defaults or
breaches by the Company under any Company Material Contract (or events or
conditions which, with notice or lapse of time or both, would constitute a
material default or breach), and there are no such material defaults (or events
or conditions which, with notice or lapse of time or both, would constitute a
material default or breach) by any other party to any Company Material
Contract. The Company has no knowledge of any pending or threatened bankruptcy
or similar proceeding with respect to any party to any Company Material
Contract which would reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
Section 3.13. Information Supplied. The information supplied or to be
supplied by the Company for inclusion or incorporation by reference in the
Registration Statement and the Joint Proxy Statement shall not, at (i) the time
the Registration Statement is declared effective, (ii) the time the Joint Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the stockholders of the Company and Parent and (iii) the time of the Company
Stockholders' Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading. If, at any time prior to the Effective Time,
any event or circumstance relating to the Company or any Company Subsidiary, or
their respective officers or directors, should be discovered by the Company
which should be set forth in an amendment or supplement to the Registration
Statement or Joint Proxy Statement, the Company shall promptly inform Parent.
All documents that the Company is responsible for filing with the SEC in
connection with the Merger or the other transactions contemplated by this
Agreement will comply as to form and substance in all material respects with
the applicable requirements of the Securities Act and the rules and regulations
thereunder and the Exchange Act and the rules and regulations thereunder.
Notwithstanding the foregoing, no representation or warranty is made by the
Company with respect to statements made or incorporated by reference therein
based on information supplied by Parent or Merger Sub for inclusion or
incorporation by reference in the Registration Statement or Joint Proxy
Statement.
Section 3.14. Employee Benefit Plans.
(a) Section 3.14(a) of the Company Disclosure Letter sets forth a true
and complete list of all "employee pension benefit plans" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) under which the Company or any Company Subsidiary has any material
liability (sometimes referred to individually as a "Company Pension Plan" and
collectively as the "Company Pension Plans"), all "employee welfare benefit
plans" (as defined in Section 3(1) of ERISA) under which the Company or any
Company Subsidiary has any material liability (sometimes referred to
individually as a "Company Welfare Plan" and collectively as the "Company
Welfare Plans"), and all vacation, severance, termination, change in control,
employment, incentive compensation, profit sharing, stock option, fringe
benefit, stock purchase, stock ownership, phantom stock, deferred compensation
plans or agreements and other employee fringe benefit plans or arrangements
maintained, contributed to or required to be maintained or contributed to by
the Company or any Company Subsidiary for the benefit of any present or former
officers, employees, directors or independent contractors of the Company or any
Company Subsidiary and under which the Company or any Company Subsidiary has
any actual or contingent material liabilities (each of the foregoing being
referred to with the Company Pension Plans and the Company Welfare Plans,
individually as a "Company Benefit Plan" and collectively as the "Company
Benefit Plans").
(b) The Company has made available to Parent true and complete copies
of (i) each Company Benefit Plan (or, in the case of any unwritten Company
Benefit Plan, a summary of the material provisions of such plan), (ii) the
three most recent annual reports on Form 5500 filed with the Internal Revenue
Service with respect to each Company Benefit Plan to the extent any such report
was required by applicable Law, (iii) the most recent summary plan description
for each Company Benefit Plan for which such a summary plan description is
required by applicable Law and (iv) each currently effective trust agreement
and insurance or annuity contract relating to any Company Benefit Plan.
(c) Except as would not reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect or as set forth in
Section 3.14(c) of the Company Disclosure Letter:
(i) Each Company Benefit Plan has been administered in
accordance with its terms, and the Company and each of the Company
Subsidiaries and all of the Company Benefit Plans are in compliance
with the applicable provisions of ERISA, the Code and other applicable
Laws as to the Company Benefit Plans. The fair market value of the
assets of each of the Company Pension Plans as of the most recent
annual valuation date for such plan equaled or exceeded on a
termination basis the then present value of the liabilities of such
plan, and all contributions required under each Company Benefit Plan
have been made in full on a timely and proper basis.
(ii) With respect to the Company Benefit Plans, individually
and in the aggregate, no event has occurred and, to the knowledge of
the Company, there exists no condition or set of circumstances,
including claims, audits and investigations, in connection with which
the Company or any of the Company Subsidiaries could be subject to any
liability under ERISA, the Code or any other applicable Law, except
for making contributions, or the payment of claims or the payment of
PBGC premiums in the ordinary course of the operation of any such
Company Benefit Plans.
(iii) Each Company Pension Plan that is intended to comply
with the provisions of Section 401(a) of the Code has been amended to
satisfy all the currently applicable requirements for such a plan, and
each such plan is the subject of a determination letter from the
Internal Revenue Service to the effect that such Company Pension Plan
as so amended satisfies all such requirements (other than the
requirements of the Economic Growth and Tax Relief Reconciliation Act
of 2001) and is qualified and exempt from income taxes under Sections
401(a) and 501(a), respectively, of the Code, and no such
determination letter has been revoked and, to the knowledge of the
Company, revocation has not been threatened. The Company has made
available to Parent a copy of each such favorable determination
letter. Neither the Company nor any Company Subsidiary has maintained,
contributed to or been obligated to maintain or contribute to, or has
any actual or contingent liability under, any benefit plan that is
subject to Title IV of ERISA or Section 412 of the Code or is
otherwise a defined benefit pension plan (as defined in Section 3(35)
of ERISA).
(iv) To the knowledge of the Company, there are no oral
understandings, agreements or undertakings binding on the Company with
any person that would (pursuant to any such understandings, agreements
or undertakings) result in any material liabilities if any Company
Benefit Plan was amended or terminated on or at any time after the
Effective Time or that would prevent any unilateral action by the
Company (or, after the Effective Time, Parent) to effect such
amendment or termination.
(v) No Company Welfare Plan provides benefits to, or on
behalf of, any former employee after the termination of employment
except (A) where the full cost of such benefit is borne entirely by
the former employee (or his eligible dependents or beneficiaries), (B)
where plan benefits are payable through a trust, the fair market value
of the assets of which equal or exceed the present value of the
liabilities of such plan or (C) where the benefit is required by
Section 4980B of the Code.
(vi) Neither the execution and delivery of this Agreement,
nor the consummation of any transaction contemplated by this Agreement
(alone or in conjunction with a termination of employment) will (A)
trigger any funding (through a grantor trust or otherwise) of any
compensation or benefits or (B) result in any violation or breach of,
or a default (with or without notice or lapse of time or both) under
any Company Benefit Plan.
(vii) Neither the Company nor any Company Subsidiary has
given notice to any participant, beneficiary, fiduciary or
administrator of any Company Benefit Plan or to any government or
agency of a government to the effect that the Company or such Company
Subsidiary intends to terminate or withdraw from such plan.
(viii) Each individual who is classified by the Company or
any of the Company Subsidiaries as an "employee" or as an "independent
contractor" is properly so classified.
Section 3.15. Labor and Employment Matters. Except as set forth in
Section 3.15 of the Company Disclosure Letter:
(a) Neither the Company nor any of the Company Subsidiaries is or has
been, since April 1, 2000, a party to, or bound by, or conducted negotiations
regarding, any collective bargaining agreement or other contracts,
arrangements, agreements or understandings with a labor union or labor
organization that was certified by the National Labor Relations Board ("NLRB")
or voluntarily recognized or recognized under Law. There is no existing,
pending or, to the knowledge of the Company, threatened, (i) walkout, lockout,
strike, slowdown, hand billing, picketing, work stoppage (sympathetic or
otherwise), work interruption or other "concerted action" (each, a "Concerted
Action") involving the employees of the Company or any of the Company
Subsidiaries which would reasonably be expected to be material to the Company
and its subsidiaries as a whole, (ii) unfair labor practice charge or
complaint, labor dispute, labor arbitration proceeding or any other matter
before the NLRB or any other comparable state agency against or involving the
Company or any of the Company Subsidiaries which would reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect,
(iii) election petition or proceeding by a labor union or representative
thereof to organize any employees of the Company or any of the Company
Subsidiaries, (iv) certification or decertification question relating to
collective bargaining units at the premises of the Company or any of the
Company Subsidiaries or (v) grievance or arbitration demand against the Company
or any of the Company Subsidiaries whether or not filed pursuant to a
collective bargaining agreement which would reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. To the
knowledge of the Company, neither the employees of the Company nor the
employees of any of the Company Subsidiaries have engaged in a material
Concerted Action in the past three years.
(b) To the knowledge of the Company, none of the Company, any of the
Company Subsidiaries or any of their respective representatives or employees
has committed an unfair labor practice in connection with the operation of the
respective businesses of the Company or any of the Company Subsidiaries that
would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. The Company and the Company Subsidiaries are
in compliance with all applicable Laws respecting labor, employment, fair
employment practices, terms and conditions of employment, workers'
compensation, occupational safety, plant closings, mass layoffs and wages and
hours, except where such failure would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. The
Company and the Company Subsidiaries have properly accrued on their books and
records all material unpaid but accrued wages, salaries and other paid
time-off.
Section 3.16. Environmental Compliance and Disclosure. Except as set
forth in Section 3.16 of the Company Disclosure Letter:
(a) Each of the Company and the Company Subsidiaries is in compliance
with all applicable Environmental Laws (which compliance includes, but is not
limited to, possession by the Company and the Company Subsidiaries of all
permits, licenses and governmental authorizations required under applicable
Environmental Laws and compliance with the terms and conditions thereof),
except as would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. Since April 1, 2000, neither the
Company nor any Company Subsidiary has received any written or, to the
knowledge of the Company, oral communication from a Governmental Entity, or, to
the knowledge of the Company, from any citizens' group, employee or otherwise,
that alleges that the Company or any Company Subsidiary is not in such
compliance.
(b) There is no Environmental Claim pending or, to the knowledge of
the Company, threatened against the Company or any Company Subsidiary, or, to
the knowledge of the Company, against any person or entity whose liability for
any Environmental Claim the Company or any Company Subsidiary has retained or
assumed either contractually or by operation of law.
(c) To the Company's knowledge, none of the assets owned by the
Company or any Company Subsidiary or any real property owned or leased by the
Company or any Company Subsidiary contain any friable asbestos, PCBs or
underground storage tanks which are reasonably likely to result in a material
liability to the Company.
As used in this Agreement, the term "Environmental Laws" means any and
all laws (including statutes and regulations) of the United States, or any
political subdivision thereof, or any other nation or political subdivision, for
the protection of the environment or human health and safety, including
regulations, rules, standards and permits issued by any court, administrative
agency or commission or other Governmental Entity under such laws, and shall
include without limitation CERCLA, the Clean Air Act (42 U.S.C. xx.xx. 7401 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. xx.xx. 6901 et
seq.), the Clean Water Act (33 U.S.C. xx.xx. 1251 et seq.), the Occupational
Safety and Health Act (29 U.S.C. xx.xx. 651 et seq.), the Toxic Substance
Control Act (15 U.S.C. xx.xx. 2601 et seq.), and the Safe Drinking Water Act (42
U.S.C. xx.xx. 300f et seq.), as well as any and all state or local laws that
relate to pollution, contamination of the environment or protection of human
health.
As used in this Agreement, the term "Hazardous Material" means any
waste, pollutant, hazardous substance, toxic, radioactive, ignitable, reactive
or corrosive substance, hazardous waste, special waste, controlled waste,
industrial substance, by-product, process intermediate product or waste,
petroleum or petroleum-derived substance or waste, chemical liquids or solids,
liquid or gaseous products, or any constituent of any such substance or waste or
any other material which may be harmful to human health or the environment.
As used in this Agreement, the term "Environmental Claim" means any
claim, action, cause of action, investigation or notice (written or oral) that
would reasonably be expected to result in liability to or expenditures, in
either case, outside the ordinary course of business, by the Company or Parent,
as applicable, in excess of $1 million by any person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries or penalties) based on or
resulting from (i) the presence, or Release into the environment, of any
Hazardous Material at any location, owned or leased by the Company or any
Company Subsidiary, or Parent or any Parent Subsidiary, as applicable, or (ii)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.
As used in this Agreement, the term "Release" means any release, spill,
emission, discharge, leaking, pumping, injection, deposit, disposal, dispersal,
leaching or migration into the indoor or outdoor environment (including, without
limitation, ambient air, surface water, groundwater and surface or subsurface
strata) or into or out of any property, including the movement of Hazardous
Materials through or in the air, soil, surface water, groundwater or property.
Section 3.17. Intellectual Property.
(a) Except as set forth in Section 3.17(a) of the Company Disclosure
Letter, the Company or a Company Subsidiary has such ownership or right to use
the Company Intellectual Property Rights as is necessary to the conduct of the
business of each of the Company and the Company Subsidiaries as presently
conducted, except where the failure to have such ownership or right of use
would not have a material adverse effect on the Company's or any Company
Subsidiary's ability to conduct its business as presently conducted. The
validity of the Company Intellectual Property Rights owned by the Company and,
to the knowledge of the Company, the validity of the Company Intellectual
Property Rights used but not owned by the Company: (i) have not been challenged
in any prior Litigation, except for challenges that would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect if determined adversely to the Company; (ii) as of the date of this
Agreement, are not being challenged in any material pending Litigation; and
(iii) as of the date of this Agreement, are not the subject(s) of any material
Litigation threatened in writing. To the knowledge of the Company, the business
of each of the Company and the Company Subsidiaries as presently conducted does
not conflict in any material respects with and has not been alleged to conflict
in any material respects with any Intellectual Property Rights of others.
Except as set forth in Sections 3.4 and 3.17(a) of the Company Disclosure
Letter, the consummation of the Merger or other transactions contemplated
hereby will not result in the material loss or impairment of any of the Company
Intellectual Property Rights. To the knowledge of the Company, there are no
third parties infringing, misappropriating or otherwise violating the Company
Intellectual Property Rights owned by the Company or the Company Subsidiaries,
except for such infringements, misappropriations or other violations as would
not have a material adverse effect on the Company's or any Company Subsidiary's
ability to conduct its business as presently conducted.
(b) The validity of the Company Intellectual Property Rights owned by
the Company and, to the knowledge of the Company, the validity of the Company
Intellectual Property Rights used but not owned by the Company (i) are not
being challenged in any pending Litigation and (ii) are not the subject(s) of
any Litigation threatened in writing, except for such challenges, threats or
Litigation described above under clauses (i) and (ii) that would not reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect if determined adversely to the Company.
(c) As used in this Agreement, the term "Intellectual Property Rights"
means (i) all United States and foreign patents, patent applications and
unpatented inventions; (ii) all United States and foreign trademarks, trade
names, service marks, and registrations and applications therefor and the
goodwill related thereto; (iii) computer software programs (other than
commercially available "off-the-shelf" software programs or software programs
subject to "shrink-wrap," "click-through" or other standard form license
agreements); (iv) all United States and foreign copyrights and registrations
and applications therefor; (v) trade secrets, know-how, processes, formulae,
algorithms, models and methodologies; and (vi) Internet domain name
registrations. As used in this Agreement, the term "Company Intellectual
Property Rights" means the Intellectual Property Rights owned by the Company or
a Company Subsidiary or used in the conduct of the business of the Company or a
Company Subsidiary as currently conducted.
Section 3.18. Brokers. Except for the Company Independent Advisors, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other similar fee or commission in connection with this Agreement, the Merger
or the other transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The Company has made
available to Parent a complete and correct copy of each of the agreements
between the Company and the Company Independent Advisors pursuant to which such
firm would be entitled to any payment relating to this Agreement, the Merger or
the other transactions contemplated by this Agreement.
Section 3.19. Transactions with Affiliates. Except as set forth in
Section 3.19(a) of the Company Disclosure Letter, as disclosed in the Company
SEC Reports filed on or before the date of this Agreement, solely as a result
of a person's ownership of Company Common Stock or for customary compensation
and benefits received in the ordinary course of business as an employee or
director of the Company or the Company Subsidiaries, no director, officer or
other "affiliate" or "associate" of the Company or any Company Subsidiary, or
any entity in which, to the knowledge of the Company, any such director,
officer or other affiliate or associate owns any beneficial interest (other
than (A) a publicly held corporation whose stock is traded on a national
securities exchange or in the over-the-counter market and less than 1% of the
stock of which is beneficially owned by any such persons and (B) entities in
which any of the entities set forth on Section 3.19(b) of the Company
Disclosure Letter or their affiliates owns a beneficial interest): (i) receives
any material benefit from any contract, arrangement or understanding with or
relating to the business or operations of the Company or any Company
Subsidiary; (ii) is a party to or receives any material benefit from any loan,
arrangement, understanding, agreement or contract for or relating to
indebtedness of the Company or any Company Subsidiary; or (iii) has any
material interest in any property (real, personal or mixed), tangible or
intangible, used, or currently intended to be used, in the business or
operations of the Company or any Company Subsidiary.
Section 3.20. Stockholders' Rights Agreement. As of the date of this
Agreement, the Company has not adopted a stockholders' rights agreement (i.e.,
"poison pill").
Section 3.21. Regulatory Compliance. Except as set forth in Section
3.21 of the Company Disclosure Letter, as may relate to the Merger and the
other transactions contemplated by this Agreement or as disclosed in the
Company SEC Reports filed on or before the date of this Agreement:
(a) The Company and each Company Subsidiary have all required
governmental licenses, permits, certificates, approvals and authorizations
("Permits") necessary for the conduct of their business and the use of their
properties and assets, as presently conducted and used, and neither the Company
nor any Company Subsidiary has received written notice from any Governmental
Entity that any such Permit is subject to any adverse action, except where the
failure to have any such Permit or the receipt of such notice would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(b) The Company and each Company Subsidiary are in compliance with (i)
to the extent applicable, all rules and regulations of the Medicare and
Medicaid programs, including any guidance interpreting such rules and
regulations; (ii) all federal laws, rules, regulations and applicable guidance
relating to health care fraud and abuse, including, without limitation: (A) the
Anti-Kickback Law, 42 U.S.C. ss. 1320a-7b, 42 C.F.R. ss. 1001.952, (B) the
federal false coding statute, 42 U.S.C. ss. 1320a-7a, (C) the federal physician
self-referral prohibition, 42 U.S.C. ss. 1395nn, 42 C.F.R. ss. 411.351 et seq.,
and (D) the false claims act, 31 U.S.C. ss. 3729 et seq.; (iii) any and all
state laws relating to health care fraud and abuse; (iv) state laws relating to
Medicaid or any other state health care or health insurance programs; (v)
federal or state laws relating to billing or claims for reimbursement submitted
to any third party payor; and (vi) any other federal or state laws relating to
fraudulent, abusive or unlawful practices connected in any way with the
provision of health care items or services, or the billing for or claims for
reimbursement for such items or services provided to a beneficiary of any
state, federal or other governmental health care or health insurance program or
any private payor, except where any failure to be in compliance with any of the
foregoing matters described above in clauses (i) through (vi) would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(c) Since April 1, 1998 and, to the knowledge of the Company, at any
time prior to April 1, 1998, neither the Company, any Company Subsidiary, nor
any director, officer, employee, or agent of the Company or any Company
Subsidiary, with respect to actions taken on behalf of the Company or a Company
Subsidiary, (i) has been assessed a civil money penalty under Section 1128A of
the Social Security Act or any regulations promulgated thereunder, (ii) has
been excluded from participation in any federal health care program or state
health care program (as such terms are defined by the Social Security Act),
(iii) has been convicted of any criminal offense relating to the delivery of
any item or service under a federal health care program relating to the
unlawful manufacture, distribution, prescription, or dispensing of a
prescription drug or a controlled substance or (iv) is a party to or subject to
any action or proceeding concerning any of the matters described above in
clauses (i) through (iii).
(d) The Company and each Company Subsidiary are in compliance with all
applicable laws, statutes, ordinances, rules and regulations of any federal,
state or local governmental authority with respect to matters relating to
patient or individual healthcare information, including, without limitation,
the Health Insurance Portability and Accountability Act of 1996, Pub. L. No.
104-191, as amended, and any rules or regulations promulgated thereunder
(collectively, the "Healthcare Information Laws"), except for failures to
comply with any of the foregoing that would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. The
Company and each Company Subsidiary (i) have undertaken all necessary surveys,
audits, inventories, reviews, analyses, or assessments (including any necessary
risk assessments) on all areas required for compliance under all Healthcare
Information Laws, (ii) have developed a plan and time line for coming into
compliance with all Healthcare Information Laws (the "Compliance Plan") and
(iii) have implemented those provisions of the Compliance Plan to ensure that
such entity is and will remain in compliance with all Healthcare Information
Laws, except for failures to take any actions described above in clauses (i)
through (iii), which actions or proceedings would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
(e) The Company and each Company Subsidiary (i) are in compliance with
all Laws and any other applicable guidance relating to the operation of
pharmacies, the repackaging of drug products, the wholesale distribution of
prescription drugs or controlled substances, and the dispensing of prescription
drugs or controlled substances, (ii) are in compliance with all Laws and any
other applicable guidance relating to the labeling, packaging, advertising, or
adulteration of prescription drugs or controlled substances and (iii) are not
subject to any sanction or other adverse action by any Governmental Entity for
the matters described above in clauses (i) and (ii), except for such failures
to comply or such sanctions described above in clauses (i) through (iii) that
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
Section 3.22. Ethical Business Practices. None of the Company, any
Company Subsidiary or, to the knowledge of the Company, any directors,
officers, agents or employees of the Company or any Company Subsidiary has, on
behalf of the Company or any Company Subsidiary, (a) used any funds for
unlawful contributions, unlawful gifts, unlawful entertainment or other
unlawful expenses related to political activity, (b) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties, campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or (c) made any payment in the
nature of criminal bribery, provided that with respect to any such unlawful
action by, or on behalf of, a business, operation or Company Subsidiary at a
time when such business, operation or Company Subsidiary was not owned,
directly or indirectly, by the Company, these representations and warranties in
this Section 3.22 are made solely to the knowledge of the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company (except as
set forth in the written disclosure letter delivered by Parent and Merger Sub to
the Company in connection with the execution and delivery of this Agreement (the
"Parent Disclosure Letter") or in the Parent SEC Reports filed on or before the
date of this Agreement; it being understood and agreed that any matter set forth
in any Section of the Parent Disclosure Letter or in the Parent SEC Reports
filed on or before the date of this Agreement shall be deemed to be a disclosure
for all purposes of this Agreement to which such matter could reasonably be
expected to be pertinent, but shall expressly not be deemed to constitute an
admission by Parent or Merger Sub, or otherwise imply, that any such matter is
material for purposes of this Agreement) as follows:
Section 4.1. Organization and Standing. Each of Parent, Merger Sub and
each Parent Subsidiary (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, (b) has full corporate (or similar) power and authority to own,
lease and operate its properties and assets and to conduct its business as
presently conducted, (c) has all necessary governmental approvals to own, lease
and operate its properties and assets and to conduct its business as presently
conducted and (d) is duly qualified or licensed to do business as a foreign
corporation or organization 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, licensing or good standing necessary,
except, in the case of clause (a), where the failure of any Parent Subsidiary
to be duly organized, validly existing and in good standing does not have, or
would not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect or, in the case of clauses (c) and (d), where
the failure to have such approvals or to be so qualified or licensed or be in
good standing, does not have, or would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect. Parent has
furnished or made available to the Company true and complete copies of its
Certificate of Incorporation (including any certificates of designations
attached thereto, the "Parent Certificate of Incorporation") and Bylaws (the
"Parent Bylaws") and the Certificate of Incorporation and Bylaws (or equivalent
organizational documents) of each Parent Subsidiary, each as amended to date.
Such Certificates of Incorporation, Bylaws or equivalent organizational
documents are in full force and effect, and neither Parent, Merger Sub nor any
Parent Subsidiary is in material violation of any provision of its Certificate
of Incorporation, Bylaws or equivalent organizational documents.
Section 4.2. Capitalization.
(a) The authorized capital stock of Parent consists of (i) 400,000,000
shares of Parent Common Stock, (ii) 9,500,000 shares of preferred stock, par
value $0.001 per share (the "Parent Preferred Stock") and (iii) 500,000 shares
of Series C Junior Participating Preferred Stock, par value $0.001 per share
(the "Parent Series C Preferred Stock"). As of the close of business on August
28, 2003, (A) 266,055,466 shares of Parent Common Stock were issued and
outstanding, all of which are duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights, (B) 1,854,800 shares of Parent
Common Stock were held in the treasury of Parent, (C) 19,806,058 shares of
Parent Common Stock were subject to outstanding stock options ("Parent
Options") issued pursuant to the Parent Stock Option Plans and 6,959,557 shares
of Parent Common Stock were authorized and reserved for future issuance
pursuant to the Parent Stock Option Plans, (D) no shares of Parent Preferred
Stock were issued and outstanding, and (E) 500,000 shares of Parent Series C
Preferred Stock were reserved for issuance pursuant to the Parent Rights
Agreement (such rights to such Parent Series C Preferred Stock, the "Parent
Rights"). No bonds, debentures, notes or other indebtedness of Parent having a
right to vote on any matters on which the holders of capital stock of Parent
may vote (the "Parent Voting Debt") are issued and outstanding. Section 4.2(a)
of the Parent Disclosure Letter sets forth a true and complete list, as of
August 28, 2003, of the outstanding Parent Options with the exercise prices
thereof. Except as set forth above or in Section 4.2(a) of the Parent
Disclosure Letter, there are no options, warrants, convertible securities,
subscriptions, stock appreciation rights, phantom stock plans or stock
equivalents or other rights, agreements, arrangements or commitments
(contingent or otherwise) of any character issued or authorized by Parent or
any Parent Subsidiary relating to the issued or unissued capital stock of
Parent or any Parent Subsidiary or obligating Parent or any Parent Subsidiary
to issue or sell any shares of capital stock of, or options, warrants,
convertible securities, subscriptions or other equity interests in, Parent or
any Parent Subsidiary. All shares of Parent 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 nonassessable. Except as set forth in Section
4.2(a) of the Parent Disclosure Letter, there are no outstanding contractual
obligations of Parent or any Parent Subsidiary to repurchase, redeem or
otherwise acquire any shares of Parent Common Stock or any capital stock of any
Parent Subsidiary or to pay any dividend or make any other distribution in
respect thereof or to provide funds to, or make any investment (in the form of
a loan, capital contribution or otherwise) in, any person. For the purposes of
this Agreement, "Parent Stock Option Plans" shall mean collectively that
certain Amended and Restated Incentive Compensation Plan, dated May 13, 1996,
as amended by the First Amendment, dated November 15, 2000, and the Second
Amendment, dated January 12, 2001; that certain Amended and Restated 1993 Stock
Option Plan, dated January, 1999, as amended by the First Amendment, dated
November 15, 2000, and the Second Amendment, dated January 12, 2001; that
certain Amended and Restated 1994 Stock Option Plan, dated August 17, 2000, as
amended by the First Amendment, dated November 15, 2000, and the Second
Amendment, dated January 12, 2001; that certain Amended and Restated 1995 Stock
Option Plan, dated August 17, 2000, as amended by the First Amendment, dated
November 15, 2000, and the Second Amendment, dated January 12, 2001; that
certain Non-Employee Director Stock Option Plan, dated November 30, 1992; that
certain Amended and Restated 1997 Long-Term Incentive Compensation Plan, dated
February 25, 1997, as amended by the First Amendment, dated November 15, 2000,
and the Second Amendment, dated January 12, 2001; that certain Amended and
Restated 1998 Employee Stock Option Plan, dated August 6, 1998, as amended by
the First Amendment, dated November 15, 2000, and the Second Amendment, dated
January 12, 2001; and that certain Amended and Restated 1998 New Employee Stock
Option Plan, dated August 6, 1998, as amended by the First Amendment, dated
November 15, 2000, and the Second Amendment, dated January 12, 2001.
(b) The authorized capital stock of Merger Sub consists of 1,000
shares of Merger Sub Common Stock. As of the close of business on August 28,
2003, 1,000 shares of Merger Sub Common Stock were issued and outstanding, all
of which are owned directly by Parent, duly authorized, validly issued, fully
paid and nonassessable and free of preemptive rights. There are no options,
warrants, convertible securities, subscriptions, stock appreciation rights,
phantom stock plans or stock equivalents or other rights, agreements,
arrangements or commitments (contingent or otherwise) of any character issued
or authorized by Merger Sub relating to the issued or unissued capital stock of
Merger Sub or obligating Merger Sub to issue or sell any shares of capital
stock of, or options, warrants, convertible securities, subscriptions or other
equity interests in, Merger Sub.
(c) Exhibit 21 to Parent's Annual Report on Form 10-K for the fiscal
year ended December 31, 2002 includes all the subsidiaries of Parent which as
of the date of this Agreement are Significant Subsidiaries (as defined in Rule
1-02 of Regulation S-X of the SEC) (the "Parent Subsidiaries"). All the
outstanding shares of capital stock of, or other equity interests in, each such
Parent Subsidiary have been duly authorized and validly issued and are fully
paid and nonassessable and are, except as set forth in Section 4.2(c) of the
Parent Disclosure Letter, owned directly or indirectly by Parent, free and
clear of all Liens, other than statutory Liens for Taxes not yet due and
payable and Liens set forth in Section 4.2(c) of the Parent Disclosure Letter,
and free of any other restriction (including any restriction on the right to
vote, sell or otherwise dispose of such capital stock or other ownership
interests), except for restrictions imposed by applicable securities laws.
Except as set forth in Section 4.2(c) of the Parent Disclosure Letter, as of
the date of this Agreement, neither Parent nor any of the Parent Subsidiaries
directly or indirectly owns any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any corporation,
partnership, joint venture or other business association or entity (other than
the Parent Subsidiaries) that is or would reasonably be expected to be material
to Parent and the Parent Subsidiaries, taken as a whole.
Section 4.3. Authority for Agreement.
(a) Each of Parent and Merger Sub has all necessary power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and, subject to obtaining necessary stockholder approval in
connection with this Agreement and the Merger, to consummate the Merger and the
other transactions contemplated by this Agreement. The execution, delivery and
performance by each of Parent and Merger Sub of this Agreement, and the
consummation by each of Parent and Merger Sub of the Merger and the other
transactions contemplated by this Agreement, have been duly authorized by all
necessary corporate action on the part of Parent and Merger Sub, and no other
corporate proceedings on the part of Parent and Merger Sub are necessary to
authorize this Agreement or to consummate the Merger or the other transactions
contemplated by this Agreement (other than the affirmative vote of the holders
of a majority of the outstanding shares of Parent Common Stock to approve and
adopt the Amended Parent Certificate of Incorporation in accordance with the
DGCL, the approval by a majority of votes cast by the holders of Parent Common
Stock, provided that the total votes cast represents over 50% in interest of
all securities entitled to vote, as required by the Listed Company Manual of
the NYSE, of the issuance of Parent Common Stock in connection with the Merger
and the filing and recordation of appropriate merger documents as required by
the DGCL). This Agreement has been duly executed and delivered by each of
Parent and Merger Sub and, assuming the due authorization, execution and
delivery by the Company, constitutes a valid and binding obligation of each of
Parent and Merger Sub enforceable against each of Parent and Merger Sub in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar Laws relating to
or affecting the rights and remedies of creditors generally and the effect of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). The affirmative vote of the
holders of a majority of the outstanding shares of Parent Common Stock entitled
to vote at a duly called and held meeting of Parent's stockholders as required
by the DGCL is the only vote of the holders of any capital stock of Parent
necessary to approve and adopt the Amended Parent Certificate of Incorporation
and approval by a majority of votes cast by the holders of Parent Common Stock,
provided that the total votes cast represents over 50% in interest of all
securities entitled to vote, as required by the Listed Company Manual of the
NYSE, is the only vote of the holders of any capital stock of Parent necessary
to approve the issuance of Parent Common Stock in connection with the Merger.
The affirmative vote of the holders of a majority of the outstanding shares of
capital stock of Merger Sub entitled to vote at a duly called and held meeting
of the stockholders as required by the DGCL is the only vote of the holders of
any capital stock of Merger Sub necessary to approve and adopt this Agreement
and the Merger.
(b) At a meeting duly called and held on September 2, 2003, the Board
of Directors of Parent unanimously (i) determined that this Agreement and the
other transactions contemplated hereby, including the Merger, are advisable and
in the best interests of Parent and Parent's stockholders, (ii) approved and
adopted this Agreement and the transactions contemplated hereby, including the
Merger, (iii) approved and adopted the Amended Parent Certificate of
Incorporation and (iv) resolved to recommend approval and adoption of the
Amended Parent Certificate of Incorporation and the approval of the issuance of
Parent Common Stock in connection with the Merger by Parent's stockholders. The
actions taken by the Board of Directors of Parent constitute approval of the
Merger, this Agreement and the other transactions contemplated hereby by the
Board of Directors of Parent under the provisions of Section 203 of the DGCL
such that Section 203 of the DGCL does not apply to this Agreement or the
transactions contemplated hereby.
(c) At a meeting duly called and held on September 2, 2003, the Board
of Directors of Merger Sub unanimously (i) determined that this Agreement and
the other transactions contemplated hereby, including the Merger, are advisable
and in the best interests of Merger Sub and Merger Sub's stockholder, (ii)
approved and adopted this Agreement and the transactions contemplated hereby,
including the Merger and (iii) resolved to recommend approval and adoption of
this Agreement and the Merger by the stockholder of Merger Sub.
(d) Each of UBS Securities LLC and X.X. Xxxxxx Securities, Inc. (the
"Parent Independent Advisors") has delivered to the Board of Directors of
Parent its opinion, dated the date of this Agreement, to the effect that, as of
such date and based on and subject to the assumptions, qualifications and
limitations contained therein, the Merger Consideration is fair, from a
financial point of view, to Parent. Parent will deliver to the Company a copy
of each such opinion solely for informational purposes after receipt thereof by
Parent.
Section 4.4. No Conflict. The execution and delivery of this Agreement
by each of Parent and Merger Sub do not, and the performance of this Agreement
by each of Parent and Merger Sub and the consummation of the Merger and the
other transactions contemplated by this Agreement will not, (a) conflict with
or violate the Parent Certificate of Incorporation or Parent Bylaws, the
Certificate of Incorporation of Merger Sub or Bylaws of Merger Sub, or the
equivalent organizational documents of any of the Parent Subsidiaries, (b)
subject to Section 4.5, conflict with or violate any Law applicable to Parent
or any of the Parent Subsidiaries or by which any property or asset of Parent
or any of the Parent Subsidiaries is bound or affected, or (c) except as set
forth in Section 4.4 of the Parent Disclosure Letter, result in a breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, give to others any right of termination,
amendment, acceleration or cancellation of any payment or other obligation
pursuant to, or result in the creation of a Lien on any property or asset of
Parent or any of the Parent Subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation or Parent Material Contract to which Parent or any of
the Parent Subsidiaries is a party or by which Parent or any of the Parent
Subsidiaries or any property or asset of any of them is bound or affected,
except, in the case of clauses (b) and (c) above, for any such conflicts,
violations, breaches, defaults or other occurrences that do not have and would
not reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
Section 4.5. Required Filings and Consents. Except as set forth in
Section 4.5 of the Parent Disclosure Letter, the execution and delivery of this
Agreement by Parent and Merger Sub do not, and the performance of this
Agreement by Parent and Merger Sub 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 Securities Act,
the Exchange Act, state securities or "blue sky" laws and filing and
recordation of appropriate merger documents as required by the DGCL, (ii) for
those required by the HSR Act and (iii) for such other consents, approvals,
authorizations, permits, filings or notifications the failure of which to be
made or obtained would not reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect.
Section 4.6. Compliance. Except as set forth in Section 4.6 of the
Parent Disclosure Letter or as disclosed in the Parent SEC Reports filed on or
before the date of this Agreement, since January 1, 2000, each of Parent and
the Parent Subsidiaries (i) has been operated at all times in compliance in all
material respects with all Laws applicable to Parent or any of the Parent
Subsidiaries or by which any property, business or asset of Parent or any of
the Parent Subsidiaries is bound or affected and (ii) is not in default or
violation of any notes, bonds, mortgages, indentures, contracts, agreements,
leases, licenses, permits, franchises or other instruments or obligations to
which Parent or any of the Parent Subsidiaries is a party or by which Parent or
any of the Parent Subsidiaries or any property or asset of Parent or any of the
Parent Subsidiaries is bound or affected, other than, in the case of clauses
(i) and (ii) above, failures to comply, defaults or violations that do not have
and would not reasonably be expected to have, individually or in the aggregate,
a Parent Material Adverse Effect.
Section 4.7. SEC Filings, Parent Financial Statements.
(a) Except as set forth in Section 4.7(a) of the Parent Disclosure
Letter, Parent and each Parent Subsidiary have filed all forms, reports,
schedules, statements and documents required to be filed with the SEC by Parent
or such Parent Subsidiary since January 1, 2000 (such documents, as
supplemented and amended, the "Parent SEC Reports"), each of which has complied
in all material respects with the applicable requirements of the Securities Act
and the rules and regulations promulgated thereunder and the Exchange Act and
the rules and regulations promulgated thereunder, each as in effect on the date
so filed (and, in the case of registration statements and proxy statements, on
the dates of effectiveness and the dates of mailing, respectively, and in the
case of any Parent SEC Reports amended or superseded by a filing prior to the
date of this Agreement, then on the date of such amending or superseding
filing). Except as set forth in Section 4.7(a) of the Parent Disclosure Letter,
none of the Parent SEC Reports (including any financial statements or schedules
included or incorporated by reference therein) contained when filed (and, in
the case of registration statements and proxy statements, on the dates of
effectiveness and the dates of mailing, respectively, and in the case of any
Parent SEC Reports amended or superseded by a filing prior to the date of this
Agreement, then on the date of such amending or superseding filing) any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein (or incorporated by reference therein) or necessary in order to
make the statements therein (or incorporated by reference therein), in light of
the circumstances under which they were made, not misleading. The principal
executive officer of Parent and the principal financial officer of Parent (and
each former principal executive officer of Parent and each former principal
financial officer of Parent, as applicable) have made the certifications
required by Sections 302 and 906 of the Xxxxxxxx-Xxxxx Act, and the rules and
regulations of the SEC promulgated thereunder with respect to Parent's filings
pursuant to the Exchange Act. For purposes of the preceding sentence,
"principal executive officer" and "principal financial officer" shall have the
meanings given to such terms in the Xxxxxxxx-Xxxxx Act.
(b) Except as set forth in Section 4.7(b) of the Parent Disclosure
Letter or as disclosed in the Parent SEC Reports filed on or before the date of
this Agreement, all of the financial statements included in the Parent SEC
Reports filed on or before the date of this Agreement, in each case, including
any related notes thereto, as filed with the SEC (collectively, the "Parent
Financial Statements"), have been prepared in all material respects in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as may be permitted by Form 10-Q of the SEC and subject,
in the case of such unaudited statements, to normal, recurring adjustments that
would not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect) and fairly present in all material respects the
consolidated financial position of Parent and the Parent Subsidiaries at the
respective dates thereof and the consolidated results of its operations and
cash flows for the periods indicated.
(c) Except as set forth in Section 4.7(c) of the Parent Disclosure
Letter, there are no liabilities of Parent or any of the Parent Subsidiaries of
any kind whatsoever, whether or not accrued and whether or not contingent or
absolute, other than (i) liabilities disclosed or provided for in the
consolidated balance sheet of Parent and the Parent Subsidiaries at December
31, 2002, including the notes thereto, and liabilities incurred in the ordinary
course of business since December 31, 2002, (ii) liabilities disclosed in the
Parent SEC Reports filed on or before the date of this Agreement, (iii)
liabilities incurred on behalf of Parent in connection with this Agreement and
the contemplated Merger, and (iv) liabilities that would not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect.
Section 4.8. Absence of Certain Changes or Events.
(a) Except as contemplated by this Agreement, as disclosed in the
Parent SEC Reports filed on or before the date of this Agreement or as
disclosed in Section 4.8(a) of the Parent Disclosure Letter, since December 31,
2002, Parent and the Parent Subsidiaries have conducted their respective
businesses in all material respects in the ordinary course of business, and
there has not been any event or occurrence of any condition that has had or
would reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect.
(b) Except as contemplated by this Agreement, as disclosed in the
Parent SEC Reports filed on or before the date of this Agreement or as
disclosed in Section 4.8(b) of the Parent Disclosure Letter, between December
31, 2002 and the date of this Agreement, Parent and the Parent Subsidiaries
have conducted their respective businesses in all material respects in the
ordinary course of business, and there has not been (i) any declaration,
setting aside or payment of any dividend or any other distribution with respect
to any of the capital stock of Parent or any Parent Subsidiary, (ii) any
material change in accounting methods, principles or practices employed by
Parent or (iii) any action of the type described in Sections 5.2(b)(ii) or
5.2(c)(i) which, had such action been taken after the date of this Agreement,
would be in material violation of any such Section.
(c) Except as contemplated by this Agreement, as disclosed in the
Parent SEC Reports filed on or before the date of this Agreement or as
disclosed in Section 4.8(c) of the Parent Disclosure Letter, since March 31,
2003, no action has been taken by or on behalf of the Parent or any Parent
Subsidiary (i) to accelerate the vesting of any Parent Options, (ii) to adopt,
amend or terminate, or agree to adopt, amend or terminate, in any material
respect, any Parent Benefit Plan, (iii) to increase the salary, incentive
compensation, deferred compensation rights, or any other benefits of any
director or Executive Officer of Parent or any Parent Subsidiary, or to agree
to any such increase in the future, (iv) to enter into, amend or modify any
written obligation to provide a financial accommodation to any Executive
Officer or director of Parent or any Parent Subsidiary or to agree in writing
to provide, amend or modify any such accommodation in the future or (v) to
amend or modify any employment agreement or policy relating to any Executive
Officer or director of Parent or any Parent Subsidiary, or to agree to any such
amendment or modification in the future.
Section 4.9. Taxes.
(a) Except as set forth in Section 4.9(a) of the Parent Disclosure
Letter and except as does not have or would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect, (i) Parent
and each of the Parent Subsidiaries have timely filed all Tax Returns required
to be filed by any of them and all such Tax Returns are true, correct and
complete, (ii) all Taxes of Parent and each of the Parent Subsidiaries which
are (A) shown as due on such Tax Returns, (B) otherwise due and payable or (C)
claimed or asserted by any taxing authority to be due, have been paid, except
for those Taxes being contested in good faith and for which adequate reserves
have been established in the financial statements included in the Parent SEC
Reports filed on or before the date of this Agreement in accordance with GAAP,
(iii) there are no Liens for any Taxes upon the assets of Parent or any of the
Parent Subsidiaries, other than statutory Liens for Taxes not yet due and
payable and Liens for real estate Taxes being contested in good faith and (iv)
neither Parent nor any of the Parent Subsidiaries has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency. Except as set forth in Section 4.9(a) of the
Parent Disclosure Letter, Parent has not received written notice of any
proposed or threatened Tax claims or assessments which, if upheld, would
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
(b) Neither Parent nor any of the Parent Subsidiaries has taken or
agreed to take any action, has failed to take any action or knows of any fact,
agreement, plan or other circumstance that is reasonably likely to prevent the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
(c) Parent has made available to the Company correct and complete
copies of (i) all federal and other material Tax Returns of Parent and the
Parent Subsidiaries relating to the taxable periods ending since December 31,
1999, which have been filed and (ii) any audit report within the last five
years relating to any material Taxes due from or with respect to Parent or any
of the Parent Subsidiaries.
Section 4.10. Change of Control Agreements. Except as set forth in
Section 4.10 of the Parent Disclosure Letter, neither the execution and
delivery of this Agreement nor the consummation of the Merger or the other
transactions contemplated by this Agreement will (either alone or in
conjunction with any other event) (i) cause the accelerated vesting of any
Parent Options, (ii) result in any material payment or benefit to any employee
of Parent or any Parent Subsidiary or (iii) result in any payment or benefit to
any director or officer of Parent or any Parent Subsidiary.
Section 4.11. Litigation.
(a) Except for the matters disclosed in Section 4.11(a) of the Parent
Disclosure Letter or the Parent SEC Reports filed on or before the date of this
Agreement, on the date of this Agreement, there is no Litigation pending or, to
the knowledge of Parent, threatened against Parent, any of the Parent
Subsidiaries or any of their executive officers or directors that, if
determined adversely to Parent, would reasonably be expected to involve fines,
penalties, payments, costs or expenses in excess of $1 million in the case of
any single matter or $3 million in the case of any group of related matters.
Section 4.11(a) of the Parent Disclosure Letter or the Parent SEC Reports filed
on or before the date of this Agreement identify all Litigation pending on the
date of this Agreement, that, if determined adversely to Parent, would
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
(b) Except for the matters disclosed in Section 4.11(b) of the Parent
Disclosure Letter or the Parent SEC Reports filed on or before the date of this
Agreement, there is no Litigation pending or, to the knowledge of Parent,
threatened against Parent, any of the Parent Subsidiaries or any of their
executive officers or directors, other than Litigation that, if determined
adversely to Parent, would not reasonably be expected to have, individually or
in the aggregate, a Parent Material Adverse Effect.
Section 4.12. Contracts and Commitments.
(a) Section 4.12(a) of the Parent Disclosure Letter sets forth as of
the date hereof a true, correct and complete list of the following contracts
(including every written amendment, modification or supplement to the foregoing
or other material amendment, modification or supplement to the foregoing that
is binding on Parent or any Parent Subsidiary) to which Parent or a Parent
Subsidiary is a party: (i) any contract that is a "material contract" (as such
term is defined in Item 601(b)(10) of Regulation S-K of the SEC), (ii)
contracts that collectively represent at least 80% of the amounts received by
Parent and the Parent Subsidiaries, taken as a whole, as rebates or
administrative fees from pharmaceutical manufacturers during Parent's last
fiscal year, (iii) revenue-generating contracts that collectively represent the
top 50 contracts for pharmacy benefit management services and the top 5 rebate
utility contracts, in each case, based on the annualized number of claims
adjudicated for Parent and the Parent Subsidiaries during Parent's quarter
ended March 31, 2003, (iv) contracts that collectively represent the top 10
retail pharmacy agreements based on the annualized number of claims adjudicated
for Parent and the Parent Subsidiaries during Parent's quarter ended March 31,
2003, (v) contracts (other than contracts described in clause (ii) above
without regard to any threshold contained therein) to provide services to
pharmaceutical manufacturers that collectively represent the top 15
revenue-generating relationships with pharmaceutical manufacturers during
Parent's last fiscal year, (vi) any contract (other than a contract described
in one of the other provisions of this Section 4.12(a) without regard to any
threshold contained therein) that involves annual expenditures during Parent's
last fiscal year by Parent or any Parent Subsidiary in excess of $5 million and
is not otherwise cancelable by Parent or any Parent Subsidiary without any
financial or other penalty on 90-days' or less notice, (vii) any contract
(other than a contract described in one of the other provisions of this Section
4.12(a) without regard to any threshold contained therein) that involves annual
revenue during Parent's last fiscal year to Parent or any Parent Subsidiary in
excess of $5 million, (viii) any contract that contains any express material
restriction on the ability of Parent or any Parent Subsidiary to compete for or
to provide services in any market segment and/or any geographic area or (ix)
any contract that is a contract, agreement or arrangement under which Parent or
any Parent Subsidiary has (A) incurred any indebtedness for borrowed money that
is currently owing or (B) given any guarantee in respect of indebtedness for
borrowed money, in each case under clauses (A) and (B) above, having an
aggregate principal amount in excess of $2.5 million (each contract referenced
above in clauses (i) through (ix) individually, a "Parent Material Contract"
and collectively, "Parent Material Contracts"); provided that, with respect to
Parent Material Contracts described above in clauses (ii), (iii), (iv), (v),
(vi), (vii), (viii) and (ix), such list shall not identify the parties thereto,
but shall identify the date of such contract, the range of revenues or
expenditures during Parent's last fiscal year or for the quarter ended March
31, 2003, as applicable, pursuant to such contract, the stated expiration date
of such contract, whether such contract is up for renewal or re-bid in calendar
year 2003 or calendar year 2004, any communications (written or, to the
knowledge of Parent, oral) received by Parent or the Parent Subsidiaries from
any party to such contract or on behalf of any such party that such party
intends to cancel, terminate, seek re-bidding of or fail to renew such contract
and whether such contract permits termination by the other party without cause
and, if so, the required notice period prior to termination. Except as set
forth in Section 4.12(a) of the Parent Disclosure Letter and in the proviso in
the preceding sentence, Parent has delivered or made available true, correct
and complete copies of all such agreements, arrangements and commitments to
counsel to the Company.
(b) Except as set forth in Section 4.12(b) of the Parent Disclosure
Letter, the Parent Material Contracts are valid, binding and enforceable in
accordance with their respective terms with respect to Parent and, to the
knowledge of Parent, with respect to each other party to any of such Parent
Material Contracts, except as such validity, binding nature and enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
Laws relating to or affecting the rights and remedies of creditors generally
and the effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Except as
set forth in Section 4.12(b) of the Parent Disclosure Letter, to the knowledge
of Parent, there are no existing material defaults or breaches by Parent under
any Parent Material Contract (or events or conditions which, with notice or
lapse of time or both, would constitute a material default or breach), and
there are no such material defaults (or events or conditions which, with notice
or lapse of time or both, would constitute a material default or breach) by any
other party to any Parent Material Contract. Parent has no knowledge of any
pending or threatened bankruptcy or similar proceeding with respect to any
party to any Parent Material Contract which would reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect.
Section 4.13. Information Supplied. The information supplied or to be
supplied by Parent or Merger Sub for inclusion or incorporation by reference in
the Registration Statement and the Joint Proxy Statement shall not, at (i) the
time the Registration Statement is declared effective, (ii) the time the Joint
Proxy Statement (or any amendment thereof or supplement thereto) is first
mailed to the stockholders of the Company and Parent and (iii) the time of the
Parent Stockholders' Meeting, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading. If, at any time prior to the
Effective Time, any event or circumstance relating to Parent, Merger Sub or any
Parent Subsidiary, or their respective officers or directors, should be
discovered by Parent which should be set forth in an amendment or supplement to
the Registration Statement or Joint Proxy Statement, Parent shall promptly
inform the Company. All documents that Parent is responsible for filing with
the SEC in connection with the Merger or the other transactions contemplated by
this Agreement will comply as to form and substance in all material respects
with the applicable requirements of the Securities Act and the rules and
regulations thereunder and the Exchange Act and the rules and regulations
thereunder. Notwithstanding the foregoing, no representation or warranty is
made by Parent or Merger Sub with respect to statements made or incorporated by
reference therein based on information supplied by the Company for inclusion or
incorporation by reference in the Registration Statement or Joint Proxy
Statement.
Section 4.14. Employee Benefit Plans.
(a) Section 4.14(a) of the Parent Disclosure Letter sets forth a true
and complete list of all "employee pension benefit plans" (as defined in
Section 3(2) of ERISA) under which Parent or any Parent Subsidiary has any
material liability (sometimes referred to individually as a "Parent Pension
Plan" and collectively as the "Parent Pension Plans"), all "employee welfare
benefit plans" (as defined in Section 3(1) of ERISA) under which Parent or any
Parent Subsidiary has any material liability (sometimes referred to
individually as a "Parent Welfare Plan" and collectively as the "Parent Welfare
Plans"), and all vacation, severance, termination, change in control,
employment, incentive compensation, profit sharing, stock option, fringe
benefit, stock purchase, stock ownership, phantom stock, deferred compensation
plans or agreements and other employee fringe benefit plans or arrangements
maintained, contributed to or required to be maintained or contributed to by
Parent or any Parent Subsidiary for the benefit of any present or former
officers, employees, directors or independent contractors of Parent or any
Parent Subsidiary and under which Parent or any Parent Subsidiary has any
actual or contingent material liabilities (each of the foregoing being referred
to with the Parent Pension Plans and the Parent Welfare Plans, individually as
a "Parent Benefit Plan" and collectively as the "Parent Benefit Plans").
(b) Parent has made available to the Company true and complete copies of
(i) each Parent Benefit Plan (or, in the case of any unwritten Parent
Benefit Plan, a summary of the material provisions of such plan), (ii)
the three most recent annual reports on Form 5500 filed with the
Internal Revenue Service with respect to each Parent Benefit Plan to
the extent any such report was required by applicable Law, (iii) the
most recent summary plan description for each Parent Benefit Plan for
which such a summary plan description is required by applicable Law and
(iv) each currently effective trust agreement and insurance or annuity
contract relating to any Parent Benefit Plan.
(c) Except as would not reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect or as set forth in
Section 4.14(c) of the Parent Disclosure Letter:
(i) Each Parent Benefit Plan has been administered in
accordance with its terms, and Parent and each of the Parent
Subsidiaries and all of the Parent Benefit Plans are in compliance
with the applicable provisions of ERISA, the Code and other applicable
Laws as to the Parent Benefit Plans. The fair market value of the
assets of each of the Parent Pension Plans as of the most recent
annual valuation date for such plan equaled or exceeded on a
termination basis the then present value of the liabilities of such
plan, and all contributions required under each Parent Benefit Plan
have been made in full on a timely and proper basis.
(ii) With respect to the Parent Benefit Plans, individually
and in the aggregate, no event has occurred and, to the knowledge of
Parent, there exists no condition or set of circumstances, including
claims, audits and investigations, in connection with which Parent or
any of the Parent Subsidiaries could be subject to any liability under
ERISA, the Code or any other applicable Law, except for making
contributions, or the payment of claims or the payment of PBGC
premiums in the ordinary course of the operation of any such Parent
Benefit Plans.
(iii) Each Parent Pension Plan that is intended to comply
with the provisions of Section 401(a) of the Code has been amended to
satisfy all the currently applicable requirements for such a plan, and
each such plan is the subject of a determination letter from the
Internal Revenue Service to the effect that such Parent Pension Plan
as so amended satisfies all such requirements (other than the
requirements of the Economic Growth and Tax Relief Reconciliation Act
of 2001) and is qualified and exempt from income taxes under Sections
401(a) and 501(a), respectively, of the Code, and no such
determination letter has been revoked and, to the knowledge of Parent,
revocation has not been threatened. Parent has made available to the
Company a copy of each such favorable determination letter. Neither
Parent nor any Parent Subsidiary has maintained, contributed to or
been obligated to maintain or contribute to, or has any actual or
contingent liability under, any benefit plan that is subject to Title
IV of ERISA or Section 412 of the Code or is otherwise a defined
benefit pension plan (as defined in Section 3(35) of ERISA).
(iv) To the knowledge of Parent, there are no oral
understandings, agreements or undertakings binding on Parent with any
person that would (pursuant to any such understandings, agreements or
undertakings) result in any material liabilities if any Parent Benefit
Plan was amended or terminated on or at any time after the Effective
Time or that would prevent any unilateral action by Parent to effect
such amendment or termination.
(v) No Parent Welfare Plan provides benefits to, or on behalf
of, any former employee after the termination of employment except (A)
where the full cost of such benefit is borne entirely by the former
employee (or his eligible dependents or beneficiaries), (B) where plan
benefits are payable through a trust, the fair market value of the
assets of which equal or exceed the present value of the liabilities
of such plan or (C) where the benefit is required by Section 4980B of
the Code.
(vi) Neither the execution and delivery of this Agreement,
nor the consummation of any transaction contemplated by this Agreement
(alone or in conjunction with a termination of employment) will (A)
trigger any funding (through a grantor trust or otherwise) of any
compensation or benefits or (B) result in any violation or breach of,
or a default (with or without notice or lapse of time or both) under
any Parent Benefit Plan.
(vii) Neither Parent nor any Parent Subsidiary has given
notice to any participant, beneficiary, fiduciary or administrator of
any Parent Benefit Plan or to any government or agency of a government
to the effect that Parent or such Parent Subsidiary intends to
terminate or withdraw from such plan.
(viii) Each individual who is classified by Parent or any of
the Parent Subsidiaries as an "employee" or as an "independent
contractor" is properly so classified.
Section 4.15. Labor and Employment Matters. Except as set forth in
Section 4.15 of the Parent Disclosure Letter:
(a) Neither Parent nor any of the Parent Subsidiaries is or has been,
since January 1, 2000, a party to, or bound by, or conducted negotiations
regarding, any collective bargaining agreement or other contracts,
arrangements, agreements or understandings with a labor union or labor
organization that was certified by the NLRB or voluntarily recognized or
recognized under Law. There is no existing, pending or, to the knowledge of
Parent, threatened, (i) Concerted Action involving the employees of Parent or
any of the Parent Subsidiaries which would reasonably be expected to be
material to Parent and its subsidiaries as a whole, (ii) unfair labor practice
charge or complaint, labor dispute, labor arbitration proceeding or any other
matter before the NLRB or any other comparable state agency against or
involving Parent or any of the Parent Subsidiaries, which would reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect, (iii) election petition or other activity or proceeding by a labor
union or representative thereof to organize any employees of Parent or any of
the Parent Subsidiaries, (iv) certification or decertification question
relating to collective bargaining units at the premises of Parent or any of the
Parent Subsidiaries or (v) grievance or arbitration demand against Parent or
any of the Parent Subsidiaries whether or not filed pursuant to a collective
bargaining agreement which would reasonably be expected to have, individually
or in the aggregate, a Parent Material Adverse Effect. To the knowledge of
Parent, neither the employees of Parent nor the employees of any of the Parent
Subsidiaries have engaged in a material Concerted Action in the past three
years.
(b) To the knowledge of Parent, none of Parent, any of the Parent
Subsidiaries or any of their respective representatives or employees has
committed an unfair labor practice in connection with the operation of the
respective businesses of Parent or any of the Parent Subsidiaries that would
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect. Parent and the Parent Subsidiaries are in compliance
with all applicable Laws respecting labor, employment, fair employment
practices, terms and conditions of employment, workers' compensation,
occupational safety, plant closings, mass layoffs and wages and hours, except
where such failure would not reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect. Parent and the Parent
Subsidiaries have properly accrued on their books and records all material
unpaid but accrued wages, salaries and other paid time-off.
Section 4.16. Environmental Compliance and Disclosure. Except as set
forth in Section 4.16 of the Parent Disclosure Letter:
(a) Each of Parent and the Parent Subsidiaries is in compliance with
all applicable Environmental Laws (which compliance includes, but is not
limited to, possession by Parent and the Parent Subsidiaries of all permits,
licenses and governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof),
except as would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect. Since January 1, 2000, neither
Parent nor any Parent Subsidiary has received any written or, to the knowledge
of Parent, oral communication from a Governmental Entity, or, to the knowledge
of Parent, from any citizens' group, employee or otherwise, that alleges that
Parent or any Parent Subsidiary is not in such compliance.
(b) There is no Environmental Claim pending or, to the knowledge of
Parent, threatened against Parent or any Parent Subsidiary, or, to the
knowledge of Parent, against any person or entity whose liability for any
Environmental Claim Parent or any Parent Subsidiary has retained or assumed
either contractually or by operation of law.
(c) To Parent's knowledge, none of the assets owned by Parent or any
Parent Subsidiary or any real property owned or leased by Parent or any Parent
Subsidiary contain any friable asbestos, PCBs or underground storage tanks
which are reasonably likely to result in a material liability to Parent.
Section 4.17. Intellectual Property.
(a) Except as set forth in Section 4.17(a) of the Parent Disclosure
Letter, Parent or a Parent Subsidiary has such ownership or right to use the
Parent Intellectual Property Rights as is necessary to the conduct of the
business of each of Parent and the Parent Subsidiaries as presently conducted,
except where the failure to have such ownership or right of use would not have
a material adverse effect on Parent's or any Parent Subsidiary's ability to
conduct its business as presently conducted. The validity of the Parent
Intellectual Property Rights owned by Parent and, to the knowledge of Parent,
the validity of the Parent Intellectual Property Rights used but not owned by
Parent: (i) have not been challenged in any prior Litigation, except for such
challenges that would not reasonably be expected to have, individually or in
the aggregate, a Parent Material Adverse Effect if determined adversely to
Parent; (ii) as of the date of this Agreement, are not being challenged in any
material pending Litigation; and (iii) as of the date of this Agreement, are
not the subject(s) of any material Litigation threatened in writing. To the
knowledge of Parent, the business of each of Parent and the Parent Subsidiaries
as presently conducted does not conflict in any material respects with and has
not been alleged to conflict in any material respects with any Intellectual
Property Rights of others. Except as set forth in Sections 4.4 and 4.17(a) of
the Parent Disclosure Letter, the consummation of the Merger or other
transactions contemplated hereby will not result in the material loss or
impairment of any of the Parent Intellectual Property Rights. To the knowledge
of Parent, there are no third parties infringing, misappropriating or otherwise
violating the Parent Intellectual Property Rights owned by Parent or the Parent
Subsidiaries, except for such infringements, misappropriations or other
violations as would not have a material adverse effect on Parent's or any
Parent Subsidiary's ability to conduct its business as presently conducted.
(b) The validity of the Parent Intellectual Property Rights owned by
Parent and, to the knowledge of Parent, the validity of the Parent Intellectual
Property Rights used but not owned by Parent (i) are not being challenged in
any pending Litigation and (ii) are not the subject(s) of any Litigation
threatened in writing, except for such challenges, threats or Litigation
described above under clauses (i) and (ii) that would not reasonably be
expected to have, individually or in the aggregate, a Parent Material Adverse
Effect if determined adversely to Parent.
(c) As used in this Agreement, the term "Parent Intellectual Property
Rights" means the Intellectual Property Rights owned by Parent or a Parent
Subsidiary or used in the conduct of the business of Parent or a Parent
Subsidiary as currently conducted.
Section 4.18. Brokers. Except for the Parent Independent Advisors, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other similar fee or commission in connection with this Agreement, the Merger
or the other transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent. Parent has made available to the
Company a complete and correct copy of each of the agreements between Parent
and the Parent Independent Advisors pursuant to which such firm would be
entitled to any payment relating to this Agreement, the Merger or the other
transactions contemplated by this Agreement.
Section 4.19. Transactions with Affiliates. Except as set forth in
Section 4.19 of the Parent Disclosure Letter, as disclosed in the Parent SEC
Reports filed on or before the date of this Agreement, solely as a result of a
person's ownership of Parent Common Stock or for customary compensation and
benefits received in the ordinary course of business as an employee or director
of Parent or the Parent Subsidiaries, no director, officer or other "affiliate"
or "associate" of Parent or any Parent Subsidiary, or any entity in which, to
the knowledge of Parent, any such director, officer or other affiliate or
associate owns any beneficial interest (other than a publicly held corporation
whose stock is traded on a national securities exchange or in the
over-the-counter market and less than 1% of the stock of which is beneficially
owned by any such persons): (i) receives any material benefit from any
contract, arrangement or understanding with or relating to the business or
operations of Parent or any Parent Subsidiary; (ii) is a party to or receives
any material benefit from any loan, arrangement, understanding, agreement or
contract for or relating to indebtedness of Parent or any Parent Subsidiary; or
(iii) has any material interest in any property (real, personal or mixed),
tangible or intangible, used, or currently intended to be used, in the business
or operations of Parent or any Parent Subsidiary.
Section 4.20. Regulatory Compliance. Except as set forth in Section
4.20 of the Parent Disclosure Letter, as may relate to the Merger and the other
transactions contemplated by this Agreement or as disclosed in the Parent SEC
Reports filed on or before the date of this Agreement:
(a) Parent and each Parent Subsidiary have all required Permits
necessary for the conduct of their business and the use of their properties and
assets, as presently conducted and used, and neither Parent nor any Parent
Subsidiary has received written notice from any Governmental Entity that any
such Permit is subject to any adverse action, except where the failure to have
any such Permit or the receipt of such notice would not reasonably be expected
to have, individually or in the aggregate, a Parent Material Adverse Effect.
(b) Parent and each Parent Subsidiary are in compliance with (i) to
the extent applicable, all rules and regulations of the Medicare and Medicaid
programs, including any guidance interpreting such rules and regulations; (ii)
all federal laws, rules, regulations and applicable guidance relating to health
care fraud and abuse, including, without limitation: (A) the Anti-Kickback Law,
42 U.S.C. ss. 1320a-7b, 42 C.F.R. ss. 1001.952, (B) the federal false coding
statute, 42 U.S.C. ss. 1320a-7a, (C) the federal physician self-referral
prohibition, 42 U.S.C. ss. 1395nn, 42 C.F.R. ss. 411.351 et seq., and (D) the
false claims act, 31 U.S.C. ss. 3729 et seq.; (iii) any and all state laws
relating to health care fraud and abuse; (iv) state laws relating to Medicaid
or any other state health care or health insurance programs; (v) federal or
state laws relating to billing or claims for reimbursement submitted to any
third party payor; and (vi) any other federal or state laws relating to
fraudulent, abusive or unlawful practices connected in any way with the
provision of health care items or services, or the billing for or claims for
reimbursement for such items or services provided to a beneficiary of any
state, federal or other governmental health care or health insurance program or
any private payor, except where any failure to be in compliance with any of the
foregoing matters described above in clauses (i) through (vi) would not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
(c) Since January 1, 1998 and, to the knowledge of Parent, at any time
prior to April 1, 1998, neither Parent, any Parent Subsidiary, nor any
director, officer, employee, or agent of Parent or any Parent Subsidiary, with
respect to actions taken on behalf of Parent or a Parent Subsidiary, (i) has
been assessed a civil money penalty under Section 1128A of the Social Security
Act or any regulations promulgated thereunder, (ii) has been excluded from
participation in any federal health care program or state health care program
(as such terms are defined by the Social Security Act), (iii) has been
convicted of any criminal offense relating to the delivery of any item or
service under a federal health care program relating to the unlawful
manufacture, distribution, prescription, or dispensing of a prescription drug
or a controlled substance or (iv) is a party to or subject to any action or
proceeding concerning any of the matters described above in clauses (i) through
(iii).
(d) Parent and each Parent Subsidiary are in compliance with all
Healthcare Information Laws, except for failures to comply with any of the
foregoing that would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect. Parent and each Parent Subsidiary
(i) have undertaken all necessary surveys, audits, inventories, reviews,
analyses, or assessments (including any necessary risk assessments) on all
areas required for compliance under all Healthcare Information Laws, (ii) have
developed a Compliance Plan and (iii) have implemented those provisions of the
Compliance Plan to ensure that such entity is and will remain in compliance
with all Healthcare Information Laws, except for failures to take any actions
described above in clauses (i) through (iii), which actions or proceedings
would not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect.
(e) Parent and each Parent Subsidiary (i) are in compliance with all
Laws and any other applicable guidance relating to the operation of pharmacies,
the repackaging of drug products, the wholesale distribution of prescription
drugs or controlled substances, and the dispensing of prescription drugs or
controlled substances, (ii) are in compliance with all Laws and any other
applicable guidance relating to the labeling, packaging, advertising, or
adulteration of prescription drugs or controlled substances and (iii) are not
subject to any sanction or other adverse action by any Governmental Entity for
the matters described above in clauses (i) and (ii), except for such failures
to comply or such sanctions described above in clauses (i) through (iii) that
would not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect.
Section 4.21. Ethical Business Practices. None of Parent, any Parent
Subsidiary or, to the knowledge of Parent, any directors, officers, agents or
employees of Parent or any Parent Subsidiary has on behalf of Parent or any
Parent Subsidiary, (a) used any funds for unlawful contributions, unlawful
gifts, unlawful entertainment or other unlawful expenses related to political
activity, (b) made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties, campaigns
or violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended, or (c) made any payment in the nature of criminal bribery, provided
that with respect to any such unlawful action by, or on behalf of, a business,
operation or Parent Subsidiary at a time when such business, operation or
Parent Subsidiary was not owned, directly or indirectly, by Parent, these
representations and warranties in this Section 4.21 are made solely to the
knowledge of Parent.
Section 4.22. Ownership of Company Common Stock. None of Parent,
Merger Sub, nor any of their respective affiliates owns or has owned, directly
or indirectly, during the past five years, shares of stock of the Company.
Section 4.23. Financing. Parent has, and will have at the Effective
Time, sufficient funds available to deposit with the Exchange Agent cash
sufficient to make the cash payments payable pursuant to Article II and cash to
make the cash payments payable pursuant to Article II from time to time as
required following termination of the Exchange Fund.
ARTICLE V
COVENANTS
Section 5.1. Conduct of the Company's Business Pending the Merger.
(a) Except as set forth in Section 5.1(a) of the Company Disclosure
Letter on the date of this Agreement, as required by applicable Law or as
expressly contemplated by this Agreement, the Company covenants and agrees that
between the date of this Agreement and the earlier of the Effective Time and
the termination of this Agreement in accordance with Section 7.1, unless Parent
shall otherwise consent in writing, such consent not to be unreasonably
withheld or delayed, the Company and the Company Subsidiaries shall use their
reasonable best efforts to conduct their business in, and the Company and the
Company Subsidiaries shall use their reasonable best efforts to not take any
action except in, the ordinary course of business.
(b) Except as set forth in Section 5.1(b) of the Company Disclosure
Letter on the date of this Agreement, as required by applicable Law or as
expressly contemplated by this Agreement, the Company covenants and agrees that
between the date of this Agreement and the earlier of the Effective Time and
the termination of this Agreement in accordance with Section 7.1, unless Parent
shall otherwise consent in writing, such consent not to be unreasonably
withheld or delayed, the Company shall not, nor shall the Company permit any of
the Company Subsidiaries to: (i) declare or pay any dividends on or make other
distributions (whether in cash, stock or property) in respect of any of its
capital stock, except for (A) dividends payable to the Company or a wholly
owned subsidiary of the Company by another wholly owned subsidiary of the
Company or (B) dividends by a Company Subsidiary that is partially owned by the
Company or a Company Subsidiary, provided that the Company or any of the
Company Subsidiaries receives its proportional share thereof; (ii) split,
combine or reclassify any of its capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; (iii) repurchase, redeem or
otherwise acquire any shares of its capital stock; or (iv) issue, deliver or
sell, or authorize or propose the issuance, delivery or sale of, any shares of
its capital stock or any securities convertible into any such shares of its
capital stock, other than the issuance of shares (A) upon the exercise of
Company Options outstanding as of the date of this Agreement, (B) upon the
exercise of warrants outstanding as of the date of this Agreement, (C) upon
conversion of Company Class B-1 Common Stock or Company Class B-2 Common Stock
and (D) in the ordinary course of business pursuant to the Purchase Plan.
Except for grants of options to employees (other than Executive Officers) who
are new hires or newly promoted, which grants shall in no event exceed options
to purchase 250,000 shares annually, the Company covenants and agrees that
between the date of this Agreement and the earlier of the Effective Time and
the termination of this Agreement in accordance with Section 7.1, unless Parent
shall otherwise consent in writing, the Company shall not, nor shall the
Company permit any of the Company Subsidiaries to, issue, deliver or sell, or
authorize or propose the issuance, delivery or sale of any rights, warrants or
options to acquire any shares of its capital stock or convertible securities or
any stock appreciation rights, phantom stock plans or stock equivalents.
(c) Except as set forth in Section 5.1(c) of the Company Disclosure
Letter on the date of this Agreement, as required by applicable Law or as
expressly contemplated by this Agreement, the Company covenants and agrees that
between the date of this Agreement and the earlier of the Effective Time and
the termination of this Agreement in accordance with Section 7.1, unless Parent
shall otherwise consent in writing, such consent not to be unreasonably
withheld or delayed, the Company shall not, nor shall the Company permit any of
the Company Subsidiaries to: (i) amend its certificate of incorporation
(including any certificate of designations attached thereto) or bylaws or other
equivalent organizational documents; (ii) create, assume or incur any material
amount of indebtedness for borrowed money or guaranty any such indebtedness of
another person, other than (A) borrowings under existing lines of credit (or
under any refinancing or amendment of such existing lines) or (B) indebtedness
owing to, or guaranties of indebtedness owing to, the Company; (iii) other than
in the ordinary course of business, make any material loans or advances to any
other person other than loans or advances between any of the Company
Subsidiaries or between the Company and any of the Company Subsidiaries; (iv)
mortgage or pledge any of its material assets or properties; (v) merge or
consolidate with any other entity in any transaction, or sell any material
business or assets (other than sales of products and inventory in the ordinary
course of business); (vi) change its accounting policies except as required by
GAAP; (vii) increase the salary, bonus or compensation of any director or
Executive Officer or make any other material change in employment terms for any
of its Executive Officers, promote any employee to a position that is an
Executive Officer or, except for normal increases as a result of promotions or
normal increases of base pay, bonuses, compensation or benefits, in each case,
in the ordinary course of business, make any material change in employment
terms for any of its officers (other than Executive Officers) or affiliates;
(viii) except for the establishment and implementation of the Retention Plan
containing the material terms set forth on Exhibit B to this Agreement (the
"Retention Plan"), enter into any new agreement or arrangement that would
result in any payment or benefit to any director, officer or employee of the
Company or any Company Subsidiary upon or in connection with a change of
control of the Company or, except for the establishment and implementation of
the Retention Plan or as contemplated by the terms of any existing Company
Benefit Plan, enter into any new, or amend any existing, Company Benefit Plan
other than employment agreements entered into in the ordinary course of
business with individuals who are new hires or newly promoted; (ix) make any
discretionary contribution to the AdvancePCS Amended and Restated Deferred
Compensation Plan or, except in the ordinary course of business, make any
material change to the Company Benefit Plans; (x) except in the ordinary course
of business, materially amend or cancel or agree to any material amendment or
cancellation of any Company Material Contract; (xi) sell, transfer or lease, or
agree to sell, transfer or lease, any material properties or assets (real,
personal or mixed, tangible or intangible) to any of its officers or directors
or any "affiliate" or "associate" of any of its officers or directors; (xii)
form or commence the operations of any business or any corporation,
partnership, joint venture, business association or other business organization
or division thereof which would be material to the Company and the Company
Subsidiaries as a whole (other than in the ordinary course of business); (xiii)
make or change any Tax election or settle or compromise any Tax liability
involving amounts in excess of $2.5 million in the aggregate, in each case,
other than in the ordinary course of business; (xiv) pay, discharge, settle or
satisfy any claims in any Litigation (whether absolute, accrued, asserted or
unasserted, contingent or otherwise) involving amounts in excess of $2.5
million in the aggregate; or (xv) with respect to the Company's 2004 fiscal
year, make any non-budgeted capital expenditures in excess of $2.5 million in
the aggregate or, with respect to the Company's 2005 fiscal year, make any
non-budgeted capital expenditures in excess of $2.5 million in the aggregate.
(d) Nothing contained in this Agreement shall give Parent or Merger
Sub, directly or indirectly, the right to control or direct the Company's
operations prior to the Effective Time. Prior to the Effective Time, the
Company shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its operations.
Section 5.2. Conduct of Parent's Business Pending the Merger.
(a) Except as set forth in Section 5.2(a) of the Parent Disclosure
Letter on the date of this Agreement, as required by applicable Law or as
expressly contemplated by this Agreement, Parent covenants and agrees that
between the date of this Agreement and the earlier of the Effective Time and
the termination of this Agreement in accordance with Section 7.1, unless the
Company shall otherwise consent in writing, such consent not to be unreasonably
withheld or delayed, Parent and the Parent Subsidiaries shall use their
reasonable best efforts to conduct their business in, and Parent and the Parent
Subsidiaries shall use their reasonable best efforts to not take any action
except in, the ordinary course of business.
(b) Except as set forth in Section 5.2(b) of the Parent Disclosure
Letter on the date of this Agreement, as required by applicable Law or as
expressly contemplated by this Agreement, Parent covenants and agrees that
between the date of this Agreement and the earlier of the Effective Time and
the termination of this Agreement in accordance with Section 7.1, unless the
Company shall otherwise consent in writing, such consent not to be unreasonably
withheld or delayed, Parent shall not, nor shall Parent permit any of the
Parent Subsidiaries to: (i) declare or pay any dividends on or make other
distributions (whether in cash, stock or property) in respect of any of its
capital stock, except for (A) dividends payable to Parent or a wholly owned
subsidiary of Parent by another wholly owned subsidiary of Parent and (B)
dividends by a Parent Subsidiary that is partially owned by Parent or a Parent
Subsidiary, provided that Parent or any of the Parent Subsidiaries receives its
proportional share thereof; (ii) split, combine or reclassify any of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock; (iii) repurchase, redeem or otherwise acquire any material
amount of its capital stock except pursuant to any stock repurchase program
announced prior to the date of this Agreement; or (iv) issue, deliver or sell,
or authorize or propose the issuance, delivery or sale of, any shares of its
capital stock or any securities convertible into any such shares of its capital
stock, or any rights, warrants or options to acquire any such shares or
convertible securities or any stock appreciation rights, phantom stock plans or
stock equivalents, other than the issuance of shares (A) upon the exercise of
Parent Options outstanding as of the date of this Agreement, (B) upon the
exercise of warrants outstanding as of the date of this Agreement, (C) in
connection with an acquisition by Parent otherwise permitted by this Agreement
and (D) in the ordinary course of business pursuant to Parent's employee stock
purchase plan.
(c) Except as set forth in Section 5.2(c) of the Parent Disclosure
Letter on the date of this Agreement, as required by applicable Law or as
expressly contemplated by this Agreement, Parent covenants and agrees that
between the date of this Agreement and the earlier of the Effective Time and
the termination of this Agreement in accordance with Section 7.1, unless the
Company shall otherwise consent in writing, such consent not to be unreasonably
withheld or delayed, Parent shall not, nor shall Parent permit any of the
Parent Subsidiaries to: (i) subject to Section 5.2(d), amend its certificate of
incorporation (including any certificate of designations attached thereto) or
bylaws or other equivalent organizational documents; (ii) create, assume or
incur any material amount of indebtedness for borrowed money or guaranty any
such indebtedness of another person, other than (A) borrowings under existing
lines of credit (or under any refinancing or amendment of such existing lines)
or (B) indebtedness owing to, or guaranties of indebtedness owing to, Parent;
(iii) other than in the ordinary course of business, make any material loans or
advances to any other person other than loans or advances between any of the
Parent Subsidiaries or between Parent and any of the Parent Subsidiaries; (iv)
mortgage or pledge any of its material assets or properties; (v) merge or
consolidate with any other entity or make any acquisition which in each case
would be material to Parent and the Parent Subsidiaries taken as a whole, or
sell any material business or assets (other than sales of products and
inventory in the ordinary course of business); (vi) change its accounting
policies except as required by GAAP; (vii) except in the ordinary course of
business, materially amend or cancel or agree to any material amendment or
cancellation of any Parent Material Contract; (viii) form or commence the
operations of any business or any corporation, partnership, joint venture,
business association or other business organization or division thereof which
would be material to Parent and the Parent Subsidiaries as a whole (other than
in the ordinary course of business) or (ix) sell, transfer or lease, or agree
to sell, transfer or lease, any material properties or assets (real, personal
or mixed, tangible or intangible) to any of its officers or directors or any
"affiliate" or "associate" of any of its officers or directors.
(d) Subject to receipt of the affirmative vote of the holders of a
majority of the outstanding shares of Parent Common Stock as required by the
DGCL, Parent covenants and agrees that it shall, on or before the Effective
Time, amend and file with the Secretary of State of the State of Delaware an
amendment to the Parent Certificate of Incorporation which shall increase the
authorized number of shares of Parent Common Stock from 400,000,000 shares to
700,000,000 shares (the "Amended Parent Certificate of Incorporation").
(e) Nothing contained in this Agreement shall give the Company,
directly or indirectly, the right to control or direct Parent's operations
prior to the Effective Time. Prior to the Effective Time, Parent shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision over its operations.
Section 5.3. Access to Information; Confidentiality.
(a) From the date hereof until the earlier of the Effective Time and
the termination of this Agreement, the Company shall, and shall use its
reasonable best efforts to cause the officers, directors, employees, auditors,
attorneys, consultants, financial advisors, lenders and other representatives
(collectively, the "Representatives") of the Company and the Company
Subsidiaries to, afford the Representatives of Parent and Merger Sub, upon
reasonable advance notice, reasonable access during normal business hours to
the officers, employees, agents, premises, properties, offices and other
facilities, books, records, contracts and documents of the Company and the
Company Subsidiaries, and shall furnish Parent and Merger Sub with all
financial, tax, operating and other data and information as Parent or Merger
Sub, through its Representatives, may reasonably request. Parent and Merger Sub
shall use reasonable best efforts to minimize any disruption to the business of
the Company and the Company Subsidiaries that may result from the requests for
access, data and other information hereunder. The Company shall use reasonable
best efforts to furnish to Parent quarterly financial and operating data and
information in substantially the form attached hereto as Exhibit C within
forty-five days following the end of each calendar quarter. In addition, the
Company shall use reasonable best efforts to furnish to Parent within thirty
days following the end of each calendar month a schedule in substantially the
form attached hereto as Exhibit D identifying the aggregate estimated
annualized revenue and earnings associated with (a) all new business secured
during the preceding calendar month, (b) all business that has been lost or is
not being renewed during the preceding calendar month and (c) all business that
has been renewed on new or revised terms or conditions (including a comparison
to the annualized revenue and earnings associated with the previous contract)
(such changes in (a), (b) and (c), the "Company Changed Contracts"). Parent
will remain subject to the terms of a confidentiality agreement with the
Company dated May 7, 2003 (the "Confidentiality Agreement"). Notwithstanding
the foregoing, the Company shall have no obligation to provide any such access
or data and information if the Company determines in good faith after
consultation with outside legal counsel that providing such access or data and
information would violate any legal or contractual restrictions, including
restrictions under Antitrust Laws. Neither Parent nor any of its
Representatives shall contact any person who, to the knowledge of Parent, is a
client or customer of the Company or any of the Company Subsidiaries without
the Company's prior written consent, such consent not to be unreasonably
withheld or delayed; provided, however, Parent and its Representatives shall
not be restricted from contacting any potential clients or customers in the
ordinary course of business, including in connection with responding to
"requests for proposals."
(b) From the date hereof until the earlier of the Effective Time and
the termination of this Agreement, Parent shall, and shall use its reasonable
best efforts to cause the Representatives of Parent and the Parent Subsidiaries
to, afford the Representatives of the Company, upon reasonable advance notice,
reasonable access during normal business hours to the officers, employees,
agents, premises, properties, offices and other facilities, books, records,
contracts and documents of Parent and the Parent Subsidiaries, and shall
furnish the Company with all financial, tax, operating and other data and
information as the Company, through its Representatives, may reasonably
request. The Company shall use reasonable best efforts to minimize any
disruption to the business of Parent and the Parent Subsidiaries that may
result from the requests for access, data and other information hereunder.
Parent shall use reasonable best efforts to furnish to the Company quarterly
financial and operating data and information in substantially the form attached
hereto as Exhibit E within forty-five days following the end of each calendar
quarter. In addition, Parent shall use reasonable best efforts to furnish to
the Company within thirty days following the end of each calendar month a
schedule in substantially the form attached hereto as Exhibit D identifying the
aggregate estimated annualized revenue and earnings associated with (a) all new
business secured during the preceding calendar month, (b) all business that has
been lost or is not being renewed during the preceding calendar month and (c)
all business that has been renewed on new or revised terms or conditions
(including a comparison to the annualized revenue and earnings associated with
the previous contract) (such changes in (a), (b) and (c), the "Parent Changed
Contracts"). The Company will remain subject to the terms of the
Confidentiality Agreement. Notwithstanding the foregoing, Parent shall have no
obligation to provide any such access or data and information if Parent
determines in good faith after consultation with outside legal counsel that
providing such access or data and information would violate any legal or
contractual restrictions, including restrictions under Antitrust Laws. Neither
the Company nor any of its Representatives shall contact any person, who to the
knowledge of the Company, is a client or customer of Parent or any of the
Parent Subsidiaries without Parent's prior written consent, such consent not to
be unreasonably withheld or delayed; provided, however, the Company or its
Representatives shall not be restricted from contacting any potential clients
or customers in the ordinary course of business, including in connection with
responding to "requests for proposals."
(c) No investigation pursuant to this Section 5.3 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
(d) Notwithstanding anything contained in this Agreement or the
Confidentiality Agreement to the contrary, the parties (and each employee,
representative or other agent of the parties) may disclose to any and all
persons, without limitation of any kind, the Tax treatment and any facts that
may be relevant to the Tax structure of the Merger; provided, however, that no
party (and no employee, representative or other agent thereof) shall disclose
any other information that is not relevant to understanding the Tax treatment
and Tax structure of the Merger (including the identity of any party and any
information that could lead another to determine the identity of any party), or
any other information to the extent that such disclosure could reasonably
result in a violation of any federal or state securities law. The parties
acknowledge and agree that this Section 5.3(d) shall be deemed an amendment to
the Confidentiality Agreement pursuant to and in accordance with paragraph 11
thereof.
Section 5.4. Notification of Certain Matters.
(a) Between the date hereof and the Effective Time, the Company will
confer in good faith on a regular basis with one or more representatives of
Parent designated to the Company regarding satisfaction of the conditions to
Closing set forth in Article VI of this Agreement. The Company acknowledges
that Parent does not and will not waive any rights it may have under this
Agreement as a result of such consultations.
(b) Between the date hereof and the Effective Time, Parent will confer
in good faith on a regular basis with one or more representatives of the
Company designated to Parent regarding satisfaction of the conditions to
Closing set forth in Article VI of this Agreement. Parent acknowledges that the
Company does not and will not waive any rights it may have under this Agreement
as a result of such consultations.
(c) If any event or matter arises after the date of this Agreement
which, if existing or occurring at the date of this Agreement, (i) would have
been required to be set forth or described by the Company in the Company
Disclosure Letter or by Parent in the Parent Disclosure Letter or (ii) would
have caused a representation or warranty in Article III or Article IV hereof,
as applicable, to be violated as of such date, then the Company or Parent, as
applicable, shall, for informational purposes only, deliver to Parent or the
Company, as applicable, the Company Disclosure Letter or the Parent Disclosure
Letter, as applicable, updated to reflect such event or matter on or before the
first business day following the 45th day after the end of each fiscal quarter
prior to the Effective Time and at the Effective Time (the last such delivery
being made as of the Effective Time); provided, however, that such supplemental
disclosure shall not be required to disclose any such event or matter, and the
Company Disclosure Letter or the Parent Disclosure Letter, as applicable, shall
not be required to be updated, in either case, with respect to representations
or warranties that are expressly made as of a specific date. Notwithstanding
the foregoing, if any event or matter arises after the date of this Agreement
that has had, or would reasonably be expected to have, a Company Material
Adverse Effect or a Parent Material Adverse Effect, the Company or Parent, as
applicable, shall promptly after becoming aware of such event or matter
communicate the occurrence of such event or matter to Parent or the Company, as
applicable, and in any event shall communicate such event or matter to the
Company or Parent, as applicable, in writing within ten days of such party's
first becoming aware of such event or matter. The Company shall use reasonable
best efforts to furnish to Parent within thirty days following the end of each
calendar month notification of any pending or threatened bankruptcy or similar
proceeding known to the Company involving any party to any Company Material
Contract. Parent shall use reasonable best efforts to furnish to the Company
within thirty days following the end of each calendar month notification of any
pending or threatened bankruptcy or similar proceeding known to Parent
involving any party to any Parent Material Contract. Failure to comply with
this Section 5.4(c) shall not result in a failure by the Company to satisfy the
conditions set forth in Sections 6.2(b) or 6.2(c) unless the event or matter
giving rise to the obligation to amend or supplement hereunder involves a
breach of a representation or warranty hereunder which results in a failure to
satisfy the condition set forth in Section 6.2(a) and which breach is incurable
or has not been cured in all material respects as contemplated by Section
7.1(i). Failure to comply with this Section 5.4(c) shall not result in a
failure by Parent to satisfy the conditions set forth in Sections 6.3(b) or
6.3(c) unless the event or matter giving rise to the obligation to amend or
supplement hereunder involves a breach of a representation or warranty
hereunder which results in a failure to satisfy the condition set forth in
Section 6.3(a) and which breach is incurable or has not been cured in all
material respects as contemplated by Section 7.1(j). Except as set forth in the
two preceding sentences, the parties' obligations under this Section 5.4(c) and
the disclosure of any matter in accordance with the provisions of this Section
5.4(c) shall not limit or otherwise affect the remedies available hereunder to
the party receiving such disclosure and shall not be deemed to cure any breach
or inaccuracy of any representation or warranty made in this Agreement.
Section 5.5. HSR Filings; Best Efforts; Further Assurances.
(a) Each of Parent and the Company shall (i) make or cause to be made
the filings required of such party to this Agreement or any of the Company
Subsidiaries, the Parent Subsidiaries or affiliates under the HSR Act with
respect to the transactions contemplated by this Agreement as promptly as
practicable after the date of this Agreement, (ii) comply at the earliest
practicable date with any request under the HSR Act for additional information,
documents or other materials received by such party to this Agreement or any of
the Company Subsidiaries or the Parent Subsidiaries from the United States
Federal Trade Commission or the United States Department of Justice or any
other Governmental Entity in respect of such filings or such transactions, and
(iii) act in good faith and reasonably cooperate with the other party in
connection with any such filing (including, if requested by the other party, to
accept all reasonable additions, deletions or changes suggested by the other
party in connection therewith) and in connection with resolving any
investigation or other inquiry of any such agency or other Governmental Entity
under any Antitrust Laws with respect to any such filing or any such
transaction. To the extent not prohibited by applicable Laws, each party to
this Agreement shall use all reasonable best efforts to furnish to each other
all information required for any application or other filing to be made
pursuant to any applicable Laws in connection with the Merger and the other
transactions contemplated by this Agreement. Each party to this Agreement shall
give the other parties to this Agreement reasonable prior notice of any
communication with, and any proposed understanding, undertaking or agreement
with, any Governmental Entity regarding any such filings or any such
transaction. None of the parties to this Agreement shall independently
participate in any meeting, or engage in any substantive conversation, with any
Governmental Entity in respect of any such filings, investigation or other
inquiry without giving the other parties to this Agreement prior notice of the
meeting or conversation and, unless prohibited by such Governmental Entity, the
opportunity to attend or participate. The parties to this Agreement will
consult and cooperate with one another in connection with any analyses,
appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or on behalf of any party to this Agreement in
connection with proceedings under or relating to the HSR Act or other Antitrust
Laws. Parent shall take the lead in coordinating any filings and obtaining any
necessary approvals under the HSR Act or any other federal, state or foreign
antitrust laws, including the timing of the initial filing, which will be made
as promptly as practicable after the date of this Agreement.
(b) Subject to Section 5.5(d), each of Parent and the Company shall
use its reasonable best efforts to resolve such objections, if any, as may be
asserted by any Governmental Entity with respect to the transactions
contemplated by this Agreement under the HSR Act, the Xxxxxxx Antitrust Act of
1890, as amended, the Xxxxxxx Act of 1914, as amended, the Federal Trade
Commission Act, as amended, and any other United States federal or state or
foreign statutes, rules, regulations, orders, decrees, administrative or
judicial doctrines or other laws that are designed to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade (collectively, "Antitrust Laws"). In connection therewith and subject to
Section 5.5(d), if any administrative or judicial action or proceeding is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as inconsistent with or violative of any
Antitrust Law, each of Parent and the Company shall (by negotiation, litigation
or otherwise) cooperate and use its reasonable best efforts vigorously to
contest and resist any such action or proceeding, including any administrative
or judicial action, and to have vacated, lifted, reversed or overturned any
decree, judgment, injunction or other order whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents, delays or restricts
consummation of the Merger or any other transactions contemplated by this
Agreement, including by vigorously pursuing all available avenues of
administrative and judicial appeal, unless, by mutual agreement, Parent and the
Company decide that litigation is not in their respective best interests.
Notwithstanding the foregoing or any other provision of this Agreement, nothing
in this Section 5.5 shall limit the right of a party to this Agreement to
terminate this Agreement pursuant to Section 7.1(c), so long as such party to
this Agreement has up to then complied in all material respects with its
obligations under this Section 5.5. Each of Parent and the Company shall use
its reasonable best efforts to take such action as may be required to cause the
expiration of the notice periods under the HSR Act or other Antitrust Laws with
respect to such transactions as promptly as possible after the execution of
this Agreement.
(c) Subject to Section 5.5(d), each of the parties to this Agreement
agrees to use its reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other parties to this Agreement in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated by this
Agreement, including (i) the obtaining of all other necessary actions or
nonactions, waivers, consents, licenses, permits, authorizations, orders and
approvals from Governmental Entities and the making of all other necessary
registrations and filings (including filings with Governmental Entities, if
any), (ii) the obtaining of all consents, approvals or waivers from third
parties related to or required in connection with the Merger that are necessary
to consummate the Merger and the transactions contemplated by this Agreement,
(iii) the preparation of the Joint Proxy Statement and the Registration
Statement, (iv) the execution and delivery of any additional instruments
reasonably necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement, and (v) the providing of all
such information concerning such party, its subsidiaries, its affiliates and
its subsidiaries' and affiliates' officers, directors, employees and partners
as may be reasonably requested in connection with any of the matters set forth
in Section 5.5(a), Section 5.5(b) or this Section 5.5(c). Each of Parent and
the Company agrees that it will use its reasonable commercial efforts to obtain
prior to the Effective Time each of the consents that are listed in Section
5.5(c) of the Company Disclosure Letter.
(d) Notwithstanding anything to the contrary in this Section 5.5,
neither Parent nor the Company shall be required in order to resolve any
objections asserted under Antitrust Laws by any Governmental Entity with
respect to the transactions contemplated by this Agreement to divest any of its
businesses, product lines or assets, or take or agree to take any other action
or agree to any limitation or restriction, that the Board of Directors of
Parent reasonably determines in good faith, after considering the advice of its
management and legal and financial advisors, (i) to be materially adverse to
Parent and its subsidiaries taken as a whole or (ii) would materially impair
the overall benefits expected, as of the date hereof, to be realized from the
consummation of the transactions contemplated by this Agreement.
(e) Except as set forth in Section 5.5(e) of the Company Disclosure
Letter or Section 5.5(e) of the Parent Disclosure Letter, as applicable, in
each case on the date of this Agreement, the Company and Parent shall not, and
shall not permit any of their respective subsidiaries to, acquire or agree to
acquire by merging or consolidating with, or by purchasing a substantial
portion of the assets of or equity in, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof, or otherwise acquire or agree to acquire any assets if the
entering into of a definitive agreement relating to or the consummation of such
acquisition, merger or consolidation would reasonably be expected to (i) impose
any delay (other than an immaterial delay) in the obtaining of, or increase the
risk (other than an insignificant increase) of not obtaining, any
authorizations, consents, orders, declarations or approvals of any Governmental
Entity necessary to consummate the transactions contemplated by this Agreement
or the expiration or termination of any applicable waiting period, (ii)
increase the risk (other than an insignificant increase) of any Governmental
Entity entering an order prohibiting the consummation of the transactions
contemplated by this Agreement, (iii) increase the risk (other than an
insignificant increase) of not being able to remove any such order on appeal or
otherwise or (iv) delay (other than an immaterial delay) or prevent the
consummation of the transactions contemplated by this Agreement.
Section 5.6. No Solicitation.
(a) Company.
(i) The Company shall not, and shall not authorize and will
use its reasonable best efforts not to, permit any of the Company
Subsidiaries or their Representatives to, directly or indirectly, (A)
solicit, initiate or encourage, or knowingly take any other action to
facilitate, the submission of any Acquisition Proposal with respect to
the Company or (B) participate in or encourage any discussions or
negotiations regarding, or furnish to any person any non-public
information with respect to, or take any other action to facilitate
any inquiries or the making of, any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal with
respect to the Company; provided, however, that, prior to obtaining
approval and adoption of this Agreement and the Merger from the
stockholders of the Company, the foregoing shall not prohibit the
Company, the Company Subsidiaries or their Representatives from
furnishing information to, or entering into discussions or
negotiations with, any person that makes an Acquisition Proposal with
respect to the Company that was not solicited by the Company in breach
of this Section 5.6(a) or that did not otherwise result from a breach
of this Section 5.6(a), if, and to the extent that, (x) the Board of
Directors of the Company, after consultation with and having
considered the advice of outside legal counsel, determines in good
faith that failure to take such action could result in a reasonable
probability that the Board of Directors of the Company would breach
its fiduciary duties under applicable Delaware law, (y) prior to
furnishing any such information to such person, the Company receives
from such person an executed agreement in reasonably customary form
relating to the confidentiality of information to be provided to such
person (provided that if the Company enters into such a
confidentiality agreement with respect to such Acquisition Proposal
that contains provisions that are less protective in any material
respects to the Company than the provisions of the Confidentiality
Agreement, the Company agrees to amend the Confidentiality Agreement
so as to provide Parent the benefit of such less protective
provisions), and (z) the Board of Directors of the Company determines
in good faith, after having considered the advice from its independent
financial advisor, that such Acquisition Proposal is or is reasonably
likely to result in a Superior Proposal. Unless the Board of Directors
of the Company, after consultation with and having considered the
advice of outside legal counsel, determines in good faith that taking
such action could result in a reasonable probability that the Board of
Directors of the Company would breach its fiduciary duties under
applicable Delaware law, the Company shall (i) provide prompt (but in
no event less than twenty-four hours after receipt of any Acquisition
Proposal with respect to the Company) written notice to Parent of the
receipt of any such Acquisition Proposal, indicating in connection
with such notice the material terms and conditions of such Acquisition
Proposal, the identity of such person making any such Acquisition
Proposal and the Company's current intention with respect to
furnishing information to, or entering into discussions or
negotiations with, such person and (ii) promptly keep Parent informed
of the status and material terms of any such Acquisition Proposal. All
information provided by the Company to Parent under this Section
5.6(a)(i) shall be kept confidential by Parent in accordance with the
terms of the Confidentiality Agreement. Notwithstanding the foregoing
or anything in this Agreement or the Confidentiality Agreement to the
contrary, Parent (and each Representative of Parent) may disclose to
any and all persons, without limitation of any kind, the Tax treatment
and any facts that may be relevant to the Tax structure of an
Acquisition Proposal with respect to the Company beginning on the
earliest of (i) the date of the public announcement of discussions
relating to such Acquisition Proposal, (ii) the date of public
announcement of such Acquisition Proposal, or (iii) the date of the
execution of an agreement (with or without conditions) to enter into
such Acquisition Proposal, provided, however, that neither Parent nor
any Representative of Parent may disclose any other information that
is not relevant to understanding the Tax treatment and Tax structure
of such Acquisition Proposal (including the identity of any party and
any information that could lead another to determine the identity of
any party), or any other information to the extent that such
disclosure could reasonably result in a violation of any federal or
state securities laws. The Company shall cease and cause to be
terminated immediately all existing discussions or negotiations with
any persons conducted heretofore with respect to any Acquisition
Proposal with respect to the Company. For purposes of this Agreement,
"Acquisition Proposal" means, other than the transactions contemplated
by this Agreement, any bona fide offer or proposal with respect to (i)
a merger, consolidation, business combination, reorganization,
recapitalization, liquidation, dissolution or similar transaction
involving the Company or Parent, as applicable, (ii) any purchase or
other acquisition of 10% or more of the consolidated assets of the
Company or Parent, as applicable, or (iii) any purchase or other
acquisition (by tender offer, exchange offer or otherwise) of 10% or
more of the outstanding voting equity securities of the Company or
Parent, as applicable.
(ii) The Board of Directors of the Company shall not, except
as expressly permitted by this Agreement (including this Section
5.6(a)(ii)), (A) withdraw, qualify or modify, or propose publicly to
withdraw, qualify or modify, in a manner adverse to Parent or Merger
Sub, the recommendation of the Board of Directors of the Company to
the Company's stockholders to approve and adopt this Agreement and the
Merger (a "Company Change in Recommendation"), (B) approve or
recommend, or propose publicly to approve or recommend, any
transaction involving an Acquisition Proposal with respect to the
Company from a third party (a "Company Alternative Transaction"), or
(C) cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement (other
than a confidentiality agreement) (each, an "Acquisition Agreement")
related to any Company Alternative Transaction. Notwithstanding the
foregoing, if prior to the approval and adoption of this Agreement and
the Merger by the Company's stockholders, the Board of Directors of
the Company determines in good faith, after it has received a Superior
Proposal in compliance with Section 5.6(a)(i) and after consultation
with and having considered the advice of outside legal counsel, that
failure to take such action could result in a reasonable probability
that the Board of Directors of the Company would breach its fiduciary
duties under applicable Delaware law, the Board of Directors of the
Company may (subject to this and the following sentences in this
Section 5.6(a)(ii)) (1) make a Company Change in Recommendation, (2)
approve or recommend, or propose publicly to approve or recommend,
such Superior Proposal (either clause (1) or (2) above being a
"Company Subsequent Determination") and (3) authorize the Company to
and cause the Company to enter into an Acquisition Agreement with
respect to a Superior Proposal, but in each case only at a time that
is after the fifth day (or the second day, in the case of a material
amendment to a Superior Proposal) following Parent's receipt of
written notice advising Parent that the Board of Directors of the
Company is prepared to accept a Superior Proposal. Such written notice
shall specify the material terms and conditions of such Superior
Proposal (and include a copy thereof with all accompanying
documentation, if in writing), identify the person making such
Superior Proposal and state that the Board of Directors of the Company
intends to make a Company Subsequent Determination or authorize the
Company to and cause the Company to enter into an Acquisition
Agreement. During such five day period (or two day period in the case
of a material amendment), the Company shall provide an opportunity for
Parent to propose such adjustments to the terms and conditions of this
Agreement as would enable the Board of Directors of the Company to
proceed with its recommendation to the Company's stockholders without
a Company Subsequent Determination. For purposes of this Agreement, a
"Superior Proposal" means any bona fide Acquisition Proposal (on its
most recently amended or modified terms, if amended or modified) made
by a third party to enter into a Company Alternative Transaction or a
Parent Alternative Transaction, as applicable, which the Board of
Directors of the Company or Parent, as applicable, determines in its
good faith judgment (having considered, among other things, the advice
of outside legal counsel and an independent financial advisor) to be
more favorable to the Company's stockholders or Parent's stockholders,
as applicable, than the Merger (taking into account such matters as
deemed relevant by such Board of Directors, including (i) whether, in
the good faith judgment of the Board of Directors of the Company or
Parent, as applicable, the third party is reasonably able to finance
the transaction, (ii) any proposed changes to this Agreement that may
be proposed by Parent or the Company, as applicable, in response to
such Alternative Transaction and (iii) the ability and timing for
satisfaction of the conditions to closing the Merger and such
Alternative Transaction).
(iii) Nothing contained in this Agreement shall prohibit the
Company from (A) taking and disclosing to its stockholders a position
contemplated by Rule 14e-2 or Rule 14d-9 promulgated under the
Exchange Act or (B) making any disclosure to the Company's
stockholders if, in the good faith judgment of the Board of Directors
of the Company, after consultation with outside legal counsel, failure
so to disclose would be inconsistent with applicable Law; provided,
however, that neither the Company nor the Board of Directors of the
Company shall, except as specifically permitted by Section 5.6(a)(ii),
make a Company Change in Recommendation or approve or recommend, or
propose publicly to approve or recommend, a Company Alternative
Transaction.
(b) Parent.
(i) Parent shall not, and shall not authorize and will use
its reasonable best efforts not to, permit any of the Parent
Subsidiaries or their Representatives to, directly or indirectly, (A)
solicit, initiate or encourage, or knowingly take any other action to
facilitate, the submission of any Acquisition Proposal with respect to
Parent or (B) participate in or encourage any discussion or
negotiations regarding, or furnish to any person any non-public
information with respect to, or take any other action to facilitate
any inquiries or the making of, any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal with
respect to Parent; provided, however, that, prior to obtaining
approval and adoption of the Amended Parent Certificate of
Incorporation and the approval of the issuance of Parent Common Stock
in connection with the Merger from the stockholders of Parent, the
foregoing shall not prohibit Parent, the Parent Subsidiaries or their
Representative from furnishing information to, or entering into
discussions or negotiations with, any person that makes an Acquisition
Proposal with respect to Parent that was not solicited by Parent in
breach of this Section 5.6(b) or that did not otherwise result from a
breach of this Section 5.6(b), if, and to the extent that, (x) the
Board of Directors of Parent, after consultation with and having
considered the advice of outside legal counsel, determines in good
faith that failure to take such action could result in a reasonable
probability that the Board of Directors of Parent would breach its
fiduciary duties under applicable Delaware law, (y) prior to
furnishing any such information to such person, Parent receives from
such person an executed agreement in reasonably customary form
relating to the confidentiality of information to be provided to such
person (provided that if Parent enters into such a confidentiality
agreement with respect to such Acquisition Proposal that contains
provisions that are less protective in any material respects to Parent
than the provisions of the Confidentiality Agreement, Parent agrees to
amend the Confidentiality Agreement so as to provide the Company the
benefit of such less protective provisions), and (z) the Board of
Directors of Parent determines in good faith, after having considered
the advice from its independent financial advisor, that such
Acquisition Proposal is or is reasonably likely to result in a
Superior Proposal. Unless the Board of Directors of Parent, after
consultation with and having considered the advice of outside legal
counsel, determines in good faith that taking such action could result
in a reasonable probability that the Board of Directors of Parent
would breach its fiduciary duties under applicable Delaware law,
Parent shall (i) provide prompt (but in no event less than twenty-four
hours after receipt of any Acquisition Proposal with respect to
Parent) written notice to the Company of the receipt of any such
Acquisition Proposal, indicating in connection with such notice the
material terms and conditions of such Acquisition Proposal, the
identity of such person making any such Acquisition Proposal and
Parent's current intention with respect to furnishing information to,
or entering into discussions or negotiations with, such person and
(ii) promptly keep the Company informed of the status and material
terms of any such Acquisition Proposal. All information provided by
Parent to the Company under this Section 5.6(b)(i) shall be kept
confidential by the Company in accordance with the terms of the
Confidentiality Agreement. Notwithstanding the foregoing or anything
in this Agreement or the Confidentiality Agreement to the contrary,
the Company (and each Representative of the Company) may disclose to
any and all persons, without limitation of any kind, the Tax treatment
and any facts that may be relevant to the Tax structure of an
Acquisition Proposal with respect to Parent beginning on the earliest
of (i) the date of the public announcement of discussions relating to
such Acquisition Proposal, (ii) the date of public announcement of
such Acquisition Proposal, or (iii) the date of the execution of an
agreement (with or without conditions) to enter into such Acquisition
Proposal, provided, however, that neither the Company nor any
Representative of the Company may disclose any other information that
is not relevant to understanding the Tax treatment and Tax structure
of such Acquisition Proposal (including the identity of any party and
any information that could lead another to determine the identity of
any party), or any other information to the extent that such
disclosure could reasonably result in a violation of any federal or
state securities laws. Parent shall cease and cause to be terminated
immediately all existing discussions or negotiations with any persons
conducted heretofore with respect to any Acquisition Proposal with
respect to Parent.
(ii) The Board of Directors of Parent shall not, except as
expressly permitted by this Agreement (including this Section
5.6(b)(ii)), (A) withdraw, qualify or modify, or propose publicly to
withdraw, qualify or modify, in a manner adverse to the Company, the
recommendation of the Board of Directors of Parent to Parent's
stockholders to approve the issuance of the Parent Common Stock in the
Merger and approve and adopt the Amended Parent Certificate of
Incorporation (a "Parent Change in Recommendation"), (B) approve or
recommend, or propose publicly to approve or recommend, any
transaction involving an Acquisition Proposal with respect Parent from
a third party (a "Parent Alternative Transaction"), or (C) cause
Parent to enter into any Acquisition Agreement related to any Parent
Alternative Transaction. Notwithstanding the foregoing, if prior to
the approval and adoption of the Amended Parent Certificate of
Incorporation and the approval of the issuance of Parent Common Stock
in connection with the Merger by Parent's stockholders, the Board of
Directors of Parent determines in good faith, after it has received a
Superior Proposal in compliance with Section 5.6(b)(i) and after
consultation with and having considered the advice of outside legal
counsel, that failure to take such action could result in a reasonable
probability that the Board of Directors of Parent would breach its
fiduciary duties under applicable Delaware law, the Board of Directors
of Parent may (subject to this and the following sentences in this
Section 5.6(b)(ii)) (1) make a Parent Change in Recommendation, (2)
approve or recommend, or propose publicly to approve or recommend,
such Superior Proposal (either clause (1) or (2) above being a "Parent
Subsequent Determination") and (3) authorize Parent to and cause
Parent to enter into an Acquisition Agreement with respect to a
Superior Proposal, but in each case only at a time that is after the
fifth day (or the second day, in the case of a material amendment to a
Superior Proposal) following the Company's receipt of written notice
advising the Company that the Board of Directors of Parent is prepared
to accept a Superior Proposal. Such written notice shall specify the
material terms and conditions of such Superior Proposal (and include a
copy thereof with all accompanying documentation, if in writing),
identify the person making such Superior Proposal and state that the
Board of Directors of Parent intends to make a Parent Subsequent
Determination or authorize Parent to and cause Parent to enter into an
Acquisition Agreement. During such five day period (or two day period
in the case of a material amendment), Parent shall provide an
opportunity for the Company to propose such adjustments to the terms
and conditions of this Agreement as would enable the Board of
Directors of Parent to proceed with its recommendation to Parent's
stockholders without a Parent Subsequent Determination.
(iii) Nothing contained in this Agreement shall prohibit
Parent from (A) taking and disclosing to its stockholders a position
contemplated by Rule 14e-2 or Rule 14d-9 promulgated under the
Exchange Act or (B) making any disclosure to Parent's stockholders if,
in the good faith judgment of the Board of Directors of Parent, after
consultation with outside legal counsel, failure so to disclose would
be inconsistent with applicable Law; provided, however, that neither
Parent nor the Board of Directors of Parent shall, except as
specifically permitted by Section 5.6(b)(ii), make a Parent Change in
Recommendation or approve or recommend, or propose publicly to approve
or recommend, a Parent Alternative Transaction.
Section 5.7. Stockholder Litigation. The Company shall give Parent the
opportunity to participate in the defense or settlement of any stockholder
Litigation against the Company and its directors relating to the Merger or the
other transactions contemplated by this Agreement; provided, however, that no
such settlement shall be agreed to without Parent's prior written consent,
which consent will not be unreasonably withheld.
Section 5.8. Indemnification; D&O Insurance.
(a) From and after the Effective Time, Parent shall cause (including
by providing adequate funding to) the Surviving Corporation to, and the
Surviving Corporation shall, (i) indemnify and hold harmless, and provide
advancement of expenses to, each present and former director and officer of the
Company or the Company Subsidiaries (the "Indemnified Parties") in respect of
acts or omissions occurring at or prior to the Effective Time (including with
respect to acts or omissions occurring in connection with approval of this
Agreement and the consummation of the transactions contemplated hereby) to the
extent provided in the Company Certificate of Incorporation or the Company
Bylaws, in each case as in effect on the date of this Agreement, or pursuant to
any other agreements in effect on the date hereof, copies of which have been
provided to Parent and (ii) include and cause to be maintained in effect in the
Surviving Corporation's (or any successor's) Certificate of Incorporation and
Bylaws for a period of at least six years from and after the Effective Time,
the current provisions regarding elimination of liability of directors,
indemnification of officers, directors and employees and advancement of
expenses contained in the Company Certificate of Incorporation and Company
Bylaws.
(b) Parent shall cause (including by providing adequate funding to)
the Surviving Corporation to, and the Surviving Corporation shall, maintain in
effect for a period of six years from and after the Effective Time the current
directors' and officers' liability insurance policies ("D&O Insurance") covered
by such policies (provided that the Surviving Corporation may substitute
therefor policies of at least the same coverage containing terms and conditions
which are, in the aggregate, not materially less favorable) with respect to
matters occurring at or prior to the Effective Time; provided, however, that in
no event shall the Surviving Corporation be required to expend pursuant to this
Section 5.8(b) more than an amount per year equal to one hundred seventy-five
percent (175%) of current annual premiums paid by the Company for such
insurance. In the event that, but for the proviso to the immediately preceding
sentence, the Surviving Corporation would be required to expend more than one
hundred seventy-five percent (175%) of current annual premiums, the Surviving
Corporation shall obtain the maximum amount of such insurance obtainable by
payment of annual premiums equal to one hundred seventy-five percent (175%) of
current annual premiums, and provided, further, that any substitution or
replacement of existing policies shall not result in any gaps or lapses of
coverage with respect to facts, events, acts or omissions occurring at or prior
to the Effective Time.
(c) It is expressly agreed that the Indemnified Parties (including
their heirs and representatives) to whom Section 5.8 applies shall be
third-party beneficiaries of this Section 5.8. The provisions of this Section
5.8 are intended to be for the benefit of, and will be enforceable by, such
third-party beneficiaries.
Section 5.9. Public Announcements. The initial press release
concerning the Merger and the transactions contemplated by this Agreement shall
be a joint press release. Parent and the Company shall consult with each other
before issuing any press release or otherwise making any public statements with
respect to this Agreement or the Merger and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by Law or requirements of the NYSE or The Nasdaq National
Market.
Section 5.10. Registration Statement; Joint Proxy Statement.
(a) As promptly as practicable after the execution of this Agreement,
(i) Parent and the Company shall jointly prepare and file with the SEC the
joint proxy statement to be sent to the stockholders of the Company and to the
stockholders of Parent relating to the meeting of Company's stockholders (the
"Company Stockholders' Meeting") and to the meeting of the Parent's
stockholders (the "Parent Stockholders' Meeting") to be held to consider, in
the case of the Company's stockholders, the approval and adoption of this
Agreement, and in the case of Parent's stockholders, the approval and adoption
of the Amended Parent Certificate of Incorporation and the approval of the
issuance of Parent Common Stock in connection with the Merger (such joint proxy
statement, as amended or supplemented, being referred to herein as the "Joint
Proxy Statement") and (ii) Parent shall prepare and file with the SEC a
registration statement on Form S-4 (together with all amendments thereto, the
"Registration Statement") in which the Joint Proxy Statement shall be included,
in connection with the registration under the Securities Act of the shares of
Parent Common Stock to be issued to the stockholders of the Company pursuant to
the Merger. Parent and the Company shall use their reasonable best efforts to
cause the Registration Statement to become effective as promptly as
practicable, and, prior to the effective date of the Registration Statement,
Parent shall take all or any action required under any applicable federal or
state securities laws in connection with such actions and the preparation of
the Registration Statement and Joint Proxy Statement. As promptly as
practicable after the Registration Statement shall have become effective, the
Company shall mail the Joint Proxy Statement to its stockholders and Parent
shall mail the Joint Proxy Statement to its stockholders.
(b) Except as specifically permitted by Section 5.6(a)(ii), the Board
of Directors of the Company shall recommend to the Company's stockholders the
approval and adoption of this Agreement and the Merger and the Board of
Directors of the Company shall not make a Company Change in Recommendation.
(c) Except as specifically permitted by Section 5.6(b)(ii), the Board
of Directors of Parent shall recommend to Parent's stockholders the approval of
the issuance of the Parent Common Stock in the Merger and approval and adoption
of the Amended Parent Certificate of Incorporation and the Board of Directors
of Parent shall not make a Parent Change in Recommendation.
(d) Except for an amendment or supplement (including by incorporation
by reference) relating to an Acquisition Proposal, a Company Subsequent
Determination, a Parent Subsequent Determination, a Company Change in
Recommendation or a Parent Change in Recommendation, no amendment or supplement
to the Joint Proxy Statement or the Registration Statement will be made by
Parent or the Company without the approval of the other party (such approval
not to be unreasonably withheld or delayed). Nothing in this Agreement shall
prohibit the Company or Parent, as the case may be, from making disclosure (and
such disclosure in and of itself shall not be deemed to be a Company Change in
Recommendation or Parent Change in Recommendation, as the case may be) of the
fact that an Acquisition Proposal has been proposed, the identity of the person
making such proposal or the material terms of such proposal. Parent and the
Company each will advise the other, promptly after they receive notice thereof,
of the time when the Registration Statement has become effective or any
supplement or amendment has been filed, of the issuance of any stop order, of
the suspension of the qualification of the Parent Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or of any
request by the SEC for amendment of the Joint Proxy Statement or the
Registration Statement or comments thereon and responses thereto or requests by
the SEC for additional information.
Section 5.11. Stockholders' Meetings.
(a) The Company shall cause the Company Stockholders' Meeting to be
duly called and held as soon as practicable for the purpose of voting on the
approval and adoption of this Agreement and the Merger, and the Company shall
use its reasonable best efforts to hold the Company Stockholders' Meeting as
soon as practicable after the date on which the Registration Statement becomes
effective. The Company shall take all action necessary in accordance with
applicable Law, the Company Certificate of Incorporation and the Company Bylaws
to duly call, give notice of and convene the Company Stockholders' Meeting.
Unless the Board of Directors of the Company has made a Company Subsequent
Determination or Company Change in Recommendation as permitted by this
Agreement, the Company shall use its reasonable best efforts to solicit from
holders of shares of Company Common Stock entitled to vote at the Company
Stockholders' Meeting proxies in favor of approval and adoption of this
Agreement and the Merger and shall take all other action necessary or, in the
reasonable judgment of Parent, helpful to secure the vote or consent of such
holders required by the DGCL or this Agreement to effect the Merger.
(b) Parent shall cause the Parent Stockholders' Meeting to be duly
called and held as soon as practicable for the purpose of voting on the
issuance of Parent Common Stock in connection with the Merger and the approval
and adoption of the Amended Parent Certificate of Incorporation and Parent
shall use its reasonable best efforts to hold the Parent Stockholders' Meeting
as soon as practicable after the date on which the Registration Statement
becomes effective. Parent shall take all action necessary in accordance with
applicable Law, the Parent Certificate of Incorporation and the Parent Bylaws
to duly call, give notice of and convene the Parent Stockholders' Meeting.
Unless the Board of Directors of Parent has made a Parent Subsequent
Determination or Parent Change in Recommendation as permitted by this
Agreement, Parent shall use its reasonable best efforts to solicit from holders
of shares of Parent Common Stock entitled to vote at the Parent Stockholders'
Meeting proxies in favor of approval of the issuance of Parent Common Stock in
connection with the Merger and the approval and adoption of the Amended Parent
Certificate of Incorporation and shall take all other action necessary or, in
the reasonable judgment of the Company, helpful to secure the vote or consent
of such holders required by the DGCL, the Listed Company Manual of the NYSE or
this Agreement to effect the Merger.
Section 5.12. Composition of Board of Directors of Parent. At or prior
to the Effective Time, Parent shall expand the size of its Board of Directors
from eleven directors to fourteen directors. Parent shall use its reasonable
best efforts to appoint three of the Company's current independent directors or
such other persons contemplated by this Section 5.12 to the Board of Directors
of Parent effective as of the Effective Time, which directors shall be proposed
by the Company. Such director nominees must be acceptable to Parent upon
evaluation in accordance with its corporate governance guidelines and
practices. If one or more of these positions cannot be filled by the Company's
current independent directors, the Company may propose other director nominees
that do not currently serve as directors of the Company for consideration by
Parent. Such directors shall be appointed to each of the three classes of the
Board of Directors of Parent such that their terms of office expire at the
annual meeting of stockholders of Parent in 2004, 2005 and 2006, respectively.
Section 5.13. Undertakings of Parent. Parent shall perform, or cause
to be performed, when due all obligations of Merger Sub under this Agreement.
Section 5.14. NYSE Listing. Prior to the Effective Time, Parent shall
cause Parent Common Stock issuable in connection with the Merger or upon the
exercise of Substitute Options or Substitute Warrants to be approved for
listing on the NYSE, subject to official notice of issuance.
Section 5.15. Employee Plans and Benefits and Employment Contracts.
(a) Except as otherwise provided in this Section 5.15, the Company as
the Surviving Corporation shall (subject to Section 5.15(d)) continue
immediately following the Effective Time to maintain each Company Benefit Plan
(provided that the Company's severance plans and policies shall be continued to
the extent provided in the Retention Plan) and each of its generally applicable
employment related policies and practices as in effect immediately before the
Effective Time except as expressly agreed upon between the Company and Parent
or, if any such Company Benefit Plan only has one participant, between such
participant and Parent, for a transition period, which transition period may be
different for each such plan and which period shall be set by Parent based on
the time deemed necessary to effect a reasonable transition for such employees
from participating in each such Company Benefit Plan to participating in a
comparable Parent Benefit Plan, if any, maintained for similarly situated
Parent employees provided that (i) no transition period for any Company Benefit
Plan shall end before the sooner to occur of six months following the Effective
Time or December 31, 2004 (the "Transition Period"), (ii) Parent shall adopt
transition rules to prevent any loss of credit for participant and employer
contributions (but only to the extent recorded on the books and records of the
Company or the Company Financial Statements), payments, co-payments and the
like if a transition period for a Company Benefit Plan ends before the end of
the plan year for such plan and (iii) the Company as the Surviving Corporation
shall continue to maintain each such Company Benefit Plan subject to the same
rights the Company had immediately prior to the Effective Time to administer,
amend and terminate such plan.
(b) In accordance with the provisions of Section 5.15(a) above, the
Company as the Surviving Corporation shall continue following the Effective
Time to maintain its generally applicable employment related policies and
practices, including those related to vacation time, sick leave, personal time
off and the like, for a transition period, which transition period may be
different for each such policy or practice and which period shall be set by
Parent based on the time deemed necessary to effect a reasonable transition for
such employees from being subject to any such policy or practice to being
subject to a comparable Parent policy or practice, if any, for similarly
situated employees of Parent or any Parent Subsidiaries; provided, however,
that notwithstanding the generality of the foregoing, following the Effective
Time, Parent shall, or shall cause the Company as the Surviving Corporation to,
honor all vacation, sick time and other paid time off that has been accrued but
unused by the employees of the Company or any of the Company Subsidiaries
immediately prior to the Effective Time, in each case solely to the extent the
Company has properly accrued for all such vacation, sick time and other paid
time off on the Company Financial Statements and provided further, however,
that no transition period for the Company's policies relating to vacation time,
sick leave, personal time off and the like shall end before the last day of the
Transition Period.
(c) Parent shall treat an individual's employment as an employee by
the Company or any Company Subsidiaries the same as employment as an employee
by Parent for purposes of satisfying any service or eligibility requirement
under any Parent Benefit Plan and to determine the extent to which a benefit
earned under such a plan is non-forfeitable if such individual is employed as
an employee by the Company or any Company Subsidiaries at the Effective Time.
(d) Parent shall provide to individuals who are employed by the
Company and the Company Subsidiaries as of the Effective Time and who remain
employed by Parent or any Parent Subsidiary after the Effective Time with
employee compensation and benefits that are comparable in all material respects
with the compensation and benefits that Parent provides to similarly-situated
employees of Parent and the Parent Subsidiaries.
(e) From and after the Effective Time, Parent shall honor or cause the
Surviving Corporation to honor in accordance with their terms all benefits and
obligations under the employment agreements listed in Section 3.14(a) of the
Company Disclosure Letter and the Retention Plan. Parent and the Company agree
that the consummation of the Merger shall constitute a "change in control" or
"change of control" or similar transaction for purposes of the agreements and
plans set forth in Section 5.15(e) of the Company Disclosure Letter
notwithstanding anything to the contrary set forth in any such agreement or
plan.
(f) Nothing in this Section 5.15 shall confer any rights on, or
provide any remedies for, any employee or former employee of the Company or any
Company Subsidiaries or on, or for, any person making a claim on behalf of any
such employee or former employee.
Section 5.16. Certain Tax Matters.
(a) Parent and the Company shall use reasonable best efforts to cause
the Merger to qualify as a "reorganization" within the meaning of Section
368(a) of the Code and to obtain the Tax opinions set forth in Sections 6.2(d)
and 6.3(d) hereof. This Agreement is intended to constitute a "plan of
reorganization" within the meaning of Treas. Reg. Sec. 1.368-2(g).
(b) Officers of Parent, Merger Sub and the Company shall execute and
deliver to King & Spalding, tax counsel to Parent, and Xxxxxxx Xxxx, tax
counsel to the Company, certificates substantially in the form agreed to by the
parties and such law firms at such time or times as may be reasonably requested
by such law firms, including contemporaneously with the execution of this
Agreement, at the time the Registration Statement and Joint Proxy Statement is
declared effective by the SEC and at the Effective Time, in connection with
such tax counsel's respective delivery of opinions, pursuant to Sections 6.2(d)
and 6.3(d) hereof, with respect to the tax treatment of the Merger. Each of
Parent, Merger Sub or the Company shall use its reasonable best efforts not to
take or cause to be taken any action which would cause to be untrue (or fail to
take or cause not to be taken any action which would cause to be untrue) any of
the certifications and representations included in the certificates described
in this Section 5.16(b).
(c) The Company and Parent shall cooperate in the preparation,
execution and filing of all Tax Returns, questionnaires, applications or other
documents regarding any real property transfer or gains, sales, use, transfer,
value added, stock transfer and 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 that are
required or permitted to be filed on or before the Effective Time. Each of
Parent and the Company shall pay, without deduction from any amount payable to
holders of Company Common Stock and without reimbursement from the other party,
any such Taxes or fees imposed on it by any Governmental Entity (or for which
its stockholders are primarily liable), which becomes payable in connection
with the transactions contemplated by this Agreement.
Section 5.17. Accountant Letters.
(a) The Company shall use commercially reasonable efforts to cause
PricewaterhouseCoopers LLP to deliver a letter relating to the Company's fiscal
years 2002 and 2003 dated not more than five days prior to the date on which
the Registration Statement shall have become effective and addressed to the
Company and Parent in form and substance reasonably satisfactory to Parent and
customary in scope and substance for agreed-upon procedures letters delivered
by independent public accountants in connection with registration statements
and proxy statements similar to the Registration Statement and the Joint Proxy
Statement; provided that, the failure of such a letter to be delivered by
PricewaterhouseCoopers LLP shall not result in a failure of a condition to
Closing (including Section 6.2(b) or (c) hereof).
(b) Parent shall use commercially reasonable efforts to cause KPMG LLP
to deliver a letter relating to Parent's fiscal year 2002 dated not more than
five days prior to the date on which the Registration Statement shall have
become effective and addressed to Parent and the Company in form and substance
reasonably satisfactory to the Company and customary in scope and substance for
agreed-upon procedures letters delivered by independent public accountants in
connection with registration statements and proxy statements similar to the
Registration Statement and the Joint Proxy Statement; provided, that the
failure of such a letter to be delivered by KPMG LLP shall not result in a
failure of a condition to Closing (including Section 6.3(b) or (c) hereof).
ARTICLE VI
CONDITIONS
Section 6.1. Conditions to the Obligation of Each Party. The
respective obligations of Parent, Merger Sub and the Company to effect the
Merger are subject to the satisfaction of the following conditions, unless
waived in writing by all parties:
(a) This Agreement and the Merger shall have been approved and adopted
by the requisite vote of the stockholders of the Company;
(b) The issuance of Parent Common Stock in connection with the Merger
shall have been approved and the Amended Parent Certificate of Incorporation
shall have been approved and adopted, in each case, by the requisite votes of
the stockholders of Parent;
(c) No applicable Law and no temporary restraining order, preliminary
or permanent injunction or other order issued by any court of competent
jurisdiction prohibiting or preventing consummation of the Merger or making the
Merger illegal shall be in effect;
(d) The SEC shall have declared the Registration Statement effective
and no stop order suspending the effectiveness of the Registration Statement or
any part thereof shall have been issued by the SEC and no proceeding for that
purpose, and no similar proceeding in respect of the Joint Proxy Statement,
shall have been initiated or threatened in writing by the SEC;
(e) The shares of Parent Common Stock to be issued in the Merger or
upon the exercise of Substitute Options or Substitute Warrants shall have been
approved for listing on the NYSE, subject to official notice of issuance;
(f) The waiting period (and any extension thereof) applicable to the
Merger under the HSR Act shall have been terminated or shall have expired; and
(g) Other than the filing of the Certificate of Merger and filings
pursuant to the HSR Act (which are addressed in Section 6.1(f)), all consents,
approvals and actions of, filings with and notices to any Governmental Entity
required of Parent or the Company or any of the Company Subsidiaries or the
Parent Subsidiaries to consummate the Merger or the other transactions
contemplated hereby, the failure of which to be obtained or taken would
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect after taking into account the Merger, shall have been
obtained. No consents, approvals, actions, filings or notices related to any
Antitrust Laws or antitrust requirements of any jurisdiction, except as set
forth in Section 6.1(f), shall be a condition to closing under this Section
6.1(g).
Section 6.2. Conditions to Obligations of Parent and Merger Sub to
Effect the Merger. The obligations of Parent and Merger Sub to effect the
Merger are further subject to satisfaction or waiver at or prior to the Closing
of the following conditions:
(a) The representations and warranties of the Company in this
Agreement shall be true and correct in all respects (but without regard to
materiality qualifications or references to Company Material Adverse Effect
contained in any specific representation or warranty) as of the date of this
Agreement and as of the date of the Closing as though made on and as of the
Closing (except for representations or warranties expressly made as of a
specific date, the accuracy of which will be determined as of the specified
date), except where any failure of such representations and warranties in the
aggregate to be true and correct in all respects would not reasonably be
expected to have a Company Material Adverse Effect;
(b) The Company shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Effective Time;
(c) The Company shall have delivered to Parent a certificate to the
effect that each of the conditions specified in Sections 6.2(a) and (b) above
has been satisfied in all respects; and
(d) Parent shall have received the opinion of King & Spalding, in form
and substance reasonably satisfactory to Parent, dated the Closing Date,
rendered on the basis of facts, representations and assumptions set forth in
such opinion and the certificates obtained from officers of Parent, Merger Sub
and the Company, all of which are consistent with the state of facts existing
as of the Effective Time, to the effect that the Merger will qualify as a
"reorganization" within the meaning of Section 368(a) of the Code. In rendering
the opinion described in this Section 6.2(d), King & Spalding shall have
received and may rely upon the certificates and representations referred to in
Section 5.16(b) hereof.
Section 6.3. Conditions to Obligations of the Company to Effect the
Merger. The obligations of the Company to effect the Merger are further subject
to satisfaction or waiver at or prior to the Closing of the following
conditions:
(a) The representations and warranties of Parent and Merger Sub in
this Agreement shall be true and correct in all respects (but without regard to
materiality qualifications or references to Parent Material Adverse Effect
contained in any specific representation or warranty) as of the date of this
Agreement and as of the date of the Closing as though made on and as of the
Closing (except for representations or warranties expressly made as of a
specific date, the accuracy of which will be determined as of the specified
date), except where any failure of such representations and warranties in the
aggregate to be true and correct in all respects would not reasonably be
expected to have a Parent Material Adverse Effect;
(b) Parent and Merger Sub shall have performed in all material
respects all obligations required to be performed by them under this Agreement
at or prior to the Effective Time;
(c) Each of Parent and Merger Sub shall have delivered to the Company
a certificate to the effect that each of the conditions specified in Sections
6.3(a) and (b) above has been satisfied in all respects; and
(d) The Company shall have received the opinion of Xxxxxxx Xxxx, in
form and substance reasonably satisfactory to the Company, dated the Closing
Date, rendered on the basis of facts, representations and assumptions set forth
in such opinion and the certificates obtained from officers of Parent, Merger
Sub and the Company, all of which are consistent with the state of facts
existing as of the Effective Time, to the effect that the Merger will qualify
as a "reorganization" within the meaning of Section 368(a) of the Code. In
rendering the opinion described in this Section 6.3(d), Xxxxxxx Xxxx shall have
received and may rely upon the certificates and representations referred to in
Section 5.16(b) hereof.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after approval of matters presented in connection with the Merger by the
Company's stockholders or Parent's stockholders, as applicable:
(a) By mutual written consent of duly authorized representatives of
Parent, Merger Sub and the Company;
(b) By any of Parent, Merger Sub or the Company, if any court of
competent jurisdiction or other Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently restraining, enjoining
or otherwise prohibiting the Merger and the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have become
final and nonappealable; provided however, that the party terminating this
Agreement pursuant to this Section 7.1(b) shall have used its reasonable best
efforts to have such order, decree, ruling or action vacated;
(c) By any of Parent, Merger Sub or the Company, if the Merger shall
not have been consummated on or before June 2, 2004 (the "Outside Date");
provided, however, that if on the Outside Date the condition to Closing set
forth in Section 6.1(f) shall not have been satisfied but all other conditions
to Closing shall be satisfied or shall be capable of being satisfied, then the
Outside Date shall be extended to September 2, 2004 if the Company or Parent
notifies the other on or prior to June 2, 2004 of its election to extend the
Outside Date to September 2, 2004; provided further, however, that the right to
terminate this Agreement under this Section 7.1(c) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the primary cause of, or resulted in, the failure to consummate the Merger on
or before such date;
(d) By Parent or Merger Sub, if the Board of Directors of the Company
(i) shall have made a Company Change in Recommendation, (ii) causes the Company
to enter into an Acquisition Agreement with respect to an Acquisition Proposal
with respect to the Company, (iii) shall have approved or recommended any
Acquisition Proposal with respect to the Company or (iv) shall have resolved to
do any of the foregoing;
(e) By the Company, if the Board of Directors of Parent (i) shall have
made a Parent Change in Recommendation, (ii) causes Parent to enter into an
Acquisition Agreement with respect to an Acquisition Proposal with respect to
Parent, (iii) shall have approved or recommended any Acquisition Proposal with
respect to Parent or (iv) shall have resolved to do any of the foregoing;
(f) By Parent or Merger Sub, if (i) a tender offer or exchange offer
that, if successful, would result in any person or group becoming a beneficial
owner of 50% or more of the outstanding shares of Company Common Stock is
commenced (other than by Parent or an affiliate of Parent) and the Company's
Board of Directors fails within ten business days of commencement of such
tender offer to recommend that the stockholders of the Company not tender their
shares in such tender or exchange offer; provided, however that if Parent or
Merger Sub does not exercise this right to terminate within 15 business days of
the commencement of any such tender offer or exchange offer, this right to
terminate shall cease to be exercisable by Parent or Merger Sub or (ii) for any
reason the Company fails to call and hold the Company Stockholders' Meeting by
June 2, 2004 and prior to such date Parent shall have called and held the
Parent Stockholders' Meeting;
(g) By the Company, if (i) a tender offer or exchange offer that, if
successful, would result in any person or group becoming a beneficial owner of
50% or more of the outstanding shares of Parent Common Stock is commenced and
Parent's Board of Directors fails within ten business days of commencement of
such tender offer to recommend that the stockholders of Parent not tender their
shares in such tender or exchange offer; provided, however, that if the Company
does not exercise this right to terminate within 15 business days of the
commencement of such tender or exchange offer, this right to terminate shall
cease to be exercisable by the Company, or (ii) for any reason Parent fails to
call and hold the Parent Stockholders' Meeting by June 2, 2004 and prior to
such date the Company shall have called and held the Company Stockholders'
Meeting;
(h) By any of Parent, Merger Sub or the Company, if (i) this Agreement
and the Merger shall fail to be approved and adopted by the stockholders of the
Company at the Company Stockholders' Meeting by reason of the failure to obtain
the required vote at such meeting or (ii) the Amended Parent Certificate of
Incorporation shall fail to be approved and adopted by the stockholders of
Parent or the issuance of Parent Common Stock in connection with the Merger
shall fail to be approved by the stockholders of Parent, in either case, at the
Parent Stockholders' Meeting by reason of the failure to obtain the required
votes at such meeting;
(i) By Parent or Merger Sub, if there shall have been a breach by the
Company of any of its representations, warranties, covenants or other
obligations hereunder, which breach would result in the failure to satisfy the
conditions set forth in Section 6.2(a) or Section 6.2(b) and in any such case
such breach shall be incapable of being cured or shall not have been cured in
all material respects within 30 days after written notice thereof shall have
been received by the Company; provided that Section 7.1(f)(ii) shall govern any
failure by the Company to call and hold the Company Stockholders' Meeting by
June 2, 2004;
(j) By the Company, if there shall have been a breach by either of
Parent or Merger Sub of any of its respective representations, warranties,
covenants or other obligations hereunder, which breach would result in the
failure to satisfy the conditions set forth in Section 6.3(a) or Section 6.3(b)
and in any such case such breach shall be incapable of being cured or shall not
have been cured in all material respects within 30 days after written notice
thereof shall have been received by Parent; provided that Section 7.1(g)(ii)
shall govern any failure by Parent to call and hold the Parent Stockholders'
Meeting by June 2, 2004;
(k) By the Company, if (i) the Board of Directors of the Company shall
have made a Company Change in Recommendation and (ii) thereafter, the Board of
Directors of the Company shall have authorized the Company to enter into an
Acquisition Agreement relating to a Superior Proposal as contemplated by
Section 5.6(a)(ii); provided that the Company's right to terminate this
Agreement under this Section 7.1(k) shall not be available if the Company is
then in breach of Section 5.6(a); or
(l) By Parent, if (i) the Board of Directors of Parent shall have made
a Parent Change in Recommendation and (ii) thereafter, the Board of Directors
of Parent shall have authorized Parent to enter into an Acquisition Agreement
relating to a Superior Proposal as contemplated by Section 5.6(b)(ii); provided
that Parent's right to terminate this Agreement under this Section 7.1(l) shall
not be available if Parent is then in breach of Section 5.6(b).
Section 7.2. Effect of Termination.
(a) In the event of the termination of this Agreement pursuant to
Section 7.1 hereof, this Agreement shall forthwith be terminated and have no
further effect with no liability on the part of any party hereto, except that
the agreements contained in this Section 7.2 and in Section 8.12 shall survive
termination hereof, provided that nothing herein shall relieve any party from
liability for any willful breach hereof.
(b) If (i) Parent or Merger Sub exercises its right to terminate this
Agreement under Section 7.1(d) or (ii) the Company exercises its right to
terminate this Agreement pursuant to Section 7.1(k), the Company shall pay to
Parent (within five business days of Parent's demand thereof) the sum of (A)
all reasonable documented out-of-pocket fees and expenses (including, without
limitation, reasonable fees and expenses of counsel, accountants, investment
bankers, experts and consultants) incurred by Parent in connection with the
Merger or related to the authorization, preparation, negotiation, financing,
execution and performance of this Agreement and the transactions contemplated
hereby up to a maximum amount of $15 million (the "Parent Expenses") and (B)
$100 million (the "Termination Fee").
(c) If (i) the Company exercises its right to terminate this Agreement
under Section 7.1(e) or (ii) Parent exercises its right to terminate this
Agreement pursuant to Section 7.1(l), Parent shall pay to the Company (within
five business days of the Company's demand thereof) the sum of (A) all
reasonable documented out-of-pocket fees and expenses (including, without
limitation, reasonable fees and expenses of counsel, accountants, investment
bankers, experts and consultants) incurred by the Company in connection with
the Merger or related to the authorization, preparation, negotiation,
financing, execution and performance of this Agreement and the transactions
contemplated hereby up to a maximum amount of $15 million (the "Company
Expenses") and (B) the Termination Fee.
(d) If Parent or Merger Sub exercises its right to terminate this
Agreement under Section 7.1(f), then the Company shall pay to Parent (within
five business days of Parent's demand thereof) the Parent Expenses. If (i)
Parent or Merger Sub exercises its right to terminate this Agreement under
Section 7.1(f), and (ii) within twelve months after termination of this
Agreement, the Company shall (A) consummate a Material Acquisition Proposal
with respect to the Company which was publicly announced prior to such
termination or (B) enter into any Acquisition Agreement relating to a Material
Acquisition Proposal with respect to the Company which was publicly announced
prior to such termination and consummate such Material Acquisition Proposal
within 24 months after termination of this Agreement, then, immediately prior
to, and as a condition of, consummation of such Material Acquisition Proposal,
the Company shall pay to Parent the Termination Fee. For purposes of this
Agreement, "Material Acquisition Proposal" means, other than the transactions
contemplated by this Agreement, any bona fide offer or proposal with respect to
(i) a merger, consolidation, business combination, reorganization,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or Parent, as applicable, pursuant to which the stockholders of the
Company or Parent, as applicable, immediately prior to such transaction would
own less than 75% of the voting equity securities of the entity surviving or
resulting from such transaction (or the ultimate parent entity thereof), (ii)
any purchase or other acquisition of 25% or more of the consolidated assets of
the Company or Parent, as applicable, or (iii) any purchase or other
acquisition (by tender offer, exchange offer or otherwise) of 25% or more of
the outstanding voting equity securities of the Company or Parent, as
applicable.
(e) If the Company exercises its right to terminate this Agreement
under Section 7.1(g), then Parent shall pay to the Company (within five
business days of the Company's demand thereof) the Company Expenses. If (i) the
Company exercises its right to terminate this Agreement under Section 7.1(g),
and (ii) within twelve months after termination of this Agreement, Parent shall
(A) consummate a Material Acquisition Proposal with respect to Parent which was
publicly announced prior to such termination or (B) enter into any Acquisition
Agreement relating to a Material Acquisition Proposal with respect to Parent
which was publicly announced prior to such termination and consummate such
Material Acquisition Proposal within 24 months after termination of this
Agreement, then, immediately prior to, and as a condition of, consummation of
such Material Acquisition Proposal, Parent shall pay to the Company the
Termination Fee.
(f) If (i) (A) Parent or Merger Sub exercises its right to terminate
this Agreement under Section 7.1(h)(i) or 7.1(i) or (B) the Company exercises
its right to terminate this Agreement under Section 7.1(h)(i), and (ii) within
twelve months after termination of this Agreement, the Company shall (A)
consummate a Material Acquisition Proposal with respect to the Company which
was publicly announced prior to such termination or (B) enter into any
Acquisition Agreement relating to a Material Acquisition Proposal with respect
to the Company which was publicly announced prior to such termination and
consummate such Material Acquisition Proposal within 24 months after
termination of this Agreement, then, immediately prior to, and as a condition
of, consummation of such Material Acquisition Proposal, the Company shall pay
to Parent the sum of (x) the Parent Expenses and (y) the Termination Fee.
(g) If (i) (A) the Company exercises its right to terminate this
Agreement under Section 7.1(h)(ii) or 7.1(j) or (B) Parent or Merger Sub
exercises its right to terminate this Agreement under Section 7.1(h)(ii), and
(ii) within twelve months after termination of this Agreement, Parent shall (A)
consummate a Material Acquisition Proposal with respect to Parent which was
publicly announced prior to such termination or (B) enter into any Acquisition
Agreement relating to a Material Acquisition Proposal with respect to Parent
which was publicly announced prior to such termination and consummate such
Material Acquisition Proposal within 24 months after termination of this
Agreement, then, immediately prior to, and as a condition of, consummation of
such Material Acquisition Proposal, Parent shall pay to the Company the sum of
(x) the Company Expenses and (y) the Termination Fee.
(h) All payments under this Section 7.2 shall be made by wire transfer
of immediately available funds to an account designated by the party entitled
to receive such payment. Each of the parties hereto acknowledges that the
agreements contained in this Section 7.2 are an integral part of the
transactions contemplated by this Agreement, and that, without these
agreements, the Company, Parent and Merger Sub would not enter into this
Agreement. Accordingly, (i) if the Company fails to pay in a timely manner any
of the amounts due pursuant to this Section 7.2, and, in order to obtain such
payment, Parent makes a claim that results in a judgment against the Company,
the Company shall pay to Parent its reasonable fees and expenses (including
reasonable attorneys' fees and expenses) in connection with such suit, together
with interest on the amounts set forth in this Section 7.2 at the prime rate of
Citibank, N.A. in effect on the date such payment was required to be made, or
(ii) if Parent fails to pay in a timely manner any of the amounts due pursuant
to this Section 7.2, and, in order to obtain such payment, the Company makes a
claim that results in a judgment against Parent, Parent shall pay to the
Company its reasonable fees and expenses (including reasonable attorneys' fees
and expenses) in connection with such suit, together with interest on the
amounts set forth in this Section 7.2 at the prime rate of Citibank, N.A. in
effect on the date such payment was required to be made. Notwithstanding
anything herein to the contrary, if either of the Company or Parent shall pay
or shall be required to pay the Termination Fee or the Parent Expenses or the
Company Expenses, as applicable, under a Section of this Article VII, it shall
not be required to pay the Termination Fee or the Parent Expenses or the
Company Expenses, as applicable, under any other Section of this Article VII.
Section 7.3. Amendments. This Agreement may be amended by the parties
hereto by action taken or authorized by their respective Boards of Directors;
provided, however, that after approval of the Merger by the Company's
stockholders, no amendment that requires the further approval of the Company's
stockholders shall be made without such approval having been obtained. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
Section 7.4. Waiver. At any time prior to the Effective Time, whether
before or after the Company Stockholders' Meeting and the Parent Stockholders'
Meeting, any party hereto may (i) extend the time for the performance of any of
the covenants, obligations or other acts of any other party hereto or (ii)
waive any inaccuracy of any representations or warranties or compliance with
any of the agreements, covenants or conditions of any other party or with any
conditions to its own obligations. Any agreement on the part of a party hereto
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party by its duly authorized
officer. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of such rights.
The waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1. No Third Party Beneficiaries. Other than the provisions
of Section 5.8 hereof, nothing in this Agreement shall confer any rights or
remedies upon any person other than the parties hereto.
Section 8.2. Entire Agreement. This Agreement, together with the
Confidentiality Agreement, the Company Disclosure Letter and the Parent
Disclosure Letter, constitutes the entire Agreement among the parties with
respect to the subject matter hereof and supersedes any prior understandings,
agreements or representations by or among the parties, written or oral, with
respect to the subject matter hereof. No amendment, modification or alteration
of the terms or provisions of this Agreement, the Company Disclosure Letter or
the Parent Disclosure Letter shall be binding unless the same shall be in
writing and duly executed by the parties hereto.
Section 8.3. Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties named herein and their
respective successors. No party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval
of the other parties; provided, however, that Merger Sub may freely assign its
rights to a Parent Subsidiary without such prior written approval but no such
assignment shall relieve Merger Sub of any of its obligations hereunder.
Section 8.4. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
Section 8.5. Headings. The descriptive headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 8.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to principles of conflicts of law thereof.
Section 8.7. Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof is
invalid or unenforceable, the parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
Section 8.8. Specific Performance. Each of the parties acknowledges
and agrees that the other party would be damaged irreparably in the event any
of the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the parties
agrees that the other party shall be entitled to seek an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof having
jurisdiction over the parties and the matter, in addition to any other remedy
to which it may be entitled, at law or in equity.
Section 8.9. Construction. The language used in this Agreement shall
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
party. Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
Section 8.10. Non-Survival of Representations and Warranties and
Agreements. The representations, warranties and agreements in this Agreement,
including any rights arising out of any breach of such representations,
warranties and agreements, shall terminate at the Effective Time, except for
those agreements contained herein (including Section 5.8) that by their terms
apply or are to be performed in whole or in part after the Effective Time and
the provisions in this Article VIII.
Section 8.11. Certain Definitions.
(a) For purposes of this Agreement, the terms "associate" and
"affiliate" shall have the same meaning as set forth in Rule 12b-2 promulgated
under the Exchange Act, and the term "person" shall mean any individual,
corporation, partnership (general or limited), limited liability company,
limited liability partnership, trust, joint venture, joint-stock company,
syndicate, association, entity, unincorporated organization or government or
any political subdivision, agency or instrumentality thereof.
(b) For purposes of this Agreement, the phrase "Company Material
Adverse Effect" shall mean, with respect to the Company, any change,
circumstance, event or effect shall have occurred that, when taken together
with all other adverse changes, circumstances, events or effects that have
occurred, is or is reasonably likely to be materially adverse to the business,
results of operations or financial condition of the Company and the Company
Subsidiaries taken as a whole, except to the extent resulting from (i) any
changes in general United States or global economic conditions, (ii) any
changes in general economic conditions in industries in which the Company or
any Company Subsidiary operates or (iii) (A) any loss by the Company or any
Company Subsidiary of any customer (including business of such customer) to
Parent or any Parent Subsidiary, (B) any loss by the Company or any Company
Subsidiary of any customer (including business of such customer) to any party
other than Parent or any Parent Subsidiary or any diminution in revenue or
earnings from any customer in connection with the renewal or renegotiation of
such customer's contract, in each case from and after the date hereof or (C)
any loss by the Company or any Company Subsidiary of the customer disclosed in
writing to Parent on or prior to the date of this Agreement, including any
diminution in revenues or earnings from such customer; provided that with
respect to clauses (i) and (ii), such effect is not materially more adverse
with respect to the Company and the Company Subsidiaries, taken as a whole,
than the effect on comparable pharmaceutical benefit management businesses
generally and with respect to clause (iii)(B) that such losses and diminution
between the date of this Agreement and the Effective Time (when netted against
revenues from new business of a comparable margin obtained during the same
period) do not involve, determined based on the information regarding Company
Changed Contracts provided by the Company pursuant to Section 5.3(a), in the
aggregate annualized revenues or annualized earnings in excess of the amounts
set forth in Exhibit F to this Agreement (it being understood and agreed that
the loss of or diminution in any revenues or earnings from the customer
described in clause (iii)(C) above shall not be counted toward these
thresholds).
(c) For purposes of this Agreement, the phrase "Parent Material
Adverse Effect" shall mean, with respect to Parent, any change, circumstance,
event or effect shall have occurred that, when taken together with all other
adverse changes, circumstances, events or effects that have occurred, is or is
reasonably likely to be materially adverse to the business, results of
operations or financial condition of Parent and the Parent Subsidiaries taken
as a whole, except to the extent resulting from (i) any changes in general
United States or global economic conditions, (ii) any changes in general
economic conditions in industries in which Parent or any Parent Subsidiary
operates or (iii) (A) any loss by Parent or any Parent Subsidiary of any
customer (including business of such customer) to the Company or any Company
Subsidiary or (B) any loss by Parent or any Parent Subsidiary of any customer
(including business of such customer) to any party other than the Company or
any Company Subsidiary or any diminution in revenue or earnings from any
customer in connection with the renewal or renegotiation of such customer's
contract, in each case from and after the date hereof; provided that with
respect to clauses (i) and (ii), such effect is not materially more adverse
with respect to Parent and the Parent Subsidiaries, taken as a whole, than the
effect on comparable pharmaceutical benefit management businesses generally and
with respect to clause (iii)(B) that such losses and diminution between the
date of this Agreement and the Effective Time (when netted against revenues
from new business of a comparable margin obtained during the same period) do
not involve, determined based on the information regarding Parent Changed
Contracts provided by Parent pursuant to Section 5.3(b), in the aggregate
annualized revenues or annualized earnings in excess of the amounts set forth
in Exhibit F to this Agreement.
(d) For purposes of this Agreement, the phrases "to the knowledge of
the Company," "known to the Company," "becoming aware" and similar formulations
shall mean with respect to the Company or the Company Subsidiaries the actual
knowledge of the people set forth in Section 8.11(d) of the Company Disclosure
Letter after reasonable inquiry.
(e) For purposes of this Agreement, the phrases "to the knowledge of
Parent," "known to Parent," "becoming aware" and similar formulations shall
mean with respect to Parent or the Parent Subsidiaries the actual knowledge of
the people set forth in Section 8.11(e) of the Parent Disclosure Letter after
reasonable inquiry.
(f) For purposes of this Agreement, the term "Executive Officer" shall
mean, with respect to the Company, any Company Subsidiary, Parent or any Parent
Subsidiary, any officer of serving as a Chief Executive Officer, Vice Chairman,
President, Senior Executive Vice President, Executive Vice President or Senior
Vice President, but shall not include any officer serving in the position of
Vice President or any lesser position in such organization.
Section 8.12. Fees and Expenses. Except as provided in Section 7.2,
all costs and expenses incurred by the parties hereto in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses.
Section 8.13. 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
telecopy 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 8.13:
If to Parent or Merger Sub: Caremark Rx, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Telecopier: 205/982-7709
Attention: Chief Executive Officer
General Counsel
with a copy to: King & Spalding LLP
(which shall not 000 Xxxxxxxxx Xxxxxx
constitute notice) Xxxxxxx, Xxxxxxx 00000
Telecopier: 404/572-5147
Attention: Xxxxxxx X. Xxxxxxxx
If to the Company: AdvancePCS
000 Xxxx Xxxx Xxxxxxxxx Xxxxxxx,
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopier: 469/524-7972
Attention: Chief Executive Officer
General Counsel
SVP, Corporate Affairs
and Secretary
with a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
(which shall not Four Times Square
constitute notice) Xxx Xxxx, XX 00000
Telecopier: 212/735-2000
Attention: Xxxx X. Xxxxxxx
Xxxx X. Xxxxxxxx
IN WITNESS WHEREOF, the Company, Parent and Merger Sub and have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
ADVANCEPCS
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Chairman of the Board,
President and Chief Executive Officer
CAREMARK RX, INC.
By: /s/ E. Xxx Xxxxxxxx
Name: E. Xxx Xxxxxxxx
Title: Chairman and Chief Executive Officer
COUGAR MERGER CORPORATION
By: /s/ E. Xxx Xxxxxxxx
Name: E. Xxx Xxxxxxxx
Title: President
