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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
D&K HEALTHCARE RESOURCES, INC.,
D&K ACQUISITION CORP.
AND
XXXXX HEALTHCARE SOLUTIONS, INC.
Dated as of October 21, 2003
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*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
ARTICLE I................................................................................................THE MERGER 1
Section 1.1 Acquisition of Membership Interest..........................................................1
Section 1.2 The Merger..................................................................................1
Section 1.3 Effective Time of the Merger................................................................2
Section 1.4 Effects of the Merger.......................................................................2
Section 1.5 Articles of Incorporation; Bylaws...........................................................2
Section 1.6 Directors and Officers......................................................................2
Section 1.7 Consideration...............................................................................2
Section 1.8 Merger Consideration Adjustment.............................................................4
Section 1.9 Closing.....................................................................................6
Section 1.10 Closing Deliveries..........................................................................7
Section 1.11 Dissenting Shares...........................................................................7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF TARGET CORPORATION 8
Section 2.1 Incorporation and Qualification.............................................................8
Section 2.2 Target Corporation's Capitalization.........................................................9
Section 2.3 Books and Records...........................................................................9
Section 2.4 Authority Relative to the Agreement.........................................................9
Section 2.5 No Violation...............................................................................10
Section 2.6 Consents and Approvals.....................................................................10
Section 2.7 Financial Statements.......................................................................10
Section 2.8 Absence of Changes.........................................................................11
Section 2.9 Litigation.................................................................................12
Section 2.10 Tax Matters................................................................................12
Section 2.11 Employee Benefit Plans.....................................................................13
Section 2.12 Employment Matters.........................................................................14
Section 2.13 Patents, Trademarks and Copyrights.........................................................14
Section 2.14 Environmental Compliance...................................................................15
Section 2.15 Title to Properties; Encumbrances..........................................................16
Section 2.16 Permits....................................................................................16
Section 2.17 Agreements, Contracts and Commitments......................................................17
Section 2.18 Undisclosed Liabilities....................................................................17
Section 2.19 Notes and Accounts Receivable..............................................................17
Section 2.20 Real Property..............................................................................18
Section 2.21 Condition of Tangible Assets...............................................................19
Section 2.22 Inventory..................................................................................19
Section 2.23 Insurance..................................................................................19
Section 2.24 Guaranties.................................................................................20
Section 2.25 Business Relationships.....................................................................20
Section 2.26 Chargebacks................................................................................20
Section 2.27 Disclosure.................................................................................20
Section 2.28 Disclaimer of Additional and Implied Warranties............................................20
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ACQUIRING CORPORATION AND NEWCO 20
Section 3.1 Organization and Authority.................................................................21
Section 3.2 Authority Relative to Agreement............................................................21
Section 3.3 No Violation...............................................................................21
Section 3.4 Consents and Approvals.....................................................................22
Section 3.5 Investment Intent..........................................................................22
Section 3.6 Financing..................................................................................23
Section 3.7 Disclosure.................................................................................23
Section 3.8 Disclaimer of Additional and Implied Warranties............................................23
ARTICLE IV COVENANTS OF TARGET CORPORATION.......................................................................23
Section 4.1 Meeting of Target Corporation Shareholders.................................................23
Section 4.2 Further Affirmative Covenants of Target Corporation........................................23
Section 4.3 Negative Covenants of Target Corporation...................................................25
ARTICLE V ADDITIONAL AGREEMENTS..................................................................................26
Section 5.1 Certain Taxes..............................................................................26
Section 5.2 Access To, and Information Concerning, Properties and Records..............................27
Section 5.3 Good Faith Efforts to Consummate Transactions..............................................29
Section 5.4 No Solicitation............................................................................29
Section 5.5 HSR Notifications..........................................................................31
Section 5.6 Employee Matters...........................................................................31
Section 5.7 Indemnification of Officers and Directors..................................................32
Section 5.8 Voting Agreement...........................................................................33
Section 5.9 Licenses...................................................................................33
ARTICLE VI CONDITIONS TO CLOSING.................................................................................33
Section 6.1 Conditions to Each Party's Obligation To Effect the Merger.................................33
Section 6.2 Conditions to the Obligations of Acquiring Corporation and
Newco to Effect the Merger.................................................................34
Section 6.3 Conditions to the Obligations of Target Corporation to
Effect the Merger..........................................................................35
ARTICLE VII TERMINATION; AMENDMENT; WAIVER.......................................................................35
Section 7.1 Termination................................................................................35
Section 7.2 Effect of Termination......................................................................36
Section 7.3 Amendment..................................................................................37
Section 7.4 Extension; Waiver..........................................................................37
ARTICLE VIII REMEDIES............................................................................................37
Section 8.1 Exclusive Rights and Remedies Prior to Closing Date........................................37
Section 8.2 Indemnification by Shareholders of Target Corporation......................................37
Section 8.3 Indemnification by Acquiring Corporation and Newco.........................................38
Section 8.4 Notice and Defense of Third Party Claims...................................................39
Section 8.5 Limitations of Liability...................................................................39
Section 8.6 Exclusive Remedies.........................................................................41
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
Section 8.7 Tax Effect of Indemnification Payments.....................................................42
Section 8.8 Cooperation................................................................................42
Section 8.9 Shareholder Representative.................................................................42
Section 8.10 ***........................................................................................43
ARTICLE IX SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.................................................43
Section 9.1 Survival of Representations and Warranties; ***............................................43
Section 9.2 Survival of Covenants......................................................................43
ARTICLE X MISCELLANEOUS..........................................................................................43
Section 10.1 Expenses...................................................................................43
Section 10.2 Public Announcements.......................................................................44
Section 10.3 Brokers and Finders........................................................................44
Section 10.4 Entire Agreement; Assignment...............................................................44
Section 10.5 Amendment and Modification.................................................................44
Section 10.6 Waiver; Consents...........................................................................45
Section 10.7 Further Assurances.........................................................................45
Section 10.8 Severability...............................................................................45
Section 10.9 Notices....................................................................................45
Section 10.10 Governing Law..............................................................................46
Section 10.11 Service of Process; Jurisdiction and Venue.................................................46
Section 10.12 Descriptive Headings; Interpretation.......................................................47
Section 10.13 Construction...............................................................................47
Section 10.14 Parties in Interest; No Third-Party Beneficiary............................................47
Section 10.15 Counterparts...............................................................................47
Section 10.16 Incorporation by Reference.................................................................48
Section 10.17 Certain Definitions........................................................................48
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as of
October 21, 2003, by and among D&K Healthcare Resources, Inc., a Delaware
corporation ("Acquiring Corporation"), D&K Acquisition Corp., an Arkansas
corporation ("Newco"), and Xxxxx HealthCare Solutions, Inc., an Arkansas
corporation ("Target Corporation").
RECITALS
WHEREAS, Acquiring Corporation desires to acquire Target Corporation, and
Target Corporation desires to be acquired by Acquiring Corporation, in the
manner provided in this Agreement;
WHEREAS, Acquiring Corporation and Target Corporation believe that the
Merger (as defined herein) of Newco, a wholly-owned subsidiary of Acquiring
Corporation, with and into Target Corporation in the manner provided by, and
subject to the terms and conditions set forth in this Agreement, and all
exhibits and schedules hereto, is desirable and in the best interests of their
respective corporations and shareholders;
WHEREAS, the respective Boards of Directors of Acquiring Corporation, Newco
and Target Corporation have approved this Agreement and the proposed
transactions substantially on the terms and conditions set forth in this
Agreement; and
WHEREAS, capitalized terms used but not otherwise defined herein shall have
the meanings assigned to them in Section 10.17.
NOW, THEREFORE, in consideration of the recitals and the respective
representations, warranties, covenants and indemnities contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and intending to be legally bound hereby, the parties hereby
agree as follows:
ARTICLE I
THE MERGER
Section 1.1 Acquisition of Membership Interest. Immediately prior to
consummation of the Merger (as defined herein) in accordance with this Article
I, Target Corporation shall acquire all right, title and interest in and to the
membership interest in Xxxxx Heartland L.L.C., an Arkansas limited liability
company, owned by Heartland Pharmacy Alliance LLC ("HPA"), under the terms of a
Membership Interest Purchase Agreement by and between Target Corporation and HPA
in substantially the form attached hereto as Exhibit A, which shall not be
entered into without the prior written consent of Acquiring Corporation.
Section 1.2 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the Arkansas Business Corporation Act, as amended
("ABCA"), Newco shall be merged with and into Target Corporation (the "Merger")
at the Effective Time (as defined herein). Following the Effective Time, Target
Corporation shall continue as the surviving
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
corporation (sometimes referred to herein as the "Surviving Corporation") and
the separate corporate existence of Newco shall cease.
Section 1.3 Effective Time of the Merger. The Merger shall become effective
at such time (the "Effective Time") as the articles of merger relating to the
Merger substantially in the form attached hereto as Exhibit D ("Articles of
Merger") filed with the Arkansas Secretary of State take effect in accordance
with the relevant provisions of the ABCA (the "Merger Filing"). The Merger
Filing shall be made simultaneously with or as soon as practicable after the
Closing (as defined herein) in accordance with this Article I. The parties agree
to use commercially reasonable efforts to consummate the Merger as soon as
practicable after the date hereof, and in any event the Merger shall be
consummated within five (5) business days after the satisfaction or waiver in
writing of all conditions set forth in Article VI or at such other time and
place as the parties shall mutually agree, subject to the terms and conditions
hereof.
Section 1.4 Effects of the Merger. At and after the Effective Time, the
Merger shall have the effects set forth in this Agreement, the Articles of
Merger and the applicable provisions of the ABCA. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all of
the property, rights, privileges, powers and franchises of Newco and Target
Corporation (the "Constituent Corporations") shall vest in the Surviving
Corporation, including, but not limited to, all right, title and interest of
Target Corporation or any of its Subsidiaries in and to any and all tradenames
used at any time by any of them including the names "Xxxxx HealthCare Solutions,
Inc.", "Xxxxx Heartland L.L.C." and any derivatives of any of the foregoing and
all debts, liabilities and duties of the Constituent Corporations shall become
the debts, liabilities and duties of the Surviving Corporation.
Section 1.5 Articles of Incorporation; Bylaws. At the Effective Time, the
Articles of Incorporation of Target Corporation, as in effect immediately prior
to the Effective Time, shall be amended in their entirety to read as set forth
in the form attached hereto as Exhibit B. At the Effective Time, the Bylaws of
Target Corporation, as in effect immediately prior to the Effective Time, shall
be amended in their entirety to read as set forth in the form attached hereto as
Exhibit C.
Section 1.6 Directors and Officers. The directors and officers of Newco
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation and shall hold office from the Effective Time until
their respective successors are duly elected or appointed and qualified in the
manner provided in the Articles of Incorporation and Bylaws of the Surviving
Corporation, or as otherwise provided by law.
Section 1.7 Consideration.
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(a) Subject to the provisions of this Section 1.7, the aggregate amount
payable with respect to the Common Stock (as defined herein) of Target
Corporation (the "Merger Consideration") shall be equal to (i) $99,250,000
less (ii) all outstanding indebtedness (including accrued interest thereon)
of Target Corporation as of the Closing Date, as set forth on Schedule
1.7(a) (the "Indebtedness"). In addition, the Merger Consideration shall be
adjusted both on and after the Closing Date in accordance with
2
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
Section 1.8 (the Merger Consideration as adjusted pursuant to Section 1.8
on the Closing Date shall be referred to as the "Closing Adjusted Merger
Consideration" and the Merger Consideration as adjusted pursuant to Section
1.8 after the Closing Date shall be referred to as the "Post-Closing
Adjusted Merger Consideration").
(b) The Closing Adjusted Merger Consideration, other than the Escrow Funds
which will be placed in escrow in accordance with Section 1.7(e), shall be
paid by wire transfer of immediately available funds at the Closing (as
defined herein) to an account designated in writing by each holder of
Common Stock (as defined below). At the Closing, Acquiring Corporation
shall fund, and cause the Surviving Corporation to pay in full, all
outstanding Indebtedness (including any accrued interest thereon).
(c) Subject to the terms of Section 1.7(e), each share of Target
Corporation's common stock, par value $100.00 per share ("Common Stock"),
issued and outstanding immediately prior to the Effective Time (other than
Dissenting Shares as defined in Section 1.11), shall, by virtue of the
Merger and without any action on the part of the holder thereof, be
converted into and represent the right to receive an amount of cash
determined by dividing (i) the Closing Adjusted Merger Consideration by
(ii) 750, without interest thereon, upon surrender of the certificate
representing such share. The percentage of the Closing Adjusted Merger
Consideration and the Post-Closing Adjusted Merger Consideration payable to
each holder of Common Stock is set forth opposite such holder's name on
Schedule 1.7(c).
(d) Each share of common stock, $0.01 par value per share, of Newco issued
and outstanding immediately prior to the Effective Time shall be converted
into and exchanged for one newly and validly issued, fully paid and
non-assessable share of common stock of the Surviving Corporation.
(e) The Closing Adjusted Merger Consideration shall be paid in full by wire
transfer of immediately available funds at the Closing; provided, however,
that $5,000,000 (the "Escrow Funds") shall be deposited in escrow with
JPMorgan Chase (the "Escrow Agent") pursuant to a mutually acceptable
Escrow Agreement in substantially the form attached hereto as Exhibit E
(the "Escrow Agreement") for the purpose of satisfying claims, if any, of
Acquiring Corporation or Newco under Article VIII hereof and paying the
reasonable attorneys' fees incurred by the Shareholder Representative (as
defined herein) under this Agreement and the Escrow Agreement in connection
with any third-party claim governed by Section 8.4. Among other mutually
agreed upon terms, the Escrow Agreement shall provide that (i) the Escrow
Funds shall be disbursed in the percentages set forth on Schedule 1.7(c)
upon the expiration of one year from the Closing Date (as defined herein)
unless Acquiring Corporation or Newco shall have exercised its rights under
Article VIII with respect to any claims under such Article, and (ii) the
Escrow Agent shall invest the Escrow Funds in a money market fund or
similar investment specified by the Shareholder Representative, and the
investment income earned on the Escrow Funds shall be disbursed to the
shareholders of Target Corporation and to Acquiring Corporation or Newco in
the percentages that the Escrow Funds are distributed under the terms of
this Agreement and the Escrow Agreement. The Escrow Agreement
3
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
will provide that Xxxxxxx Xxxxxxx Xxxxxx Xxxxxx will be appointed
attorney-in-fact for the shareholders of Target Corporation (the
"Shareholder Representative") for the purpose of the operation of the
Escrow Agreement and this Agreement.
(f) At the Effective Time, the stock transfer books of Target Corporation
shall be closed, and there shall be no further registration of transfers of
the Common Stock thereafter on the records of Target Corporation. The
Closing Adjusted Merger Consideration delivered upon the surrender for
exchange of shares of Common Stock in accordance with the terms hereof
shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of Common Stock, and there shall be no further
registration of transfers on the records of the Surviving Corporation of
shares of Common Stock which were outstanding immediately prior to the
Effective Time. Until surrendered as contemplated by this Agreement, each
certificate representing shares of Common Stock shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the appropriate portion of the Closing Adjusted Merger
Consideration and the Post-Closing Adjusted Merger Consideration, if any,
each without interest thereon. Furthermore, each share of Common Stock held
in the treasury of Target Corporation and each share of Common Stock held
by any direct or indirect wholly-owned Subsidiary of Target Corporation, if
any, immediately prior to the Effective Time shall, by virtue of the Merger
and without any action on the part of the holder thereof, cease to be
outstanding, be canceled and retired without payment of any consideration
therefor and cease to exist.
Section 1.8 Merger Consideration Adjustment.
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(a) For the purpose of this Section 1.8, Target Corporation's "Net Working
Capital", shall mean Target Corporation's current assets (excluding, except
to the extent of any cash collections prior to Closing, the Amerisource
Receivable and the ***, which shall be governed by Section 1.8(d)) less
current liabilities (excluding (i) all Indebtedness (as defined in Section
1.7(a)), including, without limitation, the current portion of all
long-term Indebtedness and all accrued interest thereon and (ii) all
amounts due under any capital lease, including, without limitation, the
current portion of such amounts) calculated on a consolidated basis and,
except as expressly stated herein, in conformity with GAAP applied on a
basis consistent with Target Corporation's balance sheet dated as of April
30, 2003 (including without limitation, in accordance with, to the extent
in conformity with GAAP, all accounting policies, practices, procedures and
valuation methods (collectively, "Accounting Practices") applied to such
balance sheet; it being understood and agreed that, to the full extent of
any conflict of any nature whatsoever between the Accounting Practices of
Target Corporation on the one hand, and the Accounting Practices of
Acquiring Corporation on the other hand (an "Accounting Conflict"), (i) the
Accounting Practices of Target Corporation shall control and (ii) to the
extent of any Accounting Conflict, the Accounting Practices of Acquiring
Corporation shall not apply, for purposes of the preparation of the Closing
Balance Sheet (as defined below) and for purposes of calculating Target
Corporation's Net Working Capital pursuant to this Section 1.8). For
purposes of calculating Net Working Capital, Acquiring Corporation and
Target Corporation acknowledge and agree that the amount of all items
4
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
included in the calculation of Net Working Capital will be taken into
account only once, and no such amounts will be taken into account more than
once, including, without limitation, the items specifically identified in
this Agreement as a deduction to Net Working Capital. For purposes of
illustration, the calculation of Net Working Capital as of April 30, 2003
and June 30, 2003, is set forth on Schedule 1.8(a).
(b) Not more than ten (10), but not less than five (5), business days prior
to the scheduled Closing, Target Corporation will deliver to Acquiring
Corporation an estimate of Target Corporation's Net Working Capital as of
the close of business on the Closing Date, prepared in accordance with
Section 1.8(a) (the "Estimated Net Working Capital"). If the Estimated Net
Working Capital is less than $75,295,519, then such shortfall shall be
deducted from the Merger Consideration at Closing on a dollar-for-dollar
basis. If the Estimated Net Working Capital is greater than $75,295,519,
then such excess shall be added to the Merger Consideration at Closing on a
dollar-for-dollar basis.
(c) Within sixty (60) days after the Closing Date, Acquiring Corporation,
at its sole expense, shall cause to be prepared and delivered to the
Shareholder Representative a final balance sheet of Target Corporation as
of the close of business on the Closing Date (the "Proposed Closing Balance
Sheet"), together with its proposed final calculation of Net Working
Capital based on the Proposed Closing Balance Sheet (the "Proposed Closing
Net Working Capital") and its proposed adjustment, if any, to the Merger
Consideration based on the difference between the Proposed Closing Net
Working Capital and the Estimated Net Working Capital (the "Proposed
Adjustment"), each prepared in accordance with Section 1.8(a). The Proposed
Closing Net Working Capital and Proposed Adjustment shall be accompanied by
any supporting documentation or other materials reasonably necessary to
determine such calculation or adjustment. In the event that the Shareholder
Representative does not object in writing to the Proposed Closing Net
Working Capital and/or the Proposed Adjustment within thirty (30) days
after receipt of same, then the Proposed Closing Net Working Capital and
Proposed Adjustment shall be deemed to have been accepted by the
Shareholder Representative and all of Target Corporation's former
shareholders and shall become final and binding. In the event that the
Shareholder Representative timely objects in writing to the Proposed
Closing Net Working Capital and/or Proposed Adjustment, then Acquiring
Corporation and the Shareholder Representative shall use commercially
reasonable efforts to resolve the dispute within thirty (30) days. If
Acquiring Corporation and the Shareholder Representative are unable to
reach an agreement within such thirty (30) day period, then they shall
submit the dispute to a nationally recognized accounting firm, mutually
agreeable to Acquiring Corporation and the Shareholder Representative,
whose determination of the working capital adjustment, if any, to the
Merger Consideration shall be made in accordance with this Section 1.8 and
shall be final and binding. The Acquiring Corporation and Target
Corporation's former shareholders shall jointly share the fees and expenses
of such accounting firm. The final balance sheet of Target Corporation as
of the close of business on the Closing Date, as finally determined in
accordance with this Section 1.8, shall be referred to as the "Closing
Balance Sheet," and the amount of any adjustments to the Merger
Consideration
5
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
determined pursuant to this subparagraph shall be referred to as the "Final
Working Capital Adjustment." Any amounts owing as a result thereof shall be
paid to Acquiring Corporation or Target Corporation's former shareholders,
pro rata, as the case may be, in cash within five (5) days of the final
determination of any Final Working Capital Adjustment as provided herein,
with simple interest thereon from the Closing Date through the date of
payment at the rate of eight percent (8%) per annum.
(d) Acquiring Corporation shall, and shall cause Surviving Corporation to,
use good faith commercially reasonable efforts, including, without
limitation, utilizing existing legal counsel and incurring all reasonably
necessary costs, expenses and attorney's fees, to collect promptly all
amounts due to Surviving Corporation related to or arising out of the
Amerisource Litigation and the *** (the "Amerisource/*** Funds"). The
Shareholder Representative shall have the right to monitor the prosecution
of the collection of the Amerisource/*** Funds, including, without
limitation, the right to discuss such collection efforts with existing
counsel, participate in and/or attend conferences, hearings or other
meetings relating to such collection efforts, and review and comment upon
any correspondence, briefs, filings or other documents related to such
collection efforts. The Shareholder Representative may assume the
prosecution of such collection efforts if the Shareholder Representative
determines, in the Shareholder Representative's sole reasonable discretion,
that Acquiring Corporation and/or Surviving Corporation are not
satisfactorily fulfilling their obligations under this Section 1.8(d). Any
Amerisource/*** Funds collected or otherwise received by Acquiring
Corporation or Surviving Corporation after the Closing less (i) the amount
of any unreimbursed post-Closing costs, expenses or attorney's fees
incurred by Acquiring Corporation or Surviving Corporation in connection
with the collection or receipt of such funds (the "Post-Closing Collection
Expenses") and (ii) any amounts legally or contractually payable to The X.
Xxxxxx Company and Xxxxx Xxxxxx Southeast L.L.C. or any of their assignees
out of such funds (the "Xxxxxx Portion") (the "Net Amerisource/*** Funds")
shall be added to the Post-Closing Adjusted Merger Consideration on a
dollar-for-dollar basis and paid to the Shareholder Representative, as
agent for the shareholders of Target Corporation, by wire transfer of
immediately available funds to an account designated in writing by the
Shareholder Representative. Such payment of any Net Amerisource/*** Funds
received by the Acquiring Corporation or the Surviving Corporation shall be
made within five (5) business days of the receipt thereof, together with
the delivery to the Shareholder Representative of documentation (including,
without limitation, final judgments or orders, settlement documents, wire
transfer receipts, invoices, bills and other similar documentation)
evidencing the Amerisource/*** Funds collected or received, the Xxxxxx
Portion remitted to The X. Xxxxxx Company, Xxxxx Xxxxxx Southeast L.L.C. or
their assignees, as applicable, and the Post-Closing Collection Expenses
incurred.
Section 1.9 Closing. Subject to the terms hereof, Target Corporation and
Newco shall execute in the manner required by the ABCA and deliver duly executed
and verified Articles of Merger substantially in the form attached hereto as
Exhibit D, and the parties hereto shall take all such other and further actions
as may be required by law to make the Merger effective. The consummation of the
transactions provided for in this Agreement (the "Closing") shall take place
6
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
at the offices of Xxxxx Liddell & Xxxx LLP, 0000 Xxxx Xxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxx, within five (5) business days following the date on which the
last of the conditions set forth in Article VI is fulfilled or waived in
writing, or at such other time and place as the parties shall mutually agree.
The date on which the Closing occurs is referred to in this Agreement as the
"Closing Date".
Section 1.10 Closing Deliveries. Acquiring Corporation, Newco and Target
Corporation will deliver, or cause to be delivered, on the Closing Date the
following instruments (collectively, the "Transaction Documents") to which they
are a party:
(a) Other than with respect to Dissenting Shares, letters of transmittal in
a form satisfactory to the parties, executed by shareholders of Target
Corporation, together with certificates representing the Common Stock or
affidavits of lost stock certificates in lieu thereof and any bonds (or
other documentation relating to ownership of Common Stock) that may be
required in connection therewith, in the reasonable discretion of Acquiring
Corporation;
(b) Other than with respect to Dissenting Shares, powers of attorney, in a
form satisfactory to the parties, executed by shareholders of Target
Corporation acknowledging their obligations under this Agreement and
appointing the Shareholder Representative as their attorney-in-fact;
(c) A Noncompetition Agreement between Acquiring Corporation or Surviving
Corporation and each of Xxxxxxx Xxxxxxx Xxxxxx Xxxxxx, Xxx Xxxxxx and
Xxxxxx Xxxxxxx Xxxxxx in substantially the form attached hereto as Exhibit
F (the "Noncompetition Agreement");
(d) An Opinion of Counsel of Target Corporation in substantially the form
attached hereto as Exhibit G;
(e) A Mutual Release of Claims in substantially the form attached hereto as
Exhibit I (the "Release of Claims") executed immediately prior to the
Merger by Target Corporation and each of the officers and directors of
Target Corporation;
(f) The Escrow Agreement in the form attached hereto as Exhibit E;
(g) A power of attorney of Target Corporation and its Subsidiaries as
provided for in Section 6.2(g); and
(h) Such additional information or documents as Acquiring Corporation,
Newco or Target Corporation shall have reasonably required to evidence the
consummation of the transactions contemplated by this Agreement.
Section 1.11 Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, shares of Common Stock issued and outstanding immediately prior
to the Effective Time that are held by shareholders of Target Corporation who
shall not have voted such shares in favor of adoption and approval of the Merger
and this Agreement and who, prior to the taking of
7
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
a vote of the shareholders on the adoption and approval of the Merger and this
Agreement, shall have delivered to Target Corporation a written notice of their
intent to demand payment for their shares in the manner provided in Section
4-27-1321 of the ABCA and who shall have delivered a written demand for payment
for such shares in the manner provided in Section 4-27-1323 of the ABCA
("Dissenting Shares") shall not be converted into the right to receive the
Merger Consideration, but the holders thereof shall be entitled to payment of
the fair value of such shares in accordance with the provisions of Section
4-27-1325 and Section 4-27-1328 of the ABCA; provided, however, that (i) if any
holder of Dissenting Shares shall subsequently vote such holder's shares in
favor of the Merger and this Agreement or otherwise waive such holder's rights
to dissent to the Merger under the ABCA, or (ii) if any holder fails to
establish such holder's entitlement to appraisal rights as provided in Section
4-27-1321 and Section 4-27-1323 of the ABCA, or fails strictly to comply with
any other applicable provision of the ABCA, such holder or holders (as the case
may be) shall forfeit the right to payment for such Dissenting Shares and such
Dissenting Shares shall thereupon be deemed to have been converted into the
right to receive the Merger Consideration as provided in Section 1.7 hereof and
shall have only such rights as provided under the ABCA.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF TARGET CORPORATION
Target Corporation makes the representations and warranties set forth in
this Article II to Acquiring Corporation and Newco. Target Corporation has
delivered to Acquiring Corporation and Newco the schedules to this Agreement
(the "Schedules"), including those referred to in this Article II, on the date
hereof and such Schedules have been reviewed and accepted by Acquiring
Corporation and Newco. Target Corporation shall, from time to time through the
Closing Date, promptly advise Acquiring Corporation and Newco as to any change,
amendment or supplement to the Schedules which is necessary to reflect changes
in the subject matter thereof occurring through the Closing Date. Acquiring
Corporation and Newco must notify Target Corporation in writing within ten (10)
business days after receipt of any change, amendment or supplement to the
Schedules of its election to terminate this Agreement in accordance with Section
7.1(b). If Acquiring Corporation and Newco fail to notify Target Corporation as
required, they shall be deemed to have waived their right to terminate this
Agreement based on such change, amendment or supplement to the Schedules.
Section 2.1 Incorporation and Qualification.
--------------------------------
(a) Target Corporation is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Arkansas. Target
Corporation has all requisite corporate power and authority to carry on its
business as it is now being conducted, and to own, lease and operate its
properties and assets, and to perform all its obligations under the
agreements and instruments to which it is a party or by which it is bound.
Except as set forth on Schedule 2.1(a), Target Corporation is duly
qualified to do business as a foreign corporation and is in good standing
under the laws of each state or other jurisdiction in which the properties
and assets owned, leased or operated by it or the nature of the business
conducted by it make such qualification necessary, except in such
jurisdictions where the failure to be duly qualified or in good
8
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
standing does not and would not result in a Material Adverse Effect. Each
such jurisdiction in which Target Corporation is so qualified is listed on
Schedule 2.1(a).
(b) Schedule 2.1(b) contains a list of all of the Subsidiaries of Target
Corporation, indicating in each case the name, type of entity, jurisdiction
of incorporation and other jurisdictions in which it is qualified to do
business. Except as otherwise noted on Schedule 2.1(b), each Subsidiary is
wholly-owned either directly or indirectly by Target Corporation. Each
Subsidiary is duly incorporated, validly existing and in good standing
under the laws of the state or jurisdiction of its incorporation and has
all requisite corporate power and authority to carry on its business as it
is now being conducted, to own, lease and operate its properties and
assets, and to perform all its obligations under the agreements and
instruments to which it is a party or by which it is bound. Except as set
forth on Schedule 2.1(b), each Subsidiary of Target Corporation is duly
qualified to do business as a foreign corporation or other business entity
and is in good standing under the laws of each state or other jurisdiction
in which the properties and assets owned, leased or operated by it or the
nature of the business conducted by it make such qualification necessary,
except in such jurisdictions where the failure to be duly qualified or in
good standing does not and would not result in a Material Adverse Effect.
Section 2.2 Target Corporation's Capitalization. The authorized and
outstanding capital stock of Target Corporation is set forth on Schedule 2.2.
Except as set forth on Schedule 2.2, there are no outstanding or authorized
subscriptions, options, convertible securities, rights, warrants, calls,
irrevocable proxies, purchase rights, exchange rights or other agreements or
commitments of any kind directly or indirectly obligating Target Corporation or
any Subsidiary of Target Corporation to sell, issue, transfer or dispose of, now
or at any time in the future any security of or equity interest in Target
Corporation or any Subsidiary of Target Corporation, or irrevocable proxies or
any agreements restricting the transfer of or otherwise relating to any security
or equity interest in Target Corporation or any Subsidiary of Target
Corporation. All of the shares of Target Corporation and all outstanding shares
of capital stock or membership interests of each Subsidiary have been duly
authorized, validly issued and are fully paid and non-assessable, and are free
of preemptive rights. Except as set forth on Schedule 2.2, all dividends by
Target Corporation or any subsidiary of Target Corporation declared prior to the
date hereof have been paid. Except as set forth on Schedule 2.2, there are no
outstanding stock appreciation, phantom stock, profit participation, or similar
rights with respect to Target Corporation or any Subsidiary of Target
Corporation. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of any capital stock of any Subsidiary
of Target Corporation.
Section 2.3 Books and Records. The minute books (containing the records of
meetings of the shareholders, the board of directors, and any committees of the
board of directors), the stock certificate books, and the stock record books of
Target Corporation and each Subsidiary of Target Corporation are correct and
complete in all material respects.
Section 2.4 Authority Relative to the Agreement. Target Corporation has
full corporate power and authority to execute and deliver this Agreement, and
except for the approval
9
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
by Target Corporation's shareholders, no further corporate proceedings on the
part of Target Corporation are necessary to consummate the transactions
contemplated hereby, which have been duly and validly authorized and approved by
its Board of Directors. This Agreement has been duly and validly executed and
delivered by Target Corporation, and this Agreement constitutes the valid and
binding obligation of Target Corporation enforceable against Target Corporation
in accordance with its terms, subject to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium, or other similar laws relating to
creditors' rights generally and general equitable principles and subject to the
approval by Target Corporation's shareholders and the applicable approval
requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act").
Section 2.5 No Violation. Except as set forth on Schedule 2.5, neither the
execution, delivery nor performance of this Agreement nor the consummation of
the transactions contemplated hereby, (i) violates ("Target's Violation") in any
material respect any law, order, writ, judgment, injunction, award, decree,
statute, or regulation applicable to Target Corporation or any Subsidiary of
Target Corporation, (ii) is in conflict with, results in a breach or termination
of any provision of, causes the acceleration of the maturity of any debt or
obligation pursuant to, constitutes a default (or gives rise to any right of
termination, cancellation or acceleration) under, or results in the creation of
any security interest, lien, charge or other encumbrance upon any property or
interest of Target Corporation or any Subsidiary of Target Corporation pursuant
to, any terms, conditions or provisions of any note, license, instrument,
indenture, mortgage, deed of trust or other agreement or understanding or any
other restriction of any kind or character, to which Target Corporation or any
Subsidiary of Target Corporation is a party or by which any property of Target
Corporation or any Subsidiary of Target Corporation is subject or bound
(collectively, "Target's Default"), or (iii) conflicts ("Target's Conflict")
with or results in any breach of any provision of the Certificate or Articles of
Incorporation or Organization or Bylaws or Operating Agreement or other similar
agreement of Target Corporation or any Subsidiary of Target Corporation. Each of
Target Corporation and its Subsidiaries has complied with all applicable laws
(including rules, regulations, codes, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal, state and local governments (and
all agencies thereof) except where the failure to comply would not result in a
Material Adverse Effect, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to comply.
Section 2.6 Consents and Approvals. Except as described on Schedule 2.6
hereto, and except for filing a Notification and Report Form pursuant to the
applicable requirements of the HSR Act, no prior consent, approval or
authorization of, or declaration, filing or registration with any person, entity
or authority, domestic or foreign, is required of or by Target Corporation or
any Subsidiary of Target Corporation in connection with the execution, delivery
and performance by Target Corporation and of this Agreement and the transactions
contemplated hereby.
Section 2.7 Financial Statements. Schedule 2.7 contains copies of (i) the
audited consolidated balance sheets of Target Corporation and its Subsidiaries
as of April 30, 2003 and April 30, 2002, and the related audited consolidated
statements of operations, stockholders' equity and cash flows for the fiscal
years ended April 30, 2003 and April 30, 2002, and (ii) the
10
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
unaudited consolidated balance sheet of Target Corporation and its Subsidiaries
as of August 31, 2003, and the related unaudited consolidated statement of
operations for the four months ended August 31, 2003 (the "Interim Financial
Statements") (all of the foregoing consolidated balance sheets and consolidated
statements of operations, shareholder's equity and cash flows of Target
Corporation are collectively referred to as "Target Corporation's Financial
Statements"). Except as set forth on Schedule 2.7, Target Corporation's
Financial Statements present fairly, in all material respects, the financial
position of Target Corporation as of the dates indicated and the results of its
operations and its cash flows for the periods indicated in conformity with GAAP,
consistently applied; provided, however, that the Interim Financial Statements
are subject to normal year-end adjustments, in accordance with past practice,
and do not include all the disclosures required by GAAP. For purposes of this
Agreement, the "Balance Sheet Date" shall be April 30, 2003, and the "Interim
Balance Sheet Date" shall be August 31, 2003. The parties acknowledge and agree
that (i) to the extent of any Accounting Conflict, the Accounting Practices of
Target Corporation shall control, (ii) to the extent of any Accounting Conflict,
the Accounting Practices of Acquiring Corporation shall not apply to the
preparation of Target Corporation's Financial Statements, including the related
notes, and (iii) to the extent of any Accounting Conflict, the failure to apply
Acquiring Corporation's Accounting Practices shall not constitute a breach of,
or inaccuracy in, any of the representations or warranties of Target Corporation
contained in this Agreement.
Section 2.8 Absence of Changes. Except as set forth on Schedule 2.8, since
the Balance Sheet Date, neither Target Corporation nor any Subsidiary of Target
Corporation has, directly or indirectly:
(a) made or authorized any amendment to its Certificate or Articles of
Incorporation or Organization or Bylaws or Operating Agreement or other
similar agreement, or changed the character or operations of its business
in any material manner;
(b) suffered any Material Adverse Effect;
(c) entered into or amended any material agreement, commitment or
transaction, except in connection with the transactions contemplated by
this Agreement;
(d) managed its working capital, except in the ordinary course of business
in accordance with the past custom and practice of Target Corporation and
its Subsidiaries;
(e) cancelled, compromised, waived, or released any right or claim (or
series of related rights and claims) either (i) involving more than $50,000
individually or $200,000 in the aggregate or (ii) outside the ordinary
course of business;
(f) entered into any employment contract or collective bargaining
agreement, written or oral, or modified the terms of any existing such
contract or agreement;
11
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
(g) made any loan to, or entered into any other transaction with, any of
its directors, officers, and employees, excluding payment of salaries,
benefits and reimbursement of business expenses in the ordinary course of
business;
(h) granted any increase in the base compensation of any of its directors,
officers, and employees outside the ordinary course of business or made any
other change in employment terms for any of its directors, officers, and
employees outside the ordinary course of business;
(i) adopted, amended, modified or terminated any bonus, profit-sharing,
incentive, severance, or other plan, contract, or commitment for the
benefit of any of its directors, officers, and employees; or
(j) committed to any of the foregoing.
Section 2.9 Litigation. Except as set forth on Schedule 2.9, there are no
actions, suits, or other proceedings pending or, to the Knowledge of Target
Corporation, threatened against Target Corporation or any Subsidiary of Target
Corporation or involving any of the properties or assets of Target Corporation
or any Subsidiary of Target Corporation, at law or in equity or before or by any
foreign, federal, state, municipal, or other governmental court, department,
commission, board, bureau, agency, or other instrumentality or person or any
board of arbitration or similar entity. Except as set forth on Schedule 2.9, to
Target Corporation's Knowledge, there are no facts or circumstances that would
cause a reasonable person to believe that any such action, suit, proceeding,
hearing, or investigation may be brought or threatened against any of Target
Corporation and its Subsidiaries.
Section 2.10 Tax Matters. Except as set forth on Schedule 2.10, each of
Target Corporation and its Subsidiaries has filed all Tax Returns that it was
required to file, and has paid or set up a reserve on its books for all Taxes
shown thereon as owing, except where the failure to file Tax Returns or to pay
Taxes would not have a Material Adverse Effect on the financial condition of
Target Corporation and its Subsidiaries taken as a whole. All such Tax Returns
were accurate, complete and true in all material respects. Schedule 2.10 lists
all federal and state income Tax Returns filed with respect to any of Target
Corporation and its Subsidiaries for taxable periods ended on or after April 30,
1997, indicates those federal income Tax Returns that have been audited and
indicates those federal income Tax Returns that currently are the subject of
audit. None of the directors or officers of Target Corporation and its
Subsidiaries has Knowledge of any proposed, threatened or expected audits,
examination claims or assessments with respect to such Tax Returns that are not
currently the subject of audit. Target Corporation has delivered to Acquiring
Corporation correct and complete copies of all federal income Tax Returns,
examination reports, and statements of deficiencies assessed against or agreed
to by any of Target Corporation and its Subsidiaries since April 30, 1997. None
of Target Corporation and its Subsidiaries has waived any statute of limitations
in respect of Taxes or agreed to any extension of time with respect to Tax
assessment or deficiency. The unpaid Taxes of the Target Corporation and its
Subsidiaries (A) did not, as of the Balance Sheet Date, exceed the reserve for
liability for Taxes (rather than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) and (B) do not exceed
that reserve as adjusted for the
12
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
passage of time through the Closing Date in accordance with the past custom and
practice of the Target Corporation and its Subsidiaries in filing their Tax
Returns. No claim has ever been made by an authority in a jurisdiction where any
of the Target Corporation and its Subsidiaries does not file Tax Returns that it
is or may be subject to taxation by that jurisdiction. None of Target
Corporation or its Subsidiaries has filed a consent under Section 341(f) of the
Internal Revenue Code of 1986, as amended (the "Code"). None of Target
Corporation and its Subsidiaries has made any material payments, is obligated to
make any material payments, or is party to any agreement that could obligate it
to make any material payments that would not be deductible under Section 280G of
the Code. None of Target Corporation and its Subsidiaries has been a U.S. real
property holding corporation within the meaning of Section 897 of the Code.
Except as disclosed in the federal income Tax Returns delivered to Acquiring
Corporation, none of Target Corporation and its Subsidiaries is a party to any
Tax allocation or sharing agreement. To the Knowledge of Target Corporation,
none of Target Corporation and its Subsidiaries has been a member of an
Affiliated Group filing a consolidated federal income Tax Return (other than a
group the common parent of which was Target Corporation) or has any liability
for Taxes of any Person (other than any of Target Corporation and its
Subsidiaries) under Treas. Reg. ss. 1.1502-6 (or any similar provision of
federal, state, local or foreign law), as a transferee, successor, by contract
or otherwise. Each of the Target Corporation and its Subsidiaries has withheld
and paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
Section 2.11 Employee Benefit Plans. Target Corporation has delivered to
Acquiring Corporation copies of the health, dental, life insurance plans, bonus,
deferred compensation, pension, profit sharing, retirement and vacation plans
and all other material employee benefit plans, programs or arrangements
providing benefits for employees of Target Corporation (the "Benefit Plans");
the three most recent annual reports (Form 5500) filed with the Internal Revenue
Service (the "IRS") with respect to each Benefit Plan (if any such report was
required); and the most recent determination letter, if any, issued by the IRS
with respect to any Benefit Plan intended to be qualified under Section 401 of
the Code. Except as set forth on Schedule 2.11, each of the Benefit Plans has
been administered and maintained in material compliance with its terms and the
requirements of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and, if applicable, the Code and all other applicable laws. The
Target Corporation does not contribute to any "multi-employer plan" (within the
meaning of Section 3(37) of ERISA) and neither Target Corporation nor any entity
that, together with Target Corporation, is treated as a single employer under
Code Section 414(b), (c), (m) or (o) ("Controlled Entity") has incurred any
withdrawal liability with respect to any multi-employer plan. Neither Target
Corporation nor any Controlled Entity maintains or sponsors or has any liability
under any pension benefit plan which is a defined benefit plan which is or has
been subject to Title IV of ERISA. All contributions required to be made by
Target Corporation with respect to any Benefit Plan due as of any date through
and including the Closing Date have been made, or will be made, when due. Except
as set forth on Schedule 2.11, there are no pending or, to the Knowledge of
Target Corporation, threatened claims by or on behalf of the Benefit Plans, the
United States Department of Labor, the Internal Revenue Service, or by any
current or former employee of Target Corporation alleging a breach of any
fiduciary duties or a violation of applicable state or federal law which could
result in a material liability on the part of Target
13
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
Corporation or a Benefit Plan under ERISA or any other law (other than benefit
claims and funding obligations in the ordinary course of business).
Section 2.12 Employment Matters. Except as disclosed on Schedule 2.12,
neither Target Corporation nor any Subsidiary of Target Corporation is a party
to any contracts or agreements granting benefits or rights to employees or
consultants, or any conciliation agreement with the Department of Labor, the
Equal Employment Opportunity Commission or any federal, state or local agency
which requires equal employment opportunities or affirmative action in
employment. Except as disclosed on Schedule 2.12, there are no unfair labor
practice complaints pending against Target Corporation or any Subsidiary of
Target Corporation before the National Labor Relations Board and no similar
claims pending before any similar state, local or foreign agency. There are no
strikes, slowdowns, work stoppages, lockouts, or to the Knowledge of Target
Corporation, threats thereof, by or with respect to any such employees. Except
as set forth on Schedule 2.12, Target Corporation has not received written
notice from any executive or managerial employee that such person intends to
terminate employment with Target Corporation or its Subsidiaries. None of Target
Corporation and its Subsidiaries is a party to or bound by any collective
bargaining agreement. To the Knowledge of Target Corporation, none of Target
Corporation and its Subsidiaries has committed any unfair labor practice. To the
Knowledge of Target Corporation, no organizational effort is presently being
made or threatened by or on behalf of any labor union with respect to employees
of any of Target Corporation and its Subsidiaries.
Section 2.13 Patents, Trademarks and Copyrights.
(a) Schedule 2.13(a) sets forth all patents, patent applications,
trademarks and service marks, trademark and service xxxx applications, and
copyrights (whether registered or unregistered) (collectively, the
"Intellectual Property") owned or used pursuant to a license, sublicense,
agreement or other permission by Target Corporation and any Subsidiary of
Target Corporation in its businesses and operations. Except as otherwise
indicated on Schedule 2.13(a), neither Target Corporation nor any
Subsidiary of Target Corporation has granted to any other person any
license to use any Intellectual Property.
(b) Neither Target Corporation nor any Subsidiary of Target Corporation has
ever received any charge, complaint, demand or notice alleging any
interference, infringement, misappropriation or violation of, and to the
Knowledge of Target Corporation, is interfering with, infringing upon,
misappropriating or violating the intellectual property rights of any other
person or entity in any Intellectual Property. Except as set forth on
Schedule 2.13(b), to the Knowledge of Target Corporation, no other person
or entity is interfering with, infringing upon, misappropriating or
violating any intellectual property rights of Target Corporation or any of
its Subsidiaries with respect to the Intellectual Property.
(c) Neither Target Corporation nor any of its Subsidiaries has undertaken
or omitted to undertake any acts that would invalidate, reduce, or
eliminate, in
14
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
whole or in part, the enforceability or scope of any Intellectual Property
owned by Target Corporation or its Subsidiaries.
(d) Target Corporation and its Subsidiaries own or have the right to use
pursuant to license, sublicense, agreement, or permission all Intellectual
Property necessary for the operation of the businesses of Target
Corporation and its Subsidiaries as presently conducted. To the Knowledge
of Target Corporation, each item of Intellectual Property owned or used by
any of Target Corporation and its Subsidiaries immediately prior to the
Closing hereunder will be owned or available for use by Acquiring
Corporation or the Surviving Corporation on identical terms and conditions
immediately subsequent to the Closing hereunder. Except as set forth on
Schedule 2.13(d), to the Knowledge of Target Corporation, each of Target
Corporation and its Subsidiaries has taken all necessary action to maintain
and protect each item of Intellectual Property that it owns or uses.
Section 2.14 Environmental Compliance. Except as set forth on Schedule
2.14, to the Knowledge of Target Corporation, without investigation or inquiry
and without any obligation to conduct the same, as of the date of this
Agreement:
(a) No Hazardous Substances exist on the Real Property (as defined herein)
in quantities which violate, and would require reporting to Governmental
Authorities and cleanup under, applicable Environmental Laws;
(b) Neither Target Corporation nor any of its Subsidiaries has received
written notice from any Governmental Authority or unaffiliated third party
alleging a violation of applicable Environmental Laws which if successfully
prosecuted against Target Corporation would have a Material Adverse Effect
on the financial condition of Target Corporation or any of its
Subsidiaries, taken individually or as a whole;
(c) Each of Target Corporation, its Subsidiaries, and their respective
predecessors and Affiliates has complied with all Environmental Laws, and
no action, suit, proceeding, hearing, investigation, charge, complaint,
claim, demand, or notice has been filed or commenced against any of them
alleging any failure so to comply, other than those violations which would
not have a Material Adverse Effect on Target Corporation on any of its
Subsidiaries, individually or taken as a whole. Without limiting the
generality of the preceding sentence, each of Target Corporation, its
Subsidiaries, and their respective predecessors and Affiliates has obtained
and been in compliance with all of the terms and conditions of all permits,
licenses, and other authorizations which are required under, and has
complied with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and timetables which
are contained in, all Environmental Laws, other than those violations which
would not have a Material Adverse Effect on Target Corporation or any of
its Subsidiaries, individually or taken as a whole; and
(d) None of Target Corporation and its Subsidiaries has any Liability, and,
to the Knowledge of Target Corporation, no circumstance exists that could
form the
15
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against Target
Corporation and any of its Subsidiaries giving rise to any Liability, for:
(i) any damage to any site, location or body of water (surface or
subsurface) under any Environmental Law, (ii) any illness of or personal
injury to any employee or other individual directly related to a release of
a Hazardous Substance existing on the Real Property in a quantity which
violates, and would require reporting to Governmental Authorities and clean
up under, any applicable Environmental Law, or (iii) any other reason under
any Environmental Law, in each case, other than those Liabilities which
would not have a Material Adverse Effect on Target Corporation or any of
its Subsidiaries, individually or taken as a whole.
Section 2.15 Title to Properties; Encumbrances. Except as set forth on
Schedule 2.15: (a) Target Corporation or a Subsidiary of Target Corporation has
good and marketable title to all of the assets reflected in the balance sheet
dated as of April 30, 2003, other than any assets therein reflected that (x)
have been sold or otherwise disposed of in the ordinary course of business since
the date thereof or (y) are not, individually or in the aggregate, material to
Target Corporation or any Subsidiary of Target Corporation, free and clear of
liens, claims and encumbrances other than (i) liens, mortgages, pledges,
security interests or other encumbrances securing indebtedness shown on Target
Corporation's Financial Statements, (ii) liens for current taxes, payments of
which are not yet delinquent or that are being contested in good faith by
appropriate proceedings, (iii) liens in respect of pledges or deposits under
workers' compensation laws or similar legislation, carriers', warehousemen's,
mechanics', laborers' and materialmen's and similar liens, if the obligations
secured by such liens are not then delinquent or are being contested in good
faith by appropriate proceedings, (iv) liens relating to accounts payable
incurred in the ordinary course of business and consistent with past practice,
and (v) such imperfections of title which do not materially detract from the
value of the assets of Target Corporation and any Subsidiary of Target
Corporation individually or in the aggregate (collectively, the "Permitted
Liens"); and (b) Target Corporation and each Subsidiary of Target Corporation
owns, or holds under valid lease agreements, all real and personal properties
necessary to operate its business as currently conducted and with respect to the
leased properties, enjoy peaceful and undisturbed possession of such properties
under such leases, other than any leased properties that, individually or in the
aggregate, are not material to Target Corporation and any Subsidiary of Target
Corporation.
Section 2.16 Permits. Except as set forth in Schedule 2.16, Target
Corporation and each Subsidiary of Target Corporation have all permits,
licenses, certificates, approvals, and other authorizations issued by
Governmental Authorities (collectively, the "Permits") that are necessary for
the operation of the business of Target Corporation as currently being
conducted, except where the failure to possess any such permit would not have a
Material Adverse Effect on Target Corporation and its Subsidiaries individually
or taken as a whole. Except as set forth in Schedule 2.16, the consummation of
the transactions contemplated by this Agreement will not result in a default
under, termination of, or a breach or violation of any Permit. Such Permits are
in full force and effect and neither Target Corporation nor any Subsidiary of
Target Corporation has received any notice that any Governmental Authority
intends to suspend, revoke, terminate or not renew any such Permit under which
Target Corporation or any of its Subsidiaries is currently operating. Except as
set forth in Schedule 2.16, Target Corporation or each Subsidiary
16
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
of Target Corporation are conducting their operations in compliance with the
terms, requirements, criteria, standards and conditions set forth in the
Permits, except for any failure to comply which would not result in a Material
Adverse Effect.
Section 2.17 Agreements, Contracts and Commitments. Except as described in
Schedule 2.17, neither Target Corporation nor any Subsidiary of Target
Corporation is a party to or is bound by (i) any written or oral contract,
agreement or commitment which involves or may involve aggregate future payments
(whether in payment of a debt, as a result of a guarantee or indemnification,
for goods or services or otherwise) by or to Target Corporation of $100,000 or
more and which is not, by its terms, terminable by Target Corporation or one or
more of its Subsidiaries without penalty or payment on 30 days notice or less,
other than purchase orders for the purchase or sale of goods and/or services
entered into by Target Corporation in the ordinary course of business, or (ii)
any employment agreement, non-competition agreement, any loan or credit
agreement, security agreement, indenture, mortgage, pledge or other instrument
evidencing indebtedness (other than equipment purchases or lease agreements
entered into in the ordinary course of business), or any sales representative,
alliance, partnership, joint venture, joint operating or similar agreement. The
Target Corporation has delivered to Acquiring Corporation a correct and complete
copy of each written agreement listed in Schedule 2.17 (as amended to date) and
a written summary setting forth the terms and conditions of each oral agreement
referred to in Schedule 2.17. With respect to each such agreement: (A) the
agreement is Enforceable against Target Corporation or its Subsidiaries, as the
case may be; (B) to the Knowledge of Target Corporation, the agreement will
continue to be Enforceable against the other parties thereto following the
consummation of the transactions contemplated hereby; (C) neither Target
Corporation nor any Subsidiary of Target Corporation is in breach under any
material provision of or is not in default in any material respect under the
terms of, any such contract, agreement or commitment described in Schedule 2.17,
and to the Knowledge of Target Corporation, no event has occurred and no
condition exists which, after notice or lapse of time or both, would constitute
such a material breach or default by Target Corporation or its Subsidiaries, or
permit termination, modification, or acceleration, under any such contract,
agreement or commitment; (D) to the Knowledge of Target Corporation, no third
party is in breach of or in default under the terms of any such contract,
agreement or commitment, or permit termination, modification, or acceleration,
under the agreement; and (E) to the Knowledge of Target Corporation, no party
has repudiated any provision of any such contract, agreement or commitment.
Section 2.18 Undisclosed Liabilities. Except as set forth on Schedule 2.18,
to Target Corporation's Knowledge, Target Corporation and its Subsidiaries have
no Liabilities except for Liabilities (i) reflected or reserved for in the
Target Corporation's Financial Statements, (ii) that have arisen since the
Interim Balance Sheet Date in the ordinary course of business consistent with
past practice, (iii) contemplated by this Agreement or described in the
Schedules hereto, (iv) under contracts, agreements or leases not required to be
disclosed on the Schedules hereto or (v) for performance obligations after the
Closing under contracts, agreements or leases whether or not such contracts,
agreements or leases are required to be disclosed on the Schedules hereto.
Section 2.19 Notes and Accounts Receivable. Except as set forth in Schedule
2.19, all notes and accounts receivable of Target Corporation and its
Subsidiaries reflected on their books
17
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
and records represent valid obligations arising from sales actually made in the
ordinary course of business, subject only to returns in the ordinary course of
business and the reserve for bad debts set forth on the Closing Balance Sheet.
The parties acknowledge and agree that (i) to the extent of any Accounting
Conflict, the Accounting Practices of Target Corporation shall control, (ii) to
the extent of any Accounting Conflict, the Accounting Practices of Acquiring
Corporation shall not apply to the Target Corporation's notes and accounts
receivable (or other relevant matters), and (iii) to the extent of any
Accounting Conflict, the failure to apply Acquiring Corporation's Accounting
Practices shall not constitute a breach of, or inaccuracy in, any of the
representations or warranties of Target Corporation contained in this Agreement.
Section 2.20 Real Property. Schedule 2.20 lists and describes briefly all
real property that any of Target Corporation and its Subsidiaries owns or
leases.
(a) Except as set forth on Schedule 2.20, with respect to each such parcel
of owned real property: (i) the identified owner has good and marketable
title to the parcel of real property, free and clear of any liens, claims
and encumbrances other than Permitted Liens; (ii) there are no pending or,
to the Knowledge of Target Corporation, threatened condemnation
proceedings, lawsuits, or administrative actions relating to the property
or other matters affecting adversely the current use, occupancy, or value
thereof; (iii) to the Knowledge of Target Corporation, without any
investigation or inquiry, the legal description for the parcel contained in
the deed thereof describes such parcel fully and adequately, the buildings
and improvements are located within the boundary lines of the described
parcels of land, are not in violation of applicable setback requirements,
zoning laws, and ordinances (and none of the properties or buildings or
improvements thereon are subject to "permitted non-conforming use" or
"permitted non-conforming structure" classifications), and do not encroach
on any easement which may burden the land, and the land does not serve any
adjoining property for any purpose inconsistent with the use of the land,
and the property is not located within any flood plain or subject to any
similar type restriction for which any permits or licenses necessary to the
use thereof have not been obtained; (iv) all facilities have received all
approvals of governmental authorities (including licenses and permits)
required in connection with the ownership or operation thereof and have
been operated and maintained in accordance with applicable laws, rules, and
regulations, except where the failure of which would not have a Material
Adverse Effect on Target Corporation and its Subsidiaries individually or
taken as a whole; (iv) there are no leases, subleases, licenses,
concessions, or other agreements, written or oral, granting to any party or
parties the right of use or occupancy of any portion of the parcel of real
property; (v) there are no outstanding options or rights of first refusal
to purchase the parcel of real property, or any portion thereof or interest
therein; and (vi) all facilities located on the parcel of real property are
supplied with utilities and other services necessary for the operation of
such facilities as presently used.
(b) Except as set forth on Schedule 2.20, with respect to each such parcel
of leased or subleased property: (i) the lease or sublease is Enforceable
against Target Corporation or its Subsidiaries, as the case may be; (ii) to
the Knowledge of Target Corporation, the lease or sublease will continue to
be Enforceable against the
18
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
other parties thereto following consummation of the transactions
contemplated hereby; (iii) none of Target Corporation and its Subsidiaries
is in breach of or in default under any lease or sublease and, to the
Knowledge of Target Corporation, no other party to the lease or sublease is
in breach or default, and to the Knowledge of Target Corporation, no event
has occurred which, with notice or lapse of time, would constitute a breach
or default or permit termination, modification, or acceleration thereunder;
(iv) none of Target Corporation and its subsidiaries has repudiated any
provision of an lease or sublease and, to the Knowledge of Target
Corporation, no other party to the lease or sublease has repudiated any
provision thereof; (v) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease; (vi) none of
Target Corporation and its Subsidiaries has assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold; (vii) all facilities leased or subleased
thereunder have received all approvals of governmental authorities
(including licenses and permits) required in connection with the operation
thereof and have been operated and maintained in accordance with applicable
laws, rules, and regulations, except where the failure of which would not
have a Material Adverse Effect on Target Corporation and its Subsidiaries
individually or taken as a whole; and (viii) all facilities leased or
subleased thereunder are supplied with utilities and other services
necessary for the operation of said facilities as presently used.
Section 2.21 Condition of Tangible Assets. Target Corporation and its
Subsidiaries own or lease, all buildings, machinery, equipment, and other
tangible assets necessary for the conduct of their businesses as currently
conducted and such assets are in good operating condition and repair (subject to
normal wear and tear), and are suitable for the purposes for which they
presently are used.
Section 2.22 Inventory. Except as set forth on Schedule 2.22, the inventory
of Target Corporation and its Subsidiaries can be sold to customers or returned
to the applicable manufacturer or supplier for a credit, subject only to the
inventory reserve set forth on the Closing Balance Sheet. The parties
acknowledge and agree that (i) to the extent of any Accounting Conflict, the
Accounting Practices of Target Corporation shall control, (ii) to the extent of
any Accounting Conflict, the Accounting Practices of Acquiring Corporation shall
not apply to the Target Corporation's inventory (or other relevant matters), and
(iii) to the extent of any Accounting Conflict, the failure to apply Acquiring
Corporation's Accounting Practices shall not constitute a breach of, or
inaccuracy in, any of the representations or warranties of Target Corporation
contained in this Agreement.
Section 2.23 Insurance. Schedule 2.23 sets forth the following information
with respect to each insurance policy (including policies providing property,
casualty, liability, and workers' compensation coverage and bond and surety
arrangements) to which any of Target Corporation and its Subsidiaries has been a
party, a named insured, or otherwise the beneficiary of coverage at any time
during the period beginning May 1, 2001 and ending on the date hereof: (i) the
name, address, and telephone number of the agent; (ii) the name of the insurer,
the name of the policyholder, and the name of each covered insured; (iii) the
policy number and the period of coverage; (iv) the scope (including an
indication of whether the coverage was on a claims made, occurrence, or other
basis) and amount (including a description of how deductibles and
19
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
ceilings are calculated and operate) of coverage; and (v) a description of any
retroactive premium adjustments or other loss-sharing arrangements. With respect
to each such insurance policy: (A) neither any of Target Corporation and its
Subsidiaries nor to the Knowledge of Target Corporation any other party to the
policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and to the Knowledge of Target Corporation
no event has occurred which, with notice or the lapse of time, would constitute
such a breach or default, or permit termination, modification, or acceleration,
under the policy; (B) to the Knowledge of Target Corporation, no party to the
policy has repudiated any provision thereof; and (C) to the Knowledge of Target
Corporation, no notices have been received indicating that the insurance policy
is not currently in effect.
Section 2.24 Guaranties. Except as set forth on Schedule 2.24, none of the
Target Corporation and its Subsidiaries is contractually liable, or has
otherwise agreed in writing to be liable, for (i) any indebtedness for borrowed
money of a third party or (ii) any other contractual obligation of a third
party.
Section 2.25 Business Relationships. None of the shareholders of Target
Corporation and their Affiliates has been involved in any business arrangement
or relationship with any of Target Corporation and its Subsidiaries within the
past 12 months, and none of the shareholders of Target Corporation and their
Affiliates owns any asset, tangible or intangible, which is used in the business
of any of Target Corporation and its Subsidiaries.
Section 2.26 Chargebacks. Except as set forth on Schedule 2.26, none of
Target Corporation and its Subsidiaries has any Liability arising out of any
chargebacks (as the term is commonly understood within the industry of Target
Corporation) to manufacturers or suppliers of products sold, leased, delivered
or distributed by any of Target Corporation and its Subsidiaries, subject to the
reserve for chargebacks set forth on the Closing Balance Sheet as adjusted for
the passage of time through the Closing Date in accordance with the past custom
and practice of Target Corporation and its Subsidiaries.
Section 2.27 Disclosure. To the Knowledge of Target Corporation, the
representations and warranties set forth in Article II of this Agreement do not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the representations and warranties set forth in
Article II, in light of the circumstances under which such representations and
warranties were made, not misleading.
Section 2.28 Disclaimer of Additional and Implied Warranties. Target
Corporation is making no representations or warranties, express or implied, of
any nature whatsoever except as specifically set forth in Article II of this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
ACQUIRING CORPORATION AND NEWCO
Acquiring Corporation and Newco hereby jointly and severally make the
representations and warranties set forth in this Article III to Target
Corporation.
20
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
Section 3.1 Organization and Authority.
(a) Acquiring Corporation is a Delaware corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and
Newco is an Arkansas corporation duly organized, validly existing and in
good standing under the laws of the State of Arkansas. Each of Acquiring
Corporation and Newco has all requisite corporate power and authority to
carry on its business as it is now being conducted, and to own, lease and
operate its properties and assets, and to perform all its obligations under
the agreements and instruments to which it is a party or by which it is
bound. Each of Acquiring Corporation and Newco is duly qualified to do
business as a foreign corporation and is in good standing under the laws of
each state or other jurisdiction in which the properties and assets owned,
leased or operated by it or the nature of the business conducted by it make
such qualification necessary, except in such jurisdictions where the
failure to be duly qualified or in good standing does not and would not
result in a Material Adverse Effect.
(b) True, correct and complete copies of the Certificate or Articles of
Incorporation and Bylaws of Acquiring Corporation and Newco, with all
amendments thereto through the date of this Agreement, have been delivered
by Acquiring Corporation to Target Corporation.
Section 3.2 Authority Relative to Agreement. Acquiring Corporation and
Newco both have full corporate power and authority to execute and deliver this
Agreement, and no further corporate proceedings on the part of Acquiring
Corporation or Newco are necessary to consummate the transactions contemplated
hereby, which have been duly and validly authorized by the Board of Directors of
Acquiring Corporation and the Board of Directors and shareholders of Newco,
respectively. This Agreement has been duly and validly executed and delivered by
Acquiring Corporation and Newco, and this Agreement constitutes the valid and
binding obligation of Acquiring Corporation and Newco enforceable jointly and
severally against Acquiring Corporation and Newco in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization, moratorium, or
other similar laws relating to creditors' rights generally and general equitable
principles, and subject to such approval of regulatory agencies as may be
required, and subject to the regulatory requirements of the HSR Act.
Section 3.3 No Violation. Neither the execution, delivery nor performance
of this Agreement, in its entirety, nor the consummation of the transactions
contemplated hereby, as of the Closing Date, (i) to the Knowledge of Acquiring
Corporation or Newco, violates ("Violation") in any material respect any law,
order, writ, judgment, injunction, award, decree, rule, statute, ordinance or
regulation applicable to Acquiring Corporation or Newco, (ii) is in conflict
with, results in a breach or termination of any provision of, causes the
acceleration of the maturity of any debt or obligation pursuant to, constitutes
a default (or gives rise to any right of termination, cancellation or
acceleration) under, or results in the creation of any security interest, lien,
charge or other encumbrance upon any currently owned property of Acquiring
Corporation or Newco pursuant to, any terms, conditions or provisions of any
note, license, instrument, indenture, mortgage, deed of trust or other agreement
or understanding or any other restriction of any kind or character, to which
Acquiring Corporation or Newco is a party or by which any
21
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
currently owned property of Acquiring Corporation or Newco is subject or bound
(collectively, "Default"), or (iii) conflicts ("Conflict") with or results in
any breach of any provision of the Certificate or Articles of Incorporation or
Bylaws of Acquiring Corporation or Newco, which Violation, Default or Conflict
could reasonably be expected to have a Material Adverse Effect on Acquiring
Corporation or Newco, collectively.
Section 3.4 Consents and Approvals. Except as set forth on Schedule 3.4 and
except for filing a Notification and Report Form pursuant to the applicable
requirements of the HSR Act, no prior consent, approval or authorization of, or
declaration, filing or registration with any person, entity or authority,
domestic or foreign, is required of or by Acquiring Corporation or Newco in
connection with the execution, delivery and performance by Acquiring Corporation
and Newco of this Agreement and the transactions contemplated hereby.
Section 3.5 Investment Intent.
------------------
(a) Acquiring Corporation is acquiring the shares of Common Stock of Target
Corporation (for purposes of this Section, "Target Shares") as contemplated
by this Agreement for its own account for investment and not with a view
toward resale or redistribution in a manner which would require
registration under the Securities Act of 1933, as amended (the "Securities
Act"), or the securities laws of any state, and Acquiring Corporation does
not presently have any reason to anticipate any change in its circumstances
or other particular occasion or event which would cause it to sell Target
Shares or any part thereof or interest therein. Acquiring Corporation has
not offered or sold Target Shares or any part thereof or interest therein,
and has no present intention of dividing Target Shares with others or of
reselling or otherwise disposing of Target Shares or any part thereof or
interest therein either currently or after the passage of a fixed or
determinable period of time or upon the occurrence or nonoccurrence of any
predetermined event or circumstance.
(b) The Acquiring Corporation acknowledges that (i) its investment in
Target Corporation involves a high degree of risk and (ii) it understands
that the purchase of Target Shares is an illiquid investment.
(c) Each of Acquiring Corporation and Newco acknowledges that Target
Corporation has made available to each of Acquiring Corporation and Newco
the opportunity to evaluate the merits and risks associated with ownership
of Target Shares, including information related to the financial position
and results of operations of Target Corporation. Specifically, each of
Acquiring Corporation and Newco acknowledges receipt of Target
Corporation's Financial Statements and each of Acquiring Corporation and
Newco has had access to officers of Target Corporation to make such further
inquiry as each of Acquiring Corporation and Newco has deemed appropriate.
Each of Acquiring Corporation and Newco further acknowledges that there can
be no assurance that the future results of Target Corporation's operations
or the operations of any Subsidiary of Target Corporation will be as
contained in any of the historical information provided to each of
Acquiring Corporation and Newco. Each of Acquiring Corporation and Newco
represents that it has made other investments of a similar nature or, by
reason
22
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
of each of Acquiring Corporation's and Newco's business and financial
experience and of the business and financial experience of those persons it
has retained to advise it with respect to its purchase and ownership of
Target Shares, it is a sophisticated, well-informed investor and has
acquired the capacity to protect its own interest in investments of this
nature. In reaching the conclusion that it desires to acquire Target
Shares, each of Acquiring Corporation and Newco has carefully evaluated its
financial resources and investment position, and the risks associated with
this investment and acknowledges that it is able to bear the economic risks
of this investment.
Section 3.6 Financing. Acquiring Corporation and Newco have, or will have
at Closing, sufficient capital resources to enable Acquiring Corporation and
Newco to pay the Merger Consideration (as adjusted in Section 1.8) and the
Indebtedness, in each case in accordance with Section 1.7, and to effect the
other transactions contemplated by this Agreement on the Closing Date.
Section 3.7 Disclosure. To the Knowledge of Acquiring Corporation and
Newco, the representations and warranties set forth in Article III of this
Agreement do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the representations and
warranties set forth in Article III, in light of the circumstances under which
such representations and warranties were made, not misleading.
Section 3.8 Disclaimer of Additional and Implied Warranties. Each of
Acquiring Corporation and Newco is making no representations or warranties,
express or implied, of any nature whatsoever except as specifically set forth in
Article III of this Agreement.
ARTICLE IV
COVENANTS OF TARGET CORPORATION
Section 4.1 Meeting of Target Corporation Shareholders. Target Corporation
shall duly call a meeting of its shareholders in compliance with the ABCA and
the applicable provisions of Target Corporation's Articles of Incorporation and
Bylaws, such shareholders' meeting to be held not later than thirty (30) days
after the date hereof for the purpose of voting upon this Agreement, the
transactions contemplated hereunder and such other matters relating to this
Agreement, if any, as shall be necessary or advisable in the reasonable opinion
of Target Corporation, and Target Corporation shall, through its board of
directors, recommend to its shareholders approval (and not withdraw such
recommendation) of such matters, subject to the provisions of Section 5.4.
Section 4.2 Further Affirmative Covenants of Target Corporation. For so
long as this Agreement is in effect, Target Corporation, from the date of this
Agreement to the Closing, except as specifically contemplated by this Agreement
or as otherwise agreed to in writing by Acquiring Corporation and Newco, shall:
(a) comply with all material contractual obligations applicable to it;
23
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
(b) comply in all material respects with all laws, statutes and regulations
applicable to it and the conduct of its business, including the timely
payment of all taxes (except for those being contested in good faith);
(c) maintain all of its assets in good repair, order and condition,
reasonable wear and tear excepted, and maintain its insurance coverages in
effect before the date hereof or obtain comparable insurance coverages from
reputable insurers which, in respect to amounts, types and risks insured,
are consistent with its coverages in effect before the date hereof;
(d) promptly notify Acquiring Corporation and Newco in writing upon
obtaining Knowledge of any default, event of default or condition which
with the passage of time or giving of notice would constitute an additional
default or event of default under any of Target Corporation's contractual
obligations, which default, event of default or condition could have a
Material Adverse Effect on the financial condition of Target Corporation or
any Subsidiary, taken individually or as a whole;
(e) promptly notify Acquiring Corporation and Newco in writing upon
obtaining Knowledge of any material pending or threatened litigation
against Target Corporation or any of its Subsidiaries;
(f) maintain and preserve intact its corporate existence, business
organization, assets, licenses, permits, authorizations and business
opportunities;
(g) use commercially reasonable efforts to maintain and retain its
employees and customer relationships, provided that Target Corporation and
its Subsidiaries shall not be required to incur any costs or expenses to
satisfy its obligations under this Section 4.2(g) outside of the ordinary
course of business consistent with past practice;
(h) maintain good accounting practices;
(i) promptly notify Acquiring Corporation and Newco in writing upon Target
Corporation's obtaining Knowledge (i) of any condition or event which
constitutes a material breach of any of the representation, warranties,
covenants or agreements set forth in this Agreement, specifying the nature
and period of existence of any such condition or event and what action
Target Corporation has taken, is taking or proposes to take with respect
thereto or (ii) of any condition or event which could have a Material
Adverse Effect;
(j) in good faith and in a timely manner (i) cooperate with Acquiring
Corporation and Newco in satisfying the conditions in this Agreement, (ii)
assist Acquiring Corporation and Newco in obtaining as promptly as possible
all consents, approvals, authorizations and rulings, whether regulatory,
corporate or otherwise, as are reasonably necessary for Acquiring
Corporation, Newco and Target Corporation (or any of them) to carry out and
consummate the transactions contemplated by this Agreement, (iii) furnish
information concerning Target Corporation not previously provided to
24
Acquiring Corporation and Newco necessary or desirable for inclusion in any
required filings or applications, and (iv) perform all of its obligations
hereunder including, but not limited to, giving any required notices to
third parties and Governmental Authorities, using its commercially
reasonable efforts to obtain from any third party or any Governmental
Authority any consents, authorizations or approvals that are reasonably
necessary in connection with consummation of the Merger; and
(k) hold a shareholder's meeting in accordance with Section 4.1 for the
purpose of approving the Merger and related items in compliance with the
ABCA and the applicable provisions of Target Corporation's Articles of
Incorporation and Bylaws.
Section 4.3 Negative Covenants of Target Corporation. For so long as this
Agreement is in effect, Target Corporation shall not, and shall cause each of
its Subsidiaries to not, from the date of this Agreement to the Closing, except
as specifically contemplated by this Agreement, as disclosed in the Schedules to
this Agreement or as otherwise agreed to in writing by Acquiring Corporation and
Newco:
(a) make any amendments to its Articles of Incorporation or Bylaws or any
other charter document;
(b) make any capital expenditures not in the ordinary course of business,
except for any capital expenditure not in excess of $25,000 or in the
aggregate of $75,000;
(c) enter into any contract or transaction outside the ordinary course of
business or with any Affiliate of Target Corporation except for (i) the
Transaction Documents to which Target Corporation is a party, (ii) other
contracts entered into pursuant to this Agreement, (iii) agreements entered
into in connection with, or amendments to, the Target Corporation's Stock
Appreciation Incentive Plan, and (iv) transaction bonus agreements or a
transaction bonus plan related to the Merger, provided that any payments
required under any document described in clauses (iii) and (iv) shall be
obligations of the Target Corporation to be paid by Target Corporation in
accordance with the terms of such document, and such payments will be
included in the calculation of Net Working Capital for purposes of the
working capital adjustment to the Merger Consideration under Section 1.8;
(d) contract to create any mortgage, pledge, lien, security interest or
encumbrance, restriction, or charge of any kind on its assets (other than
liens existing as of the date hereof, or liens created in the ordinary
course of business);
(e) incur any indebtedness for borrowed money not in the ordinary course of
business;
(f) issue any equity security; or
25
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
(g) settle or compromise any claim for dissenters' rights in respect of the
Merger prior to the Effective Time without the prior written consent of
Acquiring Corporation.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1 Certain Taxes.
--------------
(a) All transfer, documentary, sales, use, stamp, registration and other
such Taxes (other than income taxes) and fees (including any penalties and
interest), if any, incurred in connection with this Agreement shall be paid
by Acquiring Corporation. The shareholders of Target Corporation will, at
their own expense, prepare and file all necessary Tax Returns and other
documentation with respect to and pay when due, all such transfer,
documentary, sales, use, stamp, registration and other Taxes and fees, and,
if required by applicable law, Acquiring Corporation will, and will cause
its Affiliates to, join in the execution of any such Tax Returns and other
documentation.
(b) Without the prior written consent of Acquiring Corporation, neither
Target Corporation nor any of its Subsidiaries shall make or change any
election, change an annual accounting period, adopt or change any
accounting method, file any amended Tax Return, enter into any closing
agreement, settle any Tax claim or assessment relating to Target
Corporation or any of its Subsidiaries, surrender any right to claim a
refund of Taxes, consent to any extension or waiver of the limitation
period applicable to any Tax claim or assessment relating to Target or any
of its Subsidiaries, or take any other similar action relating to the
filing of any Tax Return or the payment of any Tax, if such election,
adoption, change, amendment, agreement, settlement, surrender, consent or
other action would have the effect of increasing the Tax liability of
Target Corporation or any of its Subsidiaries for any period ending after
the Closing Date or decreasing any Tax attribute of Target or any of its
Subsidiaries existing on the Closing Date.
(c) In the case of any taxable period that includes (but does not end on)
the Closing Date (a "Straddle Period"), the amount of any Taxes based on or
measured by income or receipts of Target Corporation and its Subsidiaries
for the pre-Closing tax period shall be determined based on an interim
closing of the books as of the close of business on the Closing Date (and
for such purpose, the taxable period of any partnership or other
pass-through entity in which Target Corporation or any of its Subsidiaries
holds a beneficial interest shall be deemed to terminate at such time) and
the amount of other Taxes of Target Corporation and its Subsidiaries for a
Straddle Period which relate to the pre-Closing tax period shall be deemed
to be the amount of such Tax for the entire taxable period multiplied by a
fraction the numerator of which is the number of days in the taxable period
ending on the Closing Date and the denominator of which is the number of
days in such Straddle Period.
26
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
(d) Acquiring Corporation shall prepare or caused to be prepared and file
or caused to be filed all Tax Returns for Target Corporation and its
Subsidiaries which are filed after the Closing Date. At least thirty (30)
days before the due date for any Tax Return described in the preceding
sentence that includes any pre-Closing Tax period, Acquiring Corporation
shall submit a copy of the Tax Return to the Shareholder Representative for
its review. Without the prior written consent of the Shareholder
Representative, which consent may not be unreasonably withheld, the
Acquiring Corporation may not file or amend any Tax Return that may
increase either the Tax Liabilities of the shareholders of Target
Corporation or such shareholders' obligations under this Agreement.
Acquiring Corporation, Target Corporation and its Subsidiaries, and the
shareholders of Target Corporation shall reasonably cooperate, as and to
the extent reasonably requested by the other Party, in connection with the
filing of Tax Returns pursuant to this paragraph and any audit, litigation
or other proceeding with respect to Taxes. Such cooperation shall include
the retention and (upon the other Party's request) the provision of records
and information which are reasonably relevant to any such audit, litigation
or other proceeding and making employees available on a mutually convenient
basis to provide additional information and explanation of any material
provided hereunder. Target Corporation and its Subsidiaries and the
shareholders of Target Corporation agree (A) to retain all books and
records with respect to Tax matters pertinent to Target Corporation and its
Subsidiaries relating to any taxable period beginning before the Closing
Date until the expiration of the statute of limitations (and, to the extent
notified by Acquiring Corporation or the shareholders of Target
Corporation, any extensions thereof) of the respective taxable periods, and
to abide by all record retention agreements entered into with any taxing
authority, and (B) to give the other Party reasonable written notice prior
to transferring, destroying or discarding any such books and records and,
if the other Party so requests, Target Corporation and its Subsidiaries or
the shareholders of Target Corporation, as the case may be, shall allow the
other Party to take possession of such books and records.
(e) Acquiring Corporation and the shareholders of Target Corporation
further agree, upon request, to use reasonable efforts to obtain any
certificate or other document from any governmental authority or any other
Person as may be necessary to mitigate, reduce or eliminate any Tax that
could be imposed (including, but not limited to, with respect to the
transactions contemplated hereby).
Section 5.2 Access To, and Information Concerning, Properties and Records.
---------------------------------------------------------------
(a) During the pendency of the transactions contemplated hereby, Target
Corporation shall, to the extent not prohibited by law or contract existing
prior to the date hereof, give to Acquiring Corporation and Newco, their
legal counsel, accountants and other representatives full access, upon
reasonable request and at reasonable times, throughout the period prior to
the Closing, to all of Target Corporation's and each Subsidiary's
properties, books, contracts, commitments and records, permit Acquiring
Corporation, Newco and such representatives to make such inspections
(including, without limitation, with regard to currently owned properties
and certain properties leased by Target Corporation or any Subsidiary of
Target Corporation
27
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
(collectively, the "Real Property"), physical inspection of the surface and
subsurface thereof as they may reasonably require and furnish to Acquiring
Corporation, Newco and such representatives during such period all such
information concerning Target Corporation, its Subsidiaries and their
respective affairs as Acquiring Corporation and Newco may reasonably
request.
(b) All information disclosed by Target Corporation to Acquiring
Corporation and Newco and their respective directors, officers, advisors,
representatives or agents (collectively, "Representatives"), including
without limitation, information reasonably requested concerning the
facilities, assets, records, legal compliance, financial condition, and
results of operations of Target Corporation (referred to herein as
"Evaluation Material"), shall be held strictly confidential by Acquiring
Corporation and Newco and their Representatives, shall be used solely for
purposes of evaluating the transactions contemplated hereby, and shall not
be disclosed to any third party, except where such disclosure may be
required by applicable law, regulation or court order. The term "Evaluation
Material" shall also include all reports, analyses, notes or other
information, regardless of the form in which communicated or maintained,
that are based on, contain or reflect any Evaluation Material; provided,
however, that Evaluation Material shall not include the following:
(i) information that is or becomes generally available to the public other
than as a result of a disclosure by Acquiring Corporation, Newco, or their
Representatives;
(ii) information that was in the possession of Acquiring Corporation, Newco
or their Representatives prior to disclosure by Target Corporation, its
representatives or its agents; or
(iii) information that is or becomes available to Acquiring Corporation,
Newco or their Representatives on a non-confidential basis from a source other
than Target Corporation, its representatives or its agents.
(c) Without the express written consent of Target Corporation, Acquiring
Corporation and Newco each agrees to maintain in strict confidence and not
disclose to any other person or entity any Evaluation Material other than
disclosures required to obtain the approvals for the transactions
contemplated hereby, disclosures to those Representatives who have a need
to know, or any other disclosure required by applicable law, regulation or
court order, provided that each of Acquiring Corporation and Newco agrees
to provide Target Corporation with prompt prior written notice of any
disclosure required by applicable law, regulation or court order so that an
appropriate protective order may be sought by Target Corporation. Each of
Acquiring Corporation and Newco shall be responsible for any breach of this
Section 5.2(c) by any of Acquiring Corporation's or Newco's
Representatives. In the event this Agreement is terminated pursuant to the
provisions of Article VII, upon the written request of Target Corporation,
each of Acquiring Corporation and Newco agrees to return to Target
Corporation all copies of the Evaluation Material, together with all
extracts or other reproductions thereof in the possession of Acquiring
Corporation, Newco or their Representatives.
28
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
(d) Notwithstanding anything set forth herein to the contrary (including
the confidentiality provisions set forth in Sections 5.2(b) and 5.2(c)) or
in any other agreement to which a party hereto is bound, the parties hereto
(and any employee, representative or other agent of any of the parties) are
hereby expressly authorized to disclose the "tax treatment" and "tax
structure" (as those terms are defined in Treas. Reg.ss.ss.1.6011-4(c)(8)
and (9) respectively) of the Merger and all materials of any kind
(including opinions or other tax analyses) that are provided to the parties
relating to such "tax treatment" or "tax structure" of the Merger;
provided, however, that (a) such disclosure shall not be made until the
earlier of (i) the date of the public announcement of discussions relating
to the transaction, (ii) the date of the public announcement of the
transaction, or (iii) the date of the execution of an agreement to enter
into the transaction, (b) "tax treatment" and "tax structure" shall not
include the identity of any existing or future party (or any Affiliate
thereof) to this Agreement, and (c) this provision shall not permit
disclosure to the extent that nondisclosure is required to comply with any
applicable federal or state securities laws.
Section 5.3 Good Faith Efforts to Consummate Transactions. Subject to the
terms and conditions of this Agreement, all parties hereto agree to use
reasonable good faith efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper, or advisable under this
Agreement and applicable laws and regulations, to consummate and make effective,
as soon as practicable after the date hereof, the transactions contemplated by
this Agreement, including, without limitation, securing all third-party or
regulatory approvals necessary to consummate the transactions provided herein,
to satisfy the other conditions to Closing contained herein, and to finalize the
ancillary documents related to the acquisition by Target Corporation of HPA's
50% ownership of the outstanding equity of Xxxxx Heartland L.L.C., each as soon
as reasonably practicable. Each party agrees to make copies of its respective
regulatory filings and related correspondence to regulatory agencies relating to
the transactions contemplated hereunder available to the other parties.
Section 5.4 No Solicitation.
----------------
(a) From the date of this Agreement until the Effective Time or the
termination of this Agreement pursuant to its terms, Target Corporation
agrees that it will not and will not permit any of its Subsidiaries, or any
of its or their officers, directors, employees, representatives, agents, or
Affiliates, including, without limitation, any investment banker, attorney
or accountant retained by Target Corporation or any of its Subsidiaries
(collectively, "Target's Representatives") to, directly or indirectly, (i)
initiate, solicit, encourage or otherwise facilitate (including by way of
furnishing information), any inquiries or the making of any proposal or
offer that constitutes, or may reasonably be expected to lead to an
Acquisition Proposal (as defined below), or (ii) enter into or maintain or
continue discussions or negotiate with any Person in furtherance of such
inquiries or to obtain an Acquisition Proposal, or (iii) agree to, approve,
recommend, or endorse any Acquisition Proposal, or authorize or permit any
of its or their Subsidiaries or Target's Representatives to take any such
action and Target Corporation shall promptly notify Acquiring Corporation
in writing of any such proposals received by Target Corporation or any of
its Subsidiaries or Target's
29
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
Representatives, relating to any of such matters; provided, however, that
nothing contained in this Agreement shall prohibit the Board of Directors
of Target Corporation from (A) furnishing information to, or engaging in
discussions or negotiations with, any Person in response to an unsolicited
bona fide written Acquisition Proposal, or (B) recommending such an
unsolicited bona fide written Acquisition Proposal to the shareholders of
Target Corporation, if and only to the extent that (i) the Board of
Directors of Target Corporation concludes in good faith (after consultation
with its financial advisors) that such Acquisition Proposal would
constitute a Superior Proposal (as hereinafter defined), and (ii) the Board
of Directors of Target Corporation determines in good faith (after
consultation with outside legal counsel) that the failure to take such
action would result in a breach by the Board of Directors of Target
Corporation of its fiduciary duties to Target Corporation's shareholders
under applicable law, and (iii) prior to furnishing such information to, or
entering into discussions or negotiations with, such Person, Target
Corporation provides prompt written notice to Acquiring Corporation to the
effect that it is furnishing information to, or entering into discussions
or negotiations with, such Person (which notice shall identify the nature
and material terms of the proposal), and (iv) prior to providing any
information or data to any Person in connection with an Acquisition
Proposal by any such Person, the Board of Directors of Target Corporation
receives from such Person an executed confidentiality agreement with
provisions no less favorable to Target Corporation than the confidentiality
agreement previously entered into between Target Corporation and Acquiring
Corporation in connection with its consideration of the Merger. Target
Corporation agrees that it will, effective as of the date of this
Agreement, immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties regarding any
Acquisition Proposal. Target Corporation agrees to keep Acquiring
Corporation fully and timely informed of the status of any discussions,
negotiations, furnishing of non-public information, or other activities
relating to an Acquisition Proposal.
(b) For purposes of this Agreement, "Acquisition Proposal" means an
inquiry, offer or proposal regarding any of the following (other than the
transactions contemplated by this Agreement) involving Target Corporation
or its Subsidiaries (other than (i) any acquisition proposal submitted by a
Person who also submitted an acquisition proposal pursuant to the terms of
that certain letter of X.X. Xxxxxx Securities Inc. dated August 6, 2003
soliciting acquisition proposals, except to the extent that Target
Corporation is required by applicable law to consider an acquisition
proposal from any such Person, and (ii) any prior acquisition proposal
submitted by any Person prior to the date hereof pursuant to the terms of
that certain letter of X.X. Xxxxxx Securities Inc. dated August 6, 2003
soliciting acquisition proposals): (i) any merger, reorganization,
consolidation, share exchange, recapitalization, business combination,
liquidation, dissolution, or other similar transaction involving, or any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of,
all or any significant portion of the assets or 10% or more of the equity
securities of, Target Corporation or any of its Subsidiaries, in a single
transaction or series of related transactions which could reasonably be
expected to interfere with the completion of the Merger; (ii) any tender
offer or exchange offer for 20 percent or more of the outstanding shares of
capital stock of Target Corporation or the filing of a registration
statement under the Securities Act in connection therewith; or (iii)
30
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
(c) For purposes of this Agreement, "Superior Proposal" means a bona fide
Acquisition Proposal made by a third Person that the Board of Directors of
Target Corporation determines in its good faith judgment (after
consultation with its financial advisors) to be more favorable to Target
Corporation's shareholders than the Merger and for which financing, to the
extent required, is then committed or which, in the good faith judgment of
the Board of Directors of Target Corporation (after consultation with its
financial advisors) is reasonably capable of being obtained by such third
Person.
(d) Nothing contained in this Section 5.4 shall prohibit Target Corporation
from making any disclosure to Target Corporation's shareholders which, in
the good faith judgment of the Board of Directors of Target Corporation
based on the advice of outside counsel, is required under applicable law;
provided that Target Corporation does not withdraw or modify, or propose to
withdraw or modify, its position with respect to the Merger or approve or
recommend, or propose to approve or recommend, an Acquisition Proposal
unless Target Corporation and its Board of Directors have complied with all
the provisions of this Section 5.4.
(e) In the event that this Agreement is terminated pursuant to Section
7.1(f), then Target Corporation shall pay to Acquiring Corporation a
termination fee of $2,000,000 in cash, payable within ten (10) days
following the termination of this Agreement.
(f) Nothing in this Agreement shall prohibit Target Corporation and Target
Corporation's Representatives from initiating or maintaining negotiations
with respect to, or agreeing to, approving or entering into, an agreement
related to the sale of the equity or assets of RxDirect; provided, however,
that Target Corporation shall not enter into any definitive agreement
related to any such sale without first obtaining the approval of Acquiring
Corporation, which approval shall not be unreasonably withheld.
Section 5.5 HSR Notifications. Acquiring Corporation, Newco and Target
Corporation hereby agree to file the Notification and Report Form pursuant to
the applicable provisions of the HSR Act, in a timely manner. Acquiring
Corporation shall pay any filing fee associated with such filing; provided,
however, that Target Corporation shall reimburse Acquiring Corporation for fifty
percent (50%) of any such fee in the event this Agreement is terminated pursuant
to Section 7.1(b) hereof.
Section 5.6 Employee Matters. Acquiring Corporation shall honor the
obligations of Target Corporation under the provisions of Target Corporation's
Benefit Plans and those agreements with employees listed on Schedule 2.12. For a
period of one (1) year after the Effective Time, Acquiring Corporation further
agrees to maintain and provide to the employees of Target Corporation who remain
employees of the Surviving Corporation after the Effective Time employee
benefits substantially similar to those provided to Acquiring Corporation's
similarly situated employees.
31
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
Section 5.7 Indemnification of Officers and Directors.
-----------------------------------------
(a) The Articles of Incorporation and Bylaws of the Surviving Corporation
shall contain at the Effective Time the provisions with respect to
indemnification and exculpation of present and former officers, directors
and employees of Target Corporation (the "Indemnified Personnel") set forth
in the Articles of Incorporation and Bylaws of the Surviving Corporation
attached as Exhibit B and Exhibit C, respectively, which provisions shall
not be amended, repealed or otherwise modified for a period of four (4)
years after the Effective Time in any manner that would adversely affect
the rights thereunder of persons who at any time prior to the Effective
Time were identified as prospective indemnitees under the Articles of
Incorporation or Bylaws of Target Corporation in respect of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement), unless such
modification is required by applicable law (it being understood and agreed
that the Surviving Corporation's indemnification obligations shall continue
indefinitely with respect to any indemnity claim for which notice is given
within such four (4) year period). In addition to the indemnification and
exculpation obligations set forth in the Articles of Incorporation and
Bylaws, in the event any claim, action, suit, proceeding or investigation
is brought against any Indemnified Personnel (whether arising before or
after the Effective Time), (i) the Indemnified Personnel may retain counsel
satisfactory to such Indemnified Personnel and Surviving Corporation, and
Surviving Corporation shall pay all reasonable fees and expenses of such
counsel promptly as statements therefor are received and otherwise advance
to such Indemnified Personnel upon request reimbursement of reasonable
documented expenses incurred, in either case, to fullest extent and in the
manner permitted by applicable law, and (ii) Surviving Corporation will use
all reasonable efforts to assist in the vigorous defense of any such claim,
action, suit, proceeding or investigation, including, but not limited to,
making available its personnel, and provide such testimony and access to
its books and records as shall be reasonably necessary to such defense.
Acquiring Corporation shall cause the Surviving Corporation to fulfill such
indemnification and exculpation obligations.
(b) Notwithstanding any contrary provision of this Agreement, on or before
the Closing Date, Acquiring Corporation shall purchase insurance coverage
extending for a period of two (2) years the directors' and officers'
liability insurance coverage of Target Corporation (covering past or future
claims with respect to periods prior to and including the Closing Date);
provided that (i) such insurance coverage shall be effective as of the
Closing Date, and Acquiring Corporation shall have no obligation hereunder
in the event that the Merger is not consummated, and (ii) the annual
premium payable for such insurance shall not exceed the last annual premium
paid by Target Corporation for such coverage (but in such case the
Surviving Company shall purchase as much coverage as possible within such
price limits).
(c) This Section 5.7 is intended to be for the benefit of, and shall be
enforceable by, the Indemnified Personnel referred to herein, their heirs
and personal
32
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
representatives and shall be binding on Acquiring Corporation and the
Surviving Corporation and their respective successors and assigns.
Section 5.8 Voting Agreement. Concurrent with the execution of this
Agreement or as soon as reasonably practicable thereafter, Xxxxxxx Xxxxxxx
Xxxxxx Xxxxxx and Hibernia, or X.X. Xxxxxx, as successor trustee, shall execute
and deliver to Acquiring Corporation a voting agreement, substantially in the
form of Exhibit J to this Agreement ("Voting Agreement"), whereby Xxxxxxx
Xxxxxxx Xxxxxx Xxxxxx agrees to vote all shares of voting capital stock of
Target Corporation registered in her name or beneficially owned by her as of the
date hereof and any and all other securities of Target Corporation legally or
beneficially acquired by her after the date hereof (hereinafter collectively
referred to as the "Xxxxxx Shares") and Hibernia, as trustee of the Xxxxx
Xxxxxxx Stock Trust No. 2, or X.X. Xxxxxx, as successor trustee, agrees to vote
all shares of voting capital stock of Target Corporation registered in the name
of such trust or beneficially owned by such trust as of the date hereof and any
and all other securities of Target Corporation legally or beneficially acquired
by such trust after the date hereof, each in favor of approval and adoption of
this Agreement and the Merger; provided, however, the Voting Agreement shall
terminate in accordance with its terms if this Agreement is terminated in
accordance with Section 7.1(f).
Section 5.9 Licenses. Prior to Closing and within ninety (90) days
thereafter, Acquiring Corporation shall, or shall cause Surviving Corporation
and/or its subsidiaries to, take all necessary action (including, the
preparation, execution and delivery of any required applications or notices) to
obtain all Licenses (as defined herein) required as a result of the Merger.
Prior to Closing, the Target Corporation and its Subsidiaries, and after
Closing, the Shareholder Representative, shall reasonably cooperate with
Acquiring Corporation or Surviving Corporation, as the case may be, in the
preparation of any required applications or notices in connection with any
License, and take such other actions as may be reasonably requested by Acquiring
Corporation in connection with any License.
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligations of each party to effect the Merger are subject to the
satisfaction or, if permitted by applicable law, waiver of the following
conditions prior to the Closing:
(a) the receipt of regulatory approvals required by applicable law for the
consummation of the transactions contemplated by this Agreement and the
expiration or termination of any applicable waiting period with respect
thereto; provided that this Section 6.1(a) shall not apply to any License
(it being understood and agreed that the condition related to Licenses is
set forth in Section 6.2(g));
(b) the consummation of the Merger will not violate any injunction, order
or decree of any court or governmental body having competent jurisdiction;
33
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
(c) the approval of the Merger by Target Corporation's shareholders
entitled to vote thereon in accordance with the ABCA;
(d) the acquisition by Target Corporation of HPA's 50% ownership of the
outstanding equity of Xxxxx Heartland L.L.C. such that Xxxxx Heartland
L.L.C. is a wholly-owned subsidiary of Target Corporation shall have been
consummated substantially in accordance with the terms of Exhibit A
attached hereto; and
(e) each required party shall have executed and delivered the Escrow
Agreement.
Section 6.2 Conditions to the Obligations of Acquiring Corporation and
Newco to Effect the Merger. The obligations of Acquiring Corporation and Newco
to effect the Merger are subject to the satisfaction or waiver of the following
conditions prior to the Closing:
(a) all representations and warranties of Target Corporation contained
herein, as modified by any related disclosures or exceptions identified on
the Schedules hereto, shall be true and correct as of the date hereof
(subject to Target Corporation's right to cure, prior to the Closing Date,
any inaccuracy or breach of any representation or warranty set forth
herein) and at and as of the Closing Date, with the same force and effect
as though made on and as of the Closing Date, except when any failure of a
representation or warranty to be true and correct would not result in a
Material Adverse Effect;
(b) Target Corporation shall have performed all obligations and agreements
and complied with all covenants and conditions contained in this Agreement
to be performed or complied with by it prior to the Closing Date, except
when any failure to so perform or comply would not result in a Material
Adverse Effect;
(c) Acquiring Corporation and Newco shall have received an opinion, dated
as of the Closing Date, from Xxxxx Xxxxxxx & Xxxx LLP, counsel for Target
Corporation, in substantially the form attached hereto as Exhibit G;
(d) Acquiring Corporation or Surviving Corporation and each of Xxxxxxx
Xxxxxxx Xxxxxx Xxxxxx, Xxx Xxxxxx and Xxxxxx Xxxxxxx Xxxxxx shall have
entered into a Noncompetition Agreement in substantially the form attached
hereto as Exhibit F;
(e) the holders of not more than ten percent (10%) of the outstanding
shares of Common Stock shall have given notice of their intent to exercise
dissenters' rights under the ABCA, and a certificate to the foregoing
effect dated the Closing Date and signed by the chief executive officer of
Target Corporation shall have been delivered to Acquiring Corporation;
(f) all consents, authorizations and approvals of third parties and
Governmental Authorities set forth on Schedule 6.2(f) shall have been
obtained; and
34
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
(g) Acquiring Corporation shall have received from the Target Corporation
and its Subsidiaries a power of attorney permitting Acquiring Corporation
to operate under the Target Corporation's and its Subsidiaries': (i) Drug
Enforcement Administration controlled substances registration and (ii)
various state level controlled substance registrations and wholesale
distributor licenses (the items in (i) and (ii) shall be referred to
collectively as the "Licenses"), such power of attorney to expire upon the
earlier of (x) ninety (90) days after the Closing Date and (y) the date on
which Acquiring Corporation obtains all Licenses required as a result of
the Merger.
Section 6.3 Conditions to the Obligations of Target Corporation to Effect
the Merger. The obligations of Target Corporation to effect the Merger are
subject to the satisfaction or waiver of the following conditions on or prior to
the Closing:
(a) all representations and warranties of each of Acquiring Corporation and
Newco contained herein, as modified by any related disclosures or
exceptions identified on the Schedules hereto, shall be true and correct as
of the date hereof (subject to the right of Acquiring Corporation and Newco
to cure, prior to the Closing Date, any inaccuracy or breach of any
representation or warranty set forth herein) and at and as of the Closing
Date, with the same force and effect as though made on and as of the
Closing Date, except when any failure of a representation or warranty to be
true and correct would not result in a Material Adverse Effect; and
(b) each of Acquiring Corporation and Newco shall have performed all
obligations and agreements and complied with all covenants contained in
this Agreement to be performed or complied with by it prior to the Closing
Date, except when any failure to so perform or comply would not result in a
Material Adverse Effect.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
Section 7.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by mutual written consent executed by the parties and duly authorized
by the Boards of Directors of Acquiring Corporation, Newco and Target
Corporation;
(b) by Acquiring Corporation if there is an inaccuracy or breach of any
representation, warranty or covenant of Target Corporation set forth in
this Agreement which breach has not been cured within fifteen (15) days
following receipt by Target Corporation of notice of such breach and which
breach results in a Material Adverse Effect; provided, however, that
Acquiring Corporation's right to terminate this Agreement in accordance
with this Section 7.1(b) is subject to the waiver provisions set forth in
the first paragraph of Article II;
(c) by Target Corporation if there is an inaccuracy or breach of any
35
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
representation, warranty or covenant of Acquiring Corporation or Newco set
forth in this Agreement which breach has not been cured within fifteen (15)
days following receipt by Acquiring Corporation or Newco, as applicable, of
written notice of such breach and which breach results in a Material
Adverse Effect;
(d) (i) by Acquiring Corporation or Newco upon written notice to Target
Corporation if any of the conditions in Section 6.1 and Section 6.2 have
not been satisfied within sixty (60) days of the date hereof, or such later
date agreed to in writing by Target Corporation, Acquiring Corporation and
Newco, (other than through the failure of Acquiring Corporation or Newco to
comply with its obligations under this Agreement) and neither Acquiring
Corporation nor Newco has waived such condition in writing on or before the
expiration of such sixty (60) day period (or such later date agreed to in
writing by Target Corporation, Acquiring Corporation and Newco); or (ii) by
Target Corporation upon written notice to Acquiring Corporation and Newco
if any of the conditions in Section 6.1 and Section 6.3 has not been
satisfied within sixty (60) days of the date hereof, or such later date
agreed to in writing by Target Corporation, Acquiring Corporation and
Newco, (other than through the failure of Target Corporation to comply with
its obligations under this Agreement) and Target Corporation has not waived
such condition in writing on or before the expiration of such sixty (60)
day period (or such later date agreed to in writing by Acquiring
Corporation, Newco and Target Corporation); provided, however, that,
subject to Acquiring Corporation's right of termination set forth in
Section 7.1(g), in the case of either clause (i) or (ii) above, such sixty
(60) day period (or such later date agreed to in writing by Acquiring
Corporation, Newco and Target Corporation) shall automatically be extended
for a period of sixty (60) days, if the delay in the Effective Time relates
to the Notification and Report Form filed pursuant to the HSR Act;
(e) by Acquiring Corporation, Newco and Target Corporation if any court of
competent jurisdiction in the United States of America or other (federal or
state) governmental body shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling
or other action shall have been final and nonappealable;
(f) by Target Corporation, prior to the consummation of the transactions
contemplated hereby, for the purpose of entering into an agreement with a
Person that has made a Superior Proposal; or
(g) by Acquiring Corporation on January 31, 2004 or thereafter, (i) if
Acquiring Corporation has in good faith used commercially reasonable
efforts to obtain at least a thirty (30) day extension of its lenders'
approval necessary for consummation of the Merger (which approval is
currently in effect and is not a condition to the consummation of the
Merger) and (ii) such an extension has not been granted.
Section 7.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 7.1 hereof, this Agreement
shall thereafter become null and
36
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
void and have no effect, without any liability on the part of any party or its
directors, officers or shareholders, other than the provisions of this Section
7.2, Section 5.2, Section 5.4, Section 8.1 and Article X; provided, however,
that nothing contained in this Section 7.2 shall relieve any party from
liability for any breach or violation of this Agreement, subject to Article VIII
hereof.
Section 7.3 Amendment. To the extent permitted by applicable law, this
Agreement may be amended by action taken by or on behalf of the Board of
Directors of Target Corporation at any time before or after adoption of this
Agreement by the shareholders of Target Corporation but, after any submission of
this Agreement to such shareholders for approval, no amendment shall be made
which reduces the Merger Consideration or which materially and adversely affects
the rights of Target Corporation's shareholders hereunder without any required
approval of such shareholders; provided, however, this Agreement may not be
amended except by an instrument in writing signed on behalf of all the parties.
Section 7.4 Extension; Waiver. At any time prior to the Closing Date, the
parties may (i) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein or in any document, certificate
or writing delivered pursuant hereto, or (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed by or on behalf of such party.
ARTICLE VIII
REMEDIES
Section 8.1 Exclusive Rights and Remedies Prior to Closing Date. Upon
execution of this Agreement and prior to the Closing Date, the exclusive remedy
for any material inaccuracy or breach of any representation, warranty or
covenant in this Agreement by Target Corporation shall be termination of this
Agreement by Acquiring Corporation and Newco in accordance with and subject to
Article VII. This Section 8.1 shall not apply to any breach by Target
Corporation of its obligations under Section 5.4 of this Agreement.
Section 8.2 Indemnification by Shareholders of Target Corporation. Except
as otherwise expressly provided in this Agreement, and subject to Section 8.1
and the other limitations stated in this Article VIII and Article IX, each of
the shareholders of Target Corporation agrees to and shall defend, indemnify and
hold harmless Acquiring Corporation and Newco and their respective affiliates,
for any losses, damages, liabilities, claims, demands, judgments, settlements,
costs or expenses (including reasonable attorneys' fees) ("Losses") relating to,
resulting from or arising out of, directly or indirectly or any allegation by
any third party of, the following:
(a) any inaccuracy in any representation or warranty of Target Corporation
set forth in this Agreement; or
(b) any breach or nonfulfillment of any covenant, agreement or other
obligation of Target Corporation set forth in this Agreement.
37
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
With respect to matters involving any judicial, administrative, arbitration, or
investigatory proceeding or other proceeding, claim or controversy
(collectively, a "Proceeding") not brought or asserted by third parties, within
ten (10) days after notification from Acquiring Corporation or Newco supported
by reasonable documentation setting forth the nature of the circumstances
entitling Acquiring Corporation or Newco or their respective Affiliates to
indemnity hereunder, the Shareholder Representative shall diligently commence
resolution of such matters in a manner reasonably acceptable to Acquiring
Corporation (or Newco, as applicable) and shall diligently and timely prosecute
such resolution to completion. With respect to those claims that may be
satisfied by payment of a liquidated sum of money, including, without
limitation, claims for reimbursement of expenses incurred in connection with any
circumstances entitling Acquiring Corporation or Newco or their respective
Affiliates to indemnity hereunder, Acquiring Corporation and the Shareholder
Representative shall instruct the Escrow Agent to pay the full amount so claimed
to the extent supported by reasonable documentation within fifteen (15) days of
such resolution. If the Shareholder Representative disputes the right to
indemnity of Acquiring Corporation or Newco or their respective Affiliates in
connection with such claim, the parties shall instruct the Escrow Agent to pay
any undisputed part of such claim, and Acquiring Corporation (or Newco, as
applicable) and the Shareholder Representative shall timely resolve any
remaining dispute. If litigation or any other Proceeding is commenced or
threatened by any third party for which Acquiring Corporation or Newco or their
respective Affiliate is entitled to indemnification under this Section 8.2, the
provisions of Section 8.4 shall control.
Section 8.3 Indemnification by Acquiring Corporation and Newco. Except as
otherwise expressly provided in this Article VIII, beginning on the Closing
Date, each of Acquiring Corporation and Surviving Corporation, jointly and
severally, agrees to and shall defend, indemnify and hold harmless the
shareholders of Target Corporation from and against, and shall reimburse the
shareholders of Target Corporation, for any Losses relating to, resulting from
or arising out of, directly or indirectly, or any allegation by any third party
of, the following:
(a) any inaccuracy in any representation or warranty of Acquiring
Corporation or Newco set forth in this Agreement; or
(b) any breach or nonfulfillment of any covenant, agreement or other
obligation of Acquiring Corporation or Newco set forth in this Agreement.
With respect to a Proceeding not brought or asserted by third parties, within
ten (10) days after notification from Target Corporation, the shareholders of
Target Corporation or the Shareholder Representative on behalf of the
shareholders, supported by reasonable documentation setting forth the nature of
the circumstances entitling such party to indemnity hereunder, Acquiring
Corporation and Newco shall diligently commence resolution of such matters in a
manner reasonably acceptable to such party and shall diligently and timely
prosecute such resolution to completion. With respect to those claims that may
be satisfied by payment of a liquidated sum of money, including, without
limitation, claims for reimbursement of expenses incurred in connection with any
circumstances entitling such party to indemnity hereunder, Acquiring Corporation
and Newco shall pay the full amount so claimed to the extent supported by
reasonable documentation within fifteen (15) days of such resolution. If
Acquiring Corporation
38
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
(or Newco, as applicable) disputes the right to indemnity of such party in
connection with such claim, it shall pay any undisputed part of such claim, and
Acquiring Corporation (or Newco, as applicable), and such party shall timely
resolve any remaining dispute. If litigation or any other Proceeding is
commenced or threatened by any third party for which Target Corporation or the
shareholders of Target Corporation are entitled to indemnification under this
Section 8.3, the provisions of Section 8.4 shall control.
Section 8.4 Notice and Defense of Third Party Claims. If any Proceeding
shall be brought or asserted by a third party under this Article against an
indemnified party or any successor thereto (the "Indemnified Person") in respect
of which indemnity may be sought under this Article from an indemnifying person
or any successor thereto (the "Indemnifying Person") pursuant to any Proceeding,
the Indemnified Person shall give prompt written notice of such Proceeding to
the Indemnifying Person who shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Person and the
payment of all reasonable expenses; provided, that any delay or failure so to
notify the Indemnifying Person shall relieve the Indemnifying Person of its
obligations hereunder only to the extent, if at all, that it is prejudiced by
reason of such delay or failure. In no event shall any Indemnified Person be
required to make any expenditure or bring any cause of action to enforce the
Indemnifying Person's obligations and liability under and pursuant to the
indemnifications set forth in this Article. The Indemnified Person shall have
the right to employ separate counsel in any of the foregoing Proceedings and to
participate in the defense thereof, but the reasonable fees and expenses of such
counsel shall be at the expense of the Indemnified Person unless the Indemnified
Person shall in good faith determine that there exist actual or potential
conflicts of interest which make representation by the same counsel
inappropriate. The Indemnified Person's right to participate in the defense or
response to any Proceeding should not be deemed to limit or otherwise modify its
obligations under this Article. In the event that the Indemnifying Person,
within twenty (20) days after notice of any such Proceeding, fails to assume the
defense thereof, the Indemnified Person shall have the right to undertake the
defense, compromise or settlement of such Proceeding for the account of and at
the expense of the Indemnifying Person, subject to the right of the Indemnifying
Person to assume the defense of such Proceeding with counsel reasonably
satisfactory to the Indemnified Person at any time prior to the settlement,
compromise or final determination thereof. Notwithstanding anything in this
Article to the contrary, the Indemnifying Person shall not, without the
Indemnified Person's prior written consent (which consent shall not be
unreasonably withheld or delayed), settle or compromise any Proceeding or
consent to the entry of any judgment with respect to any Proceeding. For
purposes of this Section 8.4, the term "Indemnifying Person" shall refer to the
Shareholder Representative with respect to any third-party claim for which
Acquiring Corporation and Newco are entitled to indemnification under Section
8.2, subject in all respects to Section 8.9.
Section 8.5 Limitations of Liability.
-------------------------
(a) Neither Acquiring Corporation, Newco or their respective Affiliates
shall be entitled to indemnification under this Article VIII unless written
notice of a claim for indemnity, or written notice of specific facts as to
which an indemnifiable Loss is expected to be incurred, shall have been
given within eighteen (18) months after the Closing Date, except with
respect for claims for indemnity arising in connection with
39
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
(i) the representations and warranties contained in Section 2.10 (Tax
Matters), Section 2.14 (Environmental Matters) and Section 2.26
(Chargebacks), or (ii) ***, in which case notice of a specific claim for
indemnity may be given at any time during the applicable survival period
set forth in Section 9.1.
(b) No reimbursement or other payment in respect of any Losses shall be
made by any shareholder of Target Corporation other than pursuant to this
Article VIII, and, ***, Acquiring Corporation, Newco and their respective
Affiliates collectively shall not recover any Losses pursuant to this
Article VIII, and the aggregate liability of the shareholders of Target
Corporation for all Losses for which the Acquiring Corporation, Newco and
their respective Affiliates are entitled to indemnity hereunder shall not
be, in excess of: (i) seventy-five percent (75%) of the Post-Closing
Adjusted Merger Consideration less (ii) the amount of all other Losses
recovered by Acquiring Corporation, Newco or their respective Affiliates
from the shareholders of Target Corporation pursuant to Section 8.10;
provided, however, that no shareholder of Target Corporation shall be
liable for any Losses in excess of: (i) seventy-five percent (75%) of their
pro rata share (as set forth on Schedule 1.7(c)) of the Post-Closing
Adjusted Merger Consideration less (ii) any amounts paid by such
shareholder to Acquiring Corporation, Newco or their respective Affiliates
pursuant to Section 8.10.
(c) Acquiring Corporation, Newco and their respective Affiliates shall be
entitled to indemnification under this Article VIII only to the extent that
the amount of any indemnifiable Loss, individually or in the aggregate with
all other such Losses covered by this Agreement, exceeds $250,000 (the
"Basket"), whereupon Acquiring Corporation, Newco and their respective
Affiliates shall be entitled to indemnification under this Article VIII for
all Losses in excess of $125,000.
(d) In calculating the amount of any Loss for which Acquiring Corporation,
Newco or their respective Affiliates shall be entitled to indemnification
under this Article, there shall be taken into consideration (i) the value
of any federal or state income tax benefits, and (ii) the amount of any
insurance recoveries, excluding any amounts which are in effect
self-insured whether through retention amounts or otherwise, Acquiring
Corporation, Newco or their respective Affiliates in fact receives as a
direct consequence of the circumstances to which the Losses related or from
which the Losses resulted or arose.
(e) Acquiring Corporation, Newco and their respective Affiliates shall use
commercially reasonable efforts to mitigate any Losses suffered, incurred
or sustained by Acquiring Corporation, Newco or their respective Affiliates
arising out of any matter for which Acquiring Corporation, Newco or their
respective Affiliates is entitled to indemnification herein, upon Acquiring
Corporation, Newco or their respective Affiliates having obtained actual
Knowledge of such breach by Target Corporation. In the event that Acquiring
Corporation, Newco or their respective Affiliates shall fail to make such
commercially reasonable efforts to mitigate such Losses, then
notwithstanding anything else to the contrary contained herein, Acquiring
Corporation, Newco and their respective Affiliates shall not be entitled to
indemnity for
40
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
any Losses that could have been avoided had Acquiring Corporation, Newco or
their respective Affiliates made such efforts.
(f) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NEITHER
ACQUIRING CORPORATION, NEWCO, SURVIVING CORPORATION OR THEIR RESPECTIVE
AFFILIATES, ON ONE HAND, NOR TARGET CORPORATION OR ITS SUBSIDIARIES, ON THE
OTHER HAND, SHALL BE ENTITLED TO ANY TREBLE, EXEMPLARY OR PUNITIVE DAMAGES
OF ANY TYPE UNDER ANY CIRCUMSTANCES REGARDLESS OF WHETHER SUCH DAMAGES MAY
BE AVAILABLE UNDER TEXAS LAW, THE LAW OF ANY OTHER STATE, OR FEDERAL LAW.
Section 8.6 Exclusive Remedies.
-------------------
(a) The remedies of Acquiring Corporation, Newco and their respective
Affiliates specifically provided for by this Article shall be the sole and
exclusive remedies of Acquiring Corporation, Newco and their respective
Affiliates for (i) any breach or inaccuracy of the representations and
warranties contained in this Agreement, the Schedules, any Transaction
Document or in any certificate, agreement or document furnished or
delivered pursuant hereto, (ii) the failure to perform any covenants,
agreements or obligations contained in this Agreement, any Transaction
Document or in any other agreement or document furnished or delivered
pursuant hereto, (iii) any Loss, relating to, resulting from or arising out
of any transaction or matter relating in any manner whatsoever to the
operation of Target Corporation prior to Closing (***), this Agreement or
to any document furnished or delivered pursuant hereto, or (iv) ANY
LIABILITY OR LOSS UNDER ANY ENVIRONMENTAL LAW; provided, however, that the
sole and exclusive remedy in respect of the Final Working Capital
Adjustment shall be as specified in Section 1.8.
(b) Each of the parties hereto acknowledge and agree that, due to the
nature of the business of Target Corporation and its Subsidiaries,
including the unique nature of their customer relationships, Target
Corporation and its Subsidiaries would be damaged irreparably if Acquiring
Corporation or Newco materially breach their obligations to consummate the
Merger as required under Article I of this Agreement, provided that all of
the conditions to Closing set forth in Section 6.1 and Section 6.2 shall
have been satisfied. Accordingly, in the event of any such breach of
Acquiring Corporation's or Newco's obligations to consummate the Merger,
provided that all of the conditions to Closing set forth in Section 6.1 and
Section 6.2 shall have been satisfied, Acquiring Corporation shall pay to
Target Corporation, within five (5) business days of such breach, the sum
of $3,000,000 in immediately available funds (the "Nonperformance Fee").
Furthermore, Acquiring Corporation shall indemnify Target Corporation for
any additional Losses in excess of the Nonperformance Fee incurred by
Target Corporation (or its shareholders) as a result of such breach of
Acquiring Corporation's or Newco's obligations to consummate the Merger,
without any limitation or restriction. Notwithstanding anything to the
contrary in this Agreement, in addition to the remedies provided by this
Agreement and applicable law, the parties acknowledge
41
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
and agree that, in the event Acquiring Corporation does not timely pay the
Nonperformance Fee, and in recognition of the fact that Target Corporation
and its Subsidiaries would be damaged irreparably if Acquiring Corporation
or Newco materially breach their obligations to consummate the Merger as
required under Article I of this Agreement, Target Corporation shall be
entitled, at its election, to specifically enforce the performance of
Acquiring Corporation's and Newco's obligations to consummate the Merger as
required under Article I of this Agreement in any action, including a
proceeding for injunctive relief, instituted in any court of the United
States or any state thereof having jurisdiction over the parties and the
matter.
Section 8.7 Tax Effect of Indemnification Payments. All indemnity payments
made pursuant to this Agreement shall be treated for all Tax purposes as
adjustments to the Post-Closing Adjusted Merger Consideration.
Section 8.8 Cooperation. Surviving Corporation will use all reasonable
efforts to assist the parties hereto in the resolution of any Proceeding subject
to this Article VIII, including, but not limited to, making available its
personnel, and providing such testimony and access to its books and records as
shall be reasonably necessary to effect such resolution.
Section 8.9 Shareholder Representative. By virtue of their approval of this
Agreement, the shareholders of Target Corporation will be deemed to have
irrevocably constituted and appointed, effective as of the Closing, the
Shareholder Representative as the representative and attorney-in-fact for and on
behalf of the shareholders, and to the taking by the Shareholder Representative
of any and all actions and the making of any decisions required or permitted to
be taken by her under this Agreement or the Escrow Agreement, including, without
limitation, the exercise of the power to (i) execute the Escrow Agreement, (ii)
agree to, negotiate, enter into settlements and compromises of and comply with
orders of courts and awards of arbitrators with respect to any indemnification
claim, (iii) resolve any indemnification claim, including claims relating to ***
and (iv) take all actions necessary in the judgment of the Shareholder
Representative for the accomplishment of the foregoing and all of the other
terms, conditions and limitations of this Agreement and the Escrow Agreement.
Accordingly, the Shareholder Representative has unlimited authority and power to
act on behalf of each shareholder of Target Corporation with respect to this
Agreement and the Escrow Agreement and the disposition, settlement or other
handling of all indemnification claims, rights or obligations arising from and
taken pursuant to this Agreement. The shareholders of Target Corporation will be
bound by all actions taken by the Shareholder Representative in connection with
this Agreement, and Acquiring Corporation and Newco shall be entitled to rely on
any action or decision of the Shareholder Representative. The Shareholder
Representative will incur no liability with respect to any action taken or
suffered by her in reliance upon any notice, direction, instruction, consent,
statement or other document believed by her to be genuine and to have been
signed by the proper person (and shall have no responsibility to determine the
authenticity thereof), nor for any other action or inaction, except her own
willful misconduct or bad faith. In all questions arising under this Agreement
or the Escrow Agreement, the Shareholder Representative may rely on the advice
of counsel, and the Shareholder Representative will not be liable to anyone for
anything done, omitted or suffered in good faith by the Shareholder
Representative based on such advice. Except as expressly provided herein,
42
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
the Shareholder Representative will not be required to take any action involving
any expense, other than as required by this Agreement or the Escrow Agreement.
Section 8.10 ***.
---
(a) ***
(b) ***
(c) ***
(d) ***
(e) ***
ARTICLE IX
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 9.1 Survival of Representations and Warranties; ***. The
representations and warranties of the parties hereto contained in this Agreement
shall survive the Closing and any investigation by the other party with respect
thereto but shall terminate and be of no further force or effect upon the
expiration of eighteen (18) months after the Closing Date. Notwithstanding the
foregoing, (A) the representations and warranties contained in (i) Section 2.10
(Tax Matters) shall survive for the applicable statute of limitations, period
plus sixty (60) days, (ii) Section 2.14 (Environmental Matters) shall survive
until the expiration of three (3) years after the Closing Date and (iii) Section
2.26 (Chargebacks) shall survive until the expiration of two (2) years after the
Closing Date, and (B) the indemnification obligations of the shareholders of
Target Corporation contained in *** shall survive the Closing but shall
terminate and be of no further force or effect upon the expiration of three (3)
years after the Closing Date.
Section 9.2 Survival of Covenants. The covenants and agreements of the
parties hereto, including, but not limited to, the indemnification obligations,
contained in this Agreement shall survive the Closing and any investigation by
Acquiring Corporation or Newco with respect thereto; provided, however, that
such covenants and agreements shall survive only for the period specified, if
any, by this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 Expenses. All costs and expenses incurred in connection with
the transactions contemplated by this Agreement shall be paid by the party
incurring such costs and expenses, provided that all such costs and expenses of
Target Corporation shall (i) be paid by Target Corporation and (ii) be a
deduction, without duplication, in the calculation of Net Working Capital under
Section 1.8, whether paid by Target Corporation before or after the end of the
business day immediately preceding the Closing Date; provided, however, that all
costs and expenses up to $100,000 actually paid by Target Corporation related to
its acquisition of all
43
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
right, title and interest in and to HPA's membership interest in Xxxxx Heartland
L.L.C. ("Heartland Acquisition Expenses"), as described in Section 1.1, shall be
borne by Acquiring Corporation and such Heartland Acquisition Expenses shall be
deemed to be cash for purposes of calculating Estimated Net Working Capital and
Net Working Capital; provided, however, that Acquiring Corporation shall not be
responsible for any Heartland Acquisition expenses resulting, directly or
indirectly, from fees payable to X.X. Xxxxxx.
Section 10.2 Public Announcements. Except as otherwise required by law, any
press release or similar public announcement with respect to this Agreement or
the transactions contemplated hereby shall be issued, if at all, at such time
and in such manner as Acquiring Corporation, Newco and Target Corporation shall
jointly determine. The substance, form and timing of any written or oral
communication to Target Corporation's employees, customers and suppliers and
others having dealings with Target Corporation regarding the transactions
contemplated hereby shall be approved by Target Corporation and Acquiring
Corporation, which approval shall not be unreasonably withheld, and Acquiring
Corporation and Newco shall have the right to be present for any such
communication.
Section 10.3 Brokers and Finders. Except for X.X. Xxxxxx Securities Inc.
("X.X. Xxxxxx") (whose fees and expenses shall (i) be borne by Target
Corporation and (ii) be a deduction, without duplication, in the calculation of
Net Working Capital under Section 1.8, whether paid by Target Corporation before
or after the end of the business day immediately preceding the Closing Date),
all negotiations on behalf of Acquiring Corporation, Newco and Target
Corporation relating to this Agreement and the transactions contemplated by this
Agreement have been carried on by the parties hereto and their respective agents
directly without the intervention of any other Person in such manner as to give
rise to any claim against Acquiring Corporation, Newco or Target Corporation for
financial advisory fees, brokerage or commission fees, finder's fees or other
like payment in connection with the consummation of the transactions
contemplated hereby.
Section 10.4 Entire Agreement; Assignment. This Agreement (a) constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, among the parties or any of them with respect to the subject matter hereof
(other than the confidentiality agreement executed by X.X. Xxxxxx on behalf of
Target Corporation and Acquiring Corporation on May 8, 2003 (the
"Confidentiality Agreement") which shall remain in full force and effect), and
(b) shall not be assigned by operation of law or otherwise, provided that
Acquiring Corporation may assign its rights and obligations or those of Newco to
any direct or indirect wholly-owned subsidiary of Acquiring Corporation, but no
such assignment shall relieve Acquiring Corporation or Newco of its obligations
hereunder, and Target Corporation shall be entitled to look to Acquiring
Corporation and Newco for the performance of all obligations hereunder in the
same manner as if Acquiring Corporation or Newco, as applicable, had not so
assigned any of its obligations.
Section 10.5 Amendment and Modification. Subject to Section 7.3, this
Agreement may be amended, modified, terminated, rescinded or supplemented only
by written agreement of the parties hereto.
44
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
Section 10.6 Waiver; Consents. Any failure of a party to comply with any
obligation, covenant, agreement or condition herein may be waived by the party
affected thereby only by a written instrument signed by the party granting such
waiver. No waiver, or failure to insist upon strict compliance, by any party of
any condition or any breach of any obligation, term, covenant, representation,
warranty or agreement contained in this Agreement, in any one or more instances,
shall be construed to be a waiver of, or estoppel with respect to, any other
condition or any other breach of the same or any other obligation, term,
covenant, representation, warranty or agreement. Whenever this Agreement
requires or permits consent by or on behalf of any party hereto, such consent
shall be given in writing in a manner consistent with the requirements for a
waiver.
Section 10.7 Further Assurances. From time to time as and when requested by
Acquiring Corporation, or its successors or assigns, Target Corporation and the
officers and directors of Target Corporation shall, and if necessary use
commercially reasonable efforts to cause the shareholders of Target Corporation
to, execute and deliver such further agreements, documents, deeds, certificates
and other instruments and shall take or cause to be taken such other actions,
including those as shall be reasonably necessary to vest or perfect in or to
confirm of record or otherwise Target Corporation's title to and possession of,
all of its property, interests, assets, rights, privileges, immunities, powers,
franchises and authority, as shall be reasonably necessary or advisable to carry
out the purposes of and effect the transactions contemplated by this Agreement.
Section 10.8 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
Section 10.9 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by cable, telecopy or telex, or by
registered or certified mail (postage prepaid, return receipt requested), to the
respective parties as follows:
if to Acquiring Corporation or Newco:
D&K Healthcare Resources, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopy No. (000) 000-0000
45
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
with a copy (which shall not constitute notice) to:
Xxxxxxxxx Xxxxxxxx LLP
Xxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopy No. (000) 000-0000
if to Target Corporation:
Xxxxx HealthCare Solutions, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx
Telecopy No. (000) 000-0000
and
Xx. Xxxxxxx Xxxxxxx Xxxxxx Xxxxxx
0000 Xxxxx Xxxxx
Xxxxxxxxx, Xxxxx 00000
with a copy (which shall not constitute notice) to:
Xxxxx Liddell & Xxxx LLP
3400 Chase Tower
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx and Xxxx X. Xxxxxx
Telecopy No. (000) 000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above;
provided that notice of any change of address shall be effective only upon
receipt thereof.
Section 10.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, regardless of the
laws that might otherwise govern under applicable principles of conflicts of
laws thereof; provided, however, that the Merger and the rights of any holder of
Dissenting Shares shall be governed by the ABCA.
Section 10.11 Service of Process; Jurisdiction and Venue.
------------------------------------------
(a) Any process against Acquiring Corporation, Newco or Target Corporation
in, or in connection with, any suit, action or proceeding arising out of or
relating to this Agreement or any of the transactions contemplated by this
Agreement
46
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
may be served personally or by certified mail at the address set forth in
Section 10.9 with the same effect as though served on it personally.
(b) Before the Closing, any suit, action or proceeding arising out of or
relating to this Agreement or any of the transactions contemplated by this
Agreement shall be brought in, and Acquiring Corporation, Newco and Target
Corporation hereby irrevocably submit to the exclusive jurisdiction and
venue of, the United States District Court for the Northern District of
Texas or the Eastern District of Missouri or any court of the State of
Texas located in Dallas County or the State of Missouri located in St.
Louis County and irrevocably waive any and all objections to jurisdiction
and review or venue that each may have under the laws of Texas, Missouri or
the United States.
(c) After the Closing, any suit, action or proceeding arising out of or
relating to this Agreement or any of the transactions contemplated by this
Agreement shall be brought in, and Acquiring Corporation, Newco and Target
Corporation hereby irrevocably submit to the exclusive jurisdiction and
venue of, the United States District Court for the Northern District of
Texas or any court of the State of Texas located in Dallas County and
irrevocably waive any and all objections to jurisdiction and review or
venue that each may have under the laws of Texas or the United States.
Section 10.12 Descriptive Headings; Interpretation. The descriptive
headings are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement.
Section 10.13 Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party because of the authorship of any provision of
this Agreement. Any reference to any federal, state, local, or foreign law shall
be deemed also to refer to law as amended and all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" means "including without limitation." The parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance. If any party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the party has not
breached shall not detract from or mitigate the fact that the party is in breach
of the first representation, warranty, or covenant.
Section 10.14 Parties in Interest; No Third-Party Beneficiary. This
Agreement shall be binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, is intended to confer
upon any other person any rights or remedies of any nature whatsoever under or
by reason of this Agreement.
Section 10.15 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
47
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
Section 10.16 Incorporation by Reference. Any and all Schedules, exhibits,
annexes, statements, reports, certificates or other documents or instruments
referred to herein or attached hereto are incorporated herein by reference
hereto as though fully set forth at the point referred to in the Agreement.
Section 10.17 Certain Definitions. For the purposes of this Agreement, the
following terms shall have the meanings specified or referred to below whether
or not capitalized when used in this Agreement.
(a) "ABCA " has the meaning set forth in Section 1.2.
(b) "Accounting Conflict" has the meaning set forth in Section 1.8(a).
(c) "Accounting Practices" has the meaning set forth in Section 1.8(a).
(d) "Acquiring Corporation " has the meaning set forth in the first
paragraph hereof.
(e) "Acquisition Proposal " has the meaning set forth in Section 5.4(b).
(f) "Agreement " has the meaning set forth in the first paragraph hereof.
(g) "Affiliate " means, with respect to any person or other entity, any
person or other entity that, directly or indirectly, controls, is
controlled by, or is under common control with, such person or other entity
in question. For the purposes of this definition and the definition of
Subsidiary, "control" (including "controlling," "controlled by" and "under
common control with") as used with respect to any person or other entity,
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such person or other
entity, whether through the ownership of voting securities, by contract or
otherwise.
(h) "Affiliated Group" means any affiliated group within the meaning of ss.
1504(a) of the Code.
(i) "Amerisource Litigation" means that certain litigation styled Xxxxx
Healthcare Solutions, Inc. v. Amerisource Corporation, in the United States
District Court, Eastern District of Texas, in which the trial court entered
judgment for Target Corporation on or about August 9, 2002, awarding
damages in the amount of $404,481 plus costs, interest and attorney's fees.
(j) "Amerisource Receivable" means the $420,000 receivable reflected in
Target Corporation's Financial Statements related to the Amerisource
Litigation.
48
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
(k) "Amerisource/*** Funds" has the meaning set forth in Section 1.8(d).
(l) "APCI" has the meaning set forth in Section 8.10(a).
(m) "Articles of Merger" has the meaning set forth in Section 1.3.
(n) "Balance Sheet Date" has the meaning set forth in Section 2.7.
(o) "Basket" has the meaning set forth in Section 8.5(c).
(p) "Benefit Plans" has the meaning set forth in Section 2.11.
(q) ***.
(r) ***.
(s) "Closing" has the meaning set forth in Section 1.9.
(t) "Closing Adjusted Merger Consideration" has the meaning set forth in
Section 1.7(a).
(u) "Closing Balance Sheet" has the meaning set forth in Section 1.8(c).
(v) "Closing Date" has the meaning set forth in Section 1.9.
(w) "Code" has the meaning set forth in Section 2.10.
(x) "Common Stock" has the meaning set forth in Section 1.7(c).
(y) "Confidentiality Agreement" has the meaning set forth in Section 10.4.
(z) "Conflict" has the meaning set forth in Section 3.3.
(aa) "Constituent Corporations" has the meaning set forth in Section 1.4.
(bb) "Controlled Entity" has the meaning set forth in Section 2.11.
(cc) "Default" has the meaning set forth in Section 3.3.
(dd) ***
(ee) ***
(ff) "Xxxxxx Portion" has the meaning set forth in Section 1.8(d).
49
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
(gg) "Dissenting Shares" has the meaning set forth in Section 1.11.
(hh) "Effective Time" has the meaning set forth in Section 1.3.
(ii) "Enforceable" shall mean that a contract or agreement is legal, valid,
binding and in full force and effect so that such contract or agreement,
taken as a whole, contains adequate provisions for its enforcement and for
the practical realization of the rights and benefits afforded thereby,
except for the economic consequences of any delay relating thereto, subject
to (i) the qualification that certain provisions of such contract or
agreement regarding restrictions on competition, choice of law,
severability, notice or waiver, and available remedies, are or may be
unenforceable under applicable law, (ii) the effects of bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights of creditors generally, and (iii) general principles
of equity.
(jj) "Environmental Laws" shall mean the laws listed on attached Exhibit K,
and any state analogue of the same, all as in effect on the date of this
Agreement.
(kk) "ERISA" has the meaning set forth in Section 2.11.
(ll) "Escrow Agent" has the meaning set forth in Section 1.7(e).
(mm) "Escrow Agreement" has the meaning set forth in Section 1.7(e).
(nn) "Escrow Funds" has the meaning set forth in Section 1.7(e).
(oo) "Estimated Net Working Capital" has the meaning set forth in Section
1.8(b).
(pp) "Evaluation Material" has the meaning set forth in Section 5.2(b).
(qq) ***
(rr) "Final Working Capital Adjustment" has the meaning set forth in
Section 1.8(c).
(ss) "GAAP" means generally accepted United States accounting principles.
(tt) "Governmental Authority" means any federal, state, or local
government, political subdivision or governmental or regulatory authority,
agency, board, bureau, commission, instrumentality or court or
quasi-governmental authority.
(uu) "Hazardous Substances" shall mean substances listed under 40 C.F.R.
302.4 as of the date of this Agreement.
50
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
(vv) "Heartland Acquisition Expenses" has the meaning set forth in Section
10.1.
(ww) "HPA" has the meaning set forth in Section 1.1.
(xx) "HSR Act" has the meaning set forth in Section 2.4.
(yy) "Indemnified Person" has the meaning set forth in Section 8.4.
(zz) "Indemnified Personnel" has the meaning set forth in Section 5.7(a).
(aaa) "Indemnifying Person" has the meaning set forth in Section 8.4.
(bbb) "Indebtedness" has the meaning set forth in Section 1.7(a).
(ccc) "Intellectual Property" has the meaning set forth in Section 2.13(a).
(ddd) "Interim Balance Sheet Date" has the meaning set forth in Section
2.7.
(eee) "Interim Financial Statements" has the meaning set forth in Section
2.7.
(fff) "IRS" has the meaning set forth in Section 2.11.
(ggg) "X.X. Xxxxxx" has the meaning set forth in Section 10.3.
(hhh) "Knowledge" or "known" means (i) when used with reference to Target
Corporation, that Target Corporation shall be deemed to have "knowledge" of
or to have "known" a particular fact or other matter if Xxxxxxx Xxxxxxx
Xxxxxx Xxxxxx, Xxxx Xxxxx, Xxx Xxxxx and Xxxx Xxxxx has actual knowledge,
after reasonable inquiry (including inquiry of the appropriate
individual(s) having supervisory responsibility for the relevant subject
matter), of such fact or other matter, and (ii) when used with reference to
Acquiring Corporation or Newco, that Acquiring Corporation or Newco, as
applicable, shall be deemed to have "knowledge" of or to have "known" a
particular fact or other matter if any executive officer or director of
Acquiring Corporation or Newco has actual Knowledge of such fact or other
matter.
(iii) "Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
(jjj) "License Agreement" has the meaning set forth in Section 8.10(a).
51
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
(kkk) "Licenses" has the meaning set forth in Section 6.2(g).
(lll) "Losses" has the meaning set forth in Section 8.2.
(mmm) "Material Adverse Effect" or "material" means (i) any material
adverse change in the financial condition, results of operations or
business of Target Corporation (and its Subsidiaries) or Acquiring
Corporation and Newco (and their Subsidiaries), as the case may be, taken
individually or as a whole or (ii) any material adverse change in the
ability of Target Corporation or Acquiring Corporation and Newco, as the
case may be, to perform their respective obligations pursuant to this
Agreement; provided, however, that for purposes of determining whether
there shall have been any such material adverse change as described in
either clause (i) or clause (ii) above, (a) any adverse change resulting
from or relating to the announcement, disclosure or pendency of the
transactions contemplated by this Agreement shall be disregarded, and (b)
any adverse change resulting from or relating to the taking of any action
contemplated by this Agreement shall be disregarded. For purposes of
Articles VI and Article VII of this Agreement, the term Material Adverse
Effect shall not include any individual material adverse change in the
financial condition, results of operations or business of RxDirect or Myhca
except to the extent that such adverse change results in a Material Adverse
Effect to the Target Corporation taken as a whole.
(nnn) "Merger" has the meaning set forth in Section 1.2.
(ooo) "Merger Consideration" has the meaning set forth in Section 1.7(a).
(ppp) "Merger Filing" has the meaning set forth in Section 1.3.
(qqq) "Myhca" means Myhca, Inc., a Texas corporation.
(rrr) "Xxxxxx Shares" has the meaning set forth in Section 5.8.
(sss) "Net Amerisource/*** Funds" has the meaning set forth in Section
1.8(d).
(ttt) "Net Working Capital" has the meaning set forth in Section 1.8(a).
(uuu) "Newco" has the meaning set forth in the first paragraph hereof.
(vvv) "Noncompetition Agreement" has the meaning set forth in Section
1.10(c).
(www) "Nonperformance Fee" has the meaning set forth in Section 8.6(b).
(xxx) "Permits" has the meaning set forth in Section 2.16.
(yyy) "Permitted Liens" has the meaning set forth in Section 2.15.
52
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
(zzz) "Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any department,
agency, or political subdivision thereof).
(aaaa) "Post-Closing Adjusted Merger Consideration" has the meaning set
forth in Section 1.7(a).
(bbbb) "Post-Closing Collection Expenses" has the meaning set forth in
Section 1.8(d).
(cccc) "Proceeding" has the meaning set forth in Section 8.2.
(dddd) "Proposed Adjustment" has the meaning set forth in Section 1.8(c).
(eeee) "Proposed Closing Balance Sheet" has the meaning set forth in
Section 1.8(c).
(ffff) "Proposed Closing Net Working Capital" has the meaning set forth in
Section 1.8(c).
(gggg) "Real Property" has the meaning set forth in Section 5.2(a).
(hhhh) "Release of Claims" has the meaning set forth in Section 1.10(e).
(iiii) "Representatives" has the meaning set forth in Section 5.2(b).
(jjjj) ***
(kkkk) "RxDirect" means RxDirect, Inc., a Texas corporation.
(llll) "Schedules" has the meaning set forth in the preamble to Article II.
(mmmm) "Securities Act" has the meaning set forth in Section 3.5(a).
(nnnn) "Services Agreement" has the meaning set forth in Section 8.10(a).
(oooo) "Shareholder Representative" has the meaning set forth in Section
1.7(e).
(pppp) "Straddle Period" has the meaning set forth in Section 5.1(c).
(qqqq) "Subsidiary" means, when used with reference to an entity, any
corporation, partnership or limited liability company, a majority of the
outstanding voting securities, partnership interests or membership
interests of which are owned directly or indirectly by such entity or any
partnership, joint venture or other enterprise in which such entity
currently has, directly or indirectly, any controlling equity interest. For
53
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
purposes of this Agreement, except as otherwise noted, the term Subsidiary,
as it applies to Target Corporation, shall include Xxxxx Heartland, L.L.C.
(rrrr) "Superior Proposal" has the meaning set forth in Section 5.4(c).
(ssss) "Surviving Corporation" has the meaning set forth in Section 1.2.
(tttt) "Target Corporation" has the meaning set forth in the first
paragraph hereof.
(uuuu) "Target Corporation's Financial Statements" has the meaning set
forth in Section 2.7.
(vvvv) "Target Shares" has the meaning set forth in Section 3.5(a).
(wwww) "Target's Conflict" has the meaning set forth in Section 2.5.
(xxxx) "Target's Default" has the meaning set forth in Section 2.5.
(yyyy) "Target's Representatives" has the meaning set forth in Section
5.4(a).
(zzzz) "Target's Violation" has the meaning set forth in Section 2.5.
(aaaaa) "Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
ss. 59A of the Code), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
(bbbbb) "Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
(ccccc) "Transaction Documents" has the meaning set forth in Section 1.10.
(ddddd) "Violation" has the meaning set forth in Section 3.3.
(eeeee) "Voting Agreement" has the meaning set forth in Section 5.8.
(fffff) "WDS" has the meaning set forth in Section 8.10(a).
54
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
(ggggg) "WDS Acquisition" has the meaning set forth in Section 8.10(a).
[SIGNATURE PAGE FOLLOWS]
55
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
day and year first above written.
ACQUIRING CORPORATION
D&K Healthcare Resources, Inc.
By: /s/ X. Xxxx Xxxxxxxxx III
Name: X. Xxxx Xxxxxxxxx III
Title: Chairman and Chief Executive Officer
NEWCO
D&K ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President and Secretary
TARGET CORPORATION
XXXXX HEALTHCARE SOLUTIONS, INC.
By /s/ Xxxx X. Xxxxx
Name: Xxxx X. Xxxxx
Title: President and Chief Executive Officer
SHAREHOLDER REPRESENTATIVE
/s/ Xxxxxxx Xxxxxxx Xxxxxx Xxxxxx
Xxxxxxx Xxxxxxx Xxxxxx Xxxxxx,
solely in her capacity as a shareholder and the
Shareholder Representative and only with respect to
Sections 1.7(e), 1.8(c), 1.8(d), and 5.1(d) and
Article VIII of this Agreement.
56
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
AGREEMENT AND PLAN OF MERGER BY AND AMONG D&K HEALTHCARE
RESOURCES, INC., D&K ACQUISITION CORP. AND XXXXX HEALTHCARE
SOLUTIONS, INC. Dated as of October 21, 2003
Disclosure schedule of Xxxxx HealthCare Solutions, Inc. is omitted in
accordance with Item 601(b)(2) of Regulation S-K. D&K Healthcare Resources, Inc.
will furnish supplementally a copy of the omitted disclosure schedule to the
Securities and Exchange Commission upon request, provided, however, that D&K
Healthcare Resources, Inc. may request confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended, for certain portions
of such disclosure schedule.
57
*** Indicates portions of this exhibit that have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request for
confidential treatment.
