EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is made and entered
into as of June 4, 2003, by and among CARECENTRIC, INC., a Delaware corporation
("COMPANY"), XXXXXX ASSOCIATES, INC., a Delaware corporation ("XXXXXX"), XXXX X.
XXXX ("XXXX XXXX"), XXXXXXX X. XXXX ("XXXXXXX XXXX"), and XXXXX X. XXXX ("XXXXX
X. XXXX") (Xxxx Xxxx, Xxxxxxx Xxxx, and Xxxxx Xxxx are hereinafter sometimes
referred to individually as an "INVESTOR," and collectively as the "INVESTORS").
WHEREAS, the respective Boards of Directors of Company and Xxxxxx have
deemed it advisable and in the best interests of their respective corporations
and stockholders to consummate the statutory merger, on the terms and subject to
the conditions set forth in this Agreement, of Xxxxxx with and into Company (the
"MERGER");
WHEREAS, the respective Boards of Directors of Company and Xxxxxx have
approved, in accordance with the applicable provisions of the laws of the State
of Delaware ("DELAWARE LAW"), this Agreement and the transactions contemplated
hereby, including the Merger;
WHEREAS, the Board of Directors of Company has resolved to recommend to its
stockholders approval and adoption of this Agreement, approval of the Merger,
and approval of the issuance of shares of Company's Common Stock, $0.001 par
value per share (the "COMPANY COMMON STOCK") to the Investors in connection with
the Merger;
WHEREAS, the Board of Directors of Xxxxxx has resolved to recommend to its
stockholders approval and adoption of this Agreement and approval of the Merger;
and
WHEREAS, Company, Xxxxxx, and the Investors desire to make certain
representations, warranties, covenants, and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the General Corporation Law of
the State of Delaware (the "DGCL"), Xxxxxx shall be merged with and into Company
at the Effective Time (as defined in Section 1.03). At the Effective Time, the
separate corporate existence of Xxxxxx shall cease and Company shall continue as
the surviving corporation (the "SURVIVING CORPORATION").
SECTION 1.02. CLOSING. The closing of the Merger (the "CLOSING") will take
place at 10:00 a.m., Atlanta time, on a date to be specified by the parties,
which shall be not later than the second Business Day (as defined in Section
8.13) after satisfaction or waiver of the conditions set forth in Article VI
(other than those that by their terms are to be satisfied or waived at the
Closing), at the offices of Xxxxxxxxxx Xxxxxxxx LLP, 0000 Xxxxxxxxx Xxxxxx, XX,
Xxxxxxx, Xxxxxxx, 00000, unless another time, date, or place is agreed to in
writing by Xxxxxx and Company. The date on which the Closing occurs is referred
to in this Agreement as the "CLOSING DATE."
SECTION 1.03. EFFECTIVE TIME OF THE MERGER. As soon as practicable on or
after the Closing Date, the parties shall: (a) file a certificate of merger (the
"CERTIFICATE OF MERGER") in such form as is required by, and executed and
acknowledged in accordance with, the relevant provisions of the DGCL; and (b)
make all other filings or recordings required under the DGCL to effect the
Merger. The Merger shall become effective at such date and time as the
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware or at such subsequent date and time as Xxxxxx and Company shall agree
and specify in the Certificate of Merger. The date and time at which the Merger
becomes effective is referred to in this Agreement as the "EFFECTIVE TIME."
SECTION 1.04. EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in Section 259 of the DGCL.
SECTION 1.05. CERTIFICATE OF INCORPORATION AND BYLAWS OF SURVIVING
CORPORATION.
(a) At the Effective Time, the Certificate of Incorporation of Company
as in effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of Surviving Corporation from and after the Effective Time until
thereafter changed or amended as provided therein or by applicable Delaware Law.
(b) The Bylaws of Company as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation from and after
the Effective Time until thereafter changed or amended as provided therein or by
applicable Delaware Law.
SECTION 1.06. DIRECTORS OF SURVIVING CORPORATION. The directors of Company
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
SECTION 1.07. OFFICERS OF SURVIVING CORPORATION. The officers of Company
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.01 CONVERSION OF SECURITIES. At the Effective Time, on the terms
and subject to the conditions set forth in this Agreement, by virtue of the
Merger and without any action on the part of Xxxxxx, Company or any of their
respective securityholders:
(a) COMPANY COMMON STOCK.
(i) Small Stockholders. Each share of Company Common Stock, other
than any Dissenting Shares (as defined in Section 2.01(f)), outstanding at the
close of business on the last Business Day to precede the Closing Date (the
"MEASUREMENT Date") Held (as defined in Section 8.13) by a Small Stockholder (as
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defined in Section 8.13), shall be deemed canceled and converted into the right
to receive cash in an amount equal to $0.75, without interest (the "PER SHARE
CASH MERGER CONSIDERATION"), and each such share shall no longer be outstanding
and shall automatically be canceled and shall cease to exist, and each
certificate that immediately prior to the Effective Time evidenced a Small
Stockholder's ownership of shares of Company Common Stock shall cease to have
any rights with respect thereto, except the right to receive the Per Share Cash
Merger Consideration.
(ii) Continuing Stockholders. Each share of Company Common Stock,
other than any Dissenting Shares, outstanding at the close of business on the
Measurement Date Held by a Continuing Stockholder (as such term is defined in
Section 8.13), shall continue to represent one share of Company Common Stock,
and each certificate that immediately prior to the Effective Time evidenced a
Continuing Holder's ownership of shares of Company Common Stock shall continue
to evidence ownership of the same number of shares of the Surviving Corporation.
(b) COMPANY PREFERRED STOCK. Each share of Company's Preferred Stock
(as defined in Section 3.01(e)) outstanding at the Effective Time shall continue
to represent one share of Company's Preferred Stock of the same class and series
with all of the same designated rights and preferences as immediately prior to
the Merger.
(c) XXXXXX COMMON STOCK. Each share of common stock of Xxxxxx, par
value $0.001 per share ("XXXXXX COMMON STOCK"), issued and outstanding
immediately prior to the Effective Time, shall be converted into the right to
receive that number of fully paid and nonassessable shares of Company Common
Stock equal to (i) the quotient of the total amount of cash to be paid in
respect of the shares of Company Common Stock pursuant to Section 2.01(a)(i)
(the "TOTAL CASH MERGER CONSIDERATION") divided by the Per Share Cash Merger
Consideration, divided by (ii) the number of shares of Xxxxxx Common Stock
issued and outstanding immediately prior to the Effective Date. All shares of
Company Common Stock issued pursuant to this Section 2.01(c) (the "MERGER
SHARES") shall be duly authorized and validly issued and free of preemptive
rights, with no personal liability attaching to ownership thereof.
(d) FRACTIONAL SHARES. No fraction of a share of Company Common Stock
will be issued in the Merger, but in lieu thereof, each holder of shares of
Xxxxxx Common Stock who would otherwise be entitled to a fraction of a share of
Company Common Stock (after aggregating all fractional shares of Company Common
Stock to be received by such holder) shall be entitled to receive from Company
an amount of cash (rounded to the nearest whole cent) equal to the product of
(i) such fraction, multiplied by (ii) Per Share Cash Merger Consideration.
(e) ADJUSTMENTS TO MERGER CONSIDERATION. In the event of any stock
split, reverse stock split, stock dividend (including any dividend or
distribution of securities convertible into Company Common Stock),
reorganization, reclassification, combination, recapitalization, or other like
change with respect to Company Common Stock occurring after the date hereof and
prior to the Effective Time, then each of the Per Share Cash Merger
Consideration and the Merger Shares shall be equitably adjusted to the extent
necessary to provide the parties the same economic effect as contemplated by
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this Agreement prior to such stock split, reverse stock split, stock dividend,
reorganization, reclassification, combination, recapitalization or other like
change.
(f) DISSENTING STOCKHOLDERS. Notwithstanding anything in this
Agreement to the contrary, shares of Company Common Stock and of Company's
Preferred Stock that are issued and outstanding immediately prior to the
Effective Time and that are held by any holder who is entitled to demand and
properly demands appraisal of such shares pursuant to, and who complies in all
respects with, the provisions of Section 262 of the DGCL ("DISSENTING SHARES"),
shall, if held by a Small Stockholder, not be converted into the right to
receive the Per Share Cash Merger Consideration as provided in Section
2.01(a)(i), but instead such holder shall be entitled to payment of the fair
value of such shares in accordance with the provisions of Section 262 of the
DGCL. At the Effective Time, the Dissenting Shares shall no longer be
outstanding and shall automatically be canceled and shall cease to exist, and
each holder of Dissenting Shares shall cease to have any rights with respect
thereto, except the right to receive the fair value of such shares in accordance
with the provisions of Section 262 of the DGCL. Notwithstanding the foregoing,
if any such holder shall fail to perfect or otherwise shall waive, withdraw, or
lose the right to appraisal under Section 262 of the DGCL or a court of
competent jurisdiction shall determine that such holder is not entitled to the
relief provided by Section 262 of the DGCL, then the right of such holder to be
paid the fair value of such holder's Dissenting Shares under Section 262 of DGCL
shall cease and each such Dissenting Share, if held by a Small Stockholder,
shall be deemed to have been converted at the Effective Time into, and shall
have become, the right to receive the Per Share Cash Merger Consideration as
provided in Section 2.01(a)(i). Company shall serve prompt notice to Xxxxxx and
the Investors of any demands for appraisal of any shares of Company Common
Stock, withdrawals of such demands and any other instruments served pursuant to
the DGCL received by Company, and Xxxxxx and the Investors shall have the right
to participate in and direct all negotiations and proceedings with respect to
such demands. Prior to the Effective Time, Company shall not, without the prior
written consent of Xxxxxx, make any payment with respect to, or settle or offer
to settle, any such demands, or agree to do or commit to do any of the
foregoing.
SECTION 2.03 SURRENDER OF CERTIFICATES.
(a) EXCHANGE AGENT. Company's transfer agent shall act as exchange
agent (the "EXCHANGE AGENT") in the Merger.
(b) PROVISION OF TOTAL CASH MERGER CONSIDERATION. Subject to the
conditions set forth in Article VI of this Agreement, Xxxxxx shall provide the
Total Cash Merger Consideration to the Exchange Agent in cash prior to the
Effective Time.
(c) EXCHANGE PROCEDURES. Within two Business Days following the
Effective Time, the Surviving Corporation shall cause to be mailed to each
holder of record of a certificate or certificates that immediately prior to the
Effective Time represented outstanding shares of (i) Company Common Stock
converted into the right to receive the Per Share Cash Consideration pursuant to
Section 2.01(a)(i) ("COMPANY CERTIFICATES"), and (ii) Xxxxxx Common Stock
converted into the right to receive Merger Shares pursuant to Section 2.01(c)
("XXXXXX CERTIFICATES," together with the Company Certificates, the
"CERTIFICATES"): (A) a form of letter of transmittal (the "LETTER OF
TRANSMITTAL"); and (B) instructions for use of the Letter of Transmittal in
effecting the surrender of either the Company Certificates in exchange for such
holder's pro rata portion of the Total Cash Merger Consideration or the Xxxxxx
Certificates in exchange for such holder's pro rata portion of the Merger
Shares. The Letter of Transmittal shall specify that delivery of the
Certificates shall be effected, and risk of loss and title to the Certificates
shall pass, only upon receipt thereof by the Exchange Agent and shall be in such
form and have such other provisions as the Surviving Corporation may reasonably
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specify. Upon surrender of a Certificate for cancellation to the Exchange Agent
or to such other agent or agents as may be appointed by the Surviving
Corporation, together with a properly completed and duly executed Letter of
Transmittal, (i) the holder of record of such Certificate shall be entitled to
receive: (A) if it is a Company Certificate, a check in the amount equal to such
holder's pro rata portion of the Total Cash Merger Consideration as determined
pursuant to Section 2.01(a)(i) hereof in respect of such Certificate; or (B) if
it is a Xxxxxx Certificate, a certificate representing the number of whole
shares of Company Common Stock to which such holder is entitled pursuant to
Section 2.01(c) and cash in lieu of fractional shares (if any), to which such
holder is entitled pursuant to Section 2.01(d); and (ii) such Certificate shall
be canceled. Until so surrendered, each Certificate shall be deemed from and
after the Effective Time to represent only the right to receive such holder's
pro rata portion of either (x) the Total Cash Merger Consideration contemplated
by Section 2.01(a)(i), or (y) the Merger Shares contemplated by Section 2.01(c).
Notwithstanding anything contained herein to the contrary, no interest shall be
paid or shall accrue on any cash payable to any holder of a Certificate pursuant
to the provisions of this Article II.
(d) NO LIABILITY. Notwithstanding anything to the contrary in this
Section 2.03, none of the Exchange Agent, the Surviving Corporation, or any
party hereto shall be liable to any Person for any amount properly paid to a
public official pursuant to any applicable abandoned property, escheat, or
similar law. If any Certificate has not been surrendered prior to the fifth
anniversary of the Effective Time (or immediately prior to such earlier date on
which the pro rata portion of the Total Cash Merger Consideration contemplated
by Section 2.01(a)(i) in respect of such Certificate would otherwise escheat to
or become the property of any Governmental Entity (as such term is defined in
Section 8.13)), any amounts payable in respect of such Certificate shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interests of any Person previously
entitled thereto.
SECTION 2.04 NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK OR XXXXXX
COMMON STOCK. The Per Share Cash Merger Consideration issued or issuable
following the surrender for exchange of Company Certificates in accordance with
the terms hereof shall be issued or issuable in full satisfaction of all rights
pertaining to the shares of Company Common Stock represented by the Company
Certificates, and there shall be no further registration of transfers on the
records of the Surviving Corporation of such shares of Company Common Stock that
were issued and outstanding immediately prior to the Effective Time. The Merger
Shares issued or issuable following the surrender for exchange of Xxxxxx
Certificates representing shares of Xxxxxx Common Stock in accordance with the
terms hereof shall be issued or issuable in full satisfaction of all rights
pertaining to such shares of Xxxxxx Common Stock, and there shall be no further
registration of transfers on the records of Xxxxxx of such shares of Xxxxxx
Common Stock that were issued and outstanding immediately prior to the Effective
Time. If, after the Effective Time, any Certificate for shares of Company Common
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Stock or Xxxxxx Common Stock converted into the right to receive Per Share Cash
Merger Consideration or Merger Shares, as the case may be, is presented to the
Surviving Corporation for any reason, such Certificate shall be canceled and
exchanged as provided in this Article II.
SECTION 2.05 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificate representing shares of Company Common Stock held of record by a
Small Stockholder shall have been lost, stolen, or destroyed, the Exchange Agent
shall issue in exchange for such Certificate, following the making of an
affidavit of that fact by the record holder thereof, such holder's pro rata
portion of the Total Cash Merger Consideration as may be required pursuant to
Section 2.01(a)(i) in respect of such Certificate; PROVIDED, HOWEVER, that the
Surviving Corporation, in its discretion and as a condition precedent to the
delivery thereof, may require the record holder of such Certificate to deliver a
bond in such sum as Company may reasonably direct as indemnity against any claim
that may be made against the Surviving Corporation, the Exchange Agent, or any
of their respective representatives or agents with respect to such Certificate.
SECTION 2.06 WITHHOLDING RIGHTS. The Surviving Corporation shall be
entitled to deduct and withhold from the Per Share Cash Merger Consideration
otherwise deliverable under this Agreement, and from any other payments
otherwise required pursuant to this Agreement, to any Small Stockholders, such
amounts as the Surviving Corporation is required to deduct and withhold with
respect to any such deliveries and payments under the Internal Revenue Code of
1986, as amended (the "CODE"), or any provision of state, local, provincial or
foreign tax law. To the extent that amounts are so withheld, such withheld
amounts shall be treated for all purposes of this Agreement as having been
delivered and paid to such holders in respect of which such deduction and
withholding was made.
SECTION 2.07 TERMINATION OF EXCHANGE AGENT FUNDING. Any portion of funds
(including any interest earned thereon) held by the Exchange Agent that has not
been delivered to Small Stockholders pursuant to this Article II within six
months after the Effective Time shall promptly be paid to the Surviving
Corporation, and thereafter each holder of a Certificate who has not theretofore
complied with the exchange procedures set forth in and contemplated by Section
2.03(c) shall look only to the Surviving Corporation (subject to abandoned
property, escheat, and similar laws) for its claim for such holder's pro rata
portion of the Total Cash Merger Consideration only as a general creditor
thereof.
SECTION 2.08 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation with
full right, title, and interest in, to and under, or possession of, all assets,
property, rights, privileges, powers, and franchises of Xxxxxx, the officers and
directors of the Surviving Corporation are fully authorized in the name and on
behalf of Company or otherwise, to take all lawful action necessary or desirable
to accomplish such purpose or acts, so long as such action is not inconsistent
with this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF COMPANY. Except as set
forth in the letter (with specific reference to the section of this Agreement to
which the information stated in such disclosure relates) delivered by Company to
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Xxxxxx prior to the execution of this Agreement (the "DISCLOSURE LETTER"),
Company represents and warrants to Xxxxxx and the Investors as follows:
(a) ORGANIZATION, POWER, AND STANDING. Company and each Subsidiary (as
defined in Section 8.13) of Company: (i) is a corporation or other entity duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its organization (except, in the case of good standing, for
entities organized under the laws of any jurisdiction that does not recognize
such concept); (ii) has all requisite corporate, company, or partnership power
and authority to carry on its business as now being conducted; and (iii) to the
Knowledge (as defined in Section 8.13) of Company, is duly qualified or licensed
to do business and is in good standing in each jurisdiction (except, in the case
of good standing, any jurisdiction that does not recognize such concept) in
which the nature of its business or the ownership, leasing, or operation of its
properties makes such qualification or licensing necessary, other than where the
failure to be so organized, existing, qualified, or licensed or in good standing
(except in the case of clause (i) above with respect to Company), individually
or in the aggregate, is not reasonably likely to have a Material Adverse Effect
(as defined in Section 8.13). Each Subsidiary of Company is listed in Section
3.01(a) of the Disclosure Letter. Each jurisdiction in which Company and any
Subsidiary of Company is qualified to do business is set forth in Section
3.01(a) of the Disclosure Letter.
(b) CORPORATE POWER AND AUTHORITY; DUE AUTHORIZATION. Company has all
requisite corporate power and authority to enter into this Agreement, to
consummate the transactions contemplated hereby, subject, in the case of the
Merger, to obtaining the Requisite Vote (as defined in Section 3.01(f)), and to
comply with the provisions of this Agreement. All corporate action on the part
of Company, its officers, directors, and stockholders necessary for: (i) the
authorization, execution, and delivery of this Agreement; (ii) the performance
of all obligations of Company under this Agreement; (iii) the authorization,
issuance, and delivery of the Merger Shares; and (iv) the consummation of the
transactions contemplated by this Agreement, subject in the case of the Merger,
to obtaining Requisite Vote, has been taken, and this Agreement constitutes a
valid and legally binding obligation of Company, enforceable against Company in
accordance with its terms, except as enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or other similar
laws affecting creditors' rights generally, or by general equitable principles.
(c) NO CONFLICT; CONSENTS. Except for: (i) the filing of the
Certificate of Merger as provided in Section 1.03; (ii) the filing of the Proxy
Statement (as defined in Section 5.01) and a Schedule 13E-3 with the Securities
and Exchange Commission (the "SEC") and other applicable requirements of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"); (iii) the
applicable requirements of the Securities Act of 1933, as amended (the
"SECURITIES ACT"); and (iv) such consents, approvals, orders, authorizations,
registrations, declarations, and filings as may be required under applicable
state securities laws and the securities laws of any foreign country, the
execution and delivery by Company of this Agreement, consummation of the
transactions contemplated hereby, and the performance by Company of its
obligations hereunder, do not and will not: (A) require the consent, approval,
action, order, declaration, or authorization of, any filing or notice to, or any
registration with, any Person under any statute, law, rule, regulation, permit,
license, agreement, indenture, or other instrument to which Company or any
Subsidiary of Company is a party, or to which any of their respective properties
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are subject; (B) violate the terms of any instrument, document, or agreement to
which Company or any Subsidiary of Company is a party, or by which Company, any
Subsidiary of Company, or the property of Company or any Subsidiary of Company
is bound, or be in conflict with, result in a breach of, or constitute (upon the
giving of notice or lapse of time, or both) a default under any such instrument,
document, or agreement or result in the creation of any lien upon any of the
property or assets of Company or any Subsidiary of Company, except for such
violations, conflicts, breaches, and defaults which, individually or in the
aggregate, would not have a Material Adverse Effect; (C) violate Company's
Certificate of Incorporation or Bylaws; or (D) violate any order, writ,
injunction, decree, judgment, ruling, law, rule, or regulation of any
Governmental Entity (as defined in Section 8.13) applicable to Company, any
Subsidiary of Company, the business or assets of Company, except for such
violations which would not, individually or in the aggregate, have a Material
Adverse Effect. Neither Company nor any Subsidiary of Company is subject to, or
a party to, any mortgage, lien, lease, agreement, contract, instrument, order,
judgment, or decree or any other material restriction of any kind or character
which would prevent or hinder the continued operation of the business of Company
and each Subsidiary of Company, taken as a whole, after the Closing on
substantially the same basis as theretofore operated.
(d) OWNERSHIP OF ASSETS. Company and each Subsidiary of Company has
title to all of its respective properties and assets, other than leased or
licensed property, in each case free and clear of any liens, security interests,
claims, charges, options, rights of tenants, or other encumbrances, except as
reserved against in Company's Financial Statements (as defined in Section
3.01(i)(ii)), to the extent and in the amounts so disclosed or reserved against,
and except for liens arising from current taxes not yet due and payable and
other liens not having a Material Adverse Effect.
(e) CAPITALIZATION. The authorized capital stock of Company consists
of: (i) 20,000,000 shares of Company Common Stock, of which 4,373,307 shares are
issued and outstanding; (ii) 10,000,000 shares of preferred stock, $.001 par
value per share ("PREFERRED STOCK"), of which: (A) 5,600,000 shares are
designated as Series B Preferred Stock (the "SERIES B PREFERRED STOCK"), all of
which are issued and outstanding; (B) 850,000 shares are designated Series C
Preferred Stock (the "SERIES C PREFERRED STOCK"), none of which are outstanding;
(C) 400,000 shares are designated Series D Preferred Stock ("SERIES D PREFERRED
STOCK"), of which 398,406 are issued and outstanding; and (D) 210,000 shares are
designated Series E Preferred Stock ("SERIES E PREFERRED STOCK"), all of which
are issued and outstanding. There are no other issued and outstanding shares of
capital stock or voting securities of Company. All outstanding shares of
Company's capital stock have been duly authorized, and are validly issued, fully
paid, and nonassessable. No party has any preemptive (whether statutory or
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contractual) rights in any capital stock of Company. Except as disclosed in the
Company SEC Documents (as defined in Section 3.01(i)(i)), there are no
outstanding convertible securities, subscriptions, options, warrants, calls,
rights, commitments, or any other agreement to which Company or any Subsidiary
of Company is a party, or by which Company or any Subsidiary of Company is bound
that, directly or indirectly, obligate Company or any Subsidiary of Company to
issue, deliver or sell or cause to be issued, delivered or sold any additional
securities or any other capital stock of Company or any Subsidiary of Company,
or any other securities convertible into, or exercisable or exchangeable for, or
evidencing the right to subscribe for any such securities or any other capital
stock of Company or any Subsidiary of Company. Neither Company nor any
Subsidiary of Company is a party to any agreement or understanding regarding the
voting or the registration under federal or state law of any shares of Company's
capital stock or the equity voting interests of any Subsidiary of Company. All
of the outstanding capital stock or other equity interests in each of the
Subsidiaries is owned by the entities reflected in Section 3.01(e) of the
Disclosure Letter, free and clear of all liens, claims, charges, or
encumbrances. To the Knowledge of Company, all outstanding shares of capital
stock of each corporate Subsidiary have been validly issued and are fully paid
and nonassessable. All equity interests of each other Subsidiary have been
validly issued and are fully paid. The Merger Shares, when issued, sold and
delivered in accordance with the terms of this Agreement for the consideration
expressed herein: (i) will be duly and validly issued, fully paid, and
nonassessable; (ii) will not have been issued in violation of any preemptive
rights; (iii) assuming the accuracy of the representations and warranties
contained in Section 3.03 hereof, will be issued in accordance with the
registration or qualification provisions of the Securities Act and any relevant
state securities laws or pursuant to a valid exemption therefrom; and (iv) will
be free of restrictions on transfer other than restrictions on transfer under
applicable state and federal securities laws. As of (i) May 2, 2003, the Company
Common Stock was, to the Knowledge of Company, Held of Record (as defined in
Section 8.13) by 3,599 Persons; and (ii) the date hereof, no more than 40
Persons hold outstanding options to acquire shares of the Company Common Stock.
(f) VOTE REQUIRED; SPECIAL INDEPENDENT COMMITTEE; BOARD APPROVAL.
(i) The affirmative vote at the Stockholders' Meeting (as defined
in Section 5.01(a)), or any adjournment or postponement thereof, of the holders
outstanding shares representing at least a majority of the voting power
represented by the then outstanding shares of Company Common Stock, Series B
Preferred Stock, Series D Preferred Stock, and Series E Preferred Stock (voting
together as a single class as provided in Company's Certificate of
Incorporation) in favor of adopting this Agreement (the "REQUISITE VOTE"), is
the only vote of the holders of any class or series of Company's capital stock
necessary to approve or adopt this Agreement or the consummation of the
transactions contemplated by this Agreement under Delaware Law.
(ii) The special independent committee of the Board of Directors
of Company, comprised of Xxxxxxx X. Xxxxxx, Xx. and Xxxxxxx X. Xxxxxxx, Xx. (the
"SPECIAL COMMITTEE"), at a meeting duly called and held at which all members of
the Special Committee were present, duly and unanimously adopted resolutions
(which have not been modified or rescinded): (A) approving and declaring
advisable the Merger, this Agreement, and the transactions contemplated by this
Agreement; (B) declaring that (I) it is in the best interests of Company's
stockholders that Company enter into this Agreement and consummate the Merger on
the terms and subject to the conditions set forth in this Agreement, and (II)
the terms and conditions of this Agreement and the Merger are fair to such
stockholders; and (C) recommending to the Board of Directors of Company that (I)
this Agreement be submitted to a vote for adoption at the Stockholders' Meeting,
and (II) it recommend that Company's stockholders adopt this Agreement.
(iii) The Board of Directors of Company, at a meeting duly called
and held at which all directors of Company were present, duly and unanimously
adopted resolutions (which have not been modified or rescinded): (A) approving
and declaring advisable the Merger, this Agreement, and the transactions
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contemplated by this Agreement; (B) declaring that it is in the best interests
of Company's stockholders that Company enter into this Agreement and consummate
the Merger on the terms and subject to the conditions set forth in this
Agreement; (C) directing that this Agreement be submitted to a vote for adoption
at the Stockholders' Meeting; and (iv) recommending that Company's stockholders
adopt this Agreement.
(g) OPINION OF FINANCIAL ADVISOR. SunTrust Xxxxxxxx Xxxxxxxx (the
"FINANCIAL ADVISOR") has delivered its opinion, dated June 4, 2003, to the
Special Committee, to the effect that subject to the assumptions, qualifications
and limitations set forth therein (i) the Per Share Cash Merger Consideration to
be received by the Small Stockholders is fair, from a financial point of view,
to the Small Stockholders, and (ii) the Merger is fair, from a financial point
of view, to the stockholders of Company that are not Small Stockholders. A true,
correct, and complete copy of such opinion has been provided to Xxxxxx prior to
or on the date hereof.
(h) COMPLIANCE WITH LAWS; LICENSES AND PERMITS. Company is in
compliance with all, and has not, since December 31, 2001, violated any, laws,
orders, rules, and regulations of any Governmental Entity applicable to Company,
except for such noncompliance or violations as would not, individually or in the
aggregate, have a Material Adverse Effect. Each Subsidiary of Company is in
compliance with all, and has not, since December 31, 2001, violated any, laws,
orders, rules, and regulations of any Governmental Entity applicable to such
Subisidiary of Company, except for such noncompliance or violations as would
not, individually or in the aggregate, have a Material Adverse Effect. Neither
Company nor any Subsidiary of Company has received written notice alleging any
such noncompliance or violation. All licenses, permits and approvals required
under any such laws, orders, rules, and regulations of a United States federal
Governmental Entity are in full force and effect except where the failure to be
in full force and effect would not reasonably be expected to result in a
Material Adverse Effect.
(i) COMPANY SEC DOCUMENTS; FINANCIAL STATEMENTS; LIABILITIES AND
OBLIGATIONS OF COMPANY.
(i) Since December 31, 2001, Company has timely filed with the
SEC all forms, reports, schedules, statements, and other documents required to
be filed by it with the SEC (collectively, the "COMPANY SEC DOCUMENTS") pursuant
to the Exchange Act, the Securities Act, and the SEC's rules and regulations
thereunder. Company has furnished, or otherwise made available, the Company SEC
Documents to Xxxxxx and each of the Investors. No Subsidiary of Company is
required to file any forms, reports, schedules, statements, or other document
with the SEC. As of their respective dates, each of the Company SEC Documents
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such Company SEC Document, and none of the
Company SEC Documents at the time it was filed contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(ii) The financial statements (including the related notes) of
Company included in the Company SEC Documents (including, in each case, balance
sheets, statements of operations, and statements of cash flows) (collectively,
the "COMPANY FINANCIAL STATEMENTS"): (A) comply as to form in all material
respects with the applicable accounting requirements and the published rules and
10
regulations of the SEC with respect thereto; (B) have been prepared in
accordance with United States generally accepted accounting principles ("GAAP")
(except, in the case of unaudited statements, as permitted by Form 10-Q) applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto); (C) are consistent with the books and records of Company;
(D) fairly present in all material respects the consolidated financial position
of Company and its consolidated subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal and recurring year-end
audit adjustments which are immaterial in amount); and (E) disclose all
liabilities of Company, whether absolute, contingent, accrued or otherwise,
existing as of the date thereof that are of a nature required to be reflected in
financial statements prepared in accordance with GAAP, and except for
liabilities that, individually or in the aggregate, would not have a Material
Adverse Effect.
(iii) Neither Company nor any Subsidiary of Company has any
liability or obligation (whether accrued, absolute, contingent or otherwise)
that has arisen or been accrued or otherwise incurred since December 31, 2001,
including any liability that might result from an audit of its tax returns by
any taxing authority, except for: (A) liabilities that, individually or in the
aggregate, would not have a Material Adverse Effect; (B) the liabilities and
obligations of Company and each Subsidiary of Company that are disclosed or
reserved against in the balance sheet of the most recent date contained in the
Company SEC Documents, to the extent and in the amounts so disclosed or reserved
against; and (C) liabilities incurred or accrued in the ordinary course of
business thereafter, and liabilities incurred in connection with the
transactions contemplated hereby.
(iv) Except as disclosed in the most recent Company Financial
Statements, neither Company nor any Subsidiary of Company is in default with
respect to any liability or obligation that has arisen or been accrued or
otherwise incurred since December 31, 2001, except for defaults that,
individually or in the aggregate would not have a Material Adverse Effect, and
all such liabilities or obligations shown or reflected in the most recent
Company Financial Statements and such liabilities incurred or accrued thereafter
were incurred in the ordinary course of business, and except for liabilities and
obligations, that, individually or in the aggregate, would not have a Material
Adverse Effect.
(j) TAXES. Except as to any noncompliance with any of the following
provisions that would not, individually or in the aggregate, have a Material
Adverse Effect:
(i) All tax returns required to be filed by Company and/or its
Affiliated Group (as defined in Section 1504(a) of the Code) with the Internal
Revenue Service on or before the date hereof (the "TAX RETURNS") have been
timely filed and all amounts shown as owing thereon have been paid. All Tax
Returns are correct and complete in all material respects and accurately reflect
all liability for taxes for the periods covered thereby. All taxes which are
required to be collected or withheld by Company and its Affiliated Group under
the Code or any rules and regulations promulgated thereunder on or prior to the
date hereof have been so collected or withheld. All deposits required by law to
be made by Company and its Affiliated Group on or prior to the date hereof with
respect to employees' withholding taxes have been duly made. Neither Company nor
any member of its Affiliated Group has received written notice from any tax
11
authority of the assessment or proposed assessment of any tax liabilities,
disallowances, or assessments under the Code or any rules and regulations
promulgated thereunder which remain unpaid. There is no examination currently in
progress of the Tax Returns of Company or its Affiliated Group by any taxing
authority for which Company or any member of its Affiliated Group has received
any notice, and, to the Knowledge of Company, no such examination has been
threatened by any taxing authority.
(ii) The Company Financial Statements for the year ended December
31, 2002 and the unaudited interim quarter ending March 31, 2003 reflect an
adequate reserve for deferred taxes established for timing differences between
book and tax accounting income/asset basis.
(k) CONTRACTS, AGREEMENTS AND INSTRUMENTS GENERALLY. All contracts,
agreements, commitments, and other instruments (whether oral or written) to
which Company or any Subsidiary of Company was a party as of the date hereof
that involve a receipt or an expenditure by Company or any Subsidiary or require
the performance of services or delivery of goods to, by, through, on behalf of
or for the benefit of Company or any Subsidiary, which in each case relates to a
contract, agreement, commitment or instrument that requires (or is reasonably
expected to require) payments or provides (or is reasonably expected to provide)
for receipts in excess of $50,000 on an annual basis (the "MATERIAL CONTRACTS")
are in full force and effect. None of Company, any Subsidiary of Company, and,
to the Knowledge of Company, any other Person party to any such Material
Contract has breached any provision of, or is in default under, the terms
thereof, the breach of or default under which would, individually or in the
aggregate, have a Material Adverse Effect.
(l) INTELLECTUAL PROPERTY. Neither Company nor any Subsidiary of
Company has received any notice of, or has any Knowledge of, any asserted
infringement by Company or any Subsidiary of Company of any rights of a third
party with respect to any trademarks, trade names, service marks, service names,
brand names, patents, copyrights, any applications for the foregoing, trade
secrets, inventions, know-how, information, or any other proprietary rights and
processes (collectively, "INTELLECTUAL PROPERTY") that Company believes,
individually or in the aggregate, would have a Material Adverse Effect. Neither
Company nor any Subsidiary of Company has received any notice of, or has any
Knowledge of, infringement by a third party with respect to any Intellectual
Property of, or exclusively licensed to, Company or of any Subsidiary of Company
that Company believes, individually or in the aggregate, would have a Material
Adverse Effect. Company has taken reasonable steps to protect the material
Intellectual Property of Company and its Subsidiaries. The execution, delivery
and performance by Company of this Agreement, and the consummation of the
transactions contemplated hereby, will not, to the Knowledge of Company, result
in the loss or impairment of, or give rise to any right of any third party to
terminate or materially alter, any of Company's material rights to own any of
its Intellectual Property or its material rights under any agreements relating
to such Intellectual Property, nor require the consent of any Governmental
Entity or third party in respect of any such Intellectual Property.
(m) LABOR MATTERS. Since December 31, 2001, neither Company nor any
Subsidiary of Company has been the subject of any known union activity or labor
dispute, nor has there been any strike of any kind called or, to the Knowledge
12
of Company, threatened to be called against Company or any Subsidiary of
Company. Neither Company nor any Subsidiary of Company has violated any
applicable federal or state law or regulation relating to labor or labor
practices, except where such violation has or will have, individually or in the
aggregate, no Material Adverse Effect. Company and each Subsidiary of Company is
in compliance with all applicable requirements of the Immigration and
Nationality Act of 1952, as amended by the Immigration and Nationality Act of
1986 and the regulations promulgated thereunder, except where such noncompliance
has and will have, individually or in the aggregate, no Material Adverse Effect.
(n) ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Company SEC
Documents, since December 31, 2002, Company and each Subsidiary of Company have
conducted its business only in the ordinary course of such business and neither
Company nor any Subsidiary of Company has: (i) suffered a Material Adverse
Effect, or become aware of any circumstances which might reasonably be expected
to result in such a Material Adverse Effect; or suffered any material casualty
loss to its assets (regardless of whether such assets are insured), except for
losses that, individually or in the aggregate, would not have a Material Adverse
Effect; (ii) incurred any material obligations, except in the ordinary course of
business consistent with past practices; (iii) permitted or allowed any assets
to be mortgaged, pledged, or subjected to any lien or encumbrance, except for
liens for taxes not yet due and payable and liens and encumbrances that,
individually or in the aggregate, would not have a Material Adverse Effect; (iv)
written down the value of any inventory, contract or other intangible asset, or
written off as uncollectible any notes or accounts receivable or any portion
thereof, except for write-downs and write-offs in the ordinary course of
business, consistent with past practice and at a rate no greater than during the
latest completed fiscal year; cancelled any other debts or claims, or waived any
rights of substantial value, or sold or transferred any of its material
properties or assets, real, personal, or mixed, tangible or intangible, except
in the ordinary course of business and consistent with past practice and except
for those that, individually or in the aggregate, would not have a Material
Adverse Effect; (v) sold, licensed or transferred or agreed to sell, license or
transfer, any of its assets, except in the ordinary course of business and
consistent with past practice; (vi) to Company's Knowledge, received notice of
any pending or threatened adverse claim or an alleged infringement of
proprietary material, whether such claim or infringement is based on trademark,
copyright, patent, license, trade secret, contract, or other restrictions on the
use or disclosure of proprietary materials; (vii) incurred obligations to refund
money to customers, except in the ordinary course of business, all of which will
have no Material Adverse Effect; (viii) become aware of any event, condition, or
other circumstance relating solely to its assets (as opposed to any such event,
condition, or circumstance which is, for example, national or industry-wide in
nature) which might reasonably be expected to have a Material Adverse Effect;
(ix) made any capital expenditures or commitments, any one of which is more than
$100,000, for additions to property, plant, or equipment without prior approval
of the Board of Directors of Company; (x) made any material change in any method
of accounting or accounting practice; (xi) paid, loaned, guaranteed, or advanced
any material amount to, or sold, transferred, or leased any material properties
or assets (real, personal, or mixed, tangible or intangible) to, or entered into
any agreement, arrangement, or transaction with any of its officers or
directors, or any business or entity in which any officer or director of
Company, or any affiliate or associate of any of such Persons has any direct or
indirect interest; or (xii) agreed to take any action described in this Section
3.01(n).
13
(o) LEASES. All leases pursuant to which Company or any Subsidiary of
Company leases real or personal property are in full force and effect, and no
event has occurred which is a default or which with the passage of time will
constitute a default by Company or any Subsidiary of Company thereunder, nor has
any such event occurred to the Knowledge of Company, which is a default by any
other party to such lease, except where any such event, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
No consent of any lessor is required in connection with the transactions
contemplated by this Agreement.
(p) LITIGATION. Except as disclosed in the Company SEC Documents,
there are no claims, actions, proceedings or governmental investigations pending
or, to the Knowledge of Company, threatened against Company or any Subsidiary of
Company, by or before any court or other Governmental Entity, which, if
adversely determined, would individually or in the aggregate have a Material
Adverse Effect. As of the date hereof, no action or proceeding has been
instituted or, to the Knowledge of Company, threatened before any court or other
Governmental Entity or regulatory body by any Person seeking to restrain or
prohibit the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby.
(q) EMPLOYEE BENEFIT PLANS.
(i) Each "employee benefit plan" (as defined by Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), and
any other bonus, profit sharing, pension, compensation, deferred compensation,
stock option, stock purchase, fringe benefit, severance, scholarship,
disability, sick leave, vacation, bonus, retention, or other plan, agreement, or
arrangement that Company or any Subsidiary of Company maintains or contributes
to, or is a party to or otherwise has any liability in respect of (each such
plan, agreement or arrangement and related trust, insurance contract or fund is
referred to herein as an "EMPLOYEE BENEFIT PLAN", and collectively, the
"EMPLOYEE BENEFIT PLANS") has, since December 31, 2001, been administered and
operated in compliance with its terms, and complied in all material respects in
form and in operation with the applicable requirements of ERISA and the Code and
other applicable law, except for such noncompliance that would not,
individually, or in the aggregate, have a Material Adverse Effect.
(ii) With respect to each Employee Benefit Plan: (A) each
Employee Benefit Plan that is intended to be qualified under Section 401(a) of
the Code has received a determination letter from the IRS to the effect that the
Employee Benefit Plan is qualified under Section 401 of the Code and that any
trust maintained pursuant thereto is exempt from federal income taxation under
Section 501 of the Code, and nothing has occurred or, to the Knowledge of
Company, is expected to occur that caused or could reasonably be expected to
cause the loss of such qualification or exemption or the imposition of any
penalty or tax liability; (B) all payments required by the Employee Benefit Plan
or by law (including all contributions, insurance premiums, premiums due the
PBGC or intercompany charges) with respect to all periods since December 31,
2001 through the date hereof have been made; (C) there are, and since December
31, 2001, there have been, no violations of or failures to comply with ERISA and
the Code with respect to the filing of applicable reports, documents, and
notices regarding the Employee Benefit Plan with DOL, the IRS, the PBGC or any
other governmental authority, or any of the assets of the Employee Benefit Plan
or any related trust, except for such violations or noncompliance that would
not, individually, or in the aggregate, have a Material Adverse Effect; (D) no
14
claims, lawsuit, arbitration or other action has been asserted or instituted or,
to the Knowledge of Company, threatened in writing against the Employee Benefit
Plan, any trustee or fiduciaries thereof, Company or any ERISA Affiliate, any
director, officer or employee thereof, or any of the assets of the Employee
Benefit Plan or any related trust since December 31, 2001 through the date
hereof, except for routine claims for benefits; and (E) to the Knowledge of
Company, the Employee Benefit Plan is not under audit or investigation by the
IRS or the DOL or any other governmental authority and no such completed audit,
if any, has resulted in the imposition of any tax, interest or penalty.
(iii) Neither the consummation of the transactions contemplated
by this Agreement nor any termination of employment following such transactions
will accelerate the time of the payment or vesting of, or increase the amount
of, compensation due to any employee or former employee whether or not such
payment would constitute an "excess parachute payment" under Section 280G of the
Code.
(iv) There are no unfunded obligations under any Employee Benefit
Plan which are not fully reflected on the Company Financial Statements, to the
extent required by GAAP.
(r) BUSINESS PRACTICES. Neither Company, any Subsidiary of Company,
nor to the Knowledge of Company, any directors, officers, agents or employees of
Company or any Subsidiary of Company (in their capacities as such) has: (i) used
any funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns; or (iii) made any other unlawful payment, in all
cases except where the impact from such contributions, gifts, entertainment,
payments, violations agreements, arrangements, actions or payments would not in
the aggregate have a Material Adverse Effect.
(s) STATE TAKEOVER STATUTES. Company is not governed by Section 203 of
the DGCL. No other "fair price," "moratorium," "control share acquisition" or
other similar state takeover statute or regulation is applicable to this
Agreement or any of the transactions contemplated by this Agreement.
(t) BROKERS AND FINDERS. Except for payment obligations to the
Financial Advisor, as set forth in the engagement letter dated as of April 16,
2003, a true, correct and complete copy of which has been provided to Xxxxxx and
the Investors prior to the date hereof, Company has not, nor will it incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or investment bankers' fees or any similar charges in connection
with this Agreement or any transaction contemplated hereby.
(u) SCHEDULE 13E-3 AND PROXY STATEMENT. Neither the Schedule 13E-3 nor
the Proxy Statement will, at the respective times filed with the SEC or first
published, sent or given to stockholders, or, in the case of the Proxy
Statement, at the date mailed to Company's stockholders and at the time of the
Stockholders' Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The Schedule 13E-3 and the Proxy Statement will, when
15
filed by Company with the SEC, comply as to form in all material respects with
the applicable provisions of the Exchange Act and the rules and regulations
thereunder. Notwithstanding the foregoing, Company makes no representation or
warranty with respect to the statements made in any of the foregoing documents
based on information supplied by or on behalf of Xxxxxx or the Investors or any
of their affiliates specifically for inclusion therein.
(v) ACCURACY OF REPRESENTATIONS. No representation or warranty by
Company contained in this Agreement and no statement contained in any
certificate or schedule furnished to Xxxxxx or the Investors pursuant to the
provisions hereof contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
SECTION 3.02. REPRESENTATIONS AND WARRANTIES OF XXXXXX. Xxxxxx represents
and warrants to Company as follows:
(a) ORGANIZATION. Xxxxxx is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
organization, and has all requisite corporate power and authority to carry on
its business as now being conducted.
(b) CORPORATE POWER AND AUTHORITY; DUE AUTHORIZATION. Xxxxxx has all
requisite corporate power and authority to enter into this Agreement, to
consummate the transactions contemplated hereby, and to comply with the
provisions of this Agreement. All corporate action on the part of Xxxxxx, its
officers, directors, and stockholders necessary for: (i) the authorization,
execution and delivery of this Agreement; (ii) the performance of all
obligations of Xxxxxx under this Agreement; and (iii) the consummation of the
transactions contemplated by this Agreement has been taken, and this Agreement
constitutes a valid and legally binding obligation of Xxxxxx, enforceable
against Xxxxxx in accordance with its terms, except as enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or other similar laws affecting creditors' rights generally, or by general
equitable principles.
(c) NO CONFLICT; CONSENTS. Except for the filing of the Certificate of
Merger as provided in Section 1.03, the execution and delivery by Xxxxxx of this
Agreement, consummation of the transactions contemplated hereby, and the
performance by Xxxxxx of its obligations hereunder, do not and will not: (A)
require the consent, approval, action, order, declaration, or authorization of,
any filing or notice to, or any registration with, any Person under any statute,
law, rule, regulation, permit, license, agreement, indenture, or other
instrument to which Xxxxxx is a party, or to which any of its respective
properties are subject; (B) violate the terms of any instrument, document, or
agreement to which Xxxxxx is a party or by which Xxxxxx, or the Property of
Xxxxxx is bound, or be in conflict with, result in a breach of, or constitute
(upon the giving or notice or lapse of time or both) a default under any such
instrument, document or agreement or result in the creation of a lien upon any
of the property or assets of Xxxxxx, except for such violations, conflicts,
breaches, and defaults which individually or in the aggregate, would not have a
material adverse effect on Xxxxxx; (C) violate Xxxxxx'x Certificate of
16
Incorporation or Bylaws; or (D) violate any order, writ, injunction, decree,
judgment, ruling, law, rule, or regulation of any Governmental Entity (as
defined in Section 8.13) applicable to Xxxxxx, the business or assets of Xxxxxx,
except for such violations which would not, individually or in the aggregate,
have a material adverse effect on Xxxxxx.
(d) CAPITALIZATION. As of the date of this Agreement, the authorized
capital stock of Xxxxxx consists of 1,000 shares of Common Stock, of which 1,000
shares are issued and outstanding. As of the date of this Agreement, there are
no other issued and outstanding shares of capital stock or voting securities of
Xxxxxx. All outstanding shares of Xxxxxx'x capital stock have been duly
authorized, and are validly issued, fully paid and nonassessable. No party has
any preemptive (whether statutory or contractual) rights in any capital stock of
Xxxxxx. There are no outstanding convertible securities, subscriptions, options,
warrants, calls, rights, commitments, or any other agreement to which Xxxxxx is
a party, or by which Xxxxxx is bound that, directly or indirectly, obligates
Xxxxxx to issue, deliver or sell or cause to be issued, delivered or sold, any
additional securities or any other capital stock of Xxxxxx, or any other
securities convertible into, or exercisable or exchangeable for, or evidencing
the right to subscribe for any such securities or any other capital stock of
Xxxxxx.
(e) SCHEDULE 13E-3 AND PROXY STATEMENT. No document filed or to be
filed by or on behalf of Xxxxxx or any of the Investors with the SEC or any
other Governmental Entity in connection with the transactions contemplated by
this Agreement nor any information supplied by or on behalf of Xxxxxx or any of
the Investors specifically for inclusion in the Schedule 13E-3 or the Proxy
Statement will, at the respective times filed with the SEC or other Governmental
Entity, or at any time thereafter when the information included therein is
required to be updated pursuant to applicable law, or, in the case of the Proxy
Statement, at the date mailed to Company's stockholders and at the time of the
Stockholders' Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading. Notwithstanding the foregoing, Xxxxxx makes no
representation or warranty with respect to the statements made in the foregoing
documents based on information supplied by or on behalf of Company or any
Subsidiary of Company, or affiliates (other than Xxxxxx and the Investors)
specifically for inclusion therein.
(f) INTERIM OPERATIONS OF XXXXXX. Xxxxxx was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement and has
engaged in no business other than in connection with the transactions
contemplated by this Agreement.
(g) CAPITAL RESOURCES. Xxxxxx has sufficient cash or access to cash to
pay the Total Cash Merger Consideration.
SECTION 3.03. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. Each
Investor, severally and not jointly with respect to such Investor, hereby
represents and warrants to Company as follows:
(a) AUTHORIZATION. The Investor has full power and authority to enter
into this Agreement, and such agreement constitutes the Investor's valid and
legally binding obligation, enforceable in accordance with its terms, except as
the enforceability of any of the aforementioned agreements may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other similar laws
17
relating to or affecting the rights of creditors generally and except that the
remedy of specific performance and injunctive relief and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
any court before which any proceeding therefor may be brought.
(b) PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with
such Investor in reliance upon such Investor's representation to Company, which
by the Investor's execution of this Agreement such Investor hereby confirms,
that the Merger Shares to be received by such Investor pursuant to the Merger
will be acquired for investment for such Investor's own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof, and that such Investor has no present intention of selling, granting
any participation in, or otherwise distributing the same. By executing this
Agreement, such Investor further represents that such Investor does not have any
contract, undertaking, agreement or arrangement with any Person to sell,
transfer or grant participations to such Person or to any third Person, with
respect to any of such Merger Shares.
(c) DISCLOSURE OF INFORMATION. The Investor represents that he has had
an opportunity to ask questions and receive answers from Company regarding the
terms and conditions of the offering of the Merger Shares and the business,
properties, prospects, and financial condition of Company. The Investor also
acknowledges that to the extent he is a member of the Board of Directors of
Company, he receives information regarding Company incident with such position.
The foregoing, however, does not limit or modify the representations and
warranties of Company in Section 3.01 of this Agreement or the right of the
Investor to rely thereon.
(d) INVESTMENT EXPERIENCE. The Investor is an investor in securities
of companies in the development stage and acknowledges that he is able to fend
for himself, can bear the economic risk of his investment, and has such
knowledge and experience in financial or business matters that he is capable of
evaluating the merits and risks of the investment in the Merger Shares.
(e) ACCREDITED INVESTOR. The Investor is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated under the Securities
Act, as presently in effect.
(f) RESTRICTED SECURITIES. The Investor understands that the Merger
Shares he is purchasing are characterized as "restricted securities" under the
federal securities laws inasmuch as they are being acquired from Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act only in certain limited circumstances. In this connection,
the Investor represents that he is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act, and acknowledges that the provisions of SEC Rule 144 are
unlikely to be available for resales of the Merger Shares.
18
(g) FURTHER LIMITATIONS ON DISPOSITION. Without in any way limiting
the representations set forth above, the Investor further agrees not to make any
disposition of all or any portion of the Merger Shares unless and until:
(i) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
(ii) (A) The transferee can and will make in writing,
representations to Company of the type set forth in subparagraphs (a) through
(f) of Section 3.02, and has agreed in writing for the benefit of Company to be
bound by the provisions of this Section 3.03(g); (B) the Investor shall have
notified Company of the proposed disposition; and (C) if requested by Company,
the Investor shall have furnished Company with an opinion of counsel, reasonably
satisfactory to Company that such disposition will not require registration of
such shares under the Securities Act. It is agreed that Company will not require
opinions of counsel for transactions made pursuant to Rule 144, if available.
(iii) Notwithstanding the provisions of clauses (i) and (ii)
above, no such registration statement or opinion of counsel shall be necessary
for a transfer by the Investor by gift, will or intestate succession, if the
transferee agrees in writing to be subject to the terms hereof to the same
extent as if he or she were the Investor hereunder.
(h) LEGENDS. It is understood that the certificates evidencing the
Merger Shares may bear the following legends:
(i) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD
PURSUANT TO RULE 144 OF SUCH ACT."
(ii) Any legend required by applicable state securities laws.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01 CONDUCT OF BUSINESS OF COMPANY. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement and the Effective Time, except as otherwise required or
contemplated hereunder or as required by applicable law, without the prior
written consent of Xxxxxx, Company shall, and shall cause each Subsidiary of
Company to:
(a) use all reasonable efforts to conduct its business in all material
respects only in the ordinary course of business and consistent with past
practice;
(b) not amend its Certificate or Articles of Incorporation or Bylaws
or declare, set aside or pay any dividend, or other distribution or payment in
cash, stock, or property in respect of its capital stock or acquire, directly or
indirectly, any of its capital stock, other than the declaration or payment of a
19
cash dividend by Company to holders of Preferred Stock in accordance with their
terms or dividends declared or paid by a wholly-owned Subsidiary;
(c) not issue, grant, sell, or pledge or authorize the issuance,
grant, sale, or pledge of any shares of, or rights of any kind to acquire any
shares of, its capital stock other than (i) Company Common Stock issuable upon
the exercise of stock options outstanding on or prior to the date of this
Agreement or the conversion of any convertible securities outstanding on or
prior to the date of this Agreement or (ii) options to acquire shares of Company
Common Stock to no more than 5 Persons pursuant to existing stock option plans;
(d) not, without the prior approval of the Board of Directors of
Company, (i) sell, transfer, lease, or otherwise dispose of or encumber any
assets which are material, individually or in the aggregate, to Company's
business, taken as a whole, except in the ordinary course of business and
consistent with past practice; or (ii) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof, or otherwise acquire or
agree to acquire any assets which are material, individually or in the
aggregate, to its business, taken as a whole, or acquire or agree to acquire any
equity securities of any Person;
(e) use all commercially reasonable efforts to preserve intact its
business organizations and to keep available the services of its present key
officers and employees;
(f) not, without the prior approval of the Board of Directors of
Company, enter into or amend any Material Contract, except in the ordinary
course of business and consistent with past practice;
(g) not adopt a plan of complete or partial liquidation or adopt
resolutions providing for the complete or partial liquidation, dissolution,
consolidation, merger, restructuring, or recapitalization of Company;
(h) except in the ordinary course of business and consistent with past
practice, not grant any severance or termination pay (otherwise than pursuant to
policies or contracts in effect on the date hereof and described in the
Disclosure Letter) to, or enter into any employment agreement with, any of its
executive officers or directors;
(i) not: (i) increase, except as consistent with past practice in the
ordinary course of business, the compensation payable or to become payable to
its officers or employees; (ii) enter into any contract or other binding
commitment in respect of any such increase with any of its directors, officers
or other employees, except in the ordinary course of business and consistent
with past practice; or (iii) establish, adopt, enter into, make any new grants
or awards under, or amend any collective bargaining agreement or Employee
Benefit Plan, except as required by applicable law, including any obligation to
engage in good faith collective bargaining, to maintain tax-qualified status or
as may be required by any Employee Benefit Plan as the date hereof;
(j) not, without the prior approval of the Board of Directors of
Company, settle or compromise any material claims, or litigation or, except in
the ordinary course of business consistent with past practice, modify, amend, or
terminate any of its Material Contracts or waive, release, or assign any
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material rights or claims, or make any payment, direct or indirect, of any
material liability before the same becomes due and payable in accordance with
its terms;
(k) not take any action, other than reasonable and usual actions in
the ordinary course of business and consistent with past practice with respect
to accounting policies or procedures (including tax accounting policies and
procedures), except as may be required by the SEC, the Financial Accounting
Standards Board or GAAP;
(l) confer at such times as Xxxxxx may reasonably request with one or
more representatives of Xxxxxx and the Investors to report material operational
matters and the general status of ongoing operations (in each case to the extent
Xxxxxx reasonably requires such information);
(m) not, without prior approval of the Board of Directors of Company:
(i) enter into any loan or credit agreement, or incur any indebtedness (other
than borrowings under its existing credit agreement); (ii) guarantee any
indebtedness or amend any existing loan or credit agreement; (iii) make or enter
into an agreement or contract for capital expenditures, except for capital
expenditures in the ordinary course of business consistent with past practice,
that exceed $100,000 or $250,000 in the aggregate; or (iv) enter into any
agreement or contract outside the ordinary course of business of Company;
(n) not adjust, split, combine, or reclassify its capital stock;
(o) not create or acquire any subsidiaries;
(p) not make any material tax election or settle or compromise any
material tax liability; and
(q) not authorize, or enter into any agreement or arrangement to do
any of the foregoing, or otherwise to take any of the foregoing actions, or any
action that could reasonably be expected to make any of Company's
representations or warranties contained in this Agreement untrue or incorrect or
prevent Company from performing or cause Company not to perform one or more
covenant required hereunder to be performed by Company.
SECTION 4.02 SUPERIOR PROPOSALS.
(a) At any time prior to obtaining the Requisite Vote, the Board of
Directors of Company may, in response to a Superior Proposal:
(i) withdraw or modify in a manner adverse to Xxxxxx, or
propose publicly to withdraw or modify in a manner adverse to Xxxxxx,
the recommendation or declaration of advisability by such Board of
Directors of this Agreement or the Merger or recommend, or propose
publicly to recommend, the approval or adoption of any Superior
Proposal or resolve or agree to take such action (an "ADVERSE
RECOMMENDATION"); and
(ii) cause Company to terminate this Agreement pursuant to
Section 7.01(f)(ii) and concurrently enter into a letter of intent,
memorandum of understanding, agreement in principle, acquisition
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agreement, merger agreement, option agreement, joint venture
agreement, partnership agreement, or other agreement (each, an
"ACQUISITION AGREEMENT") with respect to such Superior Proposal;
PROVIDED, HOWEVER, that Company shall not terminate this Agreement pursuant to
Section 7.01(f)(ii), and any purported termination pursuant to Section
7.01(f)(ii) shall be void and of no force or effect, unless Company shall have
complied with all the provisions of this Section 4.02, including the
notification provisions in this Section 4.02, and with all applicable
requirements of Section 5.08(b) (including the payment of the Expense
Reimbursement (as defined in Section 5.08(b)) prior to or concurrently with such
termination) in connection with such Superior Proposal; and PROVIDED FURTHER,
HOWEVER, that Company shall not exercise its right to terminate this Agreement
pursuant to Section 7.01(f)(ii) until after the second Business Day following
Xxxxxx'x receipt of written notice (a "NOTICE OF SUPERIOR PROPOSAL") from
Company advising Xxxxxx that the Board of Directors of Company has received a
Superior Proposal, specifying the terms and conditions of the Superior Proposal,
identifying the person making such Superior Proposal, stating that the Board of
Directors of Company intends to exercise its right to terminate this Agreement
pursuant to Section 7.01(f)(ii), and including copies of all documents and
written communications relating to such Superior Proposal exchanged between
Company or any of its officers, directors, investment bankers, attorneys,
accountants, or other advisors, on the one hand, and the party making a Superior
Proposal or any of its officers, directors, investment banks, attorneys,
accountants, or other advisors, on the other hand (it being understood and
agreed that, prior to any such termination taking effect, any amendment to the
price or any other material term of a Superior Proposal shall require a new
Notice of Superior Proposal and a new two Business Day period). For purposes of
this Agreement, the term "SUPERIOR PROPOSAL" means any bona fide written offer
made by a third party which, if consummated, would result in such third party
(or in the case of a direct merger between such third party and Company, the
stockholders of such third party) acquiring, directly or indirectly, more than
50% of the voting power of Company or all or substantially all the assets of
Company and its subsidiaries, taken as a whole, for consideration consisting of
cash and/or securities that the Board of Directors of Company or a committee
thereof determines in its good faith judgment to have a higher value per share
than the Per Share Cash Merger Consideration payable in the Merger and which
proposal is determined in good faith by the Board of Directors of Company or a
committee thereof to be more favorable to Company's stockholders than the
Merger, in each case taking into account any changes to the terms of this
Agreement proposed by Xxxxxx in response to such Superior Proposal or otherwise.
(b) Nothing contained in this Section 4.02 or elsewhere in this
Agreement shall prohibit Company from: (i) taking and disclosing to its
stockholders a position contemplated by Rule 14d-9 and Rule 14e-2(a) promulgated
under the Exchange Act; or (ii) making any disclosure to Company's stockholders
if, in the good faith judgment of the Board of Directors of Company, failure so
to disclose would be inconsistent with applicable Delaware Law.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01 STOCKHOLDERS' MEETING. Subject to applicable law and the other
provisions of this Agreement, Company shall, in accordance with Delaware Law,
its Certificate of Incorporation and its Bylaws: (a) duly call, give notice of,
22
convene, and hold a special meeting of its stockholders as soon as reasonably
practicable for the purpose of considering and taking action upon this Agreement
(the "STOCKHOLDERS' MEETING"); (b) include in the proxy statement or information
statement prepared by Company for distribution to stockholders of Company in
advance of the Stockholders' Meeting (the "PROXY STATEMENT") in accordance with
Regulation 14A or Regulation 14C promulgated under the Exchange Act, the
recommendation of the Board of Directors that the stockholders of Company adopt
this Agreement; and (c) use all reasonable efforts: (i) to obtain and furnish
the information required to be included by it in the Proxy Statement, including
any information required to be disclosed on Schedule 13E-3 and, after
consultation with Xxxxxx, respond promptly to any comments made by the
Commission with respect to the Proxy Statement and any preliminary version
thereof and cause the Proxy Statement to be mailed to its stockholders at the
earliest practicable time; and (ii) to obtain the necessary approvals by its
stockholders of this Agreement and the transactions contemplated thereby. Xxxxxx
will promptly provide Company with the information concerning Xxxxxx and the
Investors required to be included in the Proxy Statement, including any
information required to be disclosed on Schedule 13E-3.
SECTION 5.02 PREPARATION OF PROXY STATEMENT AND SCHEDULE 13E-3.
(a) Company shall, as soon as reasonably practicable, prepare a
preliminary form of the Proxy Statement (the "PRELIMINARY PROXY STATEMENT") and
the Schedule 13E-3. Company shall: (i) file the Preliminary Proxy Statement and
the Schedule 13E-3 with the SEC promptly after it has been prepared in a form
reasonably satisfactory to Xxxxxx; (ii) use reasonable efforts to promptly
prepare any amendments to the Preliminary Proxy Statement or the Schedule 13E-3
required in response to comments of the SEC or its staff or that Company with
the advice of counsel deems necessary or advisable; and (iii) use reasonable
efforts to cause the Proxy Statement to be mailed to Company's stockholders as
soon as reasonably practicable after the Preliminary Proxy Statement, as so
amended, is cleared by the SEC. After the Proxy Statement shall have been mailed
to Company's stockholders, Company, if required, shall promptly circulate
amended or supplemental proxy material and, if required in connection therewith,
resolicit proxies; PROVIDED, HOWEVER, that no such amended or supplemental proxy
material will be mailed by Company without consultation with and review by
Xxxxxx and its outside counsel. In addition, Company shall: (i) promptly notify
Xxxxxx of the receipt of the comments of the SEC and of any request from the SEC
for amendments or supplements to the preliminary proxy statement or Proxy
Statement or for additional information, and will promptly supply Xxxxxx and its
outside counsel with copies of all written correspondence between Company or its
representatives, on the one hand, and the SEC or members of its staff, on the
other hand, with respect to the Preliminary Proxy Statement, the Proxy
Statement, the Schedule 13E-3 or the Merger; and (ii) promptly inform Xxxxxx and
its outside counsel if at any time prior to the Stockholders' Meeting any event
should occur that is required by applicable law to be set forth in an amendment
of, or a supplement to, the Proxy Statement, in which case, Company, in
consultation with Xxxxxx and its outside counsel, will, upon learning of such
event, promptly prepare and mail such amendment or supplement.
(b) It is expressly understood and agreed that: (i) Xxxxxx and Company
will consult with each other in connection with all aspects of the preparation,
filing, and clearance by the SEC of the Proxy Statement, Preliminary Proxy
Statement, and Schedule 13E-3 (including any and all amendments or supplements
thereto); (ii) Company shall give Xxxxxx and its outside counsel the reasonable
23
opportunity to review and comment on each of the Proxy Statement, Preliminary
Proxy Statement and Schedule 13E-3 prior to filing with the SEC and shall give
Xxxxxx and its outside counsel the reasonable opportunity to review and comment
on all amendments and supplements to each of the Proxy Statement, Preliminary
Proxy Statement, and Schedule 13E-3 and all responses to requests for additional
information and replies to comments prior to filing with the SEC and each of
Company and Xxxxxx agrees to use all reasonable efforts, after consultation with
the other, to respond promptly to all such comments of and requests by the SEC;
and (iii) to the extent practicable and desired by Xxxxxx, Company and its
outside counsel shall permit Xxxxxx and its outside counsel to participate in
all communications with the SEC and its staff (including all meetings and
telephone conferences) relating to each of the Proxy Statement, Preliminary
Proxy Statement, and Schedule 13E-3 or any of the transactions contemplated
thereby (provided that, Xxxxxx shall not separately communicate with the SEC and
in the event that such participation by Xxxxxx is not practicable or desired by
Xxxxxx, Company shall promptly inform Xxxxxx and its counsel of the content of
all such communications and the participants involved therein).
SECTION 5.03 ACCESS TO INFORMATION.
(a) During the period commencing on the date hereof and continuing
until the earlier of the termination of this Agreement and the Effective Time,
Company shall: (i) afford Xxxxxx and its accountants, counsel, and other
representatives, reasonable access during normal business hours to (A) all of
Company's properties, books, contracts, commitments, and records, and (B) all
other information concerning the business, properties, and personnel of Company
as Xxxxxx may reasonably request; and (ii) Company shall provide to Xxxxxx and
its accountants, counsel and other representatives true, correct and complete
copies of internal financial statements promptly upon request.
(b) Subject to compliance with applicable law, from the date hereof
until the earlier of the termination of this Agreement and the Effective Time,
Company shall confer from time to time as requested by Xxxxxx with one or more
representatives of Xxxxxx to discuss any material changes or developments in the
operational matters of Company and the general status of the ongoing operations
of Company.
(c) No information or knowledge obtained in any investigation pursuant
to this Section 5.03 shall affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the parties
hereto to consummate the Merger.
SECTION 5.04 PUBLIC DISCLOSURE. Unless otherwise permitted by this
Agreement, Xxxxxx and Company shall consult with each other before issuing any
press release or otherwise making any public statement or making any other
public (or non-confidential) disclosure (regardless of whether it is in response
to an inquiry) regarding the terms of this Agreement or the transactions
contemplated hereby, and neither party shall issue any such press release or
make any such statement or disclosure without the prior approval of the other
(which approval shall not be unreasonably withheld), including any press release
or public statement or disclosure required by law, by judicial process or by
obligations pursuant to any listing agreement with any national securities
exchange. If compliance with both of the preceding provisions of this Section
24
5.04 and such law, judicial process or listing agreement is impractical, the
party proposing to issue such press release or make such public statement or
disclosure shall use its commercially reasonable efforts to consult with the
other party before issuing such press release or making such public statement or
disclosure.
SECTION 5.05 CONSENTS; COOPERATION.
(a) Each of Xxxxxx and Company shall promptly after the execution of
this Agreement apply for or otherwise seek, and use its commercially reasonable
efforts to obtain, all consents and approvals required to be obtained by it for
the consummation of the Merger.
(b) As soon as practicable after the date hereof, Company shall use
its commercially reasonable efforts to obtain prior to the Closing, and deliver
to Xxxxxx at or prior to the Closing, all consents, waivers and approvals under
each contract listed or described in Section 5.05(b) of the Disclosure Letter,
each such contract to be that which Company is a party in respect of which the
failure to obtain a novation or consent to assignment in connection with the
Merger or any other transaction contemplated by this Agreement, individually or
in the aggregate, could reasonably be expected to materially and adversely
affect Company's ability to operate the business of Company in the same manner
as such business was operated by Company prior to the Effective Time, or
required to be obtained in connection with the consummation of the transactions
contemplated hereby for the assignment thereof or otherwise.
SECTION 5.06 LEGAL REQUIREMENTS. Each of Xxxxxx and Company shall: (i) take
all reasonable actions necessary to comply promptly with all legal requirements
that may be imposed on it with respect to the consummation of the transactions
contemplated by this Agreement; (ii) cooperate with and furnish information to
any party hereto necessary in connection with any such requirements imposed upon
such other party in connection with the consummation of the transactions
contemplated by this Agreement; and (iii) take all reasonable actions necessary
to obtain (and shall cooperate with the other parties hereto in obtaining) any
consent, approval, order or authorization of, or any registration, declaration
or filing with, any Governmental Entity, required to be obtained or made in
connection with the taking of any action contemplated by this Agreement.
SECTION 5.07. COMMERCIALLY REASONABLE EFFORTS; FURTHER ASSURANCES. On the
terms and subject to the conditions set forth in this Agreement, each of the
parties hereto shall use its commercially reasonable efforts, and shall
cooperate with each other party hereto, to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, appropriate or
desirable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other transactions contemplated hereby,
including the satisfaction of the respective conditions set forth in Article VI.
Without limiting the generality or effect of the foregoing, in the event an
injunction or other order preventing the consummation of the Merger shall have
been issued by a court of competent jurisdiction, each party hereto shall its
use commercially reasonable efforts to have such injunction or other order
lifted. Each party hereto, at the reasonable request of another party hereto,
shall execute and deliver such other instruments and do and perform such other
acts and things as may be necessary or reasonably desirable for effecting
completely the consummation of the Merger and the other transactions
contemplated hereby.
25
SECTION 5.08. FEES AND EXPENSES.
(a) Except as expressly set forth in this Section 5.08, all fees and
expenses incurred in connection with this Agreement, the Merger, and the other
transactions contemplated by this Agreement shall be paid by the party incurring
such fees or expenses, whether or not the Merger is consummated.
(b) In the event that this Agreement is terminated by: (i) Xxxxxx
pursuant to Section 7.01(e)(i), Section 7.01(e)(ii), Section 7.01(e)(iii) or
Section 7.01(e)(iv); or (ii) Company pursuant to Section 7.01(f)(ii), then
Company shall pay to Xxxxxx upon demand, payable in same day funds, the actual,
documented out-of-pocket costs and expenses of Xxxxxx and each of the Investors
reasonably incurred in connection with this Agreement and the transactions
contemplated by this Agreement (including any financing fees, costs and
expenses, and the reasonable fees of attorneys, accountants, brokers, investment
advisors and other representatives and advisors), up to a maximum of $75,000
(the "EXPENSE REIMBURSEMENT"). Company acknowledges that the agreements
contained in this Section 5.08(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Xxxxxx and
the Investors would not enter into this Agreement; accordingly, if Company fails
promptly to pay the amounts due pursuant to this Section 5.08(b), and, in order
to obtain such payment, Xxxxxx commences a suit that results in a judgment
against Company for the amounts set forth in this Section 5.08(b), Company shall
pay to Xxxxxx its reasonable costs and expenses (including attorneys' fees and
expenses) in connection with such suit and any appeal relating thereto, together
with interest on the amounts set forth in this Section 5.08(b) at the prime rate
of Citibank, N.A. in effect on the date such payment was required to be made.
SECTION 5.09. TAX DISCLOSURE. Notwithstanding anything in this Agreement to
the contrary or in any other agreement between the parties, each party to this
Agreement (and each employee, representative, or other agent of each party) may
disclose to any and all Persons, without limitation of any kind, the tax
treatment and tax structure of the transaction contemplated by this Agreement
and all materials of any kind (including opinions or other tax analyses) that
are provided to the taxpayer relating to such tax treatment and tax structure;
each party acknowledges that it has no proprietary or exclusive rights to the
tax structure of the transaction. The preceding sentence is intended to cause
the transaction contemplated herein to be treated as not having been offered
under conditions of confidentiality for purposes of Section 1.6011-4(b)(3) (or
any successor provision) of the Treasury Regulations promulgated under Section
6011 of the Code and shall be construed in a manner consistent with such
purpose. Each party recognizes that the privilege each has to maintain with
respect to the confidentiality of the transaction contemplated by this Agreement
or the confidentiality of a communication relating to such transaction,
including a confidential communication with its attorney or with a federally
authorized tax practitioner under Section 7252 of the Code, is not intended to
be waived by the foregoing.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER.
The respective obligations of each party hereto to consummate the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
26
Closing of each of the following conditions, any of which may be waived, in
writing, by agreement of all the parties hereto (it being understood that each
such condition is solely for the benefit of the parties hereto and may be waived
in writing by their mutual agreement without notice, liability, or obligation to
any Person):
(a) STOCKHOLDER APPROVAL. This Agreement shall have been adopted and
the Merger shall have been approved, in each case by the Requisite Vote.
(b) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary, or permanent injunction or other order issued by any court
of competent jurisdiction or other legal or regulatory restraint or prohibition
preventing the consummation of the Merger shall be in effect, nor shall any
proceeding brought by a Governmental Entity seeking any of the foregoing be
pending. No action taken by any Governmental Entity, and no statute, rule,
regulation or order shall have been enacted, entered, enforced, or deemed
applicable to the Merger, which makes the consummation of the Merger illegal.
(c) GOVERNMENTAL APPROVALS. All consents, authorizations, orders, and
approvals of (or filings or registrations with) any Governmental Entity or any
other Person required to be obtained or made prior to the Effective Time in
connection with the execution, delivery, and performance of this Agreement and
the consummation of the transactions contemplated hereby shall have been
obtained or made, except for the filing of the Certificate of Merger pursuant to
Section 1.03.
(d) TERMINATION OF REGISTRATION. Based upon a calculation jointly
prepared and agreed to on the Closing Date by Company and Xxxxxx, as of the
Measurement Date, after giving effect to the Merger, the Company Common Stock
will be Held of Record by fewer than 300 Persons, and Company will be eligible
to terminate registration of the Company Common Stock under Section 12(g) of the
Exchange Act, and suspend its obligation to file periodic reports under Section
13 of the Exchange Act.
(e) OPINION OF FINANCIAL ADVISOR. The Financial Advisor shall not have
withdrawn its opinion delivered to the Special Committee of the Board of
Directors of Company, dated June 4, 2003, or its consent for Company to include
the name of the Financial Advisor and a description of such opinion in Company's
Schedule 13E-3 and Proxy Statement.
SECTION 6.02. ADDITIONAL CONDITIONS TO OBLIGATIONS OF COMPANY. The
obligations of Company to consummate the transactions contemplated hereby shall
be subject to the satisfaction at or prior to the Closing of each of the
following conditions, any of which may be waived, in writing, by Company (it
being understood that each such condition is solely for the benefit of Company
and may be waived in writing by Company in its sole discretion without notice,
liability or obligation to any Person):
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) For purposes of this Section 6.02(a), the accuracy of the
representations and warranties of Xxxxxx set forth in this Agreement shall be
assessed as of the date of this Agreement and as of the Closing with the same
effect as though all such representations and warranties had been made on and as
27
of the Closing (provided that representations and warranties which are confined
to a specified date shall speak only as of such date). There shall not exist
inaccuracies in the representations and warranties of Xxxxxx set forth in this
Agreement such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, a material adverse effect on (A) the business,
assets, liabilities, operations, results of operations, properties (including
intangible properties), regulatory status or condition (financial or otherwise)
of Xxxxxx; (B) the legality, validity, binding effect or enforceability of this
Agreement, or (C) the ability of Xxxxxx to perform its obligations under this
Agreement; PROVIDED THAT, for purposes of this sentence only, those
representations and warranties which are qualified by references to "material"
or "material adverse effect" or to the "knowledge" of any Person shall be deemed
not to include such qualifications. Xxxxxx shall have performed and complied in
all material respects with all covenants, obligations, and conditions of this
Agreement required to be performed and complied with by it at or prior to the
Closing.
(ii) The representations and warranties of the Investors in this
Agreement shall be true and correct in all respects on and as of the date hereof
and on and as of the Closing Date as though such representations and warranties
were made on and as of such date.
(b) RECEIPT OF CERTIFICATES OF XXXXXX AND THE INVESTORS. Company shall
have received: (i) a certificate executed on behalf of Xxxxxx by an authorized
officer of Xxxxxx certifying that the conditions set forth in Section 6.02(a)(i)
shall have been satisfied; and (ii) a certificate executed by each of the
Investors certifying that the conditions set forth in Section 6.02(a)(ii) shall
have been satisfied.
SECTION 6.03. ADDITIONAL CONDITIONS TO OBLIGATIONS OF XXXXXX. The
obligations of Xxxxxx to consummate the transactions contemplated hereby shall
be subject to the satisfaction at or prior to the Closing of each of the
following conditions, any of which may be waived, in writing, by Xxxxxx (it
being understood that each such condition is solely for the benefit of Xxxxxx
and may be waived in writing by Xxxxxx in its sole discretion without notice,
liability or obligation to any Person):
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. For purposes of this
Section 6.03(a), the accuracy of the representations and warranties of Company
set forth in this Agreement shall be assessed as of the date of this Agreement
and as of the Closing with the same effect as though all such representations
and warranties had been made on and as of the Closing (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date). There shall not exist inaccuracies in the
representations and warranties of Company set forth in Sections 3.01(b), 3.01(e)
(solely as it relates to the authorized and outstanding capitalization of
Company), 3.01(f), 3.01(g), and 3.01(s). There shall not exist any inaccuracies
in the other representations and warranties of Company set forth in this
Agreement such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, a Material Adverse Effect; PROVIDED THAT, for
purposes of this sentence only, those representations and warranties which are
qualified by references to "material" or "Material Adverse Effect" or to the
"knowledge" of any Person shall be deemed not to include such qualifications.
Company shall have performed and complied in all material respects with all
covenants, obligations, and conditions of this Agreement required to be
performed and complied with by it at or prior to the Closing.
28
(b) RECEIPT OF CERTIFICATE OF COMPANY. Xxxxxx shall have received a
certificate executed on behalf of Company by an authorized officer of Company
certifying that the conditions set forth in Section 6.03(a) shall have been
satisfied.
(c) THIRD PARTY CONSENTS. Xxxxxx shall have received evidence
satisfactory to it of the consent or approval of those Persons whose consent or
approval shall be required in connection with the Merger under each contract
listed in Section 5.05(b) of the Disclosure Letter.
(d) NO MATERIAL ADVERSE EFFECT. There shall not have occurred after
the date hereof any change, event or condition that, individually or in the
aggregate with any other changes, events and conditions, has resulted in, or
that could reasonably be expected to result in, a Material Adverse Effect.
(e) DISSENTERS. The aggregate number of Dissenting Shares shall not
exceed 10% of the total number of shares of Company Common Stock on the Closing
Date.
(f) TOTAL CASH MERGER CONSIDERATION. The amount of Total Cash Merger
Consideration shall not exceed $600,000.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01 TERMINATION. This Agreement may be terminated and the Merger
abandoned:
(a) by mutual written consent duly authorized by the respective Boards
of Directors of Xxxxxx and Company;
(b) by either Xxxxxx or Company, if the Effective Time shall not have
occurred on or before 181 days from the date hereof; PROVIDED, HOWEVER, that the
right to terminate this Agreement under this paragraph (b) shall not be
available to any party whose misrepresentation in this Agreement or whose
failure to perform any of its covenants and agreements or to satisfy any
obligation under this Agreement has been the cause of or resulted in the failure
of the Merger to occur on or before such date;
(c) by either Xxxxxx or Company, if any federal, state or foreign
court of competent jurisdiction or other Governmental Entity shall have issued
any judgment, injunction, order or decree prohibiting, enjoining or otherwise
restraining the transactions contemplated by this Agreement and such judgment,
injunction, order or decree shall have become final and nonappealable (provided
however, that the party seeking to terminate this Agreement pursuant to this
paragraph (c) shall have used reasonable efforts to remove such judgment
injunction, order or decree) or if any statute, rule, regulation or executive
order promulgated or enacted by any federal or state governmental authority
after the date of this Agreement which prohibits the consummation of the Merger
shall be in effect;
(d) by either Xxxxxx or Company, if this Agreement is not adopted and
the Merger is not approved at the Stockholders' Meeting (including any
adjournment or postponement thereof permitted by this Agreement) by the
Requisite Vote;
29
(e) by Xxxxxx, if: (i) Company shall have breached any representation,
warranty, or covenant contained herein in any material respect, and (A) such
breach shall not have been cured within ten Business Days (as defined in Section
8.13) after receipt by Company of written notice of such breach (PROVIDED,
HOWEVER, that no such cure period shall be available or applicable to any such
breach that by its nature cannot be cured), and (B) if not cured at or prior to
the Closing, such breach would result in the failure of any of the conditions
set forth in Section 6.03(a) to be satisfied; (ii) the Stockholders' Meeting
shall not have occurred on or before 180 days from the date hereof; (iii) an
Adverse Recommendation has occurred, or (iv) a Material Adverse Effect shall
have occurred; and
(f) by Company: (i) if Xxxxxx shall have breached any representation,
warranty or covenant contained herein in any material respect, and (A) such
breach shall not have been cured within ten Business Days (as defined in Section
8.13) after receipt by Xxxxxx of written notice of such breach (PROVIDED,
HOWEVER, that no such cure period shall be available or applicable to any such
breach that by its nature cannot be cured), and (B) if not cured at or prior to
the Closing, such breach would result in the failure of any of the conditions
set forth in Section 6.03(b) to be satisfied; or (ii) in accordance with the
terms and subject to the conditions of Section 4.02(a).
SECTION 7.02 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Company or Xxxxxx as provided in Section 7.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Company, Xxxxxx, or any Investor, other than
Section 5.08, this Section 7.02 and Article VIII and except for any material
willful breach of this Agreement by any party hereto (which material willful
breach and liability therefor shall not be affected by termination of this
Agreement).
SECTION 7.03 EXTENSION; WAIVER. At any time prior to the Effective Time,
any party hereto may, to the extent legally allowed: (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto;
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto; and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party. Without
limiting the generality or effect of the preceding sentence, no delay in
exercising any right under this Agreement shall constitute a waiver of such
right, and no waiver of any breach or default shall be deemed a waiver of any
other breach or default of the same or any other provision in this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. NON SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
warranties, representations and covenants of Company, Xxxxxx and the Investors
contained in or made pursuant to this Agreement shall not survive the Effective
Time; PROVIDED, HOWEVER, that this Section 8.01 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Effective Time.
30
SECTION 8.02. INDEMNITY BY COMPANY.
(a) INDEMNIFICATION. Company shall indemnify, defend, and hold
harmless Xxxxxx, its officers, directors, and stockholders, and each Investor
and their respective successors and permitted assigns and their representatives,
attorneys, consultants and agents (individually, an "INDEMNIFIED PARTY" and
collectively, the "INDEMNIFIED PARTIES") from and against any and all losses,
damages, costs, and expenses (including reasonable attorneys' fees but excluding
claims for lost profit) ("DAMAGES") resulting from, arising from, or caused by
any claims of current or former stockholders of Company against Xxxxxx or its
directors, any Investor, any Affiliate of Investor, or Company, any Affiliate of
Company, or any of their respective directors, made in connection with or
related to the Merger or any other transaction contemplated by this Agreement,
or the execution and delivery of this Agreement; PROVIDED, HOWEVER, that the
foregoing indemnity agreement shall not apply to any Damages to the extent, but
only to the extent, arising out of or based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to Company by Xxxxxx or any
Investor expressly for use in the Preliminary Proxy Statement, Proxy Statement,
or the Schedule 13E-3 (or any amendment or supplement thereto).
(b) CLAIMS PROCEDURES.
(i) If any claim, action at law, or suit in equity is instituted
by a current or former stockholder of Company against an Indemnified Party with
respect to which an Indemnified Party intends to claim indemnification for any
Damages under paragraph (a) of this Section 8.02, such Indemnified Party shall
give written notice to Company of such claim, action or suit with reasonable
promptness. The failure to give the notice required by this paragraph (b) with
reasonable promptness shall not relieve Company of its indemnification
obligations hereunder except to the extent that Company is actually prejudiced
as a result of the failure to give such notice.
(ii) The Indemnified Party shall have the right to conduct and
control, through counsel of its choosing, the defense of such third party action
or suit and shall do so in good faith; PROVIDED, HOWEVER, that the engagement of
such counsel by the Indemnified Party shall be subject to the approval of the
Board of Directors of Company, such approval not to be unreasonably withheld or
delayed; PROVIDED, FURTHER, that Company may participate at its own expense,
with counsel of its choosing, in the defense of such third party action or suit
although such action or suit shall be controlled by the Indemnified Party. If
the Indemnified Party does not notify Company that it is assuming the right to
conduct and control the defense of such third party action or suit when it
delivers the initial notice of the third party claim, Company shall have the
right, at the expense of Company, to conduct and control, through counsel of its
choosing, the defense of such third party action or suit and shall do so in good
faith; PROVIDED, FURTHER, that the Indemnified Party may participate at its own
expense, with counsel of its choosing, in the defense of such third party action
or suit although such action or suit shall be controlled by Company.
(iii) The Indemnified Party and Company shall cooperate with each
other to the fullest extent possible in regard to all matters relating to the
third-party claim, including corrective actions required by applicable Law,
31
assertion of defenses, the determination, mitigation, negotiation and settlement
of all amounts, costs, actions, penalties, damages and the like related thereto,
access to the books and records of Company and its Subsidiaries, and, if
necessary, providing the party controlling the defense of the third party claim
and its counsel with any powers of attorney or other documents required to
permit the party controlling the defense of the third party claim and its
counsel to act on behalf of the other party.
(iv) Neither the Indemnified Party nor Company shall settle any
such third party claim without the consent of the other party, which consent
shall not be unreasonably withheld; PROVIDED, HOWEVER, that if such settlement
involves the payment of money only and the release of all claims and the
Indemnified Party is completely indemnified therefore and nonetheless refuses to
consent to such settlement, Company shall cease to be obligated for such third
party claim. Any compromise or settlement of the claim under this paragraph (b)
shall include as an unconditional term thereof the giving by the claimant in
question to Company and the Indemnified Party of a release of all liabilities in
respect of such claims.
(c) With respect to any indemnifiable claim hereunder, the amount
recoverable by any Indemnified Party shall take into account any reimbursements
realized by such Indemnified Party from insurance policies or other
indemnification sources, arising from the same incident or set of facts or
circumstances giving rise to the claim for indemnification. Upon the payment of
the indemnified claim from Company to any Indemnified Party, Company shall have
a right of subrogation with respect to any insurance proceeds or other rights to
third party reimbursement for such claims held by the Investors.
SECTION 8.03. ASSIGNMENT; SUCCESSORS AND ASSIGNS; NO THIRD PARTY
BENEFICIARIES. Neither this Agreement nor any of the rights, interests, or
obligations hereunder shall be assigned, in whole or in part, by operation of
law or otherwise by any of the parties without the prior written consent of the
other parties, except that the Investors may assign, in their sole discretion,
any of or all the rights, interests, and obligations of Xxxxxx under this
Agreement to any Affiliate of the Investors. Subject to the preceding sentence,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties. Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
SECTION 8.04 GOVERNING LAW. This Agreement shall be governed by and
construed under the Delaware Law, without regard to the conflict of law
principles of said State.
SECTION 8.05 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties hereto and delivered to the other parties hereto.
SECTION 8.06 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
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SECTION 8.07 NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be delivered:
(a) by hand; (b) by U.S. mail, certified mail, return receipt requested; or (c)
by facsimile to the party to be notified, at the following address or telecopy
number indicated for such party, or at such other address or telecopy number as
such party may designate by ten (10) days' advance written notice to the other
parties:
If to Company:
CareCentric, Inc.
0000 Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxx
Telecopy: (000) 000-0000
with copies to:
Xxxxxx Xxxxxx Xxxxxxx LLP
2800 One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx
Telecopy: (000) 000-0000
Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxxx
Telecopy: (000) 000-0000
If to Xxxxxx or the Investors:
000 Xxxxx Xxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxx
Telecopy: (000) 000-0000
with copies to:
Xxxxxxxxxx Xxxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Telecopy: (000) 000-0000
33
Notices shall be deemed to have been given and served: (i) where delivered by
hand, at time of delivery; (ii) where delivered by U.S. mail, on acknowledgment
of receipt as shown by the date indicated on the return receipt as having been
received; and (iii) where delivered by facsimile, 24 hours after transmission
confirmation by the transmitting machine unless, within those 24 hours the
intended recipient has informed the sender that the transmission was received in
an incomplete or garbled form, or the transmission report of the sender
indicates a faulty or incomplete transmission. If such receipt is on a day that
is not a working day or is later than 5 p.m. (local time) on a working day, the
notice shall be deemed to have been given and served on the next working day.
SECTION 8.08 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power, or remedy accruing to Xxxxxx or any Investor upon any breach or
default of Company under this Agreement shall impair any such right, power, or
remedy of Xxxxxx or the Investors, nor shall it be construed to be a waiver of
any such breach or default or an acquiescence thereto, or to any similar breach
or default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of Xxxxxx or any Investors of any breach or default under
this Agreement, or any waiver on the part of Xxxxxx or any Investor of any
provisions or conditions of this Agreement, must be made in writing and shall be
effective only to the extent specifically set forth in such writing.
SECTION 8.09 EXPENSES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
SECTION 8.10 AMENDMENTS AND WAIVERS. This Agreement may be amended by the
parties at any time prior to the Effective Time; PROVIDED, HOWEVER, that, upon
obtaining the Requisite Vote, no amendment shall be made that by law requires
further approval by the stockholders of Company, without such approval. This
Agreement may not be amended or modified except by an instrument in writing
signed on behalf of each of the parties hereto. At any time prior to the
Effective Time, Xxxxxx or Company may, to the extent legally allowed, extend the
time specified herein for the performance of any of the obligations or other
acts of the other, waive any inaccuracies in the representations and warranties
of the other contained herein or in any document delivered pursuant hereto, or
waive compliance by the other with any of the agreements or covenants of such
other party or parties (as the case may be) contained herein. Any such extension
or waiver shall be valid only if set forth in a written instrument signed on
behalf of the party or parties to be bound thereby. No such extension or waiver
shall constitute a waiver of, or estoppel with respect to, any subsequent or
other breach or failure to strictly comply with the provisions of this
Agreement. The failure of any party to insist on strict compliance with this
Agreement or to assert any of its rights or remedies hereunder or with respect
hereto shall not constitute a waiver of such rights or remedies.
SECTION 8.11 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provisions were so excluded and shall be enforceable in accordance with its
terms.
34
SECTION 8.12 ENTIRE AGREEMENT. This Agreement, the documents referred to
herein and the documents delivered in connection herewith constitute the entire
agreement among the parties and no party shall be liable or bound to any other
party in any manner by any warranties, representations, or covenants except as
specifically set forth herein or therein.
SECTION 8.13. DEFINITIONS. For purposes of this Agreement:
(a) an "AFFILIATE" of any Person means another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person;
(b) a "BUSINESS DAY" means a day other than a Saturday, Sunday or
federal holiday;
(c) a "CONTINUING HOLDER" means a Person who, as of the Measurement
Date, Held the Minimum Number or more of shares of Company Common Stock;
(d) a "GOVERNMENTAL ENTITY" means any supranational, national, state,
municipal, local or foreign government, any court, tribunal, arbitrator,
administrative agency, commission or other governmental official, authority or
instrumentality, in each case whether domestic or foreign, any stock exchange or
similar self-regulatory organization or any quasi-governmental or private body
exercising any regulatory, taxing or other governmental or quasi-governmental
authority;
(e) "HELD" means having the power to vote or dispose, or to direct the
voting or disposition, of Company Common Stock, PROVIDED, HOWEVER, that no
Person will be deemed to have Held shares of Company Common Stock with respect
to which such Person has an obligation to forward communications to beneficial
owners pursuant to Rule 14b-1 or Rule 14b-2 promulgated under the Exchange Act;
(f) "HELD OF RECORD" has the meaning assigned in Rule 12g5-1 under the
Exchange Act, as interpreted by the SEC;
(g) as it relates to Company, "KNOWLEDGE" or "KNOWN" means, with
respect to any matter in question, or refers to, the actual knowledge of the
chief executive officer or chief financial officer of Company;
(h) a "MATERIAL ADVERSE EFFECT" on or with respect to Company means
any state of facts, change, development, effect or occurrence (any such item, an
"EFFECT") that is, or is likely to be, materially adverse to (i) the business,
assets, liabilities, operations, results of operations, properties (including
intangible properties), regulatory status or condition (financial or otherwise)
of Company and its subsidiaries, taken as a whole; (ii) the legality, validity,
binding effect or enforceability of this Agreement, or (iii) the ability of
Company to perform its obligations under this Agreement; PROVIDED, HOWEVER, that
for purposes of clause (i) of this definition, an Effect shall be deemed to be
"materially adverse" only if it will, or would reasonably be expected to, cost
Company (or reduce its value by) an amount equal to or in excess of $375,000;
PROVIDED, FURTHER, that in no event shall any of the following, alone or in
combination, be deemed to constitute, nor shall any of the following be taken
into account in determining whether there has been, or will be, a material
adverse effect on or with respect to Company: (A) actions or omissions of
Company or any Subsidiary of Company taken with the prior written consent of
Xxxxxx; (B) any change in the price or trading volume of Company Common Stock in
35
and of itself (but not any Effect underlying such change); (C) any Effect to the
extent (I) resulting from changes affecting the United States economy in general
or (II) generally affecting the industries in which Company operates, except, in
the case of this clause (C)(II), if the impact on Company's business is
materially disproportionate to the impact on the business of other entities
operating in such industries; (D) any Effect to the extent resulting from
changes affecting general worldwide economic or capital market conditions; or
(E) any Effect to the extent resulting from the announcement or pendency of the
Merger (except for any suit, action, investigation or proceeding if the
underlying claim is not dependent on the announcement or pendency of the
Merger);
(i) "MINIMUM NUMBER" means any one (but not more than one) of the
following three numbers, as determined by the Board of Directors (or a committee
thereof) of Company in its sole discretion: (i) 4,000; (ii) 7,000; or (iii)
10,000;
(j) a "PERSON" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, Governmental Entity,
unincorporated organization or other entity;
(k) a "SMALL STOCKHOLDER" means a Person who, as of the Measurement
Date, Held fewer than the Minimum Number of shares of Company Common Stock; and
(l) a "SUBSIDIARY" of any Person means another Person (i) of which 50%
or more of any class of capital stock, voting securities, other voting ownership
or voting partnership interests (or, if there are no such voting interests, 50%
or more of the equity interests) are owned or controlled, directly or
indirectly, by such first Person or (ii) of which such first Person is a general
partner.
SECTION 8.14. INTERPRETATION. When a reference is made in this Agreement to
an Article or to a Section, Subsection, Exhibit or Schedule, such reference
shall be to an Article of, a Section or Subsection of, or an Exhibit or Schedule
to, this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words include, includes or including are used in this Agreement, they shall
be deemed to be followed by the words without limitation. The words hereof,
hereto, hereby, herein and hereunder and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. The words "date hereof" shall refer to
the date of this Agreement. The term "or" is not exclusive. The word "extent" in
the phrase "to the extent" shall mean the degree to which a subject or other
thing extends, and such phrase shall not mean simply "if." The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms. Any agreement or instrument defined or referred to herein
or in any agreement or instrument that is referred to herein means such
agreement or instrument as from time to time amended, modified or supplemented.
References to a person are also to its permitted successors and assigns.
36
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed personally or by a duly authorized representative
thereof, all as of the date first written above.
COMPANY:
CareCentric, Inc.
By: /s/ Xxxx X. Xxxxx
-------------------------------------------
Xxxx X. Xxxxx, President and Chief
Executive Officer
XXXXXX:
Xxxxxx Associates, Inc.
By: /s/ Xxxx X. Xxxx
-------------------------------------------
Xxxx X. Xxxx, President
INVESTORS:
/s/ Xxxx X. Xxxx
-----------------------------------------------
Xxxx X. Xxxx
/s/ Xxxxxxx X. Xxxx
-----------------------------------------------
Xxxxxxx X. Xxxx
/s/ Xxxxx X. Xxxx
-----------------------------------------------
Xxxxx X. Xxxx
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