EXECUTION VERSION
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AGREEMENT AND PLAN OF MERGER
among
QUEST DIAGNOSTICS INCORPORATED,
QUEST DIAGNOSTICS NEWCO INCORPORATED
and
UNILAB CORPORATION
Dated as of April 2, 2002
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions..........................................................................................2
ARTICLE II
THE OFFER
SECTION 2.01 The Offer............................................................................................8
SECTION 2.02 Company Action......................................................................................12
SECTION 2.03 Directors...........................................................................................13
SECTION 2.04 Exchange Fund; Distributions on Shares of Parent Common Stock.......................................14
ARTICLE III
THE MERGER
SECTION 3.01 The Merger..........................................................................................14
SECTION 3.02 Effective Time; Closing.............................................................................15
SECTION 3.03 Effect of the Merger................................................................................15
SECTION 3.04 Certificate of Incorporation; By-Laws...............................................................15
SECTION 3.05 Directors and Officers..............................................................................16
ARTICLE IV
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 4.01 Conversion of Securities............................................................................16
SECTION 4.02 Exchange of Certificates............................................................................17
SECTION 4.03 Stock Transfer Books................................................................................20
SECTION 4.04 Company Stock Options...............................................................................20
SECTION 4.05 Appraisal Rights....................................................................................22
SECTION 4.06 Affiliates..........................................................................................22
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 5.01 Organization and Qualification; Subsidiaries........................................................22
SECTION 5.02 Certificate of Incorporation and By-Laws............................................................23
SECTION 5.03 Capitalization......................................................................................23
SECTION 5.04 Authority Relative to This Agreement................................................................24
SECTION 5.05 No Conflict; Required Filings and Consents..........................................................24
SECTION 5.06 Permits; Compliance.................................................................................25
SECTION 5.07 SEC Filings; Financial Statements...................................................................27
SECTION 5.08 Information to Be Supplied..........................................................................28
SECTION 5.09 Absence of Certain Changes or Events................................................................29
SECTION 5.10 Absence of Litigation...............................................................................29
SECTION 5.11 Employee Benefit Plans..............................................................................29
SECTION 5.12 Labor and Employment Matters........................................................................31
SECTION 5.13 Property and Leases.................................................................................32
SECTION 5.14 Intellectual Property...............................................................................32
SECTION 5.15 Taxes 33
SECTION 5.16 Environmental Matters...............................................................................34
SECTION 5.17 Material Contracts..................................................................................35
SECTION 5.18 Insurance...........................................................................................37
SECTION 5.19 Board Approval; Vote Required.......................................................................37
SECTION 5.20 Related Party Transactions..........................................................................37
SECTION 5.21 Guarantee by Subsidiaries...........................................................................38
SECTION 5.22 Customers...........................................................................................38
SECTION 5.23 Receivables.........................................................................................38
SECTION 5.24 Brokers.............................................................................................38
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 6.01 Corporate Organization..............................................................................39
SECTION 6.02 Certificate of Incorporation and By-Laws............................................................39
SECTION 6.03 Capitalization......................................................................................39
SECTION 6.04 Authority Relative to this Agreement................................................................40
SECTION 6.05 No Conflict; Required Filings and Consents..........................................................40
SECTION 6.06 SEC Filings; Financial Statements...................................................................41
SECTION 6.07 Information to Be Supplied..........................................................................42
SECTION 6.08 No Vote Required....................................................................................42
SECTION 6.09 Operations of Merger Sub............................................................................42
SECTION 6.10 Tax Matters.........................................................................................43
SECTION 6.11 Brokers 43
SECTION 6.12 Employee Benefit Plans..............................................................................43
SECTION 6.13 Absence of Parent Material Adverse Effect...........................................................43
SECTION 6.14 Litigation..........................................................................................44
SECTION 6.15 Permits; Compliance.................................................................................44
SECTION 6.16 Financing...........................................................................................46
ARTICLE VII
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 7.01 Conduct of Business by the Company Pending the Merger...............................................46
SECTION 7.02 Conduct of Business by Parent Pending Consummation of the Merger....................................48
ARTICLE VIII
ADDITIONAL AGREEMENTS
SECTION 8.01 Company Stockholder Meeting.........................................................................50
SECTION 8.02 Preparation of Merger Registration Statement and Proxy Statement/Prospectus.........................50
SECTION 8.03 Access to Information; Confidentiality..............................................................51
SECTION 8.04 No Solicitation of Transactions.....................................................................51
SECTION 8.05 Employee Benefits Matters...........................................................................53
SECTION 8.06 Directors' and Officers' Indemnification and Insurance..............................................54
SECTION 8.07 Notification of Certain Matters.....................................................................56
SECTION 8.08 Company Affiliates..................................................................................56
SECTION 8.09 Further Action; Reasonable Best Efforts.............................................................56
SECTION 8.10 Plan of Reorganization..............................................................................57
SECTION 8.11 Merger Sub..........................................................................................58
SECTION 8.12 Letters of Accountants..............................................................................58
SECTION 8.13 NYSE Listing........................................................................................58
SECTION 8.14 Public Announcements................................................................................59
SECTION 8.15 Transfer Tax........................................................................................59
SECTION 8.16 Transaction Fees and Expenses.......................................................................59
SECTION 8.17 Restrictions on Acquisition of Company Common Stock.................................................59
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.01 Conditions to the Obligations of Each Party.........................................................60
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01 Termination........................................................................................60
SECTION 10.02 Effect of Termination..............................................................................61
SECTION 10.03 Payment of Certain Fees; Expenses..................................................................61
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01 Non-Survival of Representations and Warranties.....................................................63
SECTION 11.02 Amendments, Modification and Waiver................................................................63
SECTION 11.03 Notices 64
SECTION 11.04 Severability.......................................................................................65
SECTION 11.05 Entire Agreement; Assignment.......................................................................65
SECTION 11.06 Parties in Interest................................................................................65
SECTION 11.07 Interpretation.....................................................................................65
SECTION 11.08 Specific Performance...............................................................................66
SECTION 11.09 Governing Law......................................................................................66
SECTION 11.10 Waiver of Jury Trial...............................................................................66
SECTION 11.11 Headings...........................................................................................66
SECTION 11.12 Counterparts.......................................................................................66
Annex I - Conditions of the Offer
Exhibit A - Form of Affiliate Letter
Exhibit 8.10(b) - Form of Quest Diagnostics Incorporated Tax Representation Letter
Exhibit 8.10(c) - Form of Unilab Corporation Tax Representation Letter
AGREEMENT AND PLAN OF MERGER, dated as of April 2, 2002
(this "Agreement"), among QUEST DIAGNOSTICS INCORPORATED, a Delaware
corporation ("Parent"), QUEST DIAGNOSTICS NEWCO INCORPORATED, a Delaware
corporation and a direct wholly owned subsidiary of Parent ("Merger Sub"),
and UNILAB CORPORATION, a Delaware corporation (the "Company").
WHEREAS, upon the terms and subject to the conditions of
this Agreement and in accordance with the General Corporation Law of the
State of Delaware (the "DGCL"), Parent, Merger Sub and the Company will
enter into a business combination transaction pursuant to which the Company
will merge with and into Merger Sub (the "Merger");
WHEREAS, in furtherance of such transaction, it is
proposed that Merger Sub shall make an offer (as such offer may be amended
from time to time, the "Offer") to acquire each issued and outstanding
share of Company Common Stock (as defined below) in exchange for, at the
election of the holder thereof, cash or shares of Parent Common Stock (as
defined below) or a combination of cash and shares of Parent Common Stock,
all in accordance with the terms and conditions set forth in this
Agreement;
WHEREAS, the Board of Directors of the Company (the
"Company Board") has (i) determined that each of the Offer and the Merger
is fair to, and in the best interests of, the Company and its stockholders
and has approved this Agreement and declared its advisability and approved
the Offer and the Merger and the other transactions contemplated by this
Agreement, and (ii) resolved to recommend acceptance of the Offer and
adoption of this Agreement by the Company's stockholders;
WHEREAS, as a condition and as an inducement to Parent's
willingness to enter into this Agreement, Parent, Merger Sub and certain
stockholders of the Company (the "Stockholders") have entered into a
Stockholders Agreement, dated as of the date hereof (the "Stockholders
Agreement"), pursuant to which, among other things, the Stockholders have
agreed to validly tender and not withdraw pursuant to the Offer all shares
of Company Common Stock beneficially owned by them, and, under certain
circumstances, to sell the shares of Company Common Stock beneficially
owned by them to Parent;
WHEREAS, prior to the date hereof, Parent and certain key
employees of the Company have entered into employment agreements (the
"Employment Agreements") that are subject to, and effective upon,
consummation of the Offer;
WHEREAS, for federal income tax purposes, the Offer and
the Merger are intended to qualify as a reorganization under the provisions
of Section 368(a) of the United States Internal Revenue Code of 1986, as
amended (the "Code"), and that this Agreement shall constitute a plan of
reorganization;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be
legally bound hereby, Parent, Merger Sub and the Company hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. (a) For purposes of this Agreement:
"Acceptance Date" means the date on which Merger Sub
accepts for payment or exchange all shares of Company Common Stock
validly tendered and not withdrawn pursuant to the Offer.
"affiliate" of a specified person means a person who,
directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such
specified person.
"beneficial owner", with respect to any Company Common
Stock, has the meaning ascribed to such term under Rule 13d-3 of
the Exchange Act.
"business day" means any day on which the principal
offices of the SEC in Washington, D.C. are open to accept filings,
or, in the case of determining a date when any payment is due, any
day on which banks are not required or authorized to close in The
City of New York.
"Certificate" means a certificate or certificates
representing shares of Company Common Stock or Restricted Stock.
"Company Common Stock" means the Company's common stock,
par value $.01 per share.
"Company Material Adverse Effect" means any event,
circumstance, change, occurrence, fact or effect that,
individually or in the aggregate with all other events,
circumstances, changes, occurrences, facts and/or effects, is or
is reasonably likely to be materially adverse to the business,
condition (financial or otherwise), assets, liabilities or results
of operations of the Company and the Subsidiaries, taken as a
whole; provided, however, that the foregoing shall not include any
event, circumstance, change, occurrence, fact or effect resulting
from or relating to (w) changes in general United States economic
conditions, changes in United States financial markets in general
or changes in the general economic conditions in the California
markets in which the Company operates, in any case, provided that
the Company and its Subsidiaries are not disproportionately
affected by such changes relative to other companies in such
markets, (x) changes in the industry in which the Company and its
Subsidiaries operate or changes in the industry in the California
markets in which the Company and its Subsidiaries operate, in
either case, provided that the Company and its Subsidiaries are
not disproportionately affected by such changes relative to other
companies in such markets, (y) changes in any applicable Laws, or
(z) the public announcement of this Agreement or the transactions
contemplated hereby.
"Company Stockholder Approval" means the adoption of this
Agreement at the Company Stockholder Meeting by a majority of all
votes entitled to be cast at the Company Stockholder Meeting in
accordance with the DGCL and the Company's Third Amended and
Restated Certificate of Incorporation.
"Company Stock Options" means the options, whether or not
exercisable and whether or not vested, outstanding under the
Company Stock Option Plans.
"Company Stock Option Plans" means each of the Company's
2001 Stock Option Plan and the Company's Amended and Restated 2000
Executive Stock Option Plan, as amended to date and as they may be
further amended from time to time as expressly permitted by this
Agreement.
"control" (including the terms "controlled by" and "under
common control with") means the possession, directly or
indirectly, or as trustee or executor, of the power to direct or
cause the direction of the management and policies of a person,
whether through the ownership of voting securities, as trustee or
executor, by contract or credit arrangement or otherwise.
"Environmental Laws" means any United States federal,
state, local or non-United States law, regulation, ordinance,
rule, code, order or other requirement or rule of law now or
hereafter in effect and as amended, relating to (i) releases or
threatened releases of Hazardous Substances or materials
containing Hazardous Substances; (ii) the manufacture, handling,
transport, use, treatment, storage or disposal of Hazardous
Substances or materials containing Hazardous Substances; or (iii)
pollution or protection of the environment, human health or safety
as a result of exposure to Hazardous Substances.
"Hazardous Substances" means (i) those substances defined
in or regulated under the following United States federal statutes
and their state counterparts, and all regulations thereunder: the
Hazardous Materials Transportation Act, the Resource Conservation
and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Clean Water Act, the Safe
Drinking Water Act, the Atomic Energy Act, the Federal
Insecticide, Fungicide, and Rodenticide Act and the Clean Air Act;
(ii) petroleum and petroleum products, including crude oil and any
fractions thereof; (iii) natural gas, synthetic gas, and any
mixtures thereof; (iv) polychlorinated biphenyls, asbestos and
radon; and (v) any substance, material or waste defined or
regulated as toxic or hazardous, a pollutant or a contaminant
pursuant to any Environmental Law.
"Intellectual Property" means (i) United States,
non-United States, and international patents, patent applications
and statutory invention registrations, (ii) trademarks, service
marks, trade dress, logos, trade names, corporate names and other
source identifiers, and registrations and applications for
registration thereof, (iii) copyrightable works, copyrights, and
registrations and applications for registration thereof, and (iv)
confidential and proprietary information, including trade secrets
and know-how.
"LLC" means KEP VI, LLC.
"LP" means Xxxxx Investment Associates VI, L.P.
"NYSE" means the New York Stock Exchange.
"Parent Common Stock" means Parent's common stock, par
value $.01 per share.
"Parent Material Adverse Effect" means any event,
circumstance, change, occurrence, fact or effect that,
individually or in the aggregate with all other events,
circumstances, changes, occurrences, facts and/or effects, is or
is reasonably likely to be materially adverse to the business,
condition (financial or otherwise), assets, liabilities or results
of operations of Parent and its subsidiaries, taken as a whole;
provided, however, that the foregoing shall not include any event,
circumstance, change, occurrence, fact or effect resulting from or
relating to (w) changes in general United States economic
conditions, changes in United States financial markets in general
or changes in the general economic conditions in the California
markets in which Parent and its subsidiaries operate, in any case,
provided that Parent and its subsidiaries are not
disproportionately affected by such changes relative to other
companies in such markets, (x) changes in the industry in which
Parent and its subsidiaries operate or changes in the industry in
the California markets in which Parent and its subsidiaries
operate, in either case, provided that Parent and its subsidiaries
are not disproportionately affected by such changes relative to
other companies in such markets, (y) changes in any applicable
Laws, or (z) the public announcement of this Agreement or the
transactions contemplated hereby. All references to Parent
Material Adverse Effect contained in this Agreement shall be
deemed to refer solely to the business, condition (financial or
otherwise), assets, liabilities or results of operations of Parent
and its subsidiaries, taken as a whole, without including its
ownership of the Company and its Subsidiaries after giving effect
to the Merger.
"Parent Plans" means (i) all employee benefit plans (as
defined in Section 3(3) of ERISA) and all bonus, stock option,
stock purchase, restricted stock, incentive, deferred
compensation, retiree medical or life insurance, supplemental
retirement, severance or other benefit plans, programs or
arrangements, and all employment, termination, severance or other
contracts or agreements to which Parent or any of its subsidiaries
is a party, with respect to which Parent or any such subsidiary
has any obligation or which are maintained, contributed to or
sponsored by Parent or any such subsidiary for the benefit of any
current or former employee, officer or director of Parent or any
such subsidiary, (ii) each employee benefit plan for which Parent
or any of its subsidiaries could incur liability under Section
4069 of ERISA in the event such plan has been or were to be
terminated, and (iii) any plan in respect of which Parent or any
of its subsidiaries could incur liability under Section 4212(c) of
ERISA.
"Performance Based Company Stock Options" means each
outstanding Company Stock Option that is not a Service Based
Company Stock Option.
"person" means an individual, corporation, partnership,
limited partnership, limited liability company, syndicate, person
(including, without limitation, a "person" as defined in Section
13(d)(3) of the Exchange Act), trust, association or entity or
government, political subdivision, agency or instrumentality of a
government.
"Proxy Statement/Prospectus" means the proxy or
information statement/prospectus included in the Merger
Registration Statement relating to the Company Stockholder
Meeting.
"Receivables" means any and all accounts receivable,
notes and other amounts receivable by the Company or any
Subsidiary from third parties, including, without limitation,
customers, arising from the conduct of the business of the Company
and the Subsidiaries, whether or not in the ordinary course,
together with all unpaid financing charges accrued thereon.
"Restricted Stock" means the 50,000 shares of restricted
Company Common Stock that were issued by the Company to FNA
Clinics of America, Inc. (and which shares were subsequently
assigned to Xxxxxx X. Xxxxxxxx, Xx. and Xxxxx Xxxxx-Xxxxxxxx)
pursuant to a letter agreement, dated January 2, 2002, among
Xxxxxx X. Xxxxxxxx, Xx., Xxxxx Xxxxx-Xxxxxxxx, FNA Clinics of
America, Inc. and Unilab Acquisition Corporation, a wholly owned
subsidiary of the Company.
"Service Based Company Stock Options" means all
outstanding Class A options granted pursuant to the Company's
Amended and Restated 2000 Executive Stock Option Plan, all
outstanding options that were assumed under the Company's Amended
and Restated 2000 Executive Stock Option Plan and all outstanding
options granted pursuant to the Company's 2001 Stock Option Plan.
"Xxxxx Law" means Section 1877 of the Social Security Act
(42 U.S.C. 1395 nn).
"subsidiary" or "subsidiaries" of the Company, the
Surviving Corporation, Parent or any other person means any
corporation or other legal entity of which such person owns,
directly or indirectly, 50% or more of the outstanding common
stock or other equity interests, the holders of which are entitled
to vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
"Taxes" means any and all taxes, fees, levies, duties,
tariffs, imposts and other charges of any kind (together with any
and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any Governmental
Authority or taxing authority, including, without limitation:
taxes or other charges on or with respect to income, franchise,
windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers'
compensation, unemployment compensation or net worth; taxes or
other charges in the nature of excise, withholding, ad valorem,
stamp, transfer, value-added or gains taxes; license, registration
and documentation fees; and customers' duties, tariffs and similar
charges.
"Tendered Cash Election Shares" means all shares of
Company Common Stock validly tendered and not withdrawn pursuant
to the Offer, the holders of which have elected to receive the
Cash Consideration in the Offer.
"Tendered Stock Election Shares" means all shares of
Company Common Stock validly tendered and not withdrawn pursuant
to the Offer, the holders of which have elected to receive the
Stock Consideration in the Offer.
"Trading Day" means any day on which securities are
traded on the NASDAQ National Market or the NYSE.
"Transaction" means the transactions contemplated by this
Agreement, including the Offer and the Merger.
"Vested Company Stock Option" means each outstanding
Service Based Company Stock Option and each outstanding
Performance Based Company Stock Option, except for the Company
Stock Options identified on Section 1.01 of the Company Disclosure
Schedule.
(b) The following terms have the meanings set forth in the Sections set forth below:
Defined Term Location of Definition
------------ ----------------------
Action................................................................ ss. 5.10
Acceptance Notice..................................................... ss. 2.01(b)
Advisors.............................................................. ss. 2.02(a)
Affected Employees.................................................... ss. 8.05(b)
Agreement............................................................. Preamble
Blue Sky Laws......................................................... ss. 5.05(b)
Cash Consideration.................................................... ss. 2.01(a)
Cash Fraction......................................................... ss. 2.01(a)
Certificate of Merger................................................. ss. 3.02
CLIA.................................................................. ss. 5.06(d)
Closing............................................................... ss. 3.02
Code.................................................................. Recitals
Company............................................................... Preamble
Company Affiliate..................................................... ss. 8.08
Company Board......................................................... Recitals
Company Disclosure Schedule........................................... Article V
Company Licensed Intellectual Property................................ ss. 5.14(a)
Company Owned Intellectual Property................................... ss. 5.14(a)
Company Permits....................................................... ss. 5.06(a)
Company Preferred Stock............................................... ss. 5.03(a)
Company SEC Reports................................................... ss. 5.07(a)
Company Stockholder Meeting........................................... ss. 8.01(a)
Competing Transaction................................................. ss. 8.04(e)
Confidentiality Agreement............................................. ss. 8.03(b)
Continuing Directors.................................................. ss. 2.03(a)
Customers............................................................. ss. 5.22
DGCL.................................................................. Recitals
Effective Time........................................................ ss. 3.02
Employment Agreements................................................. Recitals
Environmental Permits................................................. ss. 5.16
ERISA................................................................. ss. 5.11(a)
Excess Amount......................................................... ss. 4.04(c)
Exchange Act.......................................................... ss. 5.07(a)
Exchange Agent........................................................ ss. 4.02(a)
Exchange Fund......................................................... ss. 4.02(a)
Expenses.............................................................. ss. 10.03(e)
Exercise Price........................................................ ss. 4.04(c)
Exercise Taxes........................................................ ss. 4.04(c)
GAAP.................................................................. ss. 5.07(b)
Governmental Authority................................................ ss. 5.05(b)
HSR Act............................................................... ss. 5.05(b)
Indemnitees........................................................... ss. 8.06(c)
Indemnifiable Claim................................................... ss. 8.06(c)
Independent Directors................................................. ss. 8.17
IRS................................................................... ss. 5.11(a)
Law................................................................... ss. 5.05(a)
Leases................................................................ ss. 5.13(d)
Liens................................................................. ss. 5.13(b)
Management Letters.................................................... ss. 5.07(d)
Material Contracts.................................................... ss. 5.17(a)
Maximum Cash Election Number.......................................... ss. 2.01(a)
Merger................................................................ Recitals
Merger Registration Statement......................................... ss. 6.07(a)
Merger Sub............................................................ Preamble
Merger Sub Common Stock............................................... ss. 4.01(c)
Minimum Condition..................................................... ss. 2.01(b)
Monthly CapEx Amount.................................................. ss. 7.01(b)
Multiemployer Plan.................................................... ss. 5.11(b)
Multiple Employer Plan................................................ ss. 5.11(b)
Offer................................................................. Recitals
Offer Consideration................................................... ss. 2.01(a)
Offer Documents....................................................... ss. 2.01(d)
Offer Exchange Agent.................................................. ss. 2.04(a)
Offer Exchange Fund................................................... ss. 2.04(a)
Offer Registration Statement.......................................... ss. 2.01(d)
Option Holder......................................................... ss. 4.04(b)
Option Shares......................................................... ss. 4.04(b)
Order................................................................. ss. 9.01(c)
Parent................................................................ Preamble
Parent Disclosure Schedule............................................ Article VI
Parent Option......................................................... ss. 4.04(a)
Parent Permits........................................................ ss. 6.15(a)
Parent Preferred Stock................................................ ss. 6.03(a)
Parent SEC Reports.................................................... ss. 6.06(a)
Parent Stock Option Plans............................................. ss. 6.03(a)
Park Avenue........................................................... ss. 5.24
Permitted Liens....................................................... ss. 5.13(b)
Plans................................................................. ss. 5.11(a)
Recommendation........................................................ ss. 2.02(a)
Related Party Agreement............................................... ss. 5.17(a)(viii)
Representation Letters................................................ ss. 8.10(b)
Representatives....................................................... ss. 8.04(a)
Restrictive Agreement................................................. ss. 5.17(a)(vii)
Reverse Merger........................................................ ss. 3.01
Schedule 14D-9........................................................ ss. 2.02(b)
Schedule TO........................................................... ss. 2.01(d)
SEC................................................................... ss. 5.07(a)
Securities Act........................................................ ss. 5.07(a)
Standstill Period..................................................... ss. 8.17
Stock Consideration................................................... ss. 2.01(a)
Stock Value........................................................... ss. 3.01
Stockholders.......................................................... Recitals
Stockholders Agreement................................................ Recitals
Subsidiary............................................................ ss. 5.01(a)
Superior Proposal..................................................... ss. 8.04(f)
Surviving Corporation................................................. ss. 3.01
Tax Opinions.......................................................... ss. 8.10(b)
Termination Date...................................................... ss. 10.01(d)
Termination Fee....................................................... ss. 10.03(a)
Third Party Acquisition Event......................................... ss. 10.03(d)
Transaction Fees...................................................... ss. 8.16
Transfer Taxes........................................................ ss. 8.15
ARTICLE II
THE OFFER
SECTION 2.01 The Offer. (a) Provided that this Agreement
shall not have been terminated in accordance with Article X and provided
that none of the events set forth in Annex I hereto shall have occurred and
be continuing (and shall not have been waived by Parent), unless otherwise
agreed by Parent and the Company, as promptly as reasonably practicable
after the public announcement of the execution of this Agreement, Parent
shall cause Merger Sub to commence (as defined in Rule 14d-2 promulgated
under the Exchange Act) the Offer to purchase each issued and outstanding
share of Company Common Stock in exchange for, at the election of the
holder thereof, either: (i) a net amount of $26.50 in cash (the "Cash
Consideration"), or (ii) 0.3256 of a share of Parent Common Stock (the
"Stock Consideration" and, together with the Cash Consideration, the "Offer
Consideration"); provided, however, that if the number of Tendered Cash
Election Shares exceeds 30% of the aggregate number of shares of Company
Common Stock issued and outstanding immediately prior to the Acceptance
Date (the "Maximum Cash Election Number"), then each Tendered Stock
Election Share shall be exchanged for the Stock Consideration and each
Tendered Cash Election Share shall be exchanged for (1) an amount in cash,
without interest, equal to the product of (x) the Cash Consideration and
(y) a fraction (the "Cash Fraction"), the numerator of which shall be the
Maximum Cash Election Number and the denominator of which shall be the
total number of Tendered Cash Election Shares, and (2) a number of shares
of Parent Common Stock equal to the product of (x) the Stock Consideration
and (y) a fraction equal to one minus the Cash Fraction. In the event the
number of Tendered Cash Election Shares is equal to or less than the
Maximum Cash Election Number, all Tendered Cash Election Shares shall be
exchanged for the Cash Consideration and all Tendered Stock Election Shares
shall be exchanged for the Stock Consideration. Subject to the foregoing
provisions of this Section 2.01(a), stockholders of the Company shall be
permitted to elect to receive the Cash Consideration for a portion of their
shares of Company Common Stock and the Stock Consideration for another
portion of their shares of Company Common Stock. Stockholders who validly
tender shares of Company Common Stock but fail to make any election shall
be deemed to have elected to receive the Stock Consideration for all shares
of Company Common Stock validly tendered.
(b) The Offer shall be subject only to (1) the condition
that there shall be validly tendered in accordance with the terms of the
Offer, prior to the expiration of the Offer, and not withdrawn, a number of
shares of Company Common Stock that, together with the shares of Company
Common Stock owned by Parent and Merger Sub, represents at least 50.1% of
the shares of Company Common Stock outstanding on a fully diluted basis
(the "Minimum Condition") and (2) the other conditions set forth in Annex I
hereto. Upon termination of the Merger Agreement, the Offer shall
immediately expire and terminate without any shares of Company Common Stock
being purchased thereunder. Merger Sub expressly reserves the right to
waive any of the conditions to the Offer and to make any change in the
terms of or conditions to the Offer; provided, however, that, without the
prior written consent of the Company, no change may be made by Merger Sub
that (i) decreases the consideration payable in the Offer; (ii) changes the
form of consideration payable in the Offer to a form other than cash or
shares of Parent Common Stock; (iii) decreases the aggregate amount of Cash
Consideration available in the Offer or changes the relative amount of Cash
Consideration available in the Offer; (iv) reduces the number of shares of
Company Common Stock sought in the Offer; (v) imposes conditions to the
Offer in addition to those set forth in Annex I; (vi) modifies or waives
the Minimum Condition; (vii) except as provided below, changes the date on
which the Offer is scheduled to expire; or (viii) makes any other change
that is adverse to the holders of Company Common Stock or to holders that
have elected a particular form of Offer Consideration. Notwithstanding the
foregoing, unless the Company otherwise consents prior thereto, Merger Sub
shall (or, in the case of clause (iii) below, shall at its option have the
right to) extend the Offer for one or more periods (not in excess of ten
business days each) (i) beyond the scheduled expiration date, which shall
initially be 25 business days following the commencement of the Offer, up
to the Termination Date, if, at the scheduled or extended expiration date
of the Offer, any of the conditions to the Offer shall not have been
satisfied or, to the extent permitted, waived, until such conditions are
satisfied or, to the extent permitted, waived, (ii) for any period required
by any rule, regulation, interpretation or position of the SEC or the staff
thereof applicable to the Offer or any period required by applicable Law,
or (iii) for an aggregate period of not more than 10 business days beyond
the latest applicable date that would otherwise be permitted under clause
(i) or (ii) of this sentence, if, as of such date, all of the conditions to
the Offer have been satisfied or waived, but the number of shares of
Company Common Stock validly tendered and not withdrawn pursuant to the
Offer equals more than 80%, but less than 90% of the outstanding shares of
Company Common Stock on a fully diluted basis; provided, however, that (x)
Parent and Merger Sub shall not be obligated to extend the Offer pursuant
to clause (i) of this sentence (but may elect to do so in accordance with
this Section 2.01(b), provided that no such extension or series of
extensions of more than 10 business days in the aggregate may be made
without the prior written consent of the Company) if the Minimum Condition
is not satisfied at the time such extension would otherwise be required, so
long as the conditions set forth in clauses (ii), (iii) and (iv) of Annex I
have been satisfied, and Parent has publicly announced such fact and its
intention not to extend the Offer at least two business days prior to the
date such extension would, but for this proviso, otherwise have been
required and (y) in the event Parent or Merger Sub elects to extend the
expiration date pursuant to clause (iii), Parent and Merger Sub shall be
deemed to have irrevocably waived all of the conditions to the Offer set
forth in paragraphs (a) through (g) of Annex I. Except as provided in
clause (iii) of the previous sentence, Parent and Merger Sub shall not be
permitted to extend the Offer without the prior written consent of the
Company at the time that all conditions to the Offer have been satisfied
or, to the extent permitted, waived. Parent and Merger Sub shall deliver
written notice to the Company (the "Acceptance Notice") of its intention to
accept for payment shares of Company Common Stock pursuant to the Offer one
business day in advance of the proposed Acceptance Date. Subject to the
foregoing and clause (c) below, and upon the terms and subject to the
conditions of the Offer, Parent shall cause Merger Sub to accept for
payment or exchange, as promptly as practicable after the expiration of the
Offer, all shares of Company Common Stock validly tendered and not
withdrawn pursuant to the Offer. Notwithstanding anything to the contrary
contained in this Article II, no certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender
for exchange of shares of Company Common Stock pursuant to the Offer, and
such fractional share interests will not entitle the owner thereof to vote
or to any rights of a stockholder of Parent. In lieu of any such fractional
shares, the Offer Exchange Agent shall, as soon as practicable after the
Acceptance Date, aggregate all such fractional shares and such fractional
shares shall be sold by the Offer Exchange Agent as agent for the holders
of such fractional shares, at the then prevailing price on the NYSE, all in
the manner provided hereinafter. Until the net proceeds of such sale or
sales have been distributed to the holders of fractional shares, the Offer
Exchange Agent shall retain such proceeds in trust for the benefit of such
holders as part of the Offer Exchange Fund. The sale of the fractional
shares by the Offer Exchange Agent shall be executed on the NYSE or through
one or more member firms of the NYSE and will be executed in round lots to
the extent practicable. The Offer Exchange Agent will determine the
portion, if any, of the net proceeds of such sale to which each holder of
fractional shares is entitled by multiplying the amount of the aggregate
net proceeds of the sale of the fractional shares by a fraction the
numerator of which is the amount of fractional shares to which such holder
is entitled and the denominator of which is the aggregate amount of
fractional shares to which all holders of fractional shares are entitled.
The Company shall pay all commissions, transfer taxes and other
out-of-pocket transaction costs, including the expenses and compensation of
the Offer Exchange Agent, incurred in connection with such sale of shares
of Parent Common Stock.
(c) Notwithstanding anything else to the contrary
contained in this Agreement, and notwithstanding the satisfaction of the
conditions set forth on Annex I, Parent shall not (unless the Company
notifies Parent otherwise) be permitted to accept for payment or exchange
any shares of Company Common Stock pursuant to the Offer if, at such time,
(i) Parent shall have breached or failed to perform in any material respect
its obligations, covenants or agreements under the Agreement, (ii) the
representations and warranties of Parent or Merger Sub contained in the
Agreement that are qualified by reference to a Parent Material Adverse
Effect shall not have been true and correct when made or as of the
Acceptance Date as if made at or at and as of such time (other than such
representations and warranties which by their terms address matters only as
of another specified date, which shall be true and correct only as of such
date), (iii) the representations and warranties of Parent or Merger Sub
contained in the Agreement that are not so qualified shall not have been
true and correct when made or as of the Acceptance Date as if made at or at
and as of such time (other than representations and warranties which by
their terms address matters only as of another specified date, which shall
be true and correct only as of such date), except, in the case of this
clause (iii) only, for such inaccuracies as have not resulted, or are not
reasonably likely to result, in a Parent Material Adverse Effect, or (iv)
Parent shall have failed to deliver a certificate signed by an executive
officer of Parent, dated the Acceptance Date, to the effect that, to such
officer's knowledge, the conditions set forth in clauses (i) through (iii)
of this subsection (c) have been satisfied.
(d) As soon as reasonably practicable on the date of
commencement of the Offer, Parent shall, and Parent shall cause Merger Sub
to, (i) file with the SEC a Tender Offer Statement on Schedule TO relating
to the Offer, which shall include an offer to purchase and letter of
transmittal/election form and such other ancillary documents as shall be
required by applicable Law (together with any amendments or supplements
thereto, the "Schedule TO"; and, together with the Offer Registration
Statement (as defined below) and such other documents pursuant to which the
Offer will be made, the "Offer Documents"), (ii) file with the SEC a
registration statement on Form S-4 to register the offer and sale of Parent
Common Stock pursuant to the Offer (the "Offer Registration Statement") and
(iii) disseminate the Offer Documents to holders of Company Common Stock.
Each of the Company and Parent shall use their reasonable efforts to have
the Offer Registration Statement declared effective under the Securities
Act as promptly as practicable after the filing thereof with the SEC and to
keep the Offer Registration Statement effective as long as necessary to
complete the Offer. Each of Parent, Merger Sub and the Company agree
promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become
false or misleading in any material respect. Parent shall, and Parent shall
cause Merger Sub to, take all steps necessary to cause the Schedule TO and
the Offer Registration Statement as so corrected to be filed with the SEC
and the other Offer Documents as so corrected to be, at such time as
reasonably agreed by Parent and the Company, disseminated to holders of
shares of Company Common Stock, in each case as and to the extent required
by applicable federal securities Laws. The Company and its counsel shall be
given an opportunity to review and comment on the Offer Documents prior to
their being filed with the SEC or disseminated to the holders of shares of
Company Common Stock. Parent shall, and Parent shall cause Merger Sub to,
provide the Company and its counsel with any comments Parent and Merger Sub
or their counsel may receive from the SEC or its staff with respect to the
Offer Documents promptly after the receipt of such comments and shall
provide the Company and its counsel an opportunity to participate in the
response of Parent or Merger Sub to such comments.
SECTION 2.02 Company Action. (a) The Company hereby
approves of and consents to the Offer and represents that the Company
Board, at a meeting duly called and held, has (i) determined that this
Agreement and the transactions contemplated hereby, including the Offer and
the Merger, are fair to and in the best interests of the Company and its
stockholders, (ii) approved and declared advisable this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, in
accordance with the DGCL, and (iii) resolved to recommend acceptance of the
Offer and, as applicable, adoption of this Agreement by the Company's
stockholders (the "Recommendation"); provided, however, that the Company
Board may withdraw, qualify, modify or amend the Recommendation as and only
to the extent permitted by Section 8.04. The Company further represents
that the Company Board has received the opinion of each of Xxxxxxx Xxxxx
Xxxxxx Inc. and Credit Suisse First Boston Corporation (the "Advisors") to
the effect that, as of the date of this Agreement, the consideration to be
received by the holders of Company Common Stock (other than Parent, the
Stockholders and their respective affiliates) in the Offer and the Merger
is, taken together, fair from a financial point of view to such holders,
and a copy of such opinions, promptly upon receipt thereof, will be
delivered to Parent. The Company hereby consents to the inclusion in the
Offer Documents of the Recommendation of the Company Board and the Company
shall not withdraw, qualify, modify or amend the Recommendation in any
manner adverse to Parent or Merger Sub except as and only to the extent
permitted by Section 8.04(d). The Company has been advised by its directors
and officers that they intend to tender all shares of Company Common Stock
beneficially owned by them into the Offer.
(b) The Company hereby agrees to file with the SEC
contemporaneously with the commencement of the Offer and disseminate to
holders of shares of Company Common Stock a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with any amendments or supplements
thereto, the "Schedule 14D-9") that, subject to Section 8.04, shall reflect
the Recommendation of the Company Board referred to in Section 2.02(a)
above. Parent and its counsel shall be given an opportunity to review and
comment on the Schedule 14D-9 prior to its being filed with the SEC or
disseminated to holders of shares of Company Common Stock. The Company
agrees to provide Parent and its counsel with any comments that the Company
or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments and shall
provide Parent and its counsel with an opportunity to participate in the
response of the Company to such comments. Each of the Company and Parent
agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect. The Company agrees to take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and to be, at such time as reasonably agreed by Parent and the Company,
disseminated to holders of shares of Company Common Stock, in each case as
and to the extent required by applicable federal securities Laws.
(c) The Company shall promptly furnish Parent with
mailing labels containing the names and addresses of all record holders of
shares of Company Common Stock and with security position listings of
shares of Company Common Stock held in stock depositories, each as of a
recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record
holders and beneficial owners of shares of Company Common Stock. The
Company shall promptly furnish Parent with such additional information,
including, without limitation, updated listings and computer files of
stockholders, mailing labels and security position listings, and such other
assistance in disseminating the Offer Documents to holders of shares of
Company Common Stock as Parent may reasonably request. Subject to the
requirements of applicable Law, and except for such steps as are necessary
to disseminate the Offer Documents and any other documents necessary to
consummate the Offer or the Merger, Parent and Merger Sub shall hold in
confidence the information contained in such labels, listings and files,
shall use such information only in connection with the Transaction, and, if
this Agreement shall be terminated in accordance with Section 10.01, shall
deliver to the Company all copies of such information then in their
possession.
SECTION 2.03 Directors. (a) Effective upon the acceptance
for payment or exchange of any shares of Company Common Stock pursuant to
the Offer, Parent shall be entitled to designate the number of directors,
rounded up to the next whole number, on the Company Board that equals the
product of (i) the total number of directors on the Company Board (giving
effect to the election of any additional directors pursuant to this Section
2.03) and (ii) the percentage that the number of shares of Company Common
Stock beneficially owned by Parent and/or Merger Sub (including shares of
Company Common Stock accepted for payment or exchange) bears to the total
number of shares of Company Common Stock outstanding, and the Company shall
take all action necessary to cause Parent's designees to be elected or
appointed to the Company Board, including increasing the number of
directors, and seeking and accepting resignations of incumbent directors.
At such time, the Company will also use its best efforts to cause
individuals designated by Parent to constitute the number of members,
rounded up to the next whole number, on (i) each committee of the Company
Board and (ii) each board of directors of each Subsidiary of the Company
identified by Parent (and each committee thereof) that represents the same
percentage as such individuals represent on the Company Board, in each case
only to the extent permitted by applicable Law. Notwithstanding the
provisions of this Section 2.03, the parties hereto shall use their
respective best efforts (including by reducing the number of directors that
Parent may designate pursuant to the first sentence of this paragraph (a),
but in no event to less than a majority of the directors on the Company
Board) to ensure that at least two of the members of the Company Board
shall, at all times prior to the Effective Time, be directors of the
Company who were directors of the Company on the date hereof (the
"Continuing Directors"); provided that if there shall be in office fewer
than two Continuing Directors for any reason, the Company Board shall cause
a person designated by the remaining Continuing Director to fill such
vacancy who shall be deemed to be a Continuing Director for all purposes of
this Agreement, or if no Continuing Directors then remain, the other
directors of the Company then in office shall designate two persons to fill
such vacancies who will not be officers or employees or affiliates of the
Company, Parent or Merger Sub or any of their respective subsidiaries and
such persons shall be deemed to be Continuing Directors for all purposes of
this Agreement.
(b) The Company's obligations to appoint Parent's
designees to the Company Board shall be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall
promptly take all actions, and shall include in the Schedule 14D-9 such
information with respect to the Company and its officers and directors, as
Section 14(f) and Rule 14f-1 require in order to fulfill its obligations
under this Section, so long as Parent shall have provided to the Company on
a timely basis in writing and be solely responsible for any information
with respect to itself, Merger Sub and their respective nominees, officers,
directors and affiliates required by Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Parent's
designees pursuant to Section 2.03(a) and until the Effective Time, the
approval of a majority of the Continuing Directors shall be required to
authorize any termination of this Agreement by the Company, any amendment
of this Agreement requiring action by the Company Board, any extension of
time for performance of any obligation or action hereunder by Parent or
Merger Sub, any waiver of compliance with any of the agreements or
conditions contained herein for the benefit of the Company, any amendment
of the certificate of incorporation or by-laws of the Company, and any
other action of the Company hereunder which adversely affects the holders
of shares of Company Common Stock (other than Parent or Merger Sub).
SECTION 2.04 Exchange Fund; Distributions on Shares of
Parent Common Stock. (a) Prior to the Acceptance Date, Parent shall
deposit, or shall cause to be deposited, with Computershare Investor
Services, LLC or a bank or trust company that may be designated by Parent
and is reasonably satisfactory to the Company (the "Offer Exchange Agent"),
for the benefit of the holders of Company Common Stock, for exchange in
accordance with the terms of the Offer set forth in Article II, (a) cash
representing the Cash Consideration payable pursuant to Section 2.01 and
(b) certificates representing the shares of Parent Common Stock issuable to
holders of Company Common Stock in the Offer pursuant to Section 2.01 (such
cash and certificates for shares of Parent Common Stock, together with any
dividends or distributions with respect thereto, being hereinafter referred
to as, the "Offer Exchange Fund"). The Offer Exchange Agent shall, pursuant
to irrevocable instructions, make cash payments and deliver the shares of
Parent Common Stock contemplated to be issued pursuant to Section 2.01 out
of the Offer Exchange Fund. Any cash and shares of Parent Common Stock
remaining in the Offer Exchange Fund seven business days following the
Acceptance Date shall be returned to Parent, which shall thereafter be
responsible to make payments to holders of Company Common Stock that have
validly tendered their shares of Company Common Stock pursuant to the
Offer.
(b) For purposes of determining entitlement to dividends
or other distributions declared on shares of Parent Common Stock, holders
of Company Common Stock who have validly tendered and not withdrawn such
shares pursuant to the Offer shall be deemed to be record holders of Parent
Common Stock as of the Acceptance Date, notwithstanding the fact that
certificates representing such shares have not yet been issued or delivered
to tendering stockholders (or, if applicable, appropriate book-entries have
not yet been made).
ARTICLE III
THE MERGER
SECTION 3.01 The Merger. At the Effective Time, upon the
terms and subject to the conditions of this Agreement and in accordance
with the DGCL, the Company shall be merged with and into Merger Sub. As a
result of the Merger, the separate corporate existence of the Company shall
cease and Merger Sub shall continue as the surviving corporation of the
Merger; provided, however, that if (i) the aggregate market value of all
shares of Parent Common Stock payable to holders of Company Common Stock
upon consummation of the Offer and the Merger, based upon the lower of the
closing price of shares of Parent Common Stock on the NYSE Composite Tape
on the date immediately prior to the Effective Time or the Acceptance Date
(the "Stock Value"), would be less than 42% of the aggregate market value
of all such shares of Parent Common Stock and all cash (including the Cash
Consideration and cash in lieu of fractional shares) payable to holders of
Company Common Stock upon consummation of the Offer and the Merger, or (ii)
Parent and/or the Company do not obtain the Tax Opinions referred to at
Section 8.10(b) and Section 8.10(c), then, at Parent's discretion, the
Merger may not be effected as described herein and may instead be effected
as a merger of Merger Sub with and into the Company in accordance with the
DGCL (the "Reverse Merger"). If the Reverse Merger is effected, then the
separate existence of Merger Sub shall cease and the Company shall become
the surviving corporation and shall continue its existence under the laws
of the State of Delaware as a wholly owned subsidiary of Parent. The
surviving corporation of the Merger or the Reverse Merger, as the case may
be, shall be herein referred to as the "Surviving Corporation". In the
event Parent elects to effect the Reverse Merger, all references to the
"Merger" in this Agreement and all other ancillary or related agreements,
documents and instruments, except where such references relate to the
qualification of the transaction as a tax-free reorganization under Section
368(a) of the Code, shall be deemed to be references to the "Reverse
Merger", and this Agreement and such other ancillary agreements, documents
and instruments shall be construed and interpreted accordingly.
SECTION 3.02 Effective Time; Closing. As promptly as
practicable after the satisfaction or, if permissible, waiver of the
conditions set forth in Article IX, but in no event later than two business
days after all such conditions have been satisfied or waived, the parties
hereto shall cause the Merger to be consummated by filing a certificate of
merger or certificate of ownership and merger (the "Certificate of Merger")
with the Secretary of State of the State of Delaware in such form as is
required by, and executed in accordance with, the relevant provisions of
the DGCL (the date and time of such filing of the Certificate of Merger (or
such later time as may be agreed by each of the parties hereto and
specified in the Certificate of Merger) being, the "Effective Time").
Immediately prior to such filing of the Certificate of Merger, a closing of
the Merger (the "Closing") shall be held at the offices of Shearman &
Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other
place as the parties shall agree, for the purpose of confirming the
satisfaction or waiver, as the case may be, of the conditions set forth in
Article IX.
SECTION 3.03 Effect of the Merger. At the Effective Time,
the effect of the Merger shall be as provided in the applicable provisions
of the DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all of the property, rights, privileges,
powers and franchises of the Company and Merger Sub shall vest in the
Surviving Corporation, and all debts, liabilities, obligations,
restrictions, disabilities and duties of each of the Company and Merger Sub
shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Surviving Corporation.
SECTION 3.04 Certificate of Incorporation; By-Laws. (a)
At the Effective Time and subject to Section 8.06(a) and Section 8.10
hereof, the Certificate of Incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation (but in the event the Reverse
Merger is effected, then the Certificate of Incorporation of the Company
shall be the Certificate of Incorporation of the Surviving Corporation,
but, by reason of the Merger, shall at the Effective Time be amended and
restated to read in its entirety as that of Merger Sub immediately prior to
the Effective Time), in either case until thereafter amended as provided by
Law and such Certificate of Incorporation.
(b) Unless otherwise determined by Parent prior to the
Effective Time, and subject to Section 8.06(a) and Section 8.10 hereof, at
the Effective Time, the By-Laws of Merger Sub, as in effect immediately
prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation until thereafter amended as provided by Law, the Certificate of
Incorporation of the Surviving Corporation and such By-Laws.
SECTION 3.05 Directors and Officers. At the Effective
Time, the directors of Merger Sub immediately prior to the Effective Time
shall be the initial directors of the Surviving Corporation, each such
director to hold office in accordance with the DGCL, the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of
the Company immediately prior to the Effective Time shall, subject to the
applicable provisions of the Certificate of Incorporation and By-Laws of
the Surviving Corporation, be the initial officers of the Surviving
Corporation, in each case until their respective successors are duly
elected or appointed and qualified.
ARTICLE IV
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 4.01 Conversion of Securities(a) . (a) Conversion
of Company Common Stock. At the Effective Time, by virtue of the Merger and
without any action on the part of Parent, Merger Sub, the Company or the
holders of Company Common Stock, each share of Company Common Stock issued
and outstanding immediately prior to the Effective Time (other than shares
to be cancelled in accordance with Section 4.01(b) and dissenting shares,
if any) shall be converted into the Stock Consideration. As of the
Effective Time, all such shares of Company Common Stock shall no longer be
outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each holder of a certificate or certificates
representing any such shares of Company Common Stock shall cease to have
any rights with respect thereto, except the right to receive the Stock
Consideration.
(b) Cancellation of Treasury Stock and Company Common
Stock Owned by Parent and Merger Sub. At the Effective Time, by virtue of
the Merger and without any action on the part of Parent, Merger Sub, the
Company or the holders of Company Common Stock, all shares of Company
Common Stock owned by the Company as treasury stock and any shares of
Company Common Stock owned by Parent, Merger Sub or any direct or indirect
wholly owned subsidiary of Parent or Merger Sub immediately prior to the
Effective Time shall, by virtue of the Merger, and without any action on
the part of the holder thereof, automatically be canceled and retired and
shall cease to exist and no consideration shall be delivered in exchange
therefor.
(c) Capital Stock of Merger Sub. At the Effective Time,
by virtue of the Merger and without any action on the part of Parent,
Merger Sub, the Company or the holders of Company Common Stock, each share
of common stock, no par value, of Merger Sub ("Merger Sub Common Stock")
outstanding immediately prior to the Effective Time shall remain
outstanding and be (or, in the case of the Reverse Merger, shall become)
one duly authorized, validly issued, fully paid and nonassessable share of
common stock of the Surviving Corporation.
(d) Conversion of Restricted Stock. At the Effective
Time, by virtue of the Merger and without any action on the part of Parent,
Merger Sub, the Company or the holders of Restricted Stock, each share of
Restricted Stock issued and outstanding immediately prior to the Effective
Time shall be converted into the right to receive the Stock Consideration,
subject to the identical vesting and forfeiture provisions that were
applicable to such share of Restricted Stock immediately prior to the
Effective Time. As of the Effective Time, all such shares of Restricted
Stock shall no longer be outstanding and shall automatically be cancelled
and retired and shall cease to exist, and each holder of a Certificate
representing any such shares of Restricted Stock shall cease to have any
rights with respect thereto, except the right to receive the Stock
Consideration subject to such vesting and forfeiture provisions.
SECTION 4.02 Exchange of Certificates. (a) Exchange
Agent. From and after the Effective Time, Parent shall deposit, or shall
cause to be deposited, with Computershare Investor Services, LLC or a bank
or trust company that may be designated by Parent and is reasonably
satisfactory to the Company (the "Exchange Agent"), for the benefit of the
holders of Company Common Stock (other than dissenting shares), for
exchange in accordance with this Article IV through the Exchange Agent,
certificates representing the shares of Parent Common Stock issuable to
holders of Company Common Stock in the Merger pursuant to Section 4.01
(such certificates for shares of Parent Common Stock, together with any
dividends or distributions with respect thereto, being hereinafter referred
to as, the "Exchange Fund"). The Exchange Agent shall, pursuant to
irrevocable instructions, deliver the shares of Parent Common Stock
contemplated to be issued pursuant to Section 4.01 out of the Exchange
Fund. Except as contemplated by Section 4.02(f) hereof, the Exchange Fund
shall not be used for any other purpose.
(b) Exchange Procedures. As promptly as practicable after
the Effective Time, Parent shall instruct the Exchange Agent to mail to
each holder of a Certificate which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock: (i) a letter of
transmittal (which shall be in customary form and shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange
Agent) and (ii) instructions for use in effecting the surrender of the
Certificates pursuant to such letter of transmittal. Upon surrender to the
Exchange Agent of a Certificate for cancellation, together with such letter
of transmittal, duly completed and validly executed in accordance with the
instructions thereto, and such other documents as may be required pursuant
to such instructions, the holder of such Certificate shall be entitled to
receive in exchange therefor (A) a certificate representing that number of
whole shares of Parent Common Stock which such holder has the right to
receive, if any, in respect of the Company Common Stock formerly
represented by such Certificate (after taking into account all Company
Common Stock then held by such holder), (B) cash in lieu of any fractional
shares of Parent Common Stock to which such holder is entitled pursuant to
Section 4.02(e) and (C) any dividends or other distributions to which such
holder is entitled pursuant to Section 4.02(c), and the Certificate so
surrendered shall forthwith be cancelled. In the event of a transfer of
ownership of Company Common Stock that is not registered in the transfer
records of the Company, a certificate representing the proper number of
shares of Parent Common Stock, cash in lieu of any fractional shares of
Parent Common Stock to which such holder is entitled pursuant to Section
4.02(e) and any dividends or other distributions to which such holder is
entitled pursuant to Section 4.02(c) may be issued to a transferee if the
Certificate representing such Company Common Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and
effect such transfer and by evidence that any applicable stock transfer
taxes have been paid. Until surrendered as contemplated by this Section
4.02, each Certificate shall be deemed at all times after the Effective
Time to represent only the right to receive upon such surrender the
certificate representing shares of Parent Common Stock, cash in lieu of any
fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 4.02(e) and any dividends or other distributions to
which such holder is entitled pursuant to Section 4.02(c).
(c) Distributions with Respect to Unexchanged Shares of
Parent Common Stock. No dividends or other distributions declared or made
after the Effective Time with respect to the Parent Common Stock with a
record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate with respect to the shares of Parent Common Stock
represented thereby, and no cash payment in lieu of any fractional shares
shall be paid to any such holder pursuant to Section 4.02(e), until the
holder of such Certificate shall surrender such Certificate. Subject to the
effect of escheat, tax or other applicable Laws, following surrender of any
such Certificate, there shall be paid to the holder of the certificates
representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, (i) the amount of any cash payable with respect
to a fractional share of Parent Common Stock to which such holder is
entitled pursuant to Section 4.02(e) and the amount of dividends or other
distributions with a record date after the Effective Time and theretofore
paid with respect to such whole shares of Parent Common Stock, and (ii) at
the appropriate payment date, the amount of dividends or other
distributions, with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with
respect to such whole shares of Parent Common Stock.
(d) No Further Rights in Company Common Stock. All shares
of Parent Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms hereof (including any cash paid
pursuant to Section 4.02(c) or (e)) shall be deemed to have been issued at
the Effective Time in full satisfaction of all rights pertaining to such
Company Common Stock.
(e) No Fractional Shares. No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon
the surrender for exchange of Certificates pursuant to Section 4.01, and
such fractional share interests will not entitle the owner thereof to vote
or to any rights of a stockholder of Parent. In lieu of any such fractional
shares, the Exchange Agent shall, as soon as practicable after the
Effective Time, aggregate all such fractional shares and such fractional
shares shall be sold by the Exchange Agent as agent for the holders of such
fractional shares, at the then prevailing price on the NYSE, all in the
manner provided hereinafter. Until the net proceeds of such sale or sales
have been distributed to the holders of fractional shares, the Exchange
Agent shall retain such proceeds in trust for the benefit of such holders
as part of the Exchange Fund. The sale of the fractional shares by the
Exchange Agent shall be executed on the NYSE or through one or more member
firms of the NYSE and will be executed in round lots to the extent
practicable. The Exchange Agent will determine the portion, if any, of the
net proceeds of such sale to which each holder of fractional shares is
entitled by multiplying the amount of the aggregate net proceeds of the
sale of the fractional shares by a fraction the numerator of which is the
amount of fractional shares to which such holder is entitled and the
denominator of which is the aggregate amount of fractional shares to which
all holders of fractional shares are entitled. The Company shall pay all
commissions, transfer taxes and other out-of-pocket transaction costs,
including the expenses and compensation of the Exchange Agent, incurred in
connection with such sale of shares of Parent Common Stock.
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund that remains undistributed to the holders of the Company
Common Stock for six months after the Effective Time shall be delivered to
Parent, upon demand, and any holders of Company Common Stock who have not
theretofore complied with this Article IV shall thereafter look only to
Parent for the shares of Parent Common Stock, any cash in lieu of
fractional shares of Parent Common Stock to which they are entitled
pursuant to Section 4.02(e) and any dividends or other distributions with
respect to the Parent Common Stock to which they are entitled pursuant to
Section 4.02(c). Any portion of the Exchange Fund remaining unclaimed by
holders of Company Common Stock five years after the Effective Time (or
such earlier date which is immediately prior to such time as such amounts
would otherwise escheat to or become property of any Governmental
Authority) shall, to the extent permitted by applicable Law, become the
property of Parent free and clear of any claims or interest of any person
previously entitled thereto.
(g) No Liability. Neither Parent nor the Surviving
Corporation shall be liable to any holder of Company Common Stock for any
such Parent Common Stock (or dividends or distributions with respect
thereto) or cash delivered to a public official pursuant to any abandoned
property, escheat or similar Law.
(h) Withholding Rights. Each of the Surviving Corporation
and Parent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of Company
Common Stock such amounts as it is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of
state, local or foreign Tax Law. To the extent that amounts are so withheld
by the Surviving Corporation or Parent, as the case may be, such withheld
amounts shall be treated for all purposes of this Agreement as having been
paid to the holder of the Company Common Stock in respect of which such
deduction and withholding was made by the Surviving Corporation or Parent,
as the case may be.
(i) Lost, Stolen or Destroyed Certificates. If any
Certificate shall have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming such Certificate to be
lost, stolen or destroyed and, if required by Parent or the Surviving
Corporation, the posting by such person of a bond, in such reasonable
amount as Parent or the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the whole number of shares of Parent Common
Stock, any cash in lieu of fractional shares of Parent Common Stock to
which the holders thereof are entitled pursuant to Section 4.02(e) and any
dividends or other distributions to which the holders thereof are entitled
pursuant to Section 4.02(c).
SECTION 4.03 Stock Transfer Books. At the Effective Time,
the stock transfer books of the Company shall be closed and there shall be
no further registration of transfers of shares of Company Common Stock
thereafter on the records of the Company. From and after the Effective
Time, the holders of Certificates representing Company Common Stock or
Restricted Stock outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such Company Common Stock or
Restricted Stock, as the case may be, except as otherwise provided in this
Agreement or by Law. On or after the Effective Time, any Certificates
properly presented to the Exchange Agent or Parent for any reason shall be
cancelled and converted in accordance with the terms of this Article IV.
SECTION 4.04 Company Stock Options. (a) At or immediately
prior to the Effective Time, each Company Stock Option that is not
exercised prior to the Effective Time (other than any Company Stock Option
that will be cancelled pursuant to the Employment Agreements) shall, by
virtue of the Merger and without any further action on the part of any
holder thereof, be assumed by Parent and deemed to constitute an option
(each, a "Parent Option") to acquire, on the same terms and conditions as
were applicable under such Company Stock Option (subject to Section
4.04(h)), the same number of shares of Parent Common Stock as the holder of
such Company Stock Option would have been entitled to receive pursuant to
Section 4.01 of this Agreement had such holder exercised such Company Stock
Option in full immediately prior to the Effective Time (rounded to the
nearest whole number), at a price per share (rounded down to the nearest
whole cent) equal to (x) the aggregate exercise price for the shares of
Company Common Stock otherwise purchasable pursuant to such Company Stock
Option divided by (y) the number of shares, or fraction thereof, of Parent
Common Stock purchasable pursuant to the Parent Option in accordance with
the foregoing. The other terms of each such Company Stock Option shall
continue to apply in accordance with their terms, except that the vesting
price targets applicable to each unvested Performance Based Company Stock
Option that is outstanding immediately prior to the Effective Time shall be
equal to (i) the vesting price targets applicable to such unvested
Performance Based Company Stock Option immediately prior to the Effective
Time divided by (ii) the Stock Consideration.
(b) Subject to Sections 4.04(c) and 4.04(d) below, each
holder (an "Option Holder") of a Vested Company Stock Option may elect to
exercise such Vested Company Stock Option prior to the Acceptance Date
(subject to consummation of the Offer) for the purpose of tendering into
the Offer all of the shares of Company Common Stock (the "Option Shares")
issuable to such person upon exercise of the Vested Company Stock Option.
(c) An Option Holder that exercises a Vested Company
Stock Option between the date hereof and the Acceptance Date shall not be
required to deliver payment of the exercise price (the "Exercise Price")
thereof to the Company simultaneously upon exercise of such option if the
Option Holder (1) notifies the Company that such person intends to tender
into the Offer in accordance with its terms all of the Option Shares
issuable upon such exercise, (2) instructs the Company to deliver the
Option Shares to the Offer Exchange Agent, and (3) elects to receive the
Cash Consideration in exchange for all, but not less than all, of such
tendered Option Shares. If an Option Holder has satisfied clauses (1), (2)
and (3) of this Section 4.04(c), the Company shall cooperate with the Offer
Exchange Agent in determining the aggregate amount of withholding/payroll
taxes (the "Exercise Taxes") that such Option Holder has incurred or will
incur in connection with the exercise of the Vested Company Stock Option,
and the Offer Exchange Agent shall deduct the sum of the Exercise Price and
the Exercise Taxes from the aggregate Offer Consideration otherwise payable
to the Option Holder in connection with the tender of such person's Option
Shares into the Offer. If the sum of the Exercise Price and the Exercise
Taxes exceeds the Cash Consideration that is payable to the Option Holder
(the "Excess Amount"), then the Offer Exchange Agent shall promptly notify
the Option Holder of the Excess Amount and, if applicable, shall not
deliver any Stock Consideration otherwise payable to such person until the
Offer Exchange Agent, on behalf of the Company, has received payment in
full of the Excess Amount from the Option Holder. Parent shall cause the
Offer Exchange Agent to promptly deliver to the Company any amounts
received in connection with the payment by an Option Holder of the Exercise
Price and the Exercise Taxes.
(d) If an Option Holder (x) wishes to exercise a Vested
Company Stock Option for the purpose of tendering into the Offer all of the
Option Shares received thereby, and (y) does not wish to receive the Cash
Consideration in exchange for all, but not less than all, of such Option
Shares, then (A) simultaneously upon delivery of notice of exercise of such
option, the Option Holder must (1) notify the Company that such person
intends to tender into the Offer in accordance with its terms all of the
Option Shares issuable upon exercise of the Vested Company Stock Option,
(2) instruct the Company to deliver the Option Shares to the Offer Exchange
Agent, and (3) notify the Company that it will, prior to the Acceptance
Date, deliver to the Offer Exchange Agent, on behalf of the Company,
payment of the Exercise Price in cash or by check (provided that, if the
Option Holder does not deliver the Exercise Price in full to the Offer
Exchange Agent prior to the Acceptance Date, then such person shall be
deemed not to have exercised the Vested Company Stock Option and not to
have tendered any Option Shares into the Offer); and (B) promptly following
the Acceptance Date, deliver to the Offer Exchange Agent, on behalf of the
Company, payment of the aggregate Exercise Taxes in cash or by certified
check. The Offer Exchange Agent shall not deliver to any such Option Holder
any portion of the Offer Consideration otherwise payable to such person in
exchange for tendered Option Shares until the Exercise Price and all
Exercise Taxes have been paid in full.
(e) If an Option Holder wishes to exercise a Vested
Company Stock Option between the date hereof and the Acceptance Date other
than in accordance with Section 4.04(c) or Section 4.04(d) hereof, the
Option Holder may exercise such Vested Company Stock Option only in
accordance with the terms of such option, including with respect to the
timing of payment of the exercise price thereof.
(f) Subject to the parenthetical contained in Section
4.04(d)(A)(3) above, all Option Shares that are issued prior to the
Acceptance Date in connection with the exercise of any Vested Company Stock
Options shall constitute issued and outstanding shares of Company Common
Stock for purposes of Section 2.01, including, without limitation, for
purposes of determining the Maximum Cash Election Number.
(g) Prior to the commencement of the Offer, the Company
shall be permitted to amend each outstanding Company Stock Option Plan and
each outstanding Company Stock Option in accordance with Section 4.04(g) of
the Company Disclosure Schedule.
(h) At or prior to the Effective Time, Parent shall take
all corporate action necessary to reserve for issuance a sufficient number
of shares of Parent Common Stock for delivery upon exercise of the Parent
Options.
(i) At or prior to the Effective Time, Parent shall file
with the SEC a registration statement on Form S-8 (or any successor or
other appropriate form) with respect to the shares of Parent Common Stock
subject to Parent Options. Parent shall use reasonable best efforts to
maintain the effectiveness of such registration statement for as long as
any Parent Options remain outstanding. At or prior to the Effective Time,
Parent shall take all corporate action necessary to reserve for issuance a
sufficient number of shares of Parent Common Stock for delivery upon
exercise of Parent Options.
(j) Both Parent and the Company shall take such steps as
may be required to cause, to the extent possible, the transactions
contemplated by this Section 4.04 and any other dispositions of Company
equity securities and/or acquisitions of Parent equity securities
(including, in each case, derivative securities) in connection with this
Agreement or the transactions contemplated hereby by any individual who is
a director or officer of the Company, to be exempt under Rule 16b-3
promulgated under the Exchange Act, such steps to be taken in accordance
with the interpretative letter, dated January 12, 1999, issued by the SEC
to Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP.
SECTION 4.05 Appraisal Rights. In accordance with Section
262 of the DGCL, no appraisal rights shall be available to holders of
shares of Company Common Stock in connection with the Offer or, other than
pursuant to Section 262(b)(3) of the DGCL, the Merger.
SECTION 4.06 Affiliates. Notwithstanding anything to the
contrary herein, no Parent Common Stock shall be delivered to a person who
may be deemed an "affiliate" of the Company in accordance with Section 8.08
hereof for purposes of Rule 145 under the Securities Act until such person
has executed and delivered to Parent an executed copy of the affiliate
letter contemplated in Section 8.08 hereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to Parent and Merger Sub to enter into
this Agreement, the Company, except as disclosed in the Company's
disclosure schedule delivered concurrently with the delivery of this
Agreement (the "Company Disclosure Schedule"), hereby represents and
warrants to Parent and Merger Sub as follows:
SECTION 5.01 Organization and Qualification;
Subsidiaries. (a) Each of the Company and each subsidiary of the Company
(each, a "Subsidiary") is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority and all
necessary governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to have such
power, authority and governmental approvals would not prevent or materially
delay consummation of the Merger or the Transaction or otherwise prevent or
materially delay the Company from performing its obligations under this
Agreement and would not reasonably be expected to have a Company Material
Adverse Effect. The Company and each Subsidiary is duly qualified or
licensed as a foreign corporation to do business, and is in good standing,
in each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except for such failures to be so qualified or
licensed and in good standing that would not prevent or materially delay
consummation of the Merger or otherwise prevent or materially delay the
Company from performing its obligations under this Agreement and would not
reasonably be expected to have a Company Material Adverse Effect.
(b) A true and complete list of all the Subsidiaries,
together with the jurisdiction of organization of each Subsidiary and the
percentage of the outstanding capital stock or other equity interests of
each Subsidiary owned by the Company and each other Subsidiary, is set
forth in Section 5.01(b) of the Company Disclosure Schedule. Except as
disclosed in Section 5.01(b) of the Company Disclosure Schedule, the
Company does not directly or indirectly own any equity or similar interest
in, or any interest convertible into or exchangeable or exercisable for any
equity or similar interest in, any corporation, partnership, joint venture
or other business association or entity.
SECTION 5.02 Certificate of Incorporation and By-Laws.
The Company has heretofore furnished to Parent a complete and correct copy
of the certificate of incorporation and the by-laws or equivalent
organizational documents, each as amended to date, of the Company and each
Subsidiary. Such certificates of incorporation, by-laws or equivalent
organizational documents, as amended to date, are in full force and effect.
Neither the Company nor any Subsidiary is in material violation of any of
the provisions of its certificate of incorporation, by-laws or equivalent
organizational documents.
SECTION 5.03 Capitalization. (a) The authorized capital
stock of the Company consists of (i) 60,000,000 shares of Company Common
Stock and (ii) 15,000,000 shares of preferred stock, par value $.01 per
share ("Company Preferred Stock"). As of the close of business on March 25,
2002, (i) 33,487,650 shares of Company Common Stock were issued and
outstanding, all of which are duly authorized, validly issued, fully paid
and nonassessable, (ii) 50,000 shares of Restricted Stock were issued and
outstanding, (iii) no shares of Company Common Stock were held in the
treasury of the Company, (iv) no shares of Company Common Stock were held
by the Subsidiaries, (v) 3,822,307 shares of Company Common Stock were
reserved for future issuance pursuant to outstanding employee stock options
granted pursuant to the Company Stock Option Plans and (vi) no shares of
Company Preferred Stock were issued and outstanding. Except as set forth
above or in Section 5.03 of the Company Disclosure Schedule, there are no
options, warrants or other rights, agreements, arrangements or commitments
of any character relating to the issued or unissued capital stock of the
Company or any Subsidiary or obligating the Company or any Subsidiary to
issue or sell any shares of capital stock of, or other equity interests in,
the Company or any Subsidiary. Section 5.03(a) of the Company Disclosure
Schedule sets forth the following information with respect to each Company
Stock Option outstanding as of the date of this Agreement: (i) the name and
address of the optionee; (ii) the number of shares of Company Common Stock
subject to such Company Stock Option; (iii) the exercise price of such
Company Stock Option; (iv) the date on which such Company Stock Option was
granted; (v) the applicable vesting schedule; and (vi) the date on which
such Company Stock Option expires. All shares of Company Common Stock
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, will be
duly authorized, validly issued, fully paid and nonassessable. There are no
outstanding contractual obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any shares of Company Common Stock
or any capital stock of any Subsidiary or to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in,
any Subsidiary or any other person.
(b) Each outstanding share of capital stock of each
Subsidiary is duly authorized, validly issued, fully paid and
nonassessable, and each such share is owned by the Company or another
Subsidiary free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on the
Company's or any Subsidiary's voting rights, charges and other
encumbrances, except for limitations on transfer imposed by federal or
state securities Laws.
SECTION 5.04 Authority Relative to This Agreement. The
Company has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and, subject,
if applicable, to obtaining the Company Stockholder Approval with respect
to the Merger, to consummate the Transaction. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
Transaction have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
Transaction (other than, with respect to the Merger, obtaining the Company
Stockholder Approval if and to the extent required by applicable Law, and
the filing and recordation of appropriate merger documents as required by
the DGCL). This Agreement has been duly and validly executed and delivered
by the Company and, assuming the due authorization, execution and delivery
by each of the other parties hereto, constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance
with its terms, except to the extent that its enforceability may be subject
to applicable bankruptcy, insolvency, reorganization, moratorium and
similar Laws affecting the enforcement of creditors' rights generally and
by general equitable principles. The Company Board has approved this
Agreement and the transactions contemplated hereby. To the knowledge of the
Company, no state takeover statute is applicable to the Merger or the
Transaction.
SECTION 5.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company do not, and
the performance of this Agreement by the Company will not, (i) conflict
with or violate the certificate of incorporation or by-laws or any
equivalent organizational documents, each as amended to date, of the
Company or any Subsidiary, (ii) assuming that all consents, approvals,
authorizations and other actions described in Section 5.05(b) have been
made, conflict with or violate any United States or non-United States
statute, law, ordinance, regulation, rule, code, executive order,
injunction, judgment, decree or other order ("Law") applicable to the
Company or any Subsidiary or by which any property or asset of the Company
or any Subsidiary is bound or affected, or (iii) result in any breach of or
constitute a default (or an event which, with notice or lapse of time or
both, would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of the
Company or any Subsidiary pursuant to, or result in any payment under, any
Material Contract (as defined in Section 5.17), Company Permit (as defined
in Section 5.06) or franchise, except, with respect to clauses (ii) and
(iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not prevent or materially delay consummation of the
Merger or otherwise prevent or materially delay the Company from performing
its obligations under this Agreement and would not reasonably be expected
to have a Company Material Adverse Effect.
(b) The execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will
not, require any consent, approval, authorization or permit of, or filing
with or notification to, any United States federal, state, county, local or
non-United States government, governmental, regulatory or administrative
authority, agency, instrumentality or commission or any court, tribunal,
judicial or arbitral body or supranational authority (a "Governmental
Authority"), except (i) for applicable requirements, if any, of the
Securities Act, the Exchange Act, state securities or "blue sky" laws
("Blue Sky Laws") and state takeover laws, the pre-merger notification
requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and filing and recordation of appropriate
merger documents as required by the DGCL, and (ii) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or materially delay
consummation of the Merger, or otherwise prevent or materially delay the
Company from performing its obligations under this Agreement, and would not
reasonably be expected to have a Company Material Adverse Effect.
SECTION 5.06 Permits; Compliance. (a) Each of the Company
and the Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, certifications, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any
Governmental Authority necessary for each of the Company or the
Subsidiaries to own, lease and operate its properties or to carry on its
business as it is now being conducted (the "Company Permits"), except where
the failure to have, or the suspension or cancellation of, any of the
Company Permits would not prevent or materially delay consummation of the
Merger or otherwise prevent or materially delay the Company from performing
its obligations under this Agreement and would not reasonably be expected
to have a Company Material Adverse Effect. As of the date of this
Agreement, no suspension or cancellation of any of the Company Permits is
pending or, to the knowledge of the Company, threatened. Neither the
Company nor any Subsidiary is in conflict with, or in default, breach or
violation of, (i) any Law applicable to the Company or any Subsidiary or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, Company Permit, franchise or other instrument or obligation
to which the Company or any Subsidiary is a party or by which the Company
or any Subsidiary or any property or asset of the Company or any Subsidiary
is bound, except in either case for any such conflicts, defaults, breaches
or violations that would not prevent or materially delay the consummation
of the Merger or otherwise prevent or materially delay the Company from
performing its obligations under this Agreement and would not reasonably be
expected to have a Company Material Adverse Effect.
(b) None of the Company or any Subsidiary or any
individual who is currently an executive officer, director or, to the
knowledge of the Company, employee of the Company or any Subsidiary (i) has
been convicted of, charged with or, to the knowledge of the Company,
investigated for a Medicare, Medicaid or state health program-related
offense, (ii) since January 1, 1999, has been convicted of, charged with
or, to the knowledge of the Company, investigated for a violation of Law
related to fraud, theft, embezzlement, financial misconduct or obstruction
of an investigation, (iii) has been excluded or suspended from
participation in Medicare, Medicaid or any federal or state health program,
or (iv) since January 1, 1999, has been subject to any Order or any
criminal or civil fine or penalty imposed by, any Governmental Authority
with respect to any such Medicare, Medicaid or any other federal or state
health care program.
(c) Except as disclosed in Section 5.06(c) of the Company
Disclosure Schedule, since January 1, 1999, there have been no written
notices, citations or decisions by any Governmental Authority that the
Company or any Subsidiary fails to meet any applicable standards
promulgated by such Governmental Authority for which a plan of correction
has not been accepted, and the Company does not know of any such failure or
facts upon which such a failure could be alleged except, in either case, as
would not reasonably be expected to have a Company Material Adverse Effect.
Except as set forth in Section 5.06(c) of the Company Disclosure Schedule,
none of the Company or any Subsidiary has received any notice of any
potential deficiency in or violation of any applicable Law or Order
relating to the Company or any Subsidiary for which a plan of correction
has not been accepted except as would not reasonably be expected to have a
Company Material Adverse Effect. Except as disclosed in Section 5.06(c) of
the Company Disclosure Schedule, and except as would not reasonably be
expected to have a Company Material Adverse Effect, since January 1, 1996,
the Company and the Subsidiaries have complied in all material respects
with all applicable Laws with respect to the services provided and business
operated by the Company and the Subsidiaries.
(d) The Company has made available to Parent prior to the
date of this Agreement true and complete copies of (i) all material
surveys, reports, notices, inquiries, subpoenas and other correspondence
related to any certification, licensure or other inspections, and summaries
of all proficiency test results relating to the business of the Company and
the Subsidiaries for the period from January 1, 1999 (or, in the case of a
Subsidiary, from the date such entity became a Subsidiary) through the date
hereof; (ii) all material written inquiries, notices, requests for records,
subpoenas and correspondence received by the Company or any Subsidiary
related to utilization, reimbursement or other audits or investigations
relating to the business of the Company and the Subsidiaries for the period
from January 1, 1999 (or, in the case of a Subsidiary, from the date such
entity became a Subsidiary) through the date hereof; and (iii) all current
licenses or certifications of the Company or any Subsidiary under the
Clinical Laboratory Improvement Act of 1988 and the regulations promulgated
thereunder ("CLIA").
(e) Except as disclosed in Section 5.06(e) of the Company
Disclosure Schedule, and except as would not reasonably be expected to have
a Company Material Adverse Effect, (i) none of the Company nor any
Subsidiary has engaged in any activities that are prohibited under or would
violate Medicare and Medicaid statutes, 42 U.S.C. Sections 1320a-7a and 7b,
or the regulations promulgated pursuant to such statutes, or comparable
state or local Law or rules of professional conduct; (ii) the Company and
the Subsidiaries have timely and accurately filed in all material respects
all requisite claims and other reports required to be filed in connection
with all applicable state and federal Medicare and Medicaid programs due on
or before the date of this Agreement; (iii) there is no arrangement
providing for any rebates, kickbacks or other forms of compensation that is
unlawful to be paid to any person or entity in return for the referral of
business or for the arrangement for recommendation of such referrals; and
(iv) none of the Company nor any Subsidiary has any financial arrangement
which render any of its xxxxxxxx unlawful pursuant to the Xxxxx Law or
comparable state Law.
(f) To the knowledge of the Company, all agreements of
the Company and the Subsidiaries with third-party payors were entered into
by the Company or a Subsidiary, as the case may be, in the ordinary course
of business. The Company and the Subsidiaries are in compliance with each
of their respective third-party payor agreements, and the Company and the
Subsidiaries have properly charged and billed in accordance with the terms
of their respective third-party payor agreements, including, where
applicable, billing and collection of all deductibles and co-payments,
except for any such violations that would not reasonably be expected to
have a Company Material Adverse Effect.
(g) Except as disclosed in Section 5.06(g) of the Company
Disclosure Schedule, (i) no right of the Company or any Subsidiary to
receive reimbursements pursuant to any government program or private
program has ever been terminated or suspended as a result of any
investigation or action whether by any Governmental Authority or other
third party, (ii) none of the Company nor any Subsidiary has since January
1, 1999 received notice from any Governmental Authority that it has been
the subject of any inspection, investigation, survey, audit, monitoring or
other form of review by any Governmental Authority, professional review
organization, accrediting organization or certifying agency for the purpose
of any alleged improper activity on the part of such entity, other than
routine audits or inquiries and other than those which would not reasonably
be expected to have a Company Material Adverse Effect, (iii) none of the
Company nor any Subsidiary has received any written notice of deficiency
from a Governmental Authority in connection with its operations for which a
plan of correction has not been accepted, and (iv) none of the Company nor
any Subsidiary has received any written notice of any claim, requirement or
demand of any licensing, accrediting or certifying agency to rework or
redesign their operations or any part thereof.
SECTION 5.07 SEC Filings; Financial Statements. (a) The
Company has filed all forms, reports, statements, schedules and other
documents required to be filed by it with the Securities and Exchange
Commission (the "SEC") since June 6, 2001 (such forms, reports, statements,
schedules and other documents being, collectively, the "Company SEC
Reports"). The Company SEC Reports (i) at the time they were filed or, if
amended, as of the date of such amendment, complied in all material
respects with all applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as the case may be, and the rules and
regulations promulgated thereunder, and (ii) did not, at the time they were
filed, or, if amended, as of the date of such amendment, contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. The Company is eligible to use Form S-3 in connection with the
registration of securities under the Securities Act. No Subsidiary is
required to file any form, report or other document with the SEC. Except as
set forth in Section 5.07 of the Company Disclosure Schedule, the Company
has not received any non-routine inquires or interrogatories, whether in
writing or otherwise, from the SEC, the NASDAQ National Market or any other
Governmental Authority, or, to the knowledge of the Company, been the
subject of any investigation, audit, review or hearing by or in front of
such persons, in each case with respect to any of the Company SEC Reports
or any of the information contained therein. True and complete copies of
any such written inquires or interrogatories have been furnished to Parent,
and Parent has otherwise been made aware of any such oral inquiries or
interrogatories, investigations, audits, reviews or hearings.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the Company SEC
Reports was prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods indicated (except as may be indicated in the notes thereto or, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC) and
each fairly presents, in all material respects, the consolidated financial
position, results of operations and cash flows of the Company and its
consolidated Subsidiaries as at the respective dates thereof and for the
respective periods indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments).
(c) Except as and to the extent set forth in Section
5.07(c) of the Company Disclosure Schedule, neither the Company nor any
Subsidiary has any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise), in each case that is required by GAAP
to be set forth on a consolidated balance sheet of the Company or in the
notes thereto, except for liabilities and obligations incurred in the
ordinary course of business consistent with past practice since December
31, 2001, and liabilities and obligations which would not prevent or
materially delay consummation of the Transaction or otherwise be reasonably
likely to prevent or materially delay the Company from performing its
obligations under this Agreement and would not reasonably be expected to
have a Company Material Adverse Effect.
(d) Section 5.07(d) of the Company Disclosure Schedule
lists all "management letters" and other similar letters relating to the
Company's or any of its Subsidiaries internal controls and accounting
practices that have been received by the Company from its independent
accountants since December 31, 1999 (the "Management Letters"). True and
complete copies of all Management Letters have been furnished to Parent.
SECTION 5.08 Information to Be Supplied. (a) Each of the
Schedule 14D-9 and the other documents required to be filed by the Company
with the SEC in connection with the Offer, the Merger and the other
transactions contemplated hereby will comply as to form in all material
respects with the requirements of the Exchange Act and the Securities Act,
as the case may be. Each of the Schedule 14D-9 and the other documents
required to be filed by the Company with the SEC in connection with the
Offer, the Merger and the other transactions contemplated hereby and any of
the information supplied or to be supplied by the Company or its
Subsidiaries or their representatives for inclusion or incorporation by
reference in the Merger Registration Statement and the Offer Documents will
not, on the date of its filing or mailing or, in the case of the Proxy
Statement/Prospectus, at the time of the Company Stockholder Meeting or, in
the case of the Offer Documents, at the time the Offer is commenced or at
the Acceptance Date, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
(b) Notwithstanding the foregoing provisions of this
Section 5.08, no representation or warranty is made by the Company with
respect to statements made or incorporated by reference in the Offer
Documents, Merger Registration Statement, the Proxy Statement/Prospectus or
the Schedule 14D-9 based on information supplied by or on behalf of Parent
or Merger Sub for inclusion or incorporation by reference therein or based
on information which is not made in or incorporated by reference in such
documents but which should have been disclosed pursuant to Section 6.07.
SECTION 5.09 Absence of Certain Changes or Events. Since
December 31, 2001, except (a) as set forth in Section 5.09 of the Company
Disclosure Schedule, or (b) as expressly contemplated by this Agreement:
(i) the Company and the Subsidiaries have conducted their businesses only
in the ordinary course and in a manner consistent with past practice, (ii)
there has not been any Company Material Adverse Effect, and (iii) none of
the Company or any Subsidiary has taken any action that, if taken after the
date of this Agreement, would constitute a breach of any of the covenants
set forth in Section 7.01.
SECTION 5.10 Absence of Litigation. Except as set forth
in Section 5.10 of the Company Disclosure Schedule, there is no litigation,
suit, claim, action, proceeding or, to the knowledge of the Company,
investigation (an "Action") pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary, or any property or asset
of the Company or any Subsidiary, before any Governmental Authority that
(a) has had or would reasonably be expected to have a Company Material
Adverse Effect or (b) seeks to materially delay or prevent the consummation
of the Transaction. Neither the Company nor any Subsidiary nor any property
or asset of the Company or any Subsidiary is subject to any continuing
order of, consent decree, settlement agreement or other similar written
agreement with, or, to the knowledge of the Company, continuing
investigation by, any Governmental Authority, or any order, writ, judgment,
injunction, decree, determination or award of any Governmental Authority
that would prevent or materially delay consummation of the Transaction or
otherwise prevent or materially delay the Company from performing its
obligations under this Agreement or would reasonably be expected to have a
Company Material Adverse Effect.
SECTION 5.11 Employee Benefit Plans. (a) Section 5.11(a)
of the Company Disclosure Schedule lists (i) all employee benefit plans (as
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) and all bonus, stock option, stock purchase,
restricted stock, incentive, deferred compensation, retiree medical or life
insurance, supplemental retirement, severance or other benefit plans,
programs or arrangements, and all employment, termination, severance or
other contracts or agreements to which the Company or any Subsidiary is a
party, with respect to which the Company or any Subsidiary has any
obligation or which are maintained, contributed to or sponsored by the
Company or any Subsidiary for the benefit of any current or former
employee, officer or director of the Company or any Subsidiary, (ii) each
employee benefit plan for which the Company or any Subsidiary could incur
liability under Section 4069 of ERISA in the event such plan has been or
were to be terminated, (iii) any plan in respect of which the Company or
any Subsidiary could incur liability under Section 4212(c) of ERISA, and
(iv) any contracts, arrangements or understandings between the Company or
any Subsidiary and any employee of the Company or any Subsidiary including,
without limitation, any contracts, arrangements or understandings relating
in any way to a sale of the Company or any Subsidiary (collectively, the
"Plans"). Each Plan is in writing and the Company has made available to
Parent a true and complete copy of each Plan and has made available to
Parent a true and complete copy of each material document, if any, prepared
in connection with each such Plan, including, without limitation, (i) a
copy of each trust or other funding arrangement, (ii) each summary plan
description and summary of material modifications, (iii) the most recently
filed Internal Revenue Service ("IRS") Form 5500, (iv) the most recently
received IRS determination letter for each such Plan, and (v) the most
recently prepared actuarial report and financial statement in connection
with each such Plan. Neither the Company nor any Subsidiary has any express
or implied commitment (i) to create, incur liability with respect to or
cause to exist any other employee benefit plan, program or arrangement,
(ii) to enter into any contract or agreement to provide compensation or
benefits to any individual, or (iii) to modify, change or terminate any
Plan, other than with respect to a modification, change or termination
required by ERISA or the Code or as contemplated by this Agreement.
(b) None of the Plans is a multiemployer plan (within the
meaning of Section 3(37) or 4001(a)(3) of ERISA) (a "Multiemployer Plan")
or a single employer pension plan (within the meaning of Section
4001(a)(15) of ERISA) for which the Company or any Subsidiary could incur
liability under Section 4063 or 4064 of ERISA (a "Multiple Employer Plan").
None of the Plans (i) provides for the payment of separation, severance,
termination or similar-type benefits to any person, or (ii) obligates the
Company or any Subsidiary to pay separation, severance, termination or
similar-type benefits or any other amounts or benefits to any person solely
or partially as a result of any transaction contemplated by this Agreement.
Each of the Plans is subject only to the Laws of the United States or a
political subdivision thereof.
(c) Each Plan has been operated in all material respects
in accordance with its terms and the requirements of all applicable Laws
including, without limitation, ERISA and the Code. The Company and the
Subsidiaries have performed all obligations required to be performed by
them under, are not in any respect in default under or in violation of, and
have no knowledge of any default or violation by any party to, any Plan. No
Action is pending or, to the knowledge of the Company, threatened in
writing with respect to any Plan (other than claims for benefits in the
ordinary course) and no fact or event exists that could reasonably be
expected to give rise to any such Action.
(d) Each Plan that is intended to be qualified under
Section 401(a) of the Code or Section 401(k) of the Code has timely
received a favorable determination letter from the IRS covering all of the
provisions applicable to the Plan for which determination letters are
currently available that the Plan is so qualified and each trust
established in connection with any Plan which is intended to be exempt from
federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that it is so exempt, and, to the
knowledge of the Company, no fact or event has occurred since the date of
such determination letter or letters from the IRS to adversely affect the
qualified status of any such Plan or the exempt status of any such trust.
(e) To the knowledge of the Company, there has not been
any prohibited transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) with respect to any Plan. Neither the Company nor
any Subsidiary has any liability under, arising out of or by operation of
Title IV of ERISA (other than liability for premiums to the Pension Benefit
Guaranty Corporation arising in the ordinary course), including, without
limitation, any liability in connection with (i) the termination or
reorganization of any employee benefit plan subject to Title IV of ERISA,
or (ii) the withdrawal from any Multiemployer Plan or Multiple Employer
Plan, and no fact or event exists which could reasonably be expected to
give rise to any such liability.
(f) All contributions, premiums or payments required to
be made with respect to any Plan have been made on or before their due
dates. To the knowledge of the Company, all such contributions have been
fully deducted for income tax purposes and no such deduction has been
challenged or disallowed by any Governmental Authority and no fact or event
exists which could reasonably be expected to give rise to any such
challenge or disallowance.
(g) No Plan provides benefits, including death or medical
benefits (whether or not insured), with respect to current or former
employees of the Company or any Subsidiary beyond their retirement or other
termination of service, other than (i) coverage mandated by applicable Law,
(ii) death benefits or retirement benefits under any "employee pension
benefit plan" (as such term is defined in Section 3(2) of ERISA), (iii)
deferred compensation benefits accrued as liabilities on the books of the
Company or (iv) benefits the full cost of which is borne by the current or
former employee (or his beneficiary).
(h) None of the Company nor any Subsidiary has any
non-U.S. employees.
(i) Except as set forth on Section 5.11(i) of the Company
Disclosure Schedule, none of the employees of the Company or any
Subsidiaries is currently on short or long-term leave or temporary or
permanent disability leave.
(j) As of the date hereof, the Company has no knowledge
or no reasonable basis to believe that any of the key employees of the
Company or any Subsidiary will terminate their contractual arrangements
with the Company or any Subsidiary as a result of the consummation of the
transactions contemplated hereby.
SECTION 5.12 Labor and Employment Matters. There are no
controversies pending or, to the knowledge of the Company, threatened
between the Company or any Subsidiary and any of their respective
employees, which controversies would prevent or materially delay
consummation of the Merger or otherwise prevent or materially delay the
Company from performing its obligations under this Agreement or would
reasonably be expected to have a Company Material Adverse Effect. Neither
the Company nor any Subsidiary is a party to any collective bargaining
agreement or other labor union contract applicable to persons employed by
the Company or any Subsidiary, nor, to the knowledge of the Company, are
there any activities or proceedings of any labor union to organize any such
employees. There are no unfair labor practice complaints pending against
the Company or any Subsidiary before the National Labor Relations Board or
any current union representation questions involving employees of the
Company or any Subsidiary. There is no strike, slowdown, work stoppage or
lockout, or, to the knowledge of the Company, threat thereof, by or with
respect to any employees of the Company or any Subsidiary.
SECTION 5.13 Property and Leases. (a) The Company and the
Subsidiaries have good, valid and marketable title to or, in the case of
leased properties and assets, valid leasehold interest in, all their
properties and assets to conduct their respective businesses as currently
conducted or as currently contemplated by the Company to be conducted, with
only Permitted Liens or such exceptions as would not reasonably be expected
to have a Company Material Adverse Effect.
(b) Each parcel of real property owned or leased by the
Company or any Subsidiary (i) is owned or leased free and clear of all
mortgages, pledges, liens, security interests, conditional and installment
sale agreements, encumbrances, charges or other claims of third parties of
any kind, including, without limitation, any easement, right of way or
other encumbrance to title, or any option, right of first refusal, or right
of first offer (collectively, "Liens"), other than (A) Liens for current
Taxes and assessments not yet due or for Taxes being contested in good
faith and for which a reserve has been established by the Company on its
books, and (B) mechanics', materialmen's, workmen's, repairmen's,
warehousemen's and carriers' Liens arising in the ordinary course of
business of the Company or such Subsidiary consistent with past practice
(collectively, "Permitted Liens"), and (ii) to the knowledge of the
Company, is neither subject to any governmental decree or order to be sold
nor is being condemned, expropriated or otherwise taken by any public
authority with or without payment of compensation therefor, nor has any
such condemnation, expropriation or taking been proposed.
(c) All Leases are in full force and effect and have not
been modified or amended, and there exists no default under any such lease
by the Company or any Subsidiary, nor any event which, with notice or lapse
of time or both, would constitute a default thereunder by the Company or
any Subsidiary.
(d) Section 5.13(d) of the Company Disclosure Schedule
discloses a full and complete list of all leases of real property by or for
the benefit of the Company and the Subsidiaries and all amendments and
modifications thereto (the "Leases") and the lessors thereof, including
whether, to the knowledge of the Company, as of the date of this Agreement,
any such lessor is a physician or a family member of a physician. The
Company has made available to Parent prior to the date of this Agreement
complete and accurate copies of each of the Leases, and none of the Leases
has been modified in any material respect.
SECTION 5.14 Intellectual Property. (a) Except as
disclosed in Section 5.14(a) of the Company Disclosure Schedule and except
as would not reasonably be expected to have a Company Material Adverse
Effect, (i) the conduct of the business of the Company and the Subsidiaries
as currently conducted does not infringe upon or misappropriate the
Intellectual Property rights of any third party, and no claim has been
asserted to the Company that the conduct of the business of the Company and
the Subsidiaries as currently conducted infringes upon or may infringe upon
or misappropriates the Intellectual Property rights of any third party;
(ii) with respect to each item of Intellectual Property owned by the
Company or a Subsidiary and material to the business, financial condition
or results of operations of the Company and the Subsidiaries, taken as a
whole ("Company Owned Intellectual Property"), the Company or a Subsidiary
is the owner of the entire right, title and interest in and to such Company
Owned Intellectual Property and is entitled to use such Company Owned
Intellectual Property in the continued operation of its respective
business; (iii) with respect to each item of Intellectual Property licensed
to the Company or a Subsidiary that is material to the business of the
Company and the Subsidiaries as currently conducted ("Company Licensed
Intellectual Property"), the Company or a Subsidiary has (assuming the
licensor has the right to license such property) the right to use such
Company Licensed Intellectual Property in the continued operation of its
respective business in accordance with the terms of the license agreement
governing such Company Licensed Intellectual Property; (iv) to the
knowledge of the Company, the Company Owned Intellectual Property is valid
and enforceable, and has not been adjudged invalid or unenforceable in
whole or in part; (v) to the knowledge of the Company, no person is
engaging in any activity that infringes upon the Company Owned Intellectual
Property; (vi) to the knowledge of the Company, each license of the Company
Licensed Intellectual Property is valid and enforceable, is binding on all
parties to such license, and is in full force and effect; and (vii) to the
knowledge of the Company, no party to any license of the Company Licensed
Intellectual Property is in breach thereof or default thereunder.
(b) Section 5.14(b) of the Company Disclosure Schedule
sets forth a true and complete list of all (i) patents and patent
applications, registered trademarks and trademark applications, registered
copyrights and copyright applications and software included in the Company
Owned Intellectual Property and (ii) licenses that are material to the
Company's business, except "shrink wrap", "click wrap" or similar licenses
for commercially available software.
(c) The Company has taken reasonable steps in accordance
with normal industry practice to maintain the confidentiality of its trade
secrets and other confidential Intellectual Property. Except as disclosed
in Section 5.14(c) of the Company Disclosure Schedule, and except as would
not reasonably be expected to have a Company Material Adverse Effect, (i)
there has been no misappropriation of any trade secrets or other
Intellectual Property of the Company or any Subsidiary by any person, (ii)
no employee, independent contractor or agent of the Company or any
Subsidiary has misappropriated any trade secrets of any other person in the
course of such performance as an employee, independent contractor or agent,
and (iii) no employee, independent contractor or agent of the Company or
any Subsidiary is in default or breach of any term of any employment
agreement, non-disclosure agreement, assignment of invention agreement or
similar agreement or contract relating in any way to the protection,
ownership, development, use or transfer of Intellectual Property.
SECTION 5.15 Taxes. The Company and each of its
Subsidiaries have timely filed (or have had filed on their behalf) all Tax
returns and reports required to be filed by each of them and each has,
within the time and in the manner prescribed by Law, paid and discharged
all Taxes that have become due and payable, other than such payments as are
being contested in good faith by appropriate proceedings and for which
adequate reserves have been taken. All such Tax returns and reports are
true, accurate and complete in all material respects. Neither the IRS nor
any other United States or non-United States taxing authority or agency has
asserted in writing or, to the knowledge of the Company, has threatened to
assert against the Company or any Subsidiary any deficiency or claim for
any Taxes or interest thereon or penalties in connection therewith. Neither
the Company nor any Subsidiary has granted any waiver of any statute of
limitations with respect to, or any extension of a period for the
assessment of, any Tax. Neither the Company nor any Subsidiary has made an
election under Section 341(f) of the Code. There are no Tax Liens upon any
property or assets of the Company or any of the Subsidiaries except Liens
for current Taxes not yet due. Neither the Company nor any of the
Subsidiaries is a party to any agreement, understanding, or arrangement
(with any person other than the Company and/or any of the Subsidiaries)
relating to allocating or sharing of any amount of Taxes that would
reasonably be expected to have a Company Material Adverse Effect. Neither
the Company nor any of the Subsidiaries has any liability for any amount of
Taxes of any person other than the Company or any of its Subsidiaries under
Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local or foreign Law), as a transferee or successor, or by contract that
would reasonably be expected to have a Company Material Adverse Effect.
Neither the Company nor any of the Subsidiaries has been required to
include in income any adjustment pursuant to Section 481 of the Code by
reason of a voluntary change in accounting method initiated by the Company
or any of the Subsidiaries, and the IRS has not initiated or proposed any
such adjustment or change in accounting method, in either case which
adjustment or change would reasonably be expected to have a Company
Material Adverse Effect. Neither the Company nor any Subsidiary has any
income reportable for a period ending after the Acceptance Date that is
attributable to any activity or a transaction occurring in, or a change in
accounting method made for, a period ending on or prior to the Acceptance
Date that resulted in a deferred reporting of income from such transaction
or from such change of accounting method, in either case which deferral
would reasonably be expected to have a Company Material Adverse Effect or
is inconsistent with the past practice of the Company. Neither the Company
nor any Subsidiary has been a "distributing corporation" or a "controlled
corporation" in a distribution intended to qualify under Section 355(e) of
the Code within the past five years. To the knowledge of the Company,
neither the Company nor any of its affiliates has taken or agreed to take
any action that would prevent the Offer and the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code. The
Company is not aware of any agreement, plan or other circumstance, except
for a possible future change in the Stock Value, that would prevent the
Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
SECTION 5.16 Environmental Matters. Except as described
in Section 5.16 of the Company Disclosure Schedule or as would not prevent
or materially delay consummation of the Merger or otherwise prevent or
materially delay the Company from performing its obligations under this
Agreement and would not reasonably be expected to have a Company Material
Adverse Effect, (a) neither the Company nor any Subsidiary is in violation
of any Environmental Law or has received any written notice, demand,
letter, claim, request for information or other written communication
alleging that the Company or such Subsidiary may be in violation of any
Environmental Law; (b) none of the properties currently or formerly owned,
leased or operated by the Company or any Subsidiary (including, without
limitation, soils and surface and ground waters) are contaminated with any
Hazardous Substance in a quantity that is reasonably likely to lead to
cleanup or remediation of Hazardous Substances; (c) neither the Company nor
any Subsidiary has received any written notice, demand, claim or request
for information or other written communications alleging that the Company
or any Subsidiary is actually, potentially or allegedly liable under any
Environmental Law (including, without limitation, pending or threatened
Liens) for cleanup or remediation of Hazardous Substances; (d) the Company
or a Subsidiary has all permits, licenses and other authorizations required
under any Environmental Law ("Environmental Permits") and the Company and
such Subsidiaries are in compliance with the Environmental Permits; (e)
none of the properties owned or leased by the Company or any Subsidiary is
listed or, to the knowledge of the Company and the Subsidiaries, proposed
for listing on the "National Priorities List" or the Comprehensive
Environmental Response, Compensation and Liability Information System under
the Comprehensive Environmental Response, Compensation and Liability Act,
as amended, or any similar state or foreign list of sites requiring
investigation or cleanup; (f) during the past three years, neither the
Company nor any Subsidiary has entered into or agreed to any consent decree
or order and neither the Company nor any Subsidiary is subject to any
judgment, decree or judicial order relating to compliance with
Environmental Laws or the investigation, sampling, monitoring, treatment,
remediation, removal or cleanup of Hazardous Substances and, to the
knowledge of the Company and the Subsidiaries, no investigation, litigation
or other proceeding is pending or threatened with respect thereto; (g)
neither the Company nor any Subsidiary is an indemnitor in connection with
any claim asserted in writing to the Company or a Subsidiary by any
third-party indemnitee for any liability under any Environmental Law or
relating to any Hazardous Substances; and (h) neither the execution of this
Agreement nor the consummation of the Transaction will require any
investigation or remediation of any Hazardous Substances.
SECTION 5.17 Material Contracts. (a) Subsections (i)
through (xii) of Section 5.17(a) of the Company Disclosure Schedule contain
a complete list of the following contracts and agreements, whether written
or oral, to which the Company or any Subsidiary is a party (such contracts
and agreements, together with the Plans, the Leases and the Company
Permits, being "Material Contracts"):
(i) each contract, agreement or account involving
aggregate annual consideration payable to the Company for services
of more than $1,000,000, or aggregate annual payments by the
Company of more than $1,000,000;
(ii) all contracts and agreements under which the Company
or any Subsidiary provides services other than routine or
reference testing services, such as laboratory management,
laboratory directorship, consulting or information technology;
(iii) all broker, distributor, dealer, manufacturer's
representative, franchise, agency, sales promotion, market
research, marketing consulting and advertising contracts and
agreements to which the Company or any Subsidiary is a party;
(iv) all contracts and agreements relating to
indebtedness with a principal amount in excess of $500,000 or any
pledge of any asset of the Company or any Subsidiary (other than
capitalized leases involving less than $500,000 in principal
amount and other than the Company's senior credit facility);
(v) all management contracts (excluding contracts for
employment) and contracts with other consultants, including any
contracts involving the payment of royalties or other amounts
calculated based upon the revenues or income of the Company or any
Subsidiary or income or revenues related to any product of the
Company or any Subsidiary to which the Company or any Subsidiary
is a party;
(vi) all contracts and agreements with any Governmental
Authority other than agreements related to the provision of
clinical laboratory services to a Governmental Authority, provider
agreements and agreements related to licensing of any facility
entered into in the ordinary course of business;
(vii) all contracts and agreements that (A) limit or
purport to limit the ability of the Company or any Subsidiary or,
to the Company's knowledge, any key executives of the Company or
any Subsidiary, to compete in any line of business or with any
person or in any geographic area or during any period of time, (B)
require the Company or any Subsidiary to use any supplier or third
party for all or substantially all of the Company's or the
Subsidiaries' requirements or needs, (C) limit or purport to limit
in any material respect the ability of the Company or any
Subsidiary to solicit any customers or clients of the other
parties thereto, (D) require the Company or any Subsidiary to
provide to the other parties thereto "most favored nations"
pricing, or (E) require the Company or any Subsidiary to market or
co-market any clinical laboratory services or anatomic pathology
services or other products or services of a third party (each of
(A) through (E), a "Restrictive Agreement");
(viii) all contracts, agreements and arrangements between
the Company or any of its Subsidiaries, on the one hand, and LP,
LLC or any of their respective officers, directors or principals,
on the other hand (each such contract, a "Related Party
Agreement");
(ix) all joint venture contracts, partnership
arrangements or other agreements outside the ordinary course of
business involving a sharing of profits, losses, costs or
liabilities by the Company or any Subsidiary with any third party;
(x) all licenses under CLIA or issued by any other
Governmental Authority including, without limitation, the identity
of the respective licensees thereunder;
(xi) all contracts, agreements and arrangements entered
into since November 1993 between the Company or any of its
Subsidiaries and any other party providing for the acquisition by
the Company or such Subsidiary (including, without limitation, by
merger, consolidation, acquisition of stock or assets or any other
business combination) of any corporation, partnership, other
business organization or division thereof or any material amount
of assets, in each case, for an aggregate purchase price in excess
of $100,000 (provided that Section 5.17(a)(xi) of the Company
Disclosure Schedule shall also identify the amounts, if any, that
are payable or potentially payable to any other party under such
contracts, agreements and arrangements pursuant to any
post-closing adjustment to the purchase price (including without
limitation under any "earn-out" or other similar provision)); and
(xii) all other contracts and agreements, whether or not
made in the ordinary course of business, which are material to the
Company or any Subsidiary, the conduct of their respective
businesses, or the absence of which would prevent or materially
delay consummation of the Merger or otherwise prevent or
materially delay the Company from performing its obligations under
this Agreement and would reasonably be expected to have a Company
Material Adverse Effect.
(b) Except as would not prevent or materially delay
consummation of the Offer or the Merger or otherwise prevent or materially
delay the Company from performing its obligations under this Agreement and
would not reasonably be expected to have a Company Material Adverse Effect,
(i) each Material Contract is valid and binding on the Company or a
Subsidiary, as the case may be, and, to the knowledge of the Company, the
other parties thereto, and is in full force and effect against the Company
or a Subsidiary except to the extent it has expired in accordance with its
terms and represents the entire agreement between or among the parties
thereto with respect to the subject matter thereof and (ii) upon
consummation of the transactions contemplated by this Agreement, shall
continue in full force and effect without penalty or other adverse
consequence. Except as disclosed in Section 5.17(b) of the Disclosure
Schedule, none of the Company or any Subsidiary or, to the knowledge of the
Company, as of the date of this Agreement, any other party thereto, is in
breach of, or default under, any Material Contract.
(c) The Company has made available to Parent a true,
complete and correct copy of all written Material Contracts, together with
all material amendments, waivers or other changes thereto, and has been
given a written description of all oral contracts included in the Material
Contracts.
SECTION 5.18 Insurance. True and complete copies of all
material fire and casualty, general liability, business interruption and
workers' compensation insurance policies maintained by the Company or any
Subsidiary have been made available to Parent, and such policies are in
full force and effect as of the date of this Agreement. The Company or the
relevant Subsidiary has paid all premiums under such policies and none of
the Company or any Subsidiary is in default with respect to its obligations
thereunder.
SECTION 5.19 Board Approval; Vote Required. (a) The
Company Board, by resolutions duly adopted by vote of those voting at a
meeting duly called and held, has duly (i) determined that this Agreement
and the transactions contemplated hereby and thereby, including the Offer
and the Merger, are fair to and in the best interests of the Company and
its stockholders, (ii) approved and declared advisable this Agreement and
the transactions contemplated hereby and thereby, including the Offer and
the Merger, and in accordance with the DGCL, and (iii) resolved to
recommend acceptance of the Offer and the adoption of this Agreement by the
Company's stockholders at the Company Stockholder Meeting.
(b) The only vote of the holders of any class or series
of capital stock of the Company that may be necessary to adopt this
Agreement and the Transaction, including the Merger, is the affirmative
vote of the holders of a majority of the outstanding shares of Company
Common Stock in favor of the adoption of this Agreement.
SECTION 5.20 Related Party Transactions. Except as set
forth in Section 5.20 of the Company Disclosure Schedule and except as
expressly contemplated by this Agreement, no executive officer, director or
affiliate of the Company or any Subsidiary nor any immediate family member
or affiliate of such executive officer or director is a party to any
agreement, contract, commitment, arrangement or transaction with the
Company or any Subsidiary or is entitled to any payment or transfer of any
assets from the Company or any Subsidiary or has any material interest in
any material property used by the Company or any Subsidiary or has an
interest in any customer or supplier of the Company or any Subsidiary or
provider of any services to the Company or any Subsidiary, except in each
case (i) employment, management or consulting arrangements listed in
Section 5.11 or Section 5.17 of the Company Disclosure Schedule and benefit
programs and (ii) the ownership of less than 3% of the outstanding stock of
any publicly traded company.
SECTION 5.21 Guarantee by Subsidiaries. Except as set
forth in Section 5.21 of the Company Disclosure Schedule, and except as
provided pursuant to the terms of the Company's senior credit facility and
issued and outstanding senior subordinated notes, none of the Subsidiaries
is prevented or prohibited by its certificate of incorporation, by-laws or
other equivalent organizational documents, or by any contract, agreement or
other instrument or obligation, from guaranteeing all or any part of any
indebtedness of Parent or any subsidiary of Parent after the Effective
Time.
SECTION 5.22 Customers. Section 5.22 of the Company
Disclosure Schedule lists the 20 largest customers of the Company and the
Subsidiaries by revenue during the 12-month period ended December 31, 2001
(the "Customers") and the amount of gross revenue (net of setoffs,
chargebacks and credits) received by the Company and the Subsidiaries as a
result of orders by each of the Customers during such period. Since January
1, 2001 through the date hereof, none of the Company, any Subsidiary or any
officer, director, affiliate or agent of the Company or a Subsidiary has
received any written notice from any Customer to the effect that any such
Customer intends to cease or materially reduce the amount of services
requested of, or size of orders placed with, the Company or any Subsidiary
or otherwise reduce the amount of business conducted with the Company or
any Subsidiary.
SECTION 5.23 Receivables. All Receivables that arose
since December 31, 2001 arose from, and the Receivables existing on the
Acceptance Date will have arisen from, the sale of inventory or services to
persons not affiliated with the Company or any Subsidiary and in the
ordinary course of business consistent with past practice.
SECTION 5.24 Brokers. Except for Park Avenue Equity
Management, LLC ("Park Avenue"), no broker, finder or investment banker
(other than the Advisors) is entitled to any brokerage, finder's or other
fee or commission in connection with the Transaction based upon
arrangements made by or on behalf of the Company. The Company has
heretofore furnished to Parent a complete and correct copy of all
agreements between the Company and each of Park Avenue and the Advisors
pursuant to which such firms would be entitled to any payment related to
the Transaction.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
As an inducement to the Company to enter into this
Agreement, Parent and Merger Sub, except as disclosed in Parent's
disclosure schedule delivered concurrently with the delivery of this
Agreement (the "Parent Disclosure Schedule"), hereby, jointly and
severally, represent and warrant to the Company as follows:
SECTION 6.01 Corporate Organization. Each of Parent,
Merger Sub and each significant subsidiary (as defined in Rule 1-02 of
Regulation S-X promulgated by the SEC) of Parent is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority and
all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted,
except where the failure to be so organized, existing or in good standing
or to have such power, authority and governmental approvals would not
prevent or materially delay consummation of the Merger, or otherwise
prevent or materially delay Parent or Merger Sub from performing its
obligations under this Agreement and would not reasonably be expected to
have a Parent Material Adverse Effect. Each of Parent, Merger Sub and each
significant subsidiary of Parent is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction
where the character of the properties owned, leased or operated by it or
the nature of its business makes such qualification or licensing necessary,
except for such failures to be so qualified or licensed and in good
standing that would not prevent or materially delay consummation of the
Merger, or otherwise prevent or materially delay Parent or Merger Sub from
performing its obligations under this Agreement and would not reasonably be
expected to have a Parent Material Adverse Effect.
SECTION 6.02 Certificate of Incorporation and By-Laws.
Parent has heretofore furnished to the Company a complete and correct copy
of the certificate of incorporation and the by-laws of Parent and the
certificate of incorporation and by-laws of Merger Sub, each as amended to
date. Such certificates of incorporation and by-laws are in full force and
effect. Neither Parent nor Merger Sub is in violation of any of the
provisions of its certificate of incorporation or by-laws.
SECTION 6.03 Capitalization. (a) The authorized capital
stock of Parent consists of (i) 300,000,000 shares of Parent Common Stock
and (ii) 10,000,000 shares of preferred stock, par value $0.01 per share
("Parent Preferred Stock"). As of March 20, 2002, 96,685,069 shares of
Parent Common Stock and no shares of Parent Preferred Stock were issued and
outstanding, all of which are duly authorized, validly issued, fully paid
and nonassessable, and 8,123,736 shares of Parent Common Stock were
reserved for future issuance pursuant to outstanding stock options that
have been granted prior to the date hereof. Except as set forth in this
Section 6.03 and except for stock options granted pursuant to the stock
option plans of Parent (the "Parent Stock Option Plans"), there are no
options, warrants or other rights, agreements, arrangements or commitments
of any character relating to the issued or unissued capital stock of Parent
or Merger Sub or obligating Parent or Merger Sub to issue or sell any
shares of capital stock of, or other equity interests in, Parent or Merger
Sub. All shares of Parent Common Stock subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in the instruments
pursuant to which they are issuable, will be duly authorized, validly
issued, fully paid and nonassessable. There are no outstanding contractual
obligations of Parent or Merger Sub to repurchase, redeem or otherwise
acquire any shares of Parent Common Stock or any capital stock of Merger
Sub.
(b) The authorized capital stock of Merger Sub consists
of 1000 shares of Merger Sub Common Stock, all of which are duly
authorized, validly issued, fully paid and nonassessable and free of any
preemptive rights in respect thereof and all of which are owned by Parent.
Each outstanding share of capital stock of Merger Sub is duly authorized,
validly issued, fully paid and nonassessable and each such share is owned
by Parent or Merger Sub free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements, limitations
on Parent's or Merger Sub's voting rights, charges and other encumbrances
of any nature whatsoever, except where failure to own such shares free and
clear would not reasonably be expected to have a Parent Material Adverse
Effect.
(c) The shares of Parent Common Stock to be issued
pursuant to the Offer and the Merger in accordance with Section 2.01 and
Section 4.01 (i) will be duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights created by statute,
Parent's certificate of incorporation or by-laws or any agreement to which
Parent is a party or is bound and (ii) will, when issued, be registered
under the Securities Act and the Exchange Act and registered or exempt from
registration under applicable Blue Sky Laws.
SECTION 6.04 Authority Relative to this Agreement. Each
of Parent and Merger Sub has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder
and to consummate the Transaction. The execution and delivery of this
Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the Transaction have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part
of Parent or Merger Sub are necessary to authorize this Agreement or to
consummate the Transaction (other than, with respect to the Merger, the
filing and recordation of appropriate merger documents as required by the
DGCL). This Agreement has been duly and validly executed and delivered by
each of Parent and Merger Sub and, assuming due authorization, execution
and delivery by each of the other parties thereto, constitutes a legal,
valid and binding obligation of each of Parent and Merger Sub, enforceable
against each of Parent and Merger Sub in accordance with its terms, except
to the extent that its enforceability may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar Laws
affecting the enforcement of creditors' rights generally and by general
equitable principles.
SECTION 6.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by each of Parent and
Merger Sub do not, and the performance of this Agreement by each of Parent
and Merger Sub will not, (i) conflict with or violate the certificate of
incorporation or by-laws of either Parent or Merger Sub in effect on the
date of this Agreement, (ii) assuming that all consents, approvals,
authorizations and other actions described in Section 6.05(b) have been
obtained and all filings and obligations described in Section 6.05(b) have
been made, conflict with or violate any Law applicable to Parent or Merger
Sub or by which any property or asset of either of them is bound or
affected, or (iii) result in any breach of, or constitute a default (or an
event which, with notice or lapse of time or both, would become a default)
under, or give to others any rights of termination, amendment, acceleration
or cancellation of, or result in the creation of a Lien or other
encumbrance on any property or asset of Parent, Merger Sub or any
significant subsidiary of Parent pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent or Merger Sub is a party or by
which Parent or Merger Sub or any property or asset of either of them is
bound or affected, except, with respect to clauses (ii) and (iii), for any
such conflicts, violations, breaches, defaults or other occurrences which
would not prevent or materially delay consummation of the Merger or the
Offer or otherwise prevent or materially delay Parent and Merger Sub from
performing their obligations under this Agreement and would not reasonably
be expected to have a Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement by each
of Parent and Merger Sub do not, and the performance of this Agreement by
each of Parent and Merger Sub will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any
Governmental Authority, except (i) for applicable requirements, if any, of
the Securities Act, the Exchange Act, Blue Sky Laws and state takeover
laws, the HSR Act, and filing and recordation of appropriate merger
documents as required by the DGCL and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or materially delay consummation of the
Merger or the Offer or otherwise prevent Parent or Merger Sub from
performing its material obligations under this Agreement and would not
reasonably be expected to have a Parent Material Adverse Effect.
SECTION 6.06 SEC Filings; Financial Statements. (a)
Parent has filed all forms, reports, statements, schedules and other
documents required to be filed by it with the SEC since December 31, 1999
(such forms, reports, statements, schedules and other documents being,
collectively, the "Parent SEC Reports"). The Parent SEC Reports (i) at the
time they were filed or, if amended, as of the date of such amendment,
complied in all material respects with all applicable requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations promulgated thereunder, and (ii) did not, at the time they were
filed, or, if amended, as of the date of such amendment, contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. No subsidiary of Parent is required to file any form, report or
other document with the SEC. Except as set forth in Section 6.06 of the
Parent Disclosure Schedule, Parent has not received any non-routine
inquires or interrogatories, whether in writing or otherwise, from the SEC,
the NYSE or any other Governmental Authority or, to the knowledge of
Parent, been the subject of any investigation, audit, review or hearing by
or in front of such persons, in each case with respect to any of the Parent
SEC Reports or any of the information contained therein. True and complete
copies of any such written inquires or interrogatories have been furnished
to the Company, and the Company has otherwise been made aware of any such
oral inquiries or interrogatories, investigations, audits, reviews or
hearings.
(b) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the Parent SEC
Reports was prepared in accordance with GAAP applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto or, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC) and each fairly presents, in all material respects, the
consolidated financial position, results of operations and cash flows of
Parent and its consolidated subsidiaries as at the respective dates thereof
and for the respective periods indicated therein, except as otherwise noted
therein (subject, in the case of unaudited statements, to normal and
recurring year-end adjustments).
(c) Except as and to the extent set forth in Section
6.06(c) of the Parent Disclosure Schedule, none of Parent nor any of its
subsidiaries has any liability or obligation of any nature (whether
accrued, absolute, contingent or otherwise), in each case that is required
by GAAP to be set forth on a consolidated balance sheet of Parent or in the
notes thereto, except for liabilities and obligations incurred in the
ordinary course of business consistent with past practice since December
31, 2001, and liabilities and obligations which would not prevent or
materially delay consummation of the Transaction or otherwise be reasonably
likely to prevent or materially delay either Parent or Purchaser from
performing its obligations under this Agreement and would not reasonably be
expected to have a Parent Material Adverse Effect.
(d) Section 6.06(d) of the Parent Disclosure Schedule
lists all "management letters" and other similar letters relating to
Parent's or any of its subsidiaries' internal controls and accounting
practices that have been received by Parent from its independent
accountants since December 31, 1999. True and complete copies of all such
management letters have been furnished to the Company.
SECTION 6.07 Information to Be Supplied. (a) Each of the
registration statement on Form S-4 to be filed with the SEC by Parent in
connection with the issuance of Parent Common Stock in the Merger, as
amended or supplemented from time to time (as so amended and supplemented,
the "Merger Registration Statement"), the Offer Documents and the other
documents required to be filed by Parent with the SEC in connection with
the Offer, the Merger and the Transaction will comply as to form, in all
material respects, with the requirements of the Exchange Act and the
Securities Act, as the case may be. Each of the Merger Registration
Statement, the Offer Documents and the other documents required to be filed
by the Company with the SEC in connection with the Offer, the Merger and
the Transaction and any information supplied or to be supplied by Parent or
its subsidiaries or representatives for inclusion or incorporation by
reference in the Schedule 14D-9 or the Proxy Statement/Prospectus will not,
on the date of its filing or mailing or at the time they become effective
under the Securities Act or, in the case of the Offer Registration
Statement, on the dates the Offer Registration Statement is mailed to
stockholders of the Company and on the Acceptance Date and, in the case of
the Merger Registration Statement, at the time of the Company Stockholder
Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
are made, not misleading.
(b) Notwithstanding the foregoing provisions of this
Section 6.07, no representation or warranty is made by Parent with respect
to statements made or incorporated by reference in the Merger Registration
Statement or the Offer Documents based on information supplied by or on
behalf of the Company and its Subsidiaries for inclusion or incorporation
by reference therein or based on information which is not made in or
incorporated by reference in such documents but which should have been
disclosed pursuant to Section 5.08.
SECTION 6.08 No Vote Required. No vote of the
stockholders of Parent is required by Law, Parent's certificate of
incorporation or by-laws or otherwise in order for Parent and Merger Sub to
consummate the Transactions.
SECTION 6.09 Operations of Merger Sub. Merger Sub is a
direct, wholly owned subsidiary of Parent, was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations
only as contemplated by this Agreement.
SECTION 6.10 Tax Matters. To the knowledge of Parent,
neither Parent nor any of its affiliates has taken or agreed to take any
action that would prevent the Offer and the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code. Parent is
not aware of any agreement, plan or other circumstance, except for a
possible future change in the Stock Value, that would prevent the Merger
from qualifying as a reorganization within the meaning of Section 368(a) of
the Code.
SECTION 6.11 Brokers. No broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the Transaction that will not be paid by or on behalf of
Parent or Merger Sub.
SECTION 6.12 Employee Benefit Plans. (a) None of the
Parent Plans is a Multiemployer Plan or a Multiple Employer Plan.
(b) Each Parent Plan has been operated in all material
respects in accordance with its terms and the requirements of all
applicable Laws including, without limitation, ERISA and the Code. Parent
and the Subsidiaries have performed all material obligations required to be
performed by them under, are not in any default under or in violation of,
and have no knowledge of any default or violation by any party to, any
Parent Plan. Except as would not have a Parent Material Adverse Effect, no
Action is pending or threatened in writing with respect to any Parent Plan
(other than claims for benefits in the ordinary course) and, to the
knowledge of Parent, no fact or event exists that could reasonably be
expected to give rise to any such Action.
(c) Each Parent Plan that is intended to be qualified
under Section 401(a) of the Code or Section 401(k) of the Code has timely
received a favorable determination letter from the IRS covering all of the
provisions applicable to the Parent Plan for which determination letters
are currently available that the Parent Plan is so qualified and each trust
established in connection with any Parent Plan which is intended to be
exempt from federal income taxation under Section 501(a) of the Code has
received a determination letter from the IRS that it is so exempt, and, to
the knowledge of Parent, no fact or event has occurred since the date of
such determination letter or letters from the IRS to adversely affect the
qualified status of any such Parent Plan or the exempt status of any such
trust.
(d) To the knowledge of Parent, there has not been any
prohibited transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) with respect to any Parent Plan. Neither Parent
nor any Subsidiary has any liability under, arising out of or by operation
of Title IV of ERISA (other than liability for premiums to the Pension
Benefit Guaranty Corporation arising in the ordinary course), including,
without limitation, any liability in connection with (i) the termination or
reorganization of any employee benefit plan subject to Title IV of ERISA,
or (ii) the withdrawal from any Multiemployer Plan or Multiple Employer
Plan, and no fact or event exists which could reasonably be expected to
give rise to any such liability.
SECTION 6.13 Absence of Parent Material Adverse Effect.
Since December 31, 2001, (a) there has not been a Parent Material Adverse
Effect, and (b) Parent and its subsidiaries have not taken any action that,
if taken after the date of this Agreement, would constitute a breach of the
covenants set forth in Section 7.02.
SECTION 6.14 Litigation. Except as set forth in Section
6.14 of the Parent Disclosure Schedule, there is no Action pending or, to
the knowledge of Parent, threatened against Parent or any of its
subsidiaries, or any property or asset of Parent or any such subsidiary,
before any Governmental Authority that (a) has had or would reasonably be
expected to have a Parent Material Adverse Effect or (b) seeks to
materially delay or prevent the consummation of the Transaction. Neither
Parent nor any of its subsidiaries nor any property or asset of Parent or
any such subsidiary is subject to any continuing order of, consent decree,
settlement agreement or other similar written agreement with, or, to the
knowledge of Parent, continuing investigation by, any Governmental
Authority, or any order, writ, judgment, injunction, decree, determination
or award of any Governmental Authority that seeks to materially delay or
prevent the consummation of the Transaction or would prevent or materially
delay Parent from performing its obligations under this Agreement or would
reasonably be expected to have a Parent Material Adverse Effect.
SECTION 6.15 Permits; Compliance. (a) Each of Parent and
its subsidiaries is in possession of all franchises, grants,
authorizations, licenses, certifications, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any
Governmental Authority necessary for each of Parent and such subsidiaries
to own, lease and operate its properties or to carry on its business as it
is now being conducted (the "Parent Permits"), except where the failure to
have, or the suspension or cancellation of, any of the Parent Permits would
not prevent or materially delay consummation of the Merger or otherwise
prevent or materially delay Parent or Purchaser from performing its
obligations under this Agreement and would not reasonably be expected to
have a Parent Material Adverse Effect. As of the date of this Agreement, no
suspension or cancellation of any of the Parent Permits is pending or, to
the knowledge of Parent, threatened. None of Parent nor any of its
subsidiaries is in conflict with, or in default, breach or violation of,
(a) any Law applicable to Parent or any such subsidiary or by which any
property or asset of Parent or any such subsidiary is bound or affected, or
(b) any note, bond, mortgage, indenture, contract, agreement, lease,
license, Parent Permit, franchise or other instrument or obligation to
which Parent or any such subsidiary is a party or by which Parent or any
such subsidiary or any property or asset of Parent or any such subsidiary
is bound, except in either case for any such conflicts, defaults, breaches
or violations that would not prevent or materially delay the consummation
of the Merger or otherwise prevent or materially delay Parent or Purchaser
from performing its obligations under this Agreement and would not
reasonably be expected to have a Parent Material Adverse Effect.
(b) None of Parent nor any of its subsidiaries or any
individual who is currently an executive officer, director or, to the
knowledge of Parent, employee of Parent or any such subsidiary (i) has been
convicted of, charged with or, to the knowledge of Parent, investigated for
a Medicare, Medicaid or state health program-related offense, (ii) since
January 1, 1999, has been convicted of, charged with or, to the knowledge
of Parent, investigated for a violation of Law related to fraud, theft,
embezzlement, financial misconduct or obstruction of an investigation,
(iii) has been excluded or suspended from participation in Medicare,
Medicaid or any federal or state health program or (iv) since January 1,
1999, has been subject to any Order or any criminal or civil fine imposed
by any Governmental Authority with respect to any such Medicare, Medicaid
or any other federal or state health care program.
(c) Except as disclosed in Section 6.15(c) of the Parent
Disclosure Schedule, since January 1, 1999, there have been no written
notices, citations or decisions by any Governmental Authority that Parent
or any of its subsidiaries fails to meet any applicable standards
promulgated by such Governmental Authority for which a plan of correction
has not been accepted, and Parent does not know of any such failure or
facts upon which such a failure could be alleged except, in either case, as
would not reasonably be expected to have a Parent Material Adverse Effect.
Except as set forth in Section 6.15(c) of the Parent Disclosure Schedule,
none of Parent or any of its subsidiaries has received any notice of any
potential deficiency in or violation of any applicable Law or Order
relating to Parent or any such subsidiary for which a plan of correction
has not been accepted except as would not reasonably be expected to have a
Parent Material Adverse Effect. Except as disclosed in Section 6.15(c) of
the Parent Disclosure Schedule, and except as would not reasonably be
expected to have a Parent Material Adverse Effect, since January 1, 1996,
Parent has complied in all material respects with all applicable Laws with
respect to the services provided and business operated by Parent.
(d) Except as disclosed in Section 6.15(d) of the Parent
Disclosure Schedule, and except as would not have a Parent Material Adverse
Effect, (i) none of Parent nor any of its subsidiaries has engaged in any
activities that are prohibited under or would violate Medicare and Medicaid
statutes, 42 U.S.C. Section 1320a-7a and 7b, or the regulations promulgated
pursuant to such statutes, or comparable state or local Law or rules of
professional conduct; (ii) Parent and its subsidiaries have timely and
accurately filed in all material respects all requisite claims and other
reports required to be filed in connection with all applicable state and
federal Medicare and Medicaid programs due on or before the date of this
Agreement; (iii) there is no arrangement providing for any rebates,
kickbacks or other forms of compensation that is unlawful to be paid to any
person or entity in return for the referral of business or for the
arrangement for recommendation of such referrals; and (iv) none of Parent
nor any of its subsidiaries has any financial arrangement which renders any
of its xxxxxxxx unlawful pursuant to the Xxxxx Law or comparable state Law.
(e) To the knowledge of Parent, all agreements of Parent
and its subsidiaries with third-party payors were entered into by Parent or
any such subsidiaries, as the case may be, in the ordinary course of
business. Parent and its subsidiaries are in compliance with each of their
respective third-party payor agreements, and Parent and its subsidiaries
have properly charged and billed in accordance with the terms of their
respective third-party payor agreements, including, where applicable,
billing and collection of all deductibles and co-payments, except for any
such violations that would not reasonably be expected to have a Parent
Material Adverse Effect.
(f) Except as disclosed in Section 6.15(f) of the Parent
Disclosure Schedule, (i) no right of Parent or any of its subsidiaries to
receive reimbursements pursuant to any government program or private
program has ever been terminated or suspended as a result of any
investigation or action whether by any Governmental Authority or other
third party, (ii) none of Parent nor any of its subsidiaries has since
January 1, 1999 received notice from any Governmental Authority that it has
been the subject of any inspection, investigation, survey, audit,
monitoring or other form of review by any Governmental Authority,
professional review organization, accrediting organization or certifying
agency for the purpose of any alleged improper activity on the part of such
entity, other than routine audits or inquiries and other than those that
would not reasonably be expected to have a Parent Material Adverse Effect,
(iii) none of Parent nor any of its subsidiaries has received any written
notice of deficiency from a Governmental Authority in connection with its
operations for which a plan of correction has not been accepted, and (iv)
none of Parent nor any of its subsidiaries has received any written notice
of any claim, requirement or demand of any licensing, accrediting or
certifying agency to rework or redesign their operations or any part
thereof.
SECTION 6.16 Financing. Parent has, or will have prior to
the Acceptance Date, sufficient cash, available lines of credit or other
sources of immediately available funds to enable it to pay the Cash
Consideration for all Tendered Cash Election Shares and to pay all fees and
expenses in connection therewith.
SECTION 6.17 Ownership of Company Common Stock. As of the
date of this Agreement, none of Parent, any of its subsidiaries or any of
their respective controlled affiliates beneficially owns any shares of
Company Common Stock.
ARTICLE VII
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 7.01 Conduct of Business by the Company Pending
the Merger. (a) The Company agrees that, between the date of this Agreement
and the Effective Time, except as expressly contemplated by any other
provision of this Agreement, as set forth in Section 7.01 of the Company
Disclosure Schedule or as required by a Governmental Authority of competent
jurisdiction, unless Parent shall otherwise consent in writing:
(i) the businesses of the Company and the Subsidiaries
shall be conducted in all material respects only in, and the
Company and the Subsidiaries shall not take any material action
except in, the ordinary course of business and in a manner
consistent with past practice; and
(ii) the Company shall use its reasonable best efforts to
preserve substantially intact the business organization of the
Company and the Subsidiaries, to keep available the services of
the current officers, employees and consultants of the Company and
the Subsidiaries and to preserve the current relationships of the
Company and the Subsidiaries with customers, suppliers and other
persons with which the Company or any Subsidiary has significant
business relations.
(b) By way of amplification and not limitation, except as
expressly contemplated by any other provision of this Agreement or as set
forth in Section 7.01 of the Company Disclosure Schedule, neither the
Company nor any Subsidiary shall, between the date of this Agreement and
the Effective Time, directly or indirectly, do, or propose to do, any of
the following without the prior written consent of Parent:
(i) amend or otherwise change its certificate of
incorporation or by-laws or equivalent organizational documents;
(ii) issue, sell, pledge, dispose of, grant or encumber,
or authorize the issuance, sale, pledge, disposition, grant or
encumbrance of, (A) any shares of any class of capital stock of
the Company or any Subsidiary, or any options, warrants,
convertible securities or other rights of any kind to acquire any
shares of such capital stock, or any other ownership interest
(including, without limitation, any phantom interest), of the
Company or any Subsidiary (except for the issuance of up to a
maximum of 3,822,307 shares of Company Common Stock issuable
pursuant to Company Stock Options outstanding on the date hereof)
or (B) any assets of the Company or any Subsidiary, except in the
ordinary course of business and in a manner consistent with past
practice;
(iii) except as expressly set forth in, and permitted by,
Section 4.04 of the Company Disclosure Schedule, waive any stock
repurchase rights, accelerate, amend or change the period of
exercisability of options or restricted stock, reprice options
granted under any Company Stock Option Plan or authorize cash
payments in exchange for any options granted under any of such
plans;
(iv) declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock, property or otherwise,
with respect to any of its capital stock, except for dividends
payable by a Subsidiary of the Company to the Company or any other
Subsidiary;
(v) reclassify, combine, split, subdivide or redeem, or
purchase or otherwise acquire, directly or indirectly, any of its
capital stock or other securities;
(vi) (A) acquire (including, without limitation, by
merger, consolidation, or acquisition of stock or assets or any
other business combination) any corporation, partnership, other
business organization or any division thereof or any material
amount of assets; (B) incur any indebtedness for borrowed money or
issue any debt securities or assume, guarantee or endorse, or
otherwise become responsible for, the obligations of any person,
or make any loans or advances, or grant any security interest in
any of its assets except in the ordinary course of business and
consistent with past practice (which shall be deemed to include
borrowings under its senior credit facility); (C) enter into any
contract or agreement other than in the ordinary course of
business and consistent with past practice; (D) authorize, or make
any commitment with respect to, any single capital expenditure
which is in excess of $500,000 or capital expenditures which are,
in the aggregate, in excess of $500,000 per month (the "Monthly
CapEx Amount") from the date hereof until the earlier of (x) the
Acceptance Date or (z) the termination of this Agreement pursuant
to Section 10.01 (it being understood that any unused portion of
the Monthly CapEx Amount may be rolled forward and utilized in any
subsequent month); or (E) enter into or amend any contract,
agreement, commitment or arrangement with respect to any matter
set forth in this Section 7.01(vi);
(vii) sell, lease, license, mortgage, pledge, encumber or
dispose of in any manner any properties or assets which are
material, individually or in the aggregate, to the Company;
(viii) increase the compensation payable or to become
payable or the benefits provided to its directors, officers or
employees, except for increases in the ordinary course of business
and consistent with past practice in salaries or wages of
employees of the Company or any Subsidiary who are not directors
or officers of the Company or any Subsidiary, or grant any
severance or termination pay to, or enter into any employment or
severance agreement with, any director, officer or other employee
of the Company or of any Subsidiary, or establish, adopt, enter
into or amend any bonus, profit-sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of
any director, officer or employee;
(ix) change any of the accounting principals used by it,
other than as required by GAAP;
(x) (A) make or rescind any Tax election, settle or
compromise any liability for Taxes or change or revoke any of its
methods of Tax accounting, or (B) take any action with respect to
the computation of Taxes or the preparation of Tax returns that is
inconsistent with past practice; provided, however, that, in the
case of this clause (x), Parent shall not unreasonably withhold
its consent;
(xi) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent
or otherwise), other than in the ordinary course of business and
consistent with past practice or claims, liabilities or
obligations not exceeding $500,000 in the aggregate;
(xii) (A) amend, modify or consent to the termination of
any Material Contract, or amend, waive, modify or consent to the
termination of the Company's or any Subsidiary's rights
thereunder, or (B) enter into any contract or agreement that would
be a Restrictive Agreement or a Related Party Agreement;
(xiii) except with respect to trademarks in the ordinary
course of business and consistent with past practice, (A) grant
any license in respect of any material Intellectual Property of
the Company or any Subsidiary, (B) develop any Intellectual
Property jointly with any third party, or (C) disclose any
confidential Intellectual Property or other confidential
information of the Company or any Subsidiary, unless such
disclosure is made in the ordinary course of business consistent
with past practice or would not reasonably be expected to have a
Company Material Adverse Effect;
(xiv) commence or settle any material Action; or
(xv) announce an intention, enter into any formal or
informal agreement or otherwise make a commitment to do any of the
foregoing or take any action that would materially delay the
consummation of the Offer and the Merger.
SECTION 7.02 Conduct of Business by Parent Pending
Consummation of the Merger. (a) Parent agrees that, between the date of
this Agreement and the Effective Time, except as expressly contemplated by
any other provision of this Agreement or as set forth in Section 7.02 of
the Parent Disclosure Schedule, unless the Company shall otherwise consent
in writing, Parent shall not:
(i) amend or otherwise change its certificate of
incorporation or by-laws in a manner adverse to the stockholders
of the Company as opposed to any other holders of Parent Common
Stock;
(ii) issue, sell, or grant, or authorize the issuance,
sale or grant of, any shares of capital stock of Parent except at
the market price or upon the exercise of options, warrants,
convertible securities or other rights of any kind to acquire any
shares of such capital stock which were issued with an exercise or
conversion price of not less than the market price at the time of
issuance; provided, however, that the foregoing shall not prohibit
issuances of capital stock, options or rights as part of normal
employee compensation in the ordinary course of business; and
provided further, however, that this clause (ii) shall not
prohibit the issuance of capital stock, options, warrants,
convertible securities or other rights in connection with the
acquisition of another entity or business if such acquisition is
otherwise permitted by clause (v) below;
(iii) declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock, property or otherwise,
with respect to any of its capital stock, except for dividends
payable by a subsidiary of Parent to Parent or any other
subsidiary;
(iv) reclassify, combine, split or subdivide its capital
stock without appropriate adjustment being made to the Stock
Consideration payable to the holders of Company Common Stock in
the Offer or the Merger;
(v) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other
business combination) any corporation, partnership, other business
organization or any division thereof or any material amount of
assets, unless such acquisition or the entering into of a
definitive agreement relating to the consummation of such
transaction would not, in the reasonable judgment of Parent at the
time of such determination, (A) impose any material delay in the
obtaining of, or materially increase the risk of not obtaining,
any authorizations, consents, orders, declarations or approvals of
any Governmental Authority necessary to consummate the Offer or
the Merger or the expiration or termination of any applicable
waiting period under any antitrust or competition Law, or (B)
materially increase the risk of any Governmental Authority
entering an order prohibiting the consummation of the Offer or the
Merger or commencing any action seeking to achieve any of the
effects described in paragraph (a) of clause (v) of Annex I; or
(vi) announce an intention, enter into any formal or
informal agreement or otherwise make a commitment, to do any of
the foregoing or take any action that would materially delay the
consummation of the Offer and the Merger.
ARTICLE VIII
ADDITIONAL AGREEMENTS
SECTION 8.01 Company Stockholder Meeting. If required by
applicable Law, the Company, acting through the Company Board, shall, in
accordance with applicable Law, duly call, convene and hold a special
meeting of the holders of Company Common Stock (the "Company Stockholder
Meeting"), as soon as reasonably practicable after the acceptance for
payment or exchange of shares of Company Common Stock pursuant to the
Offer, for the purpose of voting upon this Agreement and the Merger, and
the Company agrees that this Agreement shall be submitted at such meeting.
Subject to Section 8.04, the Company shall take all action necessary to
secure the vote of holders of Company Common Stock required by applicable
Law and the Company's Third Amended and Restated Certificate of
Incorporation and Third Amended and Restated By-Laws to obtain the approval
for this Agreement.
SECTION 8.02 Preparation of Merger Registration Statement
and Proxy Statement/Prospectus. (a) If required by applicable Law, promptly
after the acceptance for exchange or payment of shares of Company Common
Stock pursuant to the Offer, Parent and the Company shall prepare, and
Parent shall file with the SEC, the Merger Registration Statement, in which
the Proxy Statement/Prospectus will be included as Parent's prospectus.
Parent shall provide the Company and its counsel with any comments it may
receive from the SEC or its staff with respect to the Merger Registration
Statement as promptly as practicable after receipt of such comments and the
parties shall cooperate to prepare appropriate responses to the SEC to such
comments and make such modifications to the Merger Registration Statement
as shall be reasonably appropriate. Each of the Company and Parent shall
use all reasonable efforts to have the Merger Registration Statement
declared effective under the Securities Act as promptly as practicable
after the acceptance for payment or exchange of shares of Company Common
Stock pursuant to the Offer and to keep the Merger Registration Statement
effective as long as is necessary to consummate the Merger. The Company
shall furnish all information concerning the Company as Parent may
reasonably request in connection with such action and preparation of the
Merger Registration Statement and Proxy Statement/Prospectus. If required
by applicable Law, the Company shall use its reasonable best efforts to
mail the Proxy Statement/Prospectus to its stockholders as promptly as
practicable after the Merger Registration Statement is declared effective
under the Securities Act and, if necessary, after the Proxy
Statement/Prospectus shall have been so mailed, promptly circulate amended,
supplemental or supplemented proxy material, and, if required in connection
therewith, resolicit proxies. Parent shall take any action reasonably
required to be taken under applicable state securities or Blue Sky Laws in
connection with the issuance of Parent Common Stock in the Offer and the
Merger. No amendment or supplement to the Merger Registration Statement or
Proxy Statement/Prospectus will be made by Parent or the Company without
the approval of the other party, which will not be unreasonably withheld or
delayed. Each party will advise the other party promptly, after it receives
notice thereof, of the time when the Merger Registration Statement is
declared effective or any supplement or amendment thereto has been filed,
of the issuance of any stop order, of the suspension or qualification of
Parent Common Stock issued in connection with the Merger for offering or
sale in any jurisdiction, or of any request by the SEC for amendment of the
Proxy Statement/Prospectus or comments thereon and responses thereto or
requests by the SEC for additional information. If, at any time prior to
the Effective Time, the Company or Parent discovers any information
relating to either party, or any of their respective affiliates, officers
or directors, that should be set forth in an amendment to the Proxy
Statement/Prospectus so that such document would not contain any
misstatement of material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, the
party that discovers that information shall promptly notify the other party
and an appropriate amendment or supplement describing such information
shall be promptly filed with the SEC and, to the extent required by law or
regulation, disseminated to the stockholders of the Company.
(b) Notwithstanding the foregoing, if Parent or Merger
Sub shall acquire at least 90% of the outstanding shares of Company Common
Stock pursuant to the Offer or otherwise, the parties hereto agree, subject
to the satisfaction or (to the extent permitted hereunder) waiver of all
conditions to the Merger, to take, or cause to be taken, all necessary and
appropriate action to cause the Merger to be effective as soon as
practicable after the acceptance for payment or exchange of shares of
Company Common Stock pursuant to the Offer without the Company Stockholder
Meeting.
SECTION 8.03 Access to Information; Confidentiality. (a)
Except as otherwise prohibited by applicable Law or the terms of any
contract or agreement (provided that the Company shall use all reasonable
efforts to promptly obtain any consent required under any such contract or
agreement in order that it may comply with the terms of this Section 8.03),
from the date of this Agreement until the Effective Time, the Company
shall, and shall cause its Subsidiaries to, (i) provide to Parent and
Parent's officers, directors, employees, accountants, consultants, legal
counsel, agents and other representatives access at reasonable times during
normal business hours upon prior notice to the officers, employees, agents,
properties, offices and other facilities of the Company and its
Subsidiaries and to the books and records thereof, and (ii) furnish
promptly to Parent such information concerning the business, properties,
contracts, assets, liabilities, personnel and other aspects of the Company
and its Subsidiaries as Parent or its representatives may reasonably
request.
(b) All information obtained by the parties pursuant to
this Section 8.03 shall be kept confidential in accordance with the
confidentiality agreement, dated November 20, 2001 (the "Confidentiality
Agreement"), between Parent and the Company.
(c) No investigation pursuant to this Section 8.03 shall
affect any representation or warranty in this Agreement of any party hereto
or any condition to the obligations of the parties hereto.
SECTION 8.04 No Solicitation of Transactions. (a) The
Company shall, and shall cause its Subsidiaries, and its and their
respective officers, directors, employees, subsidiaries, agents or advisors
or other representatives (including, without limitation, any investment
banker, attorney or accountant retained by it) ("Representatives") to,
immediately cease and cause to be terminated any discussions or
negotiations with third parties with respect to a Competing Transaction (as
defined below). The Company will not, directly or indirectly, and will
instruct its Representatives not to, directly or indirectly, solicit,
initiate or, except as and only to the extent permitted by Section 8.04(b),
encourage (including by way of furnishing nonpublic information), or take
any other action to facilitate, any inquiries or the making of any proposal
or offer (including, without limitation, any proposal or offer to its
stockholders) that constitutes, or may reasonably be expected to lead to,
any Competing Transaction (as defined below), or, except as and only to the
extent permitted by Section 8.04(b), enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain a Competing Transaction, or agree to or endorse any
Competing Transaction, or authorize or permit any Representative of the
Company or any of its Subsidiaries to take any such action. The Company
shall not release any third party from, or waive any provision of, any
confidentiality or standstill agreement to which it is a party.
(b) Notwithstanding anything to the contrary in this
Section 8.04, the Company Board may furnish information to, and enter into
discussions with, a person who has made an unsolicited bona fide written
proposal or offer regarding a Competing Transaction (that did not result
from a breach of this Section 8.04), and with respect to which the Company
Board has (i) determined, in its good faith judgment (after consultation
with a financial advisor of internationally recognized reputation), that
such proposal or offer constitutes or is reasonably likely to result in or
lead to a Superior Proposal (as defined below), (ii) determined, in its
good faith judgment after consultation with outside legal counsel, that, in
light of such Superior Proposal, the failure to furnish such information or
to enter into such discussions would result in a breach of its fiduciary
obligations under applicable Law, (iii) provided written notice to Parent
of its intent to furnish information or enter into discussions with such
person at least two business days prior to taking any such action and (iv)
obtained from such person an executed confidentiality agreement on terms no
less favorable to the Company than those contained in the Confidentiality
Agreement.
(c) The Company agrees that in addition to the
obligations of the Company set forth in paragraphs (a) and (b) of this
Section 8.04, promptly following receipt thereof, the Company shall advise
Parent in writing of any request for information or any Competing
Transaction, or any inquiry, discussions or negotiations with respect to
any Competing Transaction and the terms and conditions of such request for
information, Competing Transaction, inquiry, discussions or negotiations
and the Company shall promptly provide to Parent copies of any written
materials received by the Company in connection with any of the foregoing,
and the identity of the person or group making any such request for
information, Competing Transaction or inquiry or with whom any discussions
or negotiations may be taking place (as permitted by Section 8.04(b)). The
Company agrees that it shall keep Parent informed of the status and
material details (including amendments or proposed amendments) of any such
request for information, Competing Transaction or inquiry and keep Parent
informed as to the material details of any information requested of or
provided by the Company (pursuant to Section 8.04(b)) and as to the status
and material terms of all substantive discussions or negotiations
(permitted by Section 8.04(b)) with respect to any such request, Competing
Transaction or inquiry. The Company agrees that it shall simultaneously
provide to Parent any non-public information concerning the Company that
may be provided (pursuant to Section 8.04(b)) to any other person or group
in connection with any Competing Transaction which was not previously
provided to Parent.
(d) Except as otherwise set forth in this Section
8.04(d), the Company Board shall not withdraw, qualify, modify or amend, or
propose to withdraw, qualify, modify or amend, in any manner adverse to
Parent or Merger Sub, the Recommendation of the Company Board, or take any
action, or make any statement, filing or release inconsistent with such
Recommendation; provided, however, that if, prior to consummation of the
Offer, the Company Board reasonably determines in good faith, after
consultation with outside legal counsel, that the failure of the Company
Board to withdraw, qualify, modify or amend the Recommendation would be a
breach of its fiduciary duties under applicable Law, the Company Board
shall be permitted to withdraw, qualify, modify or amend, in a manner
adverse to Parent or Merger Sub, the Company Recommendation. The Company
Board shall promptly deliver to Parent written notice advising Parent (i)
that it has withdrawn, qualified, modified or amended, in a manner adverse
to Parent or Merger Sub, the Recommendation and (ii) if applicable, the
material terms and conditions of the Superior Proposal received by the
Company prior to such withdrawal, qualification, modification or amendment
and the identity of the person or persons making such Superior Proposal.
Nothing contained in this Section 8.04 shall prohibit the Company or the
Company Board from taking and disclosing to its stockholders a position
with respect to a tender or exchange offer by a third party pursuant to
Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act, or from making
any disclosure required by applicable Law; provided, however, that any
withdrawal, qualification, modification or amendment of the Recommendation
shall be made as and only to the extent permitted by Section 8.04(d).
(e) A "Competing Transaction" means any of the following
(other than the Transaction): (i) any merger, consolidation, share
exchange, business combination, recapitalization, liquidation, dissolution
or other similar transaction involving the Company or any Subsidiary, (ii)
any sale, lease, exchange, transfer or other disposition of all or a
substantial part of the assets of the Company or of any Subsidiary, (iii)
any sale, exchange, transfer or other disposition of 15% or more of any
class of equity securities of the Company or of any Subsidiary or of 15% or
more of the assets of the Company or of any Subsidiary, or (iv) any tender
offer or exchange offer that, if consummated, would result in any person
beneficially owning 15% or more of any class of equity securities of the
Company or of any Subsidiary.
(f) A "Superior Proposal" means an unsolicited bona fide
written offer made by a third party to consummate any of the following
transactions: (i) a merger, consolidation, share exchange, business
combination, recapitalization or other similar transaction involving the
Company pursuant to which the stockholders of the Company immediately
preceding such transaction would hold less than 50% of the equity interest
in the surviving or resulting entity of such transaction, (ii) the sale,
lease, exchange, transfer or other disposition of at least 50% of the
assets of the Company and its Subsidiaries, taken as a whole, in a single
or related series of transactions or (iii) the acquisition by any person or
group (including by means of a tender offer or an exchange offer or a
two-step transaction involving a tender offer followed with reasonable
promptness by a merger involving the Company), directly or indirectly, of
ownership of at least 50% of the then outstanding shares of Company Common
Stock, in each case, on terms (including conditions to consummation of the
contemplated transaction) that the Company Board determines, in its good
faith judgment (after consultation with a financial advisor of nationally
recognized reputation), to be more favorable to the Company stockholders
than the Offer and the Merger, is reasonably capable of being consummated
and for which financing, to the extent required, is reasonably likely, in
the good faith judgment of the Board (after consultation with a financial
advisor of nationally recognized reputation), to be obtained on a timely
basis.
SECTION 8.05 Employee Benefits Matters. (a) From and
after the Effective Time, Parent shall cause the Surviving Corporation and
its subsidiaries to honor in accordance with their terms, all contracts,
agreements, arrangements, policies, plans and commitments of the Company
and the Subsidiaries as in effect immediately prior to the Effective Time
that are applicable to any current or former employees or directors of the
Company or any Subsidiary; provided, however, that nothing contained herein
shall prohibit Parent or the Surviving Corporation or any of Parent's
subsidiaries from amending, modifying or terminating any such contracts,
agreements, arrangements, policies, plans and commitments in accordance
with their terms. Employees of the Company or any Subsidiary shall receive
full credit for purposes of eligibility to participate and vesting (but not
for benefit accruals) under any employee benefit plan, program or
arrangement established or maintained by the Surviving Corporation or any
of its subsidiaries for service accrued or deemed accrued prior to the
Effective Time with the Company or any Subsidiary; provided, however, that
such crediting of service shall not operate to duplicate any benefit or the
funding of any such benefit. In addition, Parent shall waive, or cause to
be waived, any limitations on benefits relating to any pre-existing
conditions to the same extent such limitations are waived under any
comparable plan of Parent or its subsidiaries and recognize, for purposes
of annual deductible and out-of-pocket limits under its medical and dental
plans, deductible and out-of-pocket expenses paid by employees of the
Company and its subsidiaries in the calendar year in which the Effective
Time occurs.
(b) Except as contemplated by the Employment Agreements,
following the Effective Time, Parent shall continue to provide, or shall
cause to be continued to be provided, to individuals who are employed by
the Surviving Corporation and its subsidiaries as of the Effective Time and
who remain employed with Parent or any subsidiary of Parent ("Affected
Employees"), for so long as such Affected Employees remain employed by
Parent or any subsidiary of Parent, employee benefits (other than salary or
incentive compensation) (i) pursuant to the Company's or its Subsidiaries
employee benefit plans, programs, policies and arrangements as provided to
such Affected Employees immediately prior to the Effective Time or (ii)
pursuant to employee benefit plans, programs, policies or arrangements
maintained by Parent or any subsidiary of Parent providing coverage and
benefits that, in the aggregate, are no less favorable than those provided
to employees of Parent or its subsidiaries in positions reasonably
comparable to the positions held by the Affected Employees.
SECTION 8.06 Directors' and Officers' Indemnification and
Insurance. (a) The Certificate of Incorporation of the Surviving
Corporation shall (i) contain provisions no less favorable with respect to
indemnification for matters occurring prior to the Effective Time than are
set forth in the Third Amended and Restated Certificate of Incorporation
and Third Amended and Restated By-Laws of the Company, as of the date
hereof, which provisions shall not be amended, repealed or otherwise
modified for a period of six years from the Effective Time in any manner
that would affect adversely the rights thereunder of individuals who, at or
prior to the Effective Time, were directors, officers, employees or agents
of the Company, unless such modification shall be required by Law, and (ii)
contain provisions no less favorable with respect to indemnification for
matters occurring from and after the Effective Time than are set forth in
Parent's Certificate of Incorporation, as of the date hereof.
(b) The Surviving Corporation shall maintain in effect
for six years from the Effective Time directors' and officers' liability
insurance covering those persons who are currently covered on the date of
this Agreement by the current directors' and officers' liability insurance
policies maintained by the Company (provided that the Surviving Corporation
or Parent may substitute therefor policies of at least the same dollar
limit coverage containing terms and conditions that are not, in the
aggregate, less favorable) with respect to matters occurring prior to the
Effective Time; provided, however, that in no event shall the Surviving
Corporation or Parent be required to expend pursuant to this Section
8.06(b) more than the annual amount set forth on Section 8.06(b) of the
Company Disclosure Schedule; provided further, however, that, if the amount
of the annual premiums necessary to maintain or procure such insurance
coverage exceeds such maximum amount, the Surviving Corporation shall
maintain or procure, for such six-year period, the most advantageous
policies of directors' and officers' insurance obtainable for an annual
premium equal to that maximum amount.
(c) In addition to the other rights provided for in this
Section 8.06 and not in limitation thereof (but without in any way limiting
or modifying the obligations of any insurance carrier contemplated by
Section 8.06(b)), for six years from and after the Effective Time, the
Surviving Corporation shall, to the fullest extent permitted by the DGCL
(including Section 145(f) thereof) on the date hereof, indemnify and hold
harmless (and release from any liability to the Surviving Corporation or
any of their respective subsidiaries) the persons who, at or prior to the
Effective Time, were officers or directors of the Company or served on
behalf of the Company as an officer or director of any of the Company's
current or former Subsidiaries (the "Indemnitees") against all expenses
(including attorneys' fees), losses, claims, damages, judgments, fines and
amounts paid in settlement that are actually and reasonably incurred by the
person in connection with any threatened, pending or completed action, suit
or proceeding, whether criminal, civil, administrative or investigative,
that related to an event, act or omission which occurred prior to the
Effective Time by reason of the fact that such person was at or prior to
the Effective Time a director or officer of the Company or any of its
current or former Subsidiaries (collectively, an "Indemnifiable Claim");
provided, however, that the Surviving Corporation shall not be responsible
for any amounts paid in settlement of any Indemnifiable Claim without the
prior written consent of Parent or the Surviving Corporation. In the event
any Indemnifiable Claim is asserted or made within such six-year period,
all rights to indemnification shall continue until such claim is disposed
of or all judgments, orders, decrees or other rulings in connection with
such claim are fully satisfied.
(d) In addition to the other rights provided for in this
Section 8.06, and not in limitation thereof, the Surviving Corporation,
Parent and the Company agree that all contracts, agreements, arrangements
or understandings between the Company and any Indemnitees, as in effect on
the date hereof (including without limitation that certain Financial
Advisory Agreement, dated November 23, 1999, between the Company and Xxxxx
& Company, L.P., to the extent in effect as of the date of this Agreement,
and including those contracts, agreements, arrangements or understandings
set forth in Section 5.17 or Section 5.20 of the Company Disclosure
Schedule), copies of which have been provided to Parent prior to the date
hereof, shall survive the Merger and continue in full force and effect in
accordance with their terms.
(e) In the event the Company or the Surviving Corporation
or any of their respective successors or assigns (i) consolidates with or
merges into any other person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers all
or substantially all of its properties and assets to any person, then, and
in each such case, proper provision shall be made so that the successors
and assigns of the Company or the Surviving Corporation, as the case may
be, or at Parent's option, Parent, shall assume the obligations set forth
in this Section 8.06.
(f) The obligation of the Surviving Corporation under
this Section 8.06 shall not be terminated or modified in such a manner as
to adversely affect any Indemnitee to whom this Section 8.06 applies
without the consent of such Indemnitee (it being expressly agreed that the
Indemnitees to whom this Section 8.06 applies shall be third party
beneficiaries of this Section 8.06).
SECTION 8.07 Notification of Certain Matters. (a) The
Company shall give prompt notice to Parent, and Parent or Merger Sub shall
give prompt notice to the Company, of (i) any representation or warranty
made by it contained in this Agreement becoming untrue or inaccurate in any
material respect and (ii) the failure by it to comply with or satisfy in
any material respect any covenant, condition or agreement to be complied
with or satisfied by it under this Agreement; provided, however, that the
delivery of any such notification pursuant to this Section 8.07 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
(b) The Company shall give prompt notice to Parent, and
Parent or Merger Sub shall give prompt notice to the Company, of: (i) any
notice or other communication from any Governmental Authority in connection
with the transactions contemplated by this Agreement, and (ii) any actions,
suits, claims, investigations or proceedings commenced or, to its
knowledge, threatened in writing against, relating to or involving or
otherwise affecting it or any of its subsidiaries which, if pending on the
date of this Agreement, would have been required to have been disclosed
pursuant to Article V and Article VI or which relate to the consummation of
the Transaction.
SECTION 8.08 Company Affiliates. No later than five
business days after the date of this Agreement, the Company shall deliver
to Parent a list of names and addresses of those persons who were, in the
Company's reasonable judgment, on such date, affiliates (within the meaning
of Rule 145 of the rules and regulations promulgated under the Securities
Act (each such person being, a "Company Affiliate")) of the Company. The
Company shall provide Parent with such information and documents as Parent
shall reasonably request for purposes of reviewing such list. The Company
shall use its reasonable best efforts to deliver or cause to be delivered
to Parent, prior to the initial expiration of the Offer, an affiliate
letter in the form attached hereto as Exhibit A, executed by each of the
Company Affiliates identified in the foregoing list and any person who
shall, to the knowledge of the Company, have become a Company Affiliate
subsequent to the delivery of such list.
SECTION 8.09 Further Action; Reasonable Best Efforts. (a)
Upon the terms and subject to the conditions of this Agreement, each of the
parties hereto shall promptly after the date of this Agreement (i) make its
respective filings, and thereafter make any other required submissions,
under the HSR Act with respect to the Transaction and (ii) use its
reasonable best efforts to take, or cause to be taken, all appropriate
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable Laws or otherwise to consummate and make
effective the Transaction, including, without limitation, using its
reasonable best efforts to obtain all permits, consents, approvals,
authorizations, qualifications and orders of Governmental Authorities and
parties to contracts with the Company and the Subsidiaries as are necessary
for the consummation of the Transaction and to fulfill the conditions to
the Offer and the Merger; provided that neither Merger Sub nor Parent will
be required by this Section 8.09 to take any action, including entering
into any consent decree, hold separate orders or other arrangements, that
(A) requires the divestiture of any assets of any of Merger Sub, Parent,
the Company or any of their respective subsidiaries or (B) limits Parent's
freedom of action with respect to, or its ability to retain, the Company
and the Subsidiaries or any portion thereof or any of Parent's or its
affiliates' other assets or businesses.
(b) Each of the parties hereto shall use its reasonable
best efforts to cause its respective officers, employees, agents, auditors
and representatives to cooperate with each other, prior to the Effective
Time, to ensure the orderly combination of the Company and the Subsidiaries
with Parent and its subsidiaries following the Effective Time and to
minimize any disruption to the respective businesses of Parent, the
subsidiaries of Parent, the Company and the Subsidiaries that might result
from the Transaction.
(c) The Company shall cooperate with Parent, and shall
use its reasonable best efforts to cause the Company's accountants to
provide to Parent, at Parent's expense, the requisite consents required to
enable Parent to fulfill any requirements imposed on it by the Exchange Act
or the Securities Act, and the Company shall cooperate with Parent in
Parent's efforts to obtain extended reporting coverage for certain
liability insurance policies maintained by the Company and the Subsidiaries
as contemplated by Section 8.06(b) hereof.
SECTION 8.10 Plan of Reorganization. (a) This Agreement
is intended to constitute a "plan of reorganization" within the meaning of
section 1.368-2(g) of the income tax regulations promulgated under the
Code. From and after the date of this Agreement and until the Effective
Time, each party hereto shall use its reasonable best efforts to cause the
Offer and the Merger to qualify, and will not knowingly take any action,
cause any action to be taken, fail to take any action or cause any action
to fail to be taken which action or failure to act could prevent the Offer
and the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code; provided, however, that Parent may elect to
effect the Reverse Merger as permitted by Section 3.01 of this Agreement.
Following the Effective Time, none of the Surviving Corporation, Parent or
any of their affiliates knowingly shall take any action, cause any action
to be taken, fail to take any action or cause any action to fail to be
taken, which action or failure to act could cause the Offer and the Merger
to fail to qualify as a reorganization within the meaning of Section 368(a)
of the Code.
(b) At or immediately prior to the Effective Time, Parent
shall seek to obtain an opinion of Shearman & Sterling, counsel to Parent,
that the Offer and the Merger will be treated as a reorganization within
the meaning of Section 368(a) of the Code (together with the opinion
referred to in Section 8.10(c) below, the "Tax Opinions"). In connection
therewith, both Parent (together with Merger Sub) and the Company shall
deliver to Shearman & Sterling representation letters (together with the
representation letters referred to in Section 8.10(c) below, the
"Representation Letters"), dated and executed as of the Effective Time (and
as of such other date or dates as reasonably requested by Shearman &
Sterling), substantially in the form attached hereto as Exhibit 8.10(b).
(c) At or immediately prior to the Effective Time, the
Company shall seek to obtain an opinion of Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP, counsel to the Company, that the Offer and the Merger will be
treated as a reorganization within the meaning of Section 368(a) of the
Code (together with the opinion referred to in Section 8.10(b) above, the
"Tax Opinions"). In connection therewith, both Parent (together with Merger
Sub) and the Company shall deliver to Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP representation letters (together with the representation letters
referred to in Section 8.10(b) above, the "Representation Letters"), dated
and executed as of the Effective Time (and as of such other date or dates
as reasonably requested by Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP),
substantially in the form attached hereto as Exhibit 8.10(c).
(d) As of the date hereof, the Company does not know of
any reason (i) why it would not be able to deliver the Representation
Letters contemplated by Sections 8.10(b) and 8.10(c) to enable such firms
to deliver the Tax Opinions or (ii) why counsel to Parent and the Company
would not be able to deliver the Tax Opinions contemplated by Sections
8.10(b) and 8.10(c).
(e) As of the date hereof, Parent does not know of any
reason (i) why it would not be able to deliver the Representation Letters
contemplated by Sections 8.10(b) and 8.10(c) to enable such firms to
deliver the Tax Opinions or (ii) why counsel to Parent and the Company
would not be able to deliver the Tax Opinions contemplated by Sections
8.10(b) and 8.10(c).
SECTION 8.11 Merger Sub. Parent shall take all action
necessary to cause Merger Sub to perform its obligations under this
Agreement and to consummate the Merger on the terms and subject to the
conditions set forth in this Agreement.
SECTION 8.12 Letters of Accountants. (a) Parent shall use
its reasonable best efforts to cause to be delivered to the Company
"comfort" letters of PricewaterhouseCoopers LLP, Parent's independent
public accountants, dated and delivered the date on which the Offer
Registration Statement shall become effective, the Acceptance Date, the
date the Merger Registration Statement shall become effective and as of the
Effective Time, and addressed to the Company, in form and substance
reasonably satisfactory to the Company and reasonably customary in scope
and substance for letters delivered by independent public accountants in
connection with transactions such as those contemplated by this Agreement.
(b) The Company shall use its reasonable best efforts to
cause to be delivered to Parent "comfort" letters of Deloitte & Touche LLP,
the Company's independent public accountants, dated and delivered the date
on which the Offer Registration Statement shall become effective, the
Acceptance Date, the date the Merger Registration Statement shall become
effective and as of the Effective Time, and addressed to Parent, in form
and substance reasonably satisfactory to Parent and reasonably customary in
scope and substance for letters delivered by independent public accountants
in connection with transactions such as those contemplated by this
Agreement.
SECTION 8.13 NYSE Listing. Parent shall as promptly as
practicable prepare and submit to the NYSE a listing application covering
the shares of Parent Common Stock to be issued in the Offer and the Merger,
and shall use its reasonable efforts to obtain, prior to the initial
scheduled expiration date of the Offer (or as soon thereafter as
practicable) and prior to the Effective Time, approval for the listing of
Parent Common Stock to be issued in the Offer and the Merger, as the case
may be, subject to official notice of issuance to the NYSE, and the Company
shall cooperate with Parent with respect to such listing.
SECTION 8.14 Public Announcements. The initial press
release relating to this Agreement shall be a joint press release the text
of which has been agreed to by each of Parent and the Company. Thereafter,
unless otherwise required by applicable Law or the requirements of the NYSE
or the NASDAQ National Market, each of Parent and the Company shall use its
reasonable best efforts to consult with each other before issuing any press
release or otherwise making any public statements with respect to this
Agreement, the Offer or the Merger; provided, however, that this Section
8.14 shall terminate in the event the Company Board withdraws the
Recommendation.
SECTION 8.15 Transfer Tax. The Company and Parent shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and
stamp Taxes, any transfer, recording, registration and other fees and any
similar Taxes which become payable in connection with the transactions
contemplated by this Agreement (together with any related interest,
penalties or additions to Tax, "Transfer Taxes"). All Transfer Taxes shall
be paid by the Company and expressly shall not be a liability of any holder
of the Company Common Stock.
SECTION 8.16 Transaction Fees and Expenses.
Notwithstanding anything to the contrary contained in this Agreement, the
Company shall not incur, or cause to be incurred, aggregate Transaction
Fees (as defined below) in excess of $10,000,000. For purposes of this
Section 8.16, "Transaction Fees" shall mean the fees and disbursements of
the Company's legal counsel and financial advisors that are incurred in
connection with the preparation, negotiation, execution, delivery and
performance of the Merger Agreement and the consummation of the
transactions contemplated hereby, except that any legal costs and expenses
incurred solely in connection with complying with the HSR Act (including,
without limitation, complying with any "second request" made thereunder)
shall be excluded from the calculation of such costs and expenses.
SECTION 8.17 Restrictions on Acquisition of Company
Common Stock. From and after the date of this Agreement and until the
earlier to occur of (x) two years following the purchase of any
Stockholders' Shares pursuant to the exercise of the Options (as such terms
are defined in the Stockholders Agreement) and (y) in the event Parent does
not exercise the Options and purchase any Stockholders' Shares pursuant
thereto, the termination of the Option Exercise Period (such period being,
the "Standstill Period"), neither Parent, nor any of its subsidiaries or
controlled affiliates shall, and Parent shall use its reasonable efforts to
cause its affiliates not to, directly or indirectly, acquire, announce an
intention to acquire, offer to acquire, or enter into any agreement,
arrangement or undertaking of any kind the purpose of which is to acquire,
by purchase, exchange or otherwise, any shares of Company Common Stock or
options or rights to acquire shares of Company Common Stock, except
pursuant to (i) the Offer, (ii) the Merger, (iii) the exercise of the
Options, or (iv) a transaction made available to all holders of Company
Common Stock that is approved by a majority of the Independent Directors.
For purposes of this Section 8.17, the term "Independent Directors" shall
mean the directors on the Company Board who are not, at the time of such
determination, directors, officers, employees or affiliates of Parent or
officers or employees of the Company.
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.01 Conditions to the Obligations of Each Party.
The obligations of the Company, Parent and Merger Sub to consummate the
Merger are subject to the satisfaction or waiver (where permissible) of the
following conditions:
(a) Merger Registration Statement. If required, the
Merger Registration Statement shall have been declared effective
by the SEC under the Securities Act and no stop order suspending
the effectiveness of the Merger Registration Statement shall have
been issued by the SEC and no proceeding for that purpose shall
have been initiated by the SEC and not concluded or withdrawn.
(b) Company Stockholder Approval. If required under the
DGCL, this Agreement shall have received Company Stockholder
Approval.
(c) No Order. No Governmental Authority shall have
enacted, issued, promulgated, enforced or entered any Law, rule,
regulation, judgment, decree, executive order or award (an
"Order") which is then in effect and has the effect of making the
Merger illegal or otherwise prohibiting consummation of the
Merger.
(d) NYSE Listing. The shares of Parent Common Stock to be
issued in the Merger shall have been authorized for listing on the
NYSE, subject to official notice of issuance.
(e) Offer. Merger Sub shall have purchased shares of
Company Common Stock pursuant to the Offer.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01 Termination. This Agreement may be
terminated at any time prior to the Effective Time, whether before
or after the Company Stockholder Approval:
(a) by mutual written consent of Parent and the Company;
or
(b) by Parent if, at any time prior to the Acceptance
Date, (i) the Company has breached in any material respect any
representation, warranty, covenant or other agreement contained in
this Agreement, which (A) would give rise to the failure of a
condition set forth in clause (e)(i), (ii) or (iii) of Annex I,
(B) cannot be or has not been cured prior to the Termination Date
(as defined below) and (C) has not been waived by Parent pursuant
to the provisions hereof; or (ii) the Company Board shall have (1)
amended, qualified, withdrawn or modified, or proposed or resolved
to do so, in a manner adverse to Parent or Merger Sub, the
Recommendation, or (2) approved or recommended, or proposed to
approve or recommend, any Competing Transaction other than the
Offer and the Merger, or the Company Board or any committee
thereof shall have resolved to do any of the foregoing; or
(c) by the Company if, at any time prior to the
Acceptance Date, Parent has breached or failed to perform in any
material respect any representation, warranty, covenant or other
agreement contained in this Agreement, which (A) would give rise
to the failure of a condition set forth in clause (i), (ii) or
(iii) of Section 2.01(c), (B) cannot be or has not been cured
prior to the Termination Date and (C) has not been waived by the
Company pursuant to the provisions hereof; or
(d) by either Parent or the Company if (i) the Offer has
not been consummated on or before September 30, 2002 (the
"Termination Date"); provided that the right to terminate this
Agreement pursuant to this clause (d)(i) shall not be available to
any party whose willful or intentional failure to fulfill any
obligation of this Agreement or other willful or intentional
breach of this Agreement has resulted in the failure of any
condition to the Offer or the Merger not to be satisfied prior to
such date, (ii) the Offer shall have expired or been terminated in
accordance with the terms of this Agreement without Parent or
Merger Sub having accepted for exchange any shares of Company
Common Stock pursuant to the Offer; or (iii) any court of
competent jurisdiction or any Governmental Authority shall have
issued an Order or taken any other action permanently restricting,
enjoining, restraining or otherwise prohibiting acceptance for
payment or exchange of shares of Company Common Stock pursuant to
the Offer or consummation of the Merger and such Order or other
action shall have become final and nonappealable.
SECTION 10.02 Effect of Termination. In the event of
termination of this Agreement by Parent or the Company, as provided in
Section 10.01, this Agreement shall forthwith become void and there shall
be no liability hereunder on the part of the Company, Parent or Merger Sub
or their respective officers or directors (except that Section 8.03,
Section 8.17, this Section 10.02, Section 10.03 and Article XI shall
survive the termination); provided, however, that nothing contained in this
Section 10.02 or in Section 10.03 shall relieve any party hereto from any
liability for any willful or intentional breach of this Agreement.
SECTION 10.03 Payment of Certain Fees; Expenses. (a) If
this Agreement is terminated by Parent in accordance with Section
10.01(b)(ii), then the Company shall pay to Parent in immediately available
funds, all of Parent's Expenses, up to a maximum of $4 million, plus a
termination fee in an amount equal to $35 million (the "Termination Fee");
provided, however, that the Company shall not be required to pay the
Termination Fee to Parent or to reimburse Parent for all of Parent's
Expenses pursuant to this Section 10.03(a) if, at the time of the event
giving rise to Parent's right to terminate this Agreement pursuant to
Section 10.01(b)(ii), a Parent Share Price Decrease (as such term is
defined in the Stockholders Agreement, but without giving effect to the
provisions of clause (3) of such definition for purposes hereof) shall have
occurred and be continuing.
(b) If this Agreement is terminated by Parent pursuant to
Section 10.01(b)(i), then the Company shall pay to Parent, within five
business days after submission of statements therefor, all of Parent's
Expenses up to a maximum of $5 million.
(c) If this Agreement is terminated by the Company
pursuant to Section 10.01(c), then Parent shall pay to Company, within five
business days after submission of statements therefor, all of Company's
Expenses (as defined in paragraph (e) of this Section) up to a maximum of
$5 million.
(d) If (x) this Agreement is terminated by Parent or the
Company pursuant to Section 10.01(b)(i), Section 10.01(d)(i) or Section
10.01(d)(ii), (y) a proposal or offer for a Competing Transaction
(replacing references to 15% in the definition thereof with references to
50% ) had been made and publicly announced or communicated to the Company's
stockholders after the date of this Agreement and prior to the date of
termination of this Agreement and (1) had not been publicly withdrawn in a
bona fide manner, (2) at the time of termination of the Merger Agreement,
provided for consideration that was more favorable to the holders of
Company Common Stock, from a financial point of view (taking into account,
among other things, the composition of such consideration compared to the
composition of the consideration being offered in the Offer and the Merger)
than the consideration payable to the holders of Company Common Stock in
the Offer and the Merger and (3) was reasonably capable of being
consummated by the party proposing it, and (z) concurrently with or within
18 months of the date of such termination a Third Party Acquisition Event
occurs, then, in addition to any amount paid or payable pursuant to Section
10.03(b), the Company shall within five business days of the occurrence of
such Third Party Acquisition Event pay to Parent the Termination Fee;
provided, however, that the Company shall not be required to pay the
Termination Fee to Parent pursuant to this Section 10.03(d) if the Merger
Agreement was terminated pursuant to Section 10.01(d)(i) or on the
Termination Date pursuant to Section 10.01(d)(ii), and if, at the time of
such termination, either (x) the condition contained in clause (ii) of
Annex I has not been satisfied or (y) the condition contained in paragraph
(d) of clause (v) of Annex I has not been satisfied or any litigation of
the type described in paragraph (a) of clause (v) of Annex I with respect
to antitrust or competition Laws shall have been instituted or commenced by
any Governmental Authority and be pending.
"Third Party Acquisition Event" shall mean the earlier of
(i) the consummation of a Competing Transaction involving the purchase of a
majority of either the equity securities of the Company or of the
consolidated assets of the Company and its Subsidiaries, taken as a whole,
or any such transaction that, if it had been proposed prior to the
termination of this Agreement, would have constituted a Competing
Transaction (replacing references to 15% in the definition thereof with
references to 50%) or (ii) the entering into by the Company or any of its
Subsidiaries of a definitive agreement with respect to any such
transaction.
(e) Notwithstanding anything to the contrary contained in
this Section 10.03, Parent shall not be entitled to receive the Termination
Fee, and neither Parent nor the Company shall be entitled to receive
reimbursement for Expenses, if, at the time of termination of this
Agreement, in the case of Parent, the Company is entitled to terminate this
Agreement under Section 10.01(c), and, in the case of the Company, Parent
is entitled to terminate this Agreement under Section 10.01(b)(i).
Notwithstanding the applicability of more than one of the foregoing
subsections of this Section 10.03 or anything to the contrary in this
Agreement, Parent shall not be entitled to be paid more than one
Termination Fee pursuant to this Agreement.
Except as set forth in this Section 10.03, all Expenses
(as defined below) incurred in connection with this Agreement and the
transactions contemplated by this Agreement shall be paid by the party
incurring such expenses, whether or not the Offer or Merger or any other
transaction is consummated. "Expenses", as used in this Agreement, shall
include all reasonable out-of-pocket expenses (including, without
limitation, all fees and expenses of counsel, accountants, investment
bankers, experts and consultants to a party hereto and its affiliates)
incurred by a party or on its behalf in connection with or related to the
authorization, preparation, negotiation, execution and performance of this
Agreement, the preparation, printing, filing and mailing of the Offer
Documents and the Merger Registration Statement, the solicitation of
stockholder approvals, the filing of any required notices under the HSR Act
or other similar regulations and all other matters related to the closing
of the Merger and the other transactions contemplated by this Agreement.
(f) The Company and Parent acknowledge that the
agreements contained in this Section 10.03 are an integral part of the
transactions contemplated by this Agreement and that without these
agreements Parent and the Company would not enter into this Agreement. In
the event that the Company shall fail to pay any Termination Fee or
Expenses when due, such Termination Fee or Expenses shall be deemed to
include the costs and expenses actually incurred or accrued by Parent
(including, without limitation, fees and expenses of counsel) in connection
with the collection under and enforcement of this Section 10.03, together
with interest on such unpaid Termination Fee or Expenses, commencing on the
date that such Termination Fee or Expenses became due, at a rate equal to
the rate of interest publicly announced by Citibank, N.A., from time to
time, in The City of New York, as such bank's prime rate plus 3.00%.
Payment of the fees and expenses described in this Section 10.03 shall not
be in lieu of any damages incurred in the event of willful or intentional
breach of this Agreement.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01 Non-Survival of Representations and
Warranties. The representations and warranties in this Agreement and in any
certificate or instrument delivered pursuant hereto shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to
Section 10.01. This Section shall not limit any covenant or other
obligation of the parties hereto which shall survive in accordance with
their terms.
SECTION 11.02 Amendments, Modification and Waiver. (a)
Except as may otherwise be provided herein, any provision of this Agreement
may be amended, modified or waived by the parties hereto, by action taken
by or authorized by their respective Board of Directors, prior to the
Effective Time if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Company and Parent or, in the
case of a waiver, by the party against whom the waiver is to be effective;
provided that approval by the Company of any amendment or waiver to this
Agreement after the purchase by Parent or Merger Sub of any shares of
Company Common Stock in the Offer shall be subject to the provisions of
Section 2.03(a); provided further, however, that, after the approval of
this Agreement by the stockholders of the Company, no such amendment shall
be made except as allowed under applicable Law.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 11.03 Notices. All notices, requests, claims,
demands and other communications hereunder shall be in writing and shall be
given (and shall be deemed to have been duly given upon receipt) by
delivery in person, by telecopy or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 11.03):
if to Parent or Merger Sub:
Quest Diagnostics Incorporated
Xxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile No: (000) 000-0000
Attention: General Counsel
with a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile No: (000) 000-0000
Attention: Xxxxx X'Xxxxx, Esq.
if to the Company:
Unilab Corporation
00000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: 000-000-0000
Attention: Xxx X. Xxxxx, Esq.
or to such other person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the
date of delivery unless if mailed, in which case on the third business day
after the mailing thereof except for a notice of a change of address, which
shall be effective only upon receipt thereof.
SECTION 11.04 Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of being
enforced by any rule of Law, or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and
effect so long as the economic or legal substance of the Transaction is not
affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order
that the Transaction be consummated as originally contemplated to the
fullest extent possible.
SECTION 11.05 Entire Agreement; Assignment. This
Agreement and the Confidentiality Agreement constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede
all prior agreements and undertakings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof. This
Agreement shall not be assigned (whether pursuant to a merger, by operation
of law or otherwise), except that Parent and Merger Sub may assign all or
any of their rights and obligations hereunder to any wholly owned
subsidiary of Parent, provided that no such assignment shall relieve the
assigning party of its obligations hereunder if such assignee does not
perform such obligations.
SECTION 11.06 Parties in Interest. This Agreement shall
be binding upon and inure solely to the benefit of each party hereto, and
nothing in this Agreement, express or implied, is intended to or shall
confer upon any other person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement, other than Section 8.06
(which is intended to be for the benefit of the persons covered thereby and
may be enforced by such persons).
SECTION 11.07 Interpretation. References in this
Agreement to "reasonable best efforts" shall require a person obligated to
use its reasonable best efforts to obtain any consent of a third party and
to make reasonable out-of-pocket expenditures, including all expenditures
incurred in connection with litigation. References herein to the "knowledge
of the Company" shall mean the actual knowledge of the "officers" of the
Company (as such term is defined in Rule 3b-2 promulgated under the
Exchange Act) after due inquiry of those persons who would reasonably be
expected to have knowledge of the subject matter of the inquiry. 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
phrase "made available" when used in this Agreement shall mean that the
information referred to has been made available if requested by the party
to whom such information is to be made available. References to "hereof"
shall mean this Agreement and references to the "date hereof" shall mean
the date of this Agreement. References in this Agreement to satisfaction of
any condition set forth on Annex I shall mean, as of such date of
determination, the absence of the event or circumstance described in such
condition.
SECTION 11.08 Specific Performance. The parties hereto
agree that irreparable damage would occur in the event any provision of
this Agreement were not performed in accordance with the terms hereof and
that the parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or in equity.
SECTION 11.09 Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York applicable to contracts executed in and to be performed in that State
(other than those provisions set forth herein that are required to be
governed by the DGCL). All actions and proceedings arising out of or
relating to this Agreement shall be heard and determined exclusively in any
New York state or federal court sitting in the Borough of Manhattan of The
City of New York. The parties hereto hereby (a) submit to the exclusive
jurisdiction of any state or federal court sitting in the Borough of
Manhattan of The City of New York for the purpose of any action arising out
of or relating to this Agreement brought by any party hereto, and (b)
irrevocably waive, and agree not to assert by way of motion, defense, or
otherwise, in any such action, any claim that it is not subject personally
to the jurisdiction of the above-named courts, that its property is exempt
or immune from attachment or execution, that the action is brought in an
inconvenient forum, that the venue of the action is improper, or that this
Agreement or the Transaction may not be enforced in or by any of the
above-named courts.
SECTION 11.10 Waiver of Jury Trial. Each of the parties
hereto hereby waives to the fullest extent permitted by applicable Law any
right it may have to a trial by jury with respect to any litigation
directly or indirectly arising out of, under or in connection with this
Agreement or the Transaction. Each of the parties hereto (a) certifies that
no representative, agent or attorney of any other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce that foregoing waiver and (b) acknowledges that
it and the other parties hereto have been induced to enter into this
Agreement and the Transaction, as applicable, by, among other things, the
mutual waivers and certifications in this Section 11.10.
SECTION 11.11 Headings. The descriptive headings
contained in this Agreement are included for convenience of reference only
and shall not affect in any way the meaning or interpretation of this
Agreement.
SECTION 11.12 Counterparts. This Agreement may be
executed and delivered (including by facsimile transmission) in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement.
SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, Parent, Merger Sub and the Company
have caused this Agreement to be executed as of the date first written
above by their respective officers thereunto duly authorized.
QUEST DIAGNOSTICS INCORPORATED
By /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: Chairman and Chief Executive Officer
QUEST DIAGNOSTICS NEWCO INCORPORATED
By /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
UNILAB CORPORATION
By /s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman & C.E.O.
ANNEX I
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CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, but
subject to compliance with the terms of the Agreement and any applicable
rules and regulations of the SEC, including Rule 14e-1(c) relating to
Merger Sub's obligation to exchange or return tendered shares after the
termination of the Offer, Merger Sub shall not be required to accept for
exchange or exchange or deliver any consideration for any shares of Company
Common Stock tendered pursuant to the Offer, and may terminate, extend or
amend the Offer in accordance with the Agreement, if (i) the Minimum
Condition shall not have been satisfied; (ii) the applicable waiting period
under the HSR Act shall not have expired or been terminated; (iii) the
Offer Registration Statement shall not have become effective under the
Securities Act or shall be the subject of any stop order or proceedings
seeking a stop order; (iv) the Parent Common Stock to be issued in the
Offer and the Merger shall not have been approved for listing on the NYSE,
subject to official notice of issuance; or (v) on or after the date of the
Agreement and at or prior to the Acceptance Date, any of the following
events or circumstances occurs or exists and is continuing:
(a) there shall have been instituted, pending, or issued
any litigation, suit, claim, action or proceeding before any federal or
state court of the United States (other than any such action in which a
motion for a temporary restraining order, a preliminary injunction or a
permanent injunction shall have been denied or shall have expired, or a
judicial order granting any such temporary restraining order, preliminary
injunction or permanent injunction shall have been reversed on appeal and
not reinstated) by any United States federal government or governmental
authority or agency or any of the several states of the United States or
any attorney general thereof (1) challenging or seeking to make illegal or
otherwise, directly or indirectly, restrain or prohibit or make materially
more costly, the making of the Offer, the acceptance for exchange or
payment of any shares of Company Common Stock by Parent, Merger Sub or any
other Subsidiary of Parent, or the consummation of the Offer or the Merger;
(2) seeking to obtain material damages or otherwise directly or indirectly
relating to the transactions contemplated by the Offer, the Merger or the
Agreement, (3) seeking to limit, restrain or prohibit Parent's or Merger
Sub's ownership or operation of all or any material portion of the business
or assets of the Company and the Subsidiaries, taken as a whole, or to
compel Parent or any of its affiliates to dispose of or hold separate all
or any material portion of the business or assets of the Company and the
Subsidiaries, taken as a whole, or (4) seeking to impose or confirm any
limitation on the ability of Parent or Merger Sub to effectively exercise
full rights of ownership of any shares of Company Common Stock to be
accepted in the Offer on all matters properly presented to the Company's
stockholders, including, without limitation, the approval and adoption of
the Agreement and the transactions contemplated by the Agreement;
(b) there shall have been (i) any Law enacted,
promulgated, amended, issued or deemed applicable to (1) Parent, the
Company or any of their respective subsidiaries or (2) any transaction
contemplated by the Agreement or (ii) entered, promulgated or enforced by
any court or Governmental Authority, any Order of any kind which prohibits,
restrains, restricts or enjoins the consummation of the Offer or has the
effect of making the Offer illegal, in each case, by any legislative body
or Governmental Authority that would result, directly or indirectly, in any
of the consequences referred to in clauses (1) through (4) of paragraph (a)
above;
(c) there shall have occurred (i) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, or (ii) any limitation (whether or not mandatory) by any
Governmental Authority on the extension of credit by banks or other lending
institutions;
(d) other than with respect to any Order that is the
subject of paragraph (a) or (b) above, there shall have been enacted,
entered, promulgated or enforced by any court or Governmental Authority any
Order which prohibits, restrains, restricts or enjoins the consummation of
the Offer or has the effect of making the Offer illegal;
(e) (i) the Company shall have breached or failed to
perform in any material respect its obligations, covenants or agreements
under the Agreement, (ii) the representations and warranties of the Company
contained in the Agreement that are qualified by reference to a Company
Material Adverse Effect shall not have been true and correct when made or
as of the Acceptance Date as if made at or at and as of such time (other
than representations and warranties which by their terms address matters
only as of another specified date, which shall be true and correct only as
of such date), or (iii) the representations and warranties of the Company
contained in the Agreement that are not so qualified shall not have been
true and correct when made or as of the Acceptance Date as if made at or at
and as of such time (other than representations and warranties which by
their terms address matters only as of another specified date, which shall
be true and correct only as of such date) except in the case of this clause
(iii) only, for such inaccuracies as have not resulted, or are not
reasonably likely to result, in a Company Material Adverse Effect;
(f) there shall have occurred or exist any events,
circumstances, changes, occurrences, facts or effects that have had or
would reasonably be expected to have a Company Material Adverse Effect; and
(g) the Agreement shall have been terminated in
accordance with its terms; which, in the reasonable judgment of Parent in
any such case, and regardless of the circumstances (including any action or
inaction by Parent or any of its affiliates) giving rise to any such
condition, makes it inadvisable to proceed with such acceptance for
exchange or payment.
The foregoing conditions are for the sole benefit of
Merger Sub and Parent and may be asserted by Merger Sub or Parent
regardless of the circumstances giving rise to any such condition or,
except in the case of the Minimum Condition, may be waived by Merger Sub or
Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Merger Sub at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right; the
waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts
and circumstances; and each such right shall be deemed an ongoing right
that may be asserted at any time and from time to time.
