Exhibit 2.1
ASSET PURCHASE AGREEMENT
among
CONCENTRA INC.,
CONCENTRA OPERATING CORPORATION
and
EM3 CORPORATION
dated as of
December 1, 2002
TABLE OF CONTENTS
Page
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ARTICLE 1
DEFINED TERMS
1.1 Defined Terms ................................................................. 1
1.2 References and Titles ......................................................... 5
ARTICLE 2
PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy ..................................................... 6
2.2 Excluded Assets ............................................................... 7
2.3 Purchase Price ................................................................ 7
2.4 Assumption of Liabilities and Obligations ..................................... 7
2.5 Deemed Assignment of Contracts ................................................ 7
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties Regarding Seller ............................... 8
3.2 Representations and Warranties of Parent and Buyer ............................ 12
ARTICLE 4
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of Seller ........................................................... 16
4.2 Conduct of Business by Buyer Pending the Transactions Contemplated Hereby ..... 16
ARTICLE 5
ADDITIONAL AGREEMENTS AND COVENANTS
5.1 No Solicitation of Transactions ............................................... 17
5.2 Access and Information ........................................................ 17
5.3 Third Party Consents .......................................................... 17
5.4 Filings ....................................................................... 17
5.5 Employee Matters .............................................................. 17
5.6 Notice of Certain Events ...................................................... 18
5.7 Additional Agreements ......................................................... 18
5.8 Bulk Sales Law ................................................................ 18
5.9 Risk of Loss .................................................................. 19
(i)
5.10 Dissolution of Seller ......................................................... 19
5.11 Joinder to Parent Agreements .................................................. 19
ARTICLE 6
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation ......................................... 20
6.2 Conditions to Obligation of Parent and Buyer .................................. 20
6.3 Conditions to Obligations of Seller ........................................... 21
ARTICLE 7
CLOSING
7.1 Closing ....................................................................... 22
7.2 Actions to Occur at Closing. .................................................. 22
ARTICLE 8
TERMINATION
8.1 Termination ................................................................... 22
8.2 Effect of Termination ......................................................... 23
ARTICLE 9
GENERAL PROVISIONS
9.1 Survival of Representations, Warranties, and Covenants ........................ 23
9.2 Amendment and Modification .................................................... 24
9.3 Waiver of Compliance .......................................................... 24
9.4 Specific Performance .......................................................... 24
9.5 Severability .................................................................. 24
9.6 Expenses and Obligations ...................................................... 24
9.7 Parties in Interest ........................................................... 24
9.8 Notices ....................................................................... 25
9.9 Counterparts .................................................................. 25
9.10 Entire Agreement .............................................................. 25
9.11 Governing Law ................................................................. 25
9.12 Public Announcements .......................................................... 25
9.13 Assignment .................................................................... 26
9.14 Director and Officer Liability ................................................ 26
9.15 Headings ...................................................................... 26
(ii)
Exhibits
--------
Exhibit A Form of Assignment and Assumption Agreement
Seller Disclosure Schedules
---------------------------
Schedule 3.1(a) Seller's Jurisdictions of Qualification and Assumed Names
Schedule 3.1(d) Seller Financial Statements
(iii)
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made and entered into as
of December 1, 2002, among Em3 Corporation, a Nevada corporation ("Seller"),
Concentra Inc., a Delaware corporation ("Parent"), and Concentra Operating
Corporation, a Nevada corporation and a wholly-owned subsidiary of Parent
("Buyer").
WITNESSETH:
WHEREAS, Seller desires to sell, convey, transfer, and assign to Buyer, and
Parent and Buyer desire to buy from Seller, substantially all the assets,
properties and business of Seller (the "Business"), and, in connection with such
purchase and sale, Buyer is willing to assume certain obligations and
liabilities relating to the purchased assets, upon the terms and conditions
hereinafter set forth in consideration of the Purchase Price (hereinafter
defined); and
WHEREAS, following the consummation of the sale of the assets and
properties used in the Business, Seller intends, subject to receipt of the
requisite stockholder approval, to dissolve and liquidate Seller in accordance
with the laws of the State of Nevada; and
WHEREAS, for federal income tax purposes, the parties hereto intend that
the transactions contemplated hereby will qualify as a reorganization under the
provisions of Section 368(a) of the Code (hereinafter defined);
NOW, THEREFORE, in consideration of the respective representations,
warranties, agreements, and conditions hereinafter set forth, and other good and
valuable consideration, the sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE 1
DEFINED TERMS
1.1 Defined Terms. The following terms shall have the following meanings
in this Agreement:
"Accounts Receivable" means all accounts receivable of the Business,
any payments received with respect thereto after the Closing Date, unpaid
interest accrued on any such accounts receivable, and any security or collateral
relating thereto.
"Accredited Investor" means an "accredited investor" as such term is
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
"Affiliate" means, with respect to any person, any other person
controlling, controlled by, or under common control with such person. For
purposes of this definition and this Agreement, the term "control" (and
correlative terms) means the power, whether by contract, equity ownership, or
otherwise, to direct the policies or management of a person.
"Applicable Laws" means, with respect to any person, all laws,
statutes, rules, regulations, ordinances, judgments, orders, decrees,
injunctions, and writs of any Governmental
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Entity having jurisdiction over that person or the business, operations, or
assets of that person, as they may be in effect on or prior to the Closing Date.
"Assets" means all the tangible and intangible assets owned, leased,
or licensed by Seller that are used or held for use in connection with the
Business, whether or not reflected on the Seller Financial Statements or Seller
Balance Sheet, but specifically excluding therefrom the Excluded Assets.
"Assignment and Assumption Agreement" means the Assignment and
Assumption Agreement between Seller and Buyer substantially in the form of
Exhibit A.
"Assumed Contracts" means those Seller Contracts entered into in the
ordinary course of business at any time prior to, or subsequent to, the date of
this Agreement that relate to the Business or any part thereof.
"Balance Sheet Date" has the meaning set forth in Section
3.1(d)(iii).
"Business" has the meaning set forth in the recitals to this
Agreement.
"Business Day" means any other day than (i) a Saturday or Sunday, or
(ii) a day on which commercial banks in Dallas, Texas, are authorized or
required to be closed.
"Buyer" has the meaning set forth in the introductory paragraph to
this Agreement.
"Buyer SEC Documents" has the meaning set forth in Section 3.2(f).
"Closing" means the consummation of the transactions contemplated
hereby in accordance with the provisions of Article 7.
"Choses in Action" means a right to receive or recover property,
debt, or damages on a cause of action, whether pending or not and whether
arising in contract, tort, or otherwise. The term shall include rights to
indemnification, damages for breach of warranty, or any other event or
circumstance, judgments, settlements, and proceeds from judgments or
settlements.
"Closing Date" means the date of the Closing specified in Section
7.1.
"Code" shall mean the United States Internal Revenue Code of 1986,
as amended. All references to the Code, U.S. Treasury regulations, or other
governmental pronouncements shall be deemed to include references to any
applicable successor regulations or amending pronouncement.
"Dissolution" means the dissolution of Seller in accordance with the
laws of the State of Nevada following Parent's and Buyer's purchase of the
Assets pursuant to this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934 and the
rules and regulations promulgated thereunder.
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"Excluded Assets" has the meaning set forth in Section 2.2.
"GAAP" means generally accepted accounting principles in the United
States.
"Governmental Entity" means any governmental department, commission,
board, bureau, agency, court, or other instrumentality of the United States or
any state, county, parish or municipality, jurisdiction, or other political
subdivision thereof.
"IRS" means the United States Internal Revenue Service.
"Knowledge" means, with respect to a specified party hereto, the
actual knowledge of the directors and executive officers of such party.
"Leased Real Property" means all of the Seller's leasehold
interests, easements, licenses, rights to access, and rights-of-way which are
used or held for use in the Business.
"Liens" has the meaning set forth in Section 3.1(h).
"Operating" has the meaning set forth in Section 3.2(f).
"Parent" has the meaning set forth in the introductory paragraph to
this Agreement.
"Parent Class A Common Stock" has the meaning set forth in Section
3.2(b).
"Parent Common Stock" has the meaning set forth in Section 3.2(b).
"Parent Material Adverse Effect" means any change, occurrence, fact,
event, or effect that, individually or in the aggregate with any such other
changes, occurrences, facts, events, or effects, is, or could reasonably be
expected to be, materially adverse to the financial condition, business,
properties, or results of operations of Parent and its Subsidiaries taken as a
whole; provided, however, that in no event shall any of the following constitute
a Parent Material Adverse Effect: (i) any change resulting from conditions
affecting the industry in which Parent operates, unless the change has a
disproportionate effect on Parent; (ii) any change resulting from the
announcement or pendency of any of the transactions contemplated hereby; or
(iii) any change resulting from compliance by Parent with the terms of, or the
taking by Parent of any action contemplated or permitted by, this Agreement.
"Parent Preferred Stock" has the meaning set forth in Section
3.2(b).
"Parent Registration Rights Agreement" has the meaning set forth in
Section 5.11.
"Parent Stockholders Agreement" has the meaning set forth in Section
5.11.
"Permits" means permits, licenses, variances, exemptions, orders,
franchises, and approvals of Governmental Entities.
"Permitted Encumbrances" means with respect to any person (a)
statutory Liens for current Taxes not yet due and payable, (b) mechanics',
carriers', workers', repairers', and other
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similar liens imposed by law arising or incurred in the ordinary course of
business for obligations not yet due, (c) in the case of leases of vehicles,
rolling stock, and other personal property, encumbrances which do not,
individually or in the aggregate, materially impair the operation of the
business at the facility at which such leased equipment or other personal
property is located, (d) other liens, charges, or encumbrances incidental to the
operation of such person or any of its Subsidiaries or the ownership of such
person's or any of its Subsidiaries' assets which were not incurred in
connection with the borrowing of money or the advance of credit and which do not
materially detract from the value of the assets encumbered thereby or materially
interfere with the use thereof, and (e) Liens on leases of real property arising
from the provisions of such leases, including, in relation to leased real
property, any agreements and/or conditions imposed on the issuance of land use
permits, zoning, business licenses, use permits, or other entitlements of
various types issued by any Governmental Entity, necessary or beneficial to the
continued use and occupancy of such person's or any of its Subsidiaries' assets.
"person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization, or other
entity.
"Personal Property" means all tangible personal property, plant, and
equipment owned, leased, used, or held by or for the benefit of, or otherwise
employed in or related to, the Business, including all tools, motor vehicles,
furniture, furnishings, leasehold improvements, office equipment, inventories,
and supplies.
"Purchase Price" has the meaning set forth in Section 2.3.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933 and the rules and
regulations promulgated thereunder.
"Seller" has the meaning set forth in the introductory paragraph to
this Agreement.
"Seller Balance Sheet" has the meaning set forth in Section
3.1(d)(iii).
"Seller Common Stock" has the meaning set forth in the recitals to
this Agreement.
"Seller Contracts" means all agreements, contracts, or other binding
commitments or arrangements, written or oral (including any amendments and other
modifications thereto), to which Seller is a party or is otherwise bound and
that relate to the Business.
"Seller Disclosure Schedules" has the meaning set forth in Section
3.1.
"Seller Financial Statements" has the meaning set forth in Section
3.1(d)(ii).
"Seller Material Adverse Effect" means any change, occurrence, fact,
event, or effect that, individually or in the aggregate with any such other
changes, occurrences, facts, events, or effects, is, or could reasonably be
expected to be, materially adverse to the financial
4
condition, business, properties, or results of operations of Seller; provided,
however, that in no event shall any of the following constitute a Seller
Material Adverse Effect: (i) any change resulting from conditions affecting the
industry in which Seller operates, unless the change has a disproportionate
effect on Seller; (ii) any change resulting from the announcement or pendency of
any of the transactions contemplated hereby; or (iii) any change resulting from
compliance by Seller with the terms of, or the taking by Seller of any action
contemplated or permitted by, this Agreement.
"Seller Reports" has the meaning set forth in Section 3.1(d).
"Subsidiary" of any person means any corporation, partnership, joint
venture, or other legal entity of which such person (either alone or through or
together with any other subsidiary), owns, directly or indirectly, 50% or more
of the capital stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity.
"Taxes" means, unless otherwise specified herein, taxes, charges,
fees, imposts, levies, interest, penalties, additions to tax, or other
assessments or fees of any kind, including, but not limited to, income,
corporate, capital, excise, property, sales, use, turnover, value added and
franchise taxes, deductions, withholdings, and customs duties, imposed by any
Governmental Entity and any payments with respect thereto required under any
tax-sharing agreement.
"Tax Returns" means, unless otherwise specified herein, any return,
report, information return, or other document (including any related or
supporting information) filed or required to be filed with any Governmental
Entity in connection with the determination, assessment, collection, or
administration of any Taxes or the administration of any laws, regulations, or
administrative requirements relating to any Taxes.
"Transaction Documents" has the meaning set forth in Section 3.1(c).
"Treasury Regulations" shall mean the regulations issued pursuant to
the Code.
"Voting Debt" with respect to any person means bonds, debentures,
notes, or other indebtedness having the right to vote (or convertible into
securities having the right to vote) on any matters on which holders of equity
interests in that person or any Subsidiary of that person may vote.
1.2 References and Titles. All references in this Agreement to Exhibits,
Schedules, Articles, Sections, subsections, and other subdivisions refer to the
corresponding Exhibits, Schedules, Articles, Sections, subsections, and other
subdivisions of this Agreement unless expressly provided otherwise. Titles
appearing at the beginning of any Articles, Sections, subsections, or other
subdivisions of this Agreement are for convenience only, do not constitute any
part of such Articles, Sections, subsections, or other subdivisions, and shall
be disregarded in construing the language contained therein. The words "this
Agreement," "herein," "hereby," "hereunder", and "hereof," and words of similar
import, refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited. The words "this Section," "this subsection", and
words of similar import, refer only to the Sections or subsections hereof in
5
which such words occur. The word "including" (in its various forms) means
"including without limitation." Pronouns in masculine, feminine, or neuter
genders shall be construed to state and include any other gender and words,
terms and titles (including terms defined herein) in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
expressly requires. Unless the context otherwise requires, all defined terms
contained herein shall include the singular and plural and the conjunctive and
disjunctive forms of such defined terms.
ARTICLE 2
PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement and except for the Excluded Assets, Seller shall sell,
assign, transfer, and deliver to Buyer on the Closing Date, and Parent and Buyer
shall purchase from Seller on the Closing Date, all of the Assets, free and
clear of any Liens or liabilities (except for Permitted Encumbrances). The
Assets to be assigned, transferred, and delivered by Seller to Buyer hereunder
shall include the following:
(a) All Accounts Receivable;
(b) All Personal Property;
(c) All Leased Real Property;
(d) All Permits;
(e) All Assumed Contracts;
(f) All cash, cash equivalents, and marketable securities,
including cash on hand maintained at any of Seller's facilities, cash in
transit, and cash, cash equivalents, and marketable securities in lock boxes or
on deposit with or held by any financial institution in connection with the
Business;
(g) All prepaid expenses, advance payments, deposits, surety
accounts, and other similar assets relating to the Business, including prepaid
deposits with suppliers and utilities;
(h) All rights, claims, and benefits of Seller in, to, or under
all insurance policies maintained by Seller for the Business;
(i) All of the proprietary rights of Seller relating to the
Business, including all patents, patent applications, patent licenses,
trademarks, trade names, and registrations and applications therefore, trade
secrets, technology, know-how, formulae, designs and drawings, computer
software, slogans, copyrights, processes, and other similar intangible property
and rights relating to the Business;
(j) All books and records relating to the Business (excluding
those described in, or relating to the assets described in, Section 2.2),
including executed copies of the Assumed
6
Contracts, or if no executed agreement exists, summaries of each Assumed
Contract transferred pursuant to clause (e) above, subject to the right of
Seller to copy and have such books and records made reasonably available to
Seller for tax and other legitimate organization purposes for a period of six
years after the Closing;
(k) To the extent assignable, all computer programs and software, and
all rights and interests of Seller in and to any computer programs and software
used in connection with the Business;
(l) All Choses in Action of Seller; and
(m) All intangible assets of Seller relating to the Business not
specifically described above, including goodwill, and all other assets, other
than the Excluded Assets, used or held for use in connection with the Business.
2.2 Excluded Assets. The Excluded Assets shall consist of the following:
(a) the Purchase Price received by Seller hereunder;
(b) the amount of cash necessary to cover the cost of any fractional
shares that would otherwise be distributable upon dissolution, not to exceed the
sum of Seven Hundred Dollars ($700);
(c) the rights of Seller under this Agreement or any other
Transaction Document; and
(d) the capital stock of Seller (whether held in treasury or issued
and outstanding).
2.3 Purchase Price. The aggregate purchase price payable by Parent and
Buyer to Seller in consideration for the Assets (the "Purchase Price") shall be
(i) 1,826,956 shares of Parent Common Stock, and (ii) the assumption by Buyer of
all the obligations and liabilities of Seller relating to the Business.
2.4 Assumption of Liabilities and Obligations. As of the Closing Date,
Buyer shall assume and undertake to pay, discharge, and perform all the
obligations and liabilities of Seller relating to the Business, including up to
an aggregate of up to One Million Dollars ($1,000,000) in unsecured indebtedness
owed by Seller to Welsh, Carson, Xxxxxxxx & Xxxxx VIII, L.P. This Section 2.4 is
not intended to and shall not benefit any person other than Seller and Buyer.
Nothing in this Section 2.4 shall create or be construed as creating any third
party beneficiary right in any person.
2.5 Deemed Assignment of Contracts. To the extent that the assignment
hereunder of any of the Assumed Contracts shall require the consent of any other
party (or in the event that any of the same shall be non-assignable), neither
this Agreement nor any actions taken hereunder shall constitute an assignment or
an agreement to assign if such assignment or attempted assignment would
constitute a breach thereof or result in a loss or diminution thereof; provided,
however, that Seller shall cooperate, at Buyer's expense, with Buyer to
establish a reasonable
7
arrangement designed to provide Buyer with the benefits and burdens of any
Assumed Contract, including appointing Buyer to act as its agent to perform all
of Seller's obligations under such Assumed Contract and to collect and promptly
remit to Buyer all compensation received by Seller pursuant to such Assumed
Contract and to enforce, for the account and benefit of Buyer, any and all
rights of Seller against any other person arising out of the breach or
cancellation of such Assumed Contract by such other person or otherwise (any and
all of which arrangements shall constitute, as between the parties hereto, a
deemed assignment or transfer); provided, that from and after Closing, the
Seller shall have no liability to the Buyer in the event that any Assumed
Contract requiring consent to assignment hereunder (or which by its terms is
non-assignable) is terminated.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties Regarding Seller. Seller represents
and warrants to Parent and Buyer as of the date hereof as follows (with the
understanding that Parent and Buyer are relying on such representations and
warranties in entering into and performing this Agreement) as qualified by
matters reflected on the disclosure schedule delivered by Seller to Parent and
Buyer on or prior to the date of this Agreement (the "Seller Disclosure
Schedules") and made a part hereof by reference):
(a) Organization, Standing, and Power. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Nevada, and Seller has all requisite power and authority to own, lease, and
operate its properties and to carry on its business as now being conducted, and
is duly qualified and in good standing to do business in each jurisdiction in
which the business it is conducting, or the operation, ownership, or leasing of
its properties, makes such qualification necessary, other than in such
jurisdictions where the failure so to qualify would not have a Seller Material
Adverse Effect. Seller has heretofore delivered to Buyer complete and correct
copies of Seller's articles of incorporation and bylaws. Schedule 3.1(a) of the
Seller Disclosure Schedules sets forth a list of each jurisdiction in which
Seller is qualified or licensed to do business and each assumed name under which
it conducts business in any jurisdiction.
(b) Subsidiaries of Seller. Seller does not own, directly or
indirectly, any equity interest in any other corporation, partnership, or other
person or have the right, pursuant to a contract or otherwise, to acquire any
capital stock, equity interest, or other similar investment in any corporation,
partnership, or other person.
(c) Authority; No Violations; Consents and Approvals. (i) Seller
has all requisite power and authority to enter into this Agreement, the
Assignment and Assumption Agreement, and all other documents to be executed in
connection with the transactions contemplated hereby and thereby (collectively,
the "Transaction Documents") to which Seller is a party and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of the
Transaction Documents to which Seller is a party and the consummation of the
transactions contemplated hereby or thereby have been duly authorized by all
necessary action on the part of Seller. The Transaction Documents to which
Seller is a party have been duly executed and delivered by Seller and assuming
the Transaction Documents to which each of
8
Parent and Buyer is a party constitute valid and binding obligations of each of
Parent and Buyer, constitute valid and binding obligations of Seller,
enforceable in accordance with their terms, subject, as to enforceability, to
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(ii) The execution and delivery of the Transaction Documents
by Seller do not, and the consummation of the transactions contemplated hereby
or thereby, and compliance with the provisions hereof or thereof, will not,
subject to obtaining the consents, approvals, authorizations, and Permits and
making the filings described in Section 3.1(c)(iii) or otherwise described on
Schedule 3.1(c) of the Seller Disclosure Schedules, conflict with, or result in
any violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation, or acceleration of
any material obligation or to the loss of a material benefit under, or give rise
to a right of purchase under, result in the creation of any Liens upon any of
the Assets under, require the consent or approval of any third party, or
otherwise result in a material detriment to Seller under, any provision of (A)
Seller's articles of incorporation or bylaws, (B) any loan or credit agreement,
note, bond, mortgage, indenture, lease, or other agreement, instrument, permit,
concession, franchise, or license applicable to Seller or the Assets or any
guarantee by Seller of any of the foregoing, (C) any joint venture or other
ownership arrangement, or (D) assuming the consents, approvals, authorizations,
or Permits and filings or notifications referred to in Section 3.1(c)(iii) are
duly and timely obtained or made, any judgment, order, decree, statute, law,
ordinance, rule, or regulation applicable to Seller or any of the Assets.
(iii) No consent, approval, order, or authorization of, or
registration, declaration or filing with, or Permit from any Governmental
Entity, is required by or with respect to Seller in connection with the
execution and delivery of the Transaction Documents by Seller or the
consummation by Seller of the transactions contemplated hereby or thereby, and
any such consent, approval, order, authorization, registration, declaration,
filing, or Permit that the failure to obtain or make (A) has not had, and could
not reasonably be expected to have, individually or in the aggregate, a Seller
Material Adverse Effect, or (B) would not, or could not reasonably be expected
to, materially impair the ability of Seller to perform its obligations hereunder
or prevent the consummation of any of the transactions contemplated hereby.
(d) Reports; Financial Statements; Absence of Certain Changes or
Events. Seller has filed all forms, reports, statements and other documents
required to be filed with any and all Governmental Entities. All such forms,
reports, statements and other documents required to be filed with any
Governmental Entity are referred to herein, collectively, as the "Seller
Reports." The Seller Reports were prepared in all material respects in
accordance with the requirements of Applicable Law.
(i) Seller has delivered to Buyer copies of (A) the
unaudited balance sheets of Seller as of December 31, 2000, and December 31,
2001, together with the statements of income and cash flows of Seller for the
periods then ended, and the notes thereto, and (B) the unaudited balance sheet
of Seller as of October 31, 2002, together with the related unaudited statements
of income and cash flows for the ten month period then ended (such unaudited
9
financial statements collectively being referred to as the "Seller Financial
Statements"). The Seller Financial Statements, including the notes thereto, were
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby (except to the extent disclosed therein or required by
changes in GAAP) and present fairly the information purported to be presented
therein as of such dates and for the periods then ended.
(ii) Except as disclosed in Schedule 3.1(d) of the Seller
Disclosure Schedules, there is no liability or obligation of any kind, whether
accrued, absolute, fixed, contingent or otherwise, of Seller that is not
reflected or reserved against in the balance sheet of Seller as of October 31,
2002 (the "Seller Balance Sheet"), other than (A) liabilities incurred in the
ordinary course of business in a manner consistent with past practice since
October 31, 2002 (the "Balance Sheet Date"), or (B) any such liability or
obligation that would not be required to be presented in financial statements or
the notes thereto prepared in conformity with GAAP applied, in a manner
consistent with past practice, in the preparation of the Seller Financial
Statements.
(iii) Except as disclosed in Schedule 3.1(d) of the Seller
Disclosure Schedules, since the Balance Sheet Date, Seller has conducted its
business only in the ordinary course consistent with past practice and nothing
has occurred that would have been prohibited by Section 4.1 if the terms of such
section had been in effect as of and after the Balance Sheet Date. Since the
Balance Sheet Date, there has not occurred, and Seller has not incurred or
suffered, any event, circumstance, or fact that has had, or could reasonably be
expected to result in, a Seller Material Adverse Effect.
(e) No Default. Seller is not in default or violation (and no event
has occurred which, with notice or the lapse of time or both, would constitute a
default or violation) of any term, condition or provision of (i) Seller's
articles of incorporation or bylaws, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease, or other agreement, instrument, Permit,
concession, franchise, or license to which Seller is now a party or by which
Seller or any of the Assets is bound, or (iii) any order, writ, injunction,
decree, statute, rule, or regulation applicable to Seller, except in the case of
clauses (ii) and (iii) for defaults or violations which in the aggregate have
not had and could not reasonably be expected to have a Seller Material Adverse
Effect.
(f) Compliance with Applicable Laws. Seller holds all Permits
necessary for the lawful conduct of the Business, except for any such Permits
the failure to possess which, individually or in the aggregate, could not
reasonably be expected to have, a Seller Material Adverse Effect. Seller holds
all such Permits and is in compliance with the terms of its Permits, except
where the failure so to comply has not had, and could not reasonably be expected
to have, a Seller Material Adverse Effect. The Business is not being conducted
in violation of any law, ordinance, or regulation of any Governmental Entity,
except for possible violations that have not had, and could not reasonably be
expected to have, a Seller Material Adverse Effect. As of the date of this
Agreement and to the Knowledge of Seller, no investigation or review by any
Governmental Entity with respect to Seller is pending or threatened, other than
those the outcome of which has not had, and could not reasonably be expected to
have, a Seller Material Adverse Effect.
10
(g) Litigation. There is no claim, action, suit, inquiry,
judicial or administrative proceeding, grievance or arbitration pending or, to
the Knowledge of Seller, threatened against Seller, the Business or any of the
Assets by or before any arbitrator or Governmental Entity, nor are there any
investigations relating to Seller, the Business or any of the Assets pending or,
to the Knowledge of Seller, threatened by or before any arbitrator or
Governmental Entity. There is no judgment, decree, injunction, order,
determination, award, finding or letter of deficiency of any Governmental Entity
or arbitrator, or settlement agreement outstanding against Seller, the Business,
or any of the Assets.
(h) Title to Assets; Liens and Encumbrances. The Assets are the
only assets, properties, rights, and interests used by Seller in connection with
the Business. The Assets to be conveyed to Buyer under this Agreement constitute
all of the assets, properties, rights, and interests necessary to conduct the
Business in substantially the same manner as conducted by Seller prior to the
date of this Agreement. All of the Assets used in connection with the operation
of the Business (including the assets reflected on the Seller Balance Sheet) are
in good operating condition and repair, subject to normal wear and tear
consistent with the age of the properties or assets, and are adequate and
sufficient for the uses to which they are put in the Business. None of the
Assets have any material known defects or are in need of maintenance or repair,
except for ordinary, routine maintenance and repairs which are not material in
nature or cost. Seller has good, marketable, and exclusive title to, and the
valid and enforceable power and unqualified right to use and transfer to Buyer,
each of the Assets. All of the Assets, including leases, are free and clear of
all liens, pledges, claims, security interests, restrictions, mortgages,
tenancies, and other possessory interests, conditional sale or other title
retention agreements, assessments, easements, rights of way, covenants,
restrictions, rights of first refusal, defects in title, encroachments and other
burdens, options, or encumbrances of any kind (collectively, "Liens") except
Permitted Encumbrances. At the Closing, all of the Assets shall be free and
clear of all Liens other than Permitted Encumbrances.
(i) Taxes. Seller has filed, or caused to be filed, all Tax
Returns, and all such Tax Returns that have been filed are accurate and
complete. Seller has paid (or there has been paid on its behalf), or has set up
an adequate reserve for the payment of, all taxes required to be paid, withheld,
or deducted, or for which Seller is liable, in respect of the periods covered by
such Tax Returns, and with respect to each tax, from the end of the period
covered by the most recently filed Tax Return to the date hereof, and the Seller
Balance Sheet reflects an adequate reserve for all taxes payable, or required to
be withheld and remitted, by Seller, or for which Seller is liable, accrued
through the Balance Sheet Date. No deficiencies for any taxes have been
proposed, asserted, or assessed against Seller and are pending, and no requests
for waivers of the time to assess any such taxes are pending. The federal income
Tax Returns of Seller have not been examined by the IRS. Seller has not (i)
filed a consent under section 341(f) of the Code, (ii) made, or is obligated or
may become obligated to make, any payments that will not be deductible by reason
of section 280G, of the Code or (iii) been a member of an affiliated group of
corporations which has filed a consolidated federal income tax return nor
otherwise has any liability for the taxes of any person under Treas. Reg. ss.
1.1502-6, any similar provision of state, local, or foreign law, or by reason of
its status as a transferee, successor, indemnitor, or otherwise.
11
(j) Certain Agreements. Seller and, to the Knowledge of Seller,
each other party to contracts to which Seller is a party, has performed in all
material respects the obligations required to be performed by it under such
contracts and is not (with or without lapse of time or the giving of notice, or
both) in breach or default thereunder. A complete copy of each written contract
to which Seller is a party and a description of each oral contract to which
seller is a party has been provided to Buyer prior to the date of this
Agreement.
(k) Liabilities of Seller. Seller has no liabilities or
obligations relating to the Business or the Assets except: (i) to the extent
reflected in the Balance Sheet; (ii) to the extent specifically set forth herein
or in any of the Seller Disclosure Schedules; (iii) the Permitted Encumbrances;
(iv) liabilities incurred in the ordinary course of business since the Balance
Sheet Date; and (v) liabilities which, individually or in the aggregate, would
not reasonably be expected to have a Seller Material Adverse Effect.
(l) Action by the Board Regarding Dissolution. The board of
directors of Seller has taken all actions required under the laws of the State
of Nevada that it is required to make to effect the Dissolution upon completion
of the transactions contemplated hereby, and, subject to approval by the
stockholders of Seller, such board of directors has directed its officers to
take all actions necessary to effect the Dissolution following the Closing. None
of the foregoing actions have been limited by subsequent actions of the board of
directors of Seller nor have any resolutions or authorizations related to the
same been terminated or withdrawn by such board of directors.
(m) Brokers. No broker, investment banker, or other person is
entitled to any broker's, finder's, or other similar fee or commission in
connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of Seller.
(n) Stockholder Approval. To the extent required by Applicable
Law, this Agreement and the transactions contemplated hereby and the Dissolution
have been approved by the requisite vote of the stockholders of Seller.
(o) Disclosure. No representation or warranty by Seller contained
in this Agreement or in any certificate furnished pursuant to this Agreement
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact necessary, in light of the circumstances
under which it was or will be made, in order to make the statements herein or
therein not misleading.
3.2 Representations and Warranties of Parent and Buyer. Parent and Buyer
represent and warrant, jointly and severally, to Seller as follows (with the
understanding that Seller is relying on such representations and warranties in
entering into and performing this Agreement):
(a) Organization, Standing and Power. Each of Parent and Buyer is
a corporation duly organized and validly existing under the laws of the State of
Delaware and Nevada, respectively, and is in good standing with the Secretaries
of State of the States of Delaware and Nevada, respectively. Each of Parent's
other Subsidiaries is a corporation, limited liability company or partnership
duly organized, validly existing and in good standing under the
12
laws of its state of incorporation or organization, and each of Parent and its
Subsidiaries has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, and is duly
qualified and in good standing to do business in each jurisdiction in which the
business it is conducting, or the operation, ownership or leasing of its
properties, makes such qualification necessary, other than in such jurisdictions
where the failure so to qualify would not have a Parent Material Adverse Effect.
Parent has heretofore delivered to Seller complete and correct copies of
Parent's certificate of incorporation and bylaws.
(b) Capital Structure. Capital Structure. As of the date
hereof, the authorized capital stock of Parent consists of (1) 100,000,000
shares of common stock, par value $0.01 per share ("Parent Common Stock"), (2)
5,000,000 shares of Class A Common Stock, par value $0.01 per share ("Parent
Class A Common Stock"), and (3) 20,000,000 shares of preferred stock, par value
$0.01 per share (the "Parent Preferred Stock"). As of the date of this
Agreement: (1) 31,100,022 shares of Parent Common Stock are issued and
outstanding; (2) 2,032,514 shares of Parent Class A Common Stock are issued and
outstanding; (3) no shares of Parent Preferred Stock are issued and outstanding;
(4) 3,768,075 shares of Parent Common Stock are reserved for issuance pursuant
to the Concentra Managed Care, Inc. 1999 Stock Option and Restricted Stock
Purchase Plan; (5) 526,000 shares of Parent Common Stock are reserved for
issuance pursuant to the Concentra Managed Care, Inc. 1997 Long Term Incentive
Plan; (6) 5,904 shares of Parent Common Stock are reserved for issuance pursuant
to the Preferred Payment Systems, Inc. 1996 Incentive Stock Plan; (7) warrants
to purchase 2,366,294 shares of Parent Common Stock are issued and outstanding
("Parent Warrants"); (8) 2,032,514 shares of Parent Common Stock are reserved
for issuance upon conversion of Parent Class A Common Stock; (9) 2,366,294
shares of Parent Common Stock are subject to issuance, and are also reserved for
issuance, upon exercise of Parent Warrants; and (10) no Voting Debt is issued
and outstanding in Parent or any of its Subsidiaries. All outstanding shares of
Parent Common Stock and Parent Class A Common Stock are validly issued, fully
paid, and nonassessable and, except as provided in that certain Stockholders
Agreement, dated as of August 17, 1999, by and among Parent and the stockholders
named therein, as amended, are not subject to preemptive rights. Except for the
Lien of Parent's senior creditors under Parent's senior credit agreement, all
outstanding equity interests of the Subsidiaries of Parent that are owned by
Parent, or a direct or indirect wholly owned Subsidiary of Parent, are free and
clear of all Liens. There are no restrictions on Parent's ability to vote the
equity interests of any of its Subsidiaries.
(c) Authority; No Violations, Consents and Approvals.
(i) Each of Parent and Buyer has all requisite power and
authority to enter into the Transaction Documents to which it is a party and to
consummate the transactions contemplated hereby or thereby. The execution and
delivery of the Transaction Documents and the consummation of the transactions
contemplated hereby or thereby have been duly authorized by all necessary action
on the part of Parent and Buyer. The Transaction Documents to which Parent
and/or Buyer are parties have been duly executed and delivered by each of Parent
and Buyer, as applicable, and, assuming the Transaction Documents to which
Seller is a party constitute the valid and binding obligations of Seller,
constitute a valid and binding obligation of each of Parent and Buyer, as
applicable, enforceable in accordance with their terms, subject as to
enforceability, to bankruptcy, insolvency, reorganization, moratorium, and other
laws of general
13
applicability relating to or affecting creditors' rights and to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(ii) The execution and delivery of the Transaction Documents
by Parent and Buyer do not, and the consummation of the transactions
contemplated hereby or thereby, and compliance with the provisions hereof or
thereof, will not, subject to obtaining the consents, approvals, authorizations,
and Permits and making the filings described in Section 3.2(c)(iii) and to
compliance with certain notice and document delivery requirements under the
indentures to which Parent and Buyer are subject, conflict with, or result in
any violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation, or acceleration of
any material obligation or to the loss of a material benefit under, or give rise
to a right of purchase under, result in the creation of any Lien upon any of the
properties or assets of Parent or any of its Subsidiaries under, require the
consent or approval of any third party lender, or otherwise result in a material
detriment to Parent or any of its Subsidiaries under, any provision of (A) the
certificates of incorporation or bylaws of Parent or any provision of the
comparable charter or organizational documents of any of Parent's Subsidiaries,
(B) any loan or credit agreement, note, bond, mortgage, indenture, lease, or
other agreement, instrument, Permit, concession, franchise, or license
applicable to Parent or any of its Subsidiaries or its or their respective
properties or assets, or any guarantee by Parent or any of its Subsidiaries of
the foregoing, (C) any joint venture or other ownership arrangement, or (D)
assuming the consents, approvals, authorizations, or permits and filings or
notifications referred to in Section 3.2(c)(iii) are duly and timely obtained or
made, any judgment, order, decree, statute, law, ordinance, rule, or regulation
applicable to Parent or any of its Subsidiaries or any of their respective
properties or assets.
(iii) No consent, approval, order, or authorization of, or
registration, declaration or filing with, or Permit from any Governmental Entity
is required by or with respect to Parent or any of its Subsidiaries in
connection with the execution and delivery by Parent or Buyer of the Transaction
Documents to which Parent or Buyer is a party or the consummation by Parent or
Buyer of the transactions contemplated hereby or thereby, except for any such
consent, approval, order, authorization, registration, declaration, filing, or
Permit that the failure to obtain or make (1) has not had, and could not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect, or (2) would not, or could not reasonably be expected
to, materially impair the ability of each of Parent or Buyer to perform its
obligations hereunder or prevent the consummation of any of the transactions
contemplated hereby.
(d) Compliance with Applicable Laws. Parent or its Subsidiaries
hold all Permits necessary for the lawful conduct of the business of Parent and
its Subsidiaries, except for any such Permits, the failure to possess which,
individually or in the aggregate, could not reasonably be expected to have a
Parent Material Adverse Effect. Each of Parent and its Subsidiaries is in
compliance with the terms of its Permits, except where the failure so to comply
has not had, and could not reasonably be expected to have, a Parent Material
Adverse Effect. The businesses of Parent and each of its Subsidiaries are not
being conducted in violation of any law, ordinance, or regulation of any
Governmental Entity, except for possible violations which have not had, and
could not reasonably be expected to have, a Parent Material Adverse Effect. As
of the date hereof and to the Knowledge of Parent, no investigation or review by
any Governmental Entity with respect to Parent or any of its Subsidiaries is
pending or threatened,
14
other than those the outcome of which has not had, and could not reasonably be
expected to have, a Parent Material Adverse Effect.
(e) Absence of Litigation. Except as disclosed in the Buyer SEC
Documents, there is no claim, action, suit, inquiry, judicial or administrative
proceeding, grievance, or arbitration pending or, to the Knowledge of Buyer,
threatened against Parent or any of its Subsidiaries or any of the assets of
Parent or any of its Subsidiaries by or before any arbitrator or Governmental
Entity, nor are there any investigations relating to Parent or any of its
Subsidiaries or any of such assets pending or, to the Knowledge of Parent,
threatened by or before any arbitrator or Governmental Entity, in either case
that would have a Parent Material Adverse Effect. Except as disclosed in the
Buyer SEC Documents, there is no judgment, decree, injunction, order,
determination, award, finding, or letter of deficiency of any Governmental
Entity or arbitrator, or settlement agreement outstanding against Parent, any of
its Subsidiaries or any of their respective assets. There is no action, suit,
inquiry, or judicial or administrative proceeding pending or, to the Knowledge
of Parent, threatened against Parent or any of its Subsidiaries relating to the
transactions contemplated hereby.
(f) SEC Documents. Buyer has made available to Seller a true and
complete copy of each report, schedule, registration statement, and definitive
proxy statement filed by Buyer with the SEC since January 1, 2000 and prior to
or on the date of this Agreement (the "Buyer SEC Documents"), which are all the
documents (other than preliminary material) that Buyer or its Subsidiaries were
required to file with the SEC between January 1, 2000 and the date of this
Agreement. As of their respective dates, the Buyer SEC Documents complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Buyer SEC Documents, and none of the Buyer SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated there or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. None of
Buyer or its Subsidiaries has any outstanding and unresolved comments from the
SEC with respect to any of the Buyer SEC Documents. The consolidated financial
statements of Buyer included in the Buyer SEC Documents complied as to form in
all material respects with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto or, in the case of the unaudited statements, as permitted by Rule 10-01
of Regulation S-X of the SEC) and fairly present in accordance with applicable
requirements of GAAP (subject, in the case of the unaudited statements, to
normal, recurring adjustments, none of which are material) the consolidated
financial position of Buyer and its consolidated Subsidiaries as of their
respective dates and the consolidated results of operations and the consolidated
cash flows of Buyer and its consolidated Subsidiaries for the periods presented
therein.
(g) Affiliate Relationships. Except as discussed in the Buyer SEC
Documents, there are no contracts or other arrangements involving Parent or any
of its Subsidiaries in which any member, manager, officer, director, or
Affiliate of Parent or any of its Subsidiaries has a financial interest,
including indebtedness to Parent or any of its Subsidiaries.
15
(h) Brokers. No broker, investment banker, or other person is
entitled to any broker's, finder's, or other similar fee or commission in
connection with the transactions contemplated hereby based upon arrangements
made by or on behalf of Parent or Buyer.
(i) Disclosure. No representation or warranty by Parent or Buyer
contained in this Agreement or in any certificate furnished pursuant to this
Agreement contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading.
(j) Shares. The shares of Parent Common Stock to be issued
pursuant to the transactions contemplated hereby 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 bylaws, or
any agreement to which Parent is a party or is bound.
ARTICLE 4
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of Seller. Except as contemplated by or otherwise
permitted under this Agreement or the Seller Disclosure Schedules or to the
extent that Parent shall otherwise consent in writing, from the date of this
Agreement until the Closing, Seller covenants and agrees with Parent and Buyer
that from the date hereof until the Closing, Seller shall (i) conduct the
Business only in the usual and ordinary course as previously conducted,
including, without limitation, policies and practices relating to the collection
of Accounts Receivable and the payment of trade accounts payable, bonuses,
commissions, and other liabilities, (ii) maintain the Assets in as good working
order and condition as at present, ordinary wear and tear excepted, (iii) timely
perform all contractual obligations to which it is subject, (iv) keep in full
force and effect its policies of insurance, and (v) maintain and preserve its
business organization intact, to retain its and its Affiliates' employees, and
to maintain its relationships with employees, suppliers, patients, payors, and
others having business relations with Seller or the Business.
4.2 Conduct of Business by Buyer Pending the Transactions Contemplated
Hereby. Except as otherwise permitted under this Agreement, and without limiting
the generality of the foregoing, from the date hereof until the Closing Date,
without the written consent of Seller (which consent shall not be unreasonably
withheld):
(a) Parent shall not (i) take, or agree or commit to take, any
action that would make any representation and warranty of Parent or Buyer
hereunder inaccurate in any material respect at, or as of any time prior to, the
Closing, or (ii) omit, or agree or commit to omit, to take any action necessary
to prevent any such representation or warranty from being materially inaccurate
in any respect at any such time;
(b) Parent shall not adopt a plan of complete or partial
liquidation, dissolution, or reorganization; and
(c) Parent shall not agree or commit to do any of the foregoing.
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ARTICLE 5
ADDITIONAL AGREEMENTS AND COVENANTS
5.1 No Solicitation of Transactions. Seller shall not, nor shall it
permit its Affiliates to, directly or indirectly, through any officer, director,
stockholder, employee, agent, financial advisor, banker or other representative,
or otherwise, solicit, initiate, or encourage the submission of any proposal or
offer from any person relating to any acquisition or purchase of all or any
material portion of the Assets or any equity interest in Seller or any merger,
consolidation, share exchange, business combination, or other similar
transaction with Seller or participate in any negotiations regarding, or furnish
to any other person any information with respect to, or otherwise cooperate in
any way with, or assist or participate in, facilitate or encourage, any effort
or attempt by any other person to do or seek any of the foregoing. Seller shall
immediately communicate to Parent the material terms of any such proposal (and
the identity of the party making such proposal) that it may receive and, if such
proposal is in writing, Seller shall promptly deliver a copy of such proposal to
Parent. Seller agrees not to release any third party from, or waive any
provision of, any confidentiality or standstill agreement to which Seller is a
party. Seller immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
5.2 Access and Information. Until the Closing, Seller shall afford to
Parent and its representatives (including accountants and counsel) full access
during normal business hours, upon reasonable notice and in such manner as will
not unreasonably interfere with the conduct of the business of Seller, to all
properties, books, records, and Tax Returns of Seller and all other information
with respect to the Business, together with the opportunity to make copies of
such books, records, and other documents and to discuss the Business with such
officers, directors, accountants, consultants, and counsel for Seller as Parent
deems reasonably necessary or appropriate for the purposes of familiarizing
itself with Seller or the Business. In furtherance of the foregoing, Seller
shall authorize and instruct its independent public accountants to meet with
Parent and its representatives, including Parent's independent public
accountants, to discuss the Business and accounts of Seller and to make
available (with the opportunity to make copies) to Parent and its
representatives, including its independent public accountants, all the work
papers of its accountants related to their audit of the financial statements and
Tax Returns of Seller.
5.3 Third Party Consents. After the date hereof and prior to the
Closing, Seller shall use all commercially reasonable efforts, including making
any required payments, to obtain the written consent from any party to a
contract with Seller that is required to permit the consummation of the
transactions contemplated hereby or that is required to prevent a breach of such
contract or the creation of the right to terminate such contract.
5.4 Filings. Each party hereto shall make all filings required to be
made by such party in connection herewith or desirable to achieve the purposes
contemplated hereby, and shall cooperate as needed with respect to any such
filing by any other party hereto.
5.5 Employee Matters. Nothing contained in this Agreement shall be
deemed to give any employee of Seller the right to be retained in the employ of
Parent or any of its Subsidiaries on or after the Closing Date, to retain the
same salary, job responsibility, or job
17
location, or to interfere with the right of Parent or any of its Subsidiaries to
terminate any employee at any time.
5.6 Notice of Certain Events. Each party to this Agreement shall as
promptly as reasonably practicable notify the other parties hereto of:
(a) any notice or other communication from any person alleging
that the consent of such person (or other person) is or may be required in
connection with the transactions contemplated hereby;
(b) any notice or other communication from any Governmental
Entity in connection with the transactions contemplated hereby;
(c) any actions, suits, claims, investigations, or proceedings
commenced or, to the best of its Knowledge, threatened 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 Section 3.1(g) or 3.2(e) or which relate to the consummation of the
transactions contemplated hereby;
(d) Parent shall as promptly as reasonably practicable notify
Seller of any Parent Material Adverse Effect or the occurrence of any event
which is reasonably likely to result in a Parent Material Adverse Effect;
(e) Seller shall as promptly as reasonably practicable notify
Parent of:
(i) any notice of, or other communication relating to, a
default or event that, with notice or lapse of time or both, would become a
default, received by Seller subsequent to the date of this Agreement, under
any contract to which Seller is a party; and
(ii) any Seller Material Adverse Effect or the occurrence of
any event which is reasonably likely to result in a Seller Material Adverse
Effect.
5.7 Additional Agreements. Subject to the terms and conditions of this
Agreement, each of Seller, Parent and Buyer will use its commercially reasonable
efforts to do, or cause to be taken all action and to do, or cause to be done,
all things necessary, proper, or advisable under Applicable Laws and regulations
to consummate and make effective the transactions contemplated hereby. If at any
time after the Closing Date, any further action is necessary to comply with this
Agreement, the parties to this Agreement or their duly authorized
representatives shall take all such action.
5.8 Bulk Sales Law. Parent and Buyer agree to waive compliance by Seller
with the requirements of any bulk sales or fraudulent conveyance statute, and
Seller, in consideration of such waiver, agrees to indemnify and hold Parent and
Buyer harmless against any and all damages, losses, claims, liabilities,
demands, charges, suits, penalties, costs, and expenses (including court costs
and reasonable attorneys' fees and expenses incurred in investigating and
preparing for any litigation or proceeding) resulting from or arising out of any
failure to comply with any such statute.
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5.9 Risk of Loss.
(a) The risk of any loss, damage, impairment, confiscation, or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Seller at all times prior to the Closing. In the event of any such loss, damage,
impairment, confiscation, or condemnation, whether or not covered by insurance,
Seller shall promptly notify Parent of such loss, damage, impairment,
confiscation, or condemnation, which notice shall provide an estimate of the
costs to repair, restore or replace such Assets and shall state whether Seller
intends to repair, restore, or replace such assets.
(b) If Seller, at its expense, repairs, replaces, or restores such
Assets to their prior condition to the satisfaction of Parent before the
Closing, Seller shall be entitled to all insurance proceeds and condemnation
awards, if any, by reason of such award or loss.
(c) If Seller does not or cannot restore or replace lost, damaged,
impaired, confiscated, or condemned Assets, Parent may, on its own behalf and on
behalf of Buyer, at its option:
(i) terminate this Agreement by notice forthwith without any
further obligation hereunder if the replacement cost of such assets exceeds
$500,000 in the aggregate; or
(ii) proceed to the Closing of this Agreement without Seller
completing the restoration and replacement of such Assets, provided that
Seller shall assign all rights under applicable insurance policies and
condemnation awards, if any, to Parent or Buyer, at Parent's direction, and
that the Purchase Price shall be reduced by the repair or replacement costs
of any Asset to the extent not covered by such insurance proceeds or
condemnation award, and in such event, Seller shall have no further
liability with respect to the condition of the Assets directly attributable
to the loss, damage, impairment, confiscation, or condemnation.
(d) Parent will notify Seller of a decision under the options
described in Section 5.9(c)(i) or 5.9(c)(ii) above within ten Business Days
after Seller's notice to Parent of the loss, damage, impairment, confiscation,
or condemnation of Assets; provided, however, that if Seller states that it
intends to restore the damaged Assets and if Seller has not restored or replaced
such Assets immediately prior to the Closing Date, notwithstanding Parent's
prior delivery of a notice to proceed pursuant to this Section 5.9(d), Parent
and Buyer shall have the right to either postpone the Closing or terminate this
Agreement by notice forthwith.
5.10 Dissolution of Seller. Seller hereby agrees to take any and all action
necessary to effect the Dissolution, subject to the receipt of the approval of
Seller's stockholders, as soon as practicable after the Closing.
5.11 Joinder to Parent Agreements. Certain stockholders of Buyer are
parties to that certain Stockholders Agreement, dated as of August 17, 1999, as
amended (the "Parent Stockholders Agreement"), among Parent and the stockholders
named therein, and that certain Registration Rights Agreement, dated as of
August 17, 1999, as amended (the "Parent Registration Rights Agreement"), with
the Parent. Parent agrees to make reasonable efforts to
19
cause the actions necessary to amend each of the Parent Stockholders Agreement
and the Parent Registration Rights Agreement to join each of Seller's
stockholders to whom the shares of Parent Common Stock are distributed upon the
dissolution of Seller, to the extent such stockholder is not already a party
thereto and so desires to be joined thereto.
ARTICLE 6
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation. The respective obligations of
Parent, Buyer, and Seller to effect the transactions contemplated hereby are
subject to the satisfaction on or prior to the Closing Date of the following
conditions:
(a) Consents and Approvals. All authorizations, consents, orders or
approvals of, or declarations or filings with, or expirations of waiting periods
imposed by, any Governmental Entity necessary for the consummation of the
transactions contemplated hereby shall have been filed, occurred, or been
obtained.
(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction, or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect.
(c) No Action. No action shall have been taken nor any statute, rule,
or regulation shall have been enacted by any Governmental Entity that makes the
consummation of the transactions contemplated hereby illegal.
(d) No Litigation. No litigation or administrative proceeding or
investigation (whether formal or informal) shall be pending or, to Seller's,
Parent's or Buyer's Knowledge, threatened which challenges the transactions
contemplated hereby.
6.2 Conditions to Obligation of Parent and Buyer. The obligation of Parent
and Buyer to effect the transactions contemplated hereby is subject to the
satisfaction of the following conditions unless waived, in whole or in part, by
Parent:
(a) Representations and Warranties. The representations and warranties
of Seller set forth in this Agreement shall be true and correct in all material
respects (provided that any representation or warranty of Seller contained
herein that is qualified by a materiality standard or a Seller Material Adverse
Effect qualification shall not be further qualified hereby) as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date, and Parent and Buyer shall have received a certificate to the
foregoing effect signed on behalf of Seller by an officer of Seller.
(b) Performance of Obligations. Seller shall have performed in all
material respects (provided that any covenant or agreement that is qualified by
a materiality standard or Seller Material Adverse Effect qualification shall not
be further qualified hereby) all obligations required to be performed by it or
them under this Agreement prior to the Closing Date, and Parent and Buyer shall
have received a certificate to such effect signed on behalf of Seller by the
chief executive officer or by an officer of Seller.
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(c) Consents Under Agreements. Parent shall have been furnished with
evidence reasonably satisfactory to it of the consent or approval of each person
that is a party to a contract to which Seller is a party (including evidence of
the payment or any required payment) and whose consent or approval shall be
required in order to permit the consummation of the transactions contemplated
hereby or to prevent a breach of such contract or the creation of a right to
terminate such contract, and such consent or approval shall be in form and
substance reasonably satisfactory to Parent.
(d) Stockholder Approval. To the extent required by Applicable Law,
this Agreement and the transactions contemplated hereby shall have been approved
by the requisite vote of the stockholders of Seller.
(e) Closing Deliveries. All documents, instruments, certificates, or
other items required to be delivered by Seller pursuant to Section 7.2 shall
have been delivered.
(f) Limited Number of Unaccredited Investors. Parent shall be
satisfied that all stockholders of Seller upon consummation of the transactions
contemplated hereby do not include more than 35 persons who are not Accredited
Investors. Parent shall be satisfied that any such stockholder who is not an
Accredited Investor shall have appointed a "purchaser representative" as defined
in Regulation D promulgated under the Securities Act in connection with the
proposed dissolution of Seller upon completion of the transactions contemplated
hereby.
6.3 Conditions to Obligations of Seller. The obligation of Seller to
effect the transactions contemplated hereby is subject to the satisfaction of
the following conditions unless waived, in whole or in part, by Seller.
(a) Representations and Warranties. The representations and warranties
of Buyer set forth in this Agreement shall be true and correct in all material
respects (provided that any representation or warranty of Parent and Buyer
contained herein that is qualified by a materiality standard shall not be
further qualified hereby) as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date, and Seller shall have
received a certificate to the foregoing effect signed on behalf of each of
Parent and Buyer by the chief executive officer or by the chief financial
officer of Parent and Buyer.
(b) Performance of Obligations of Buyer. Each of Parent and Buyer
shall have performed in all material respects (provided that any covenant or
agreement that is qualified by a materiality standard shall not be further
qualified hereby) the obligations required to be performed by it under this
Agreement prior to the Closing Date, and Seller shall have received a
certificate to such effect signed on behalf of Parent and Buyer by the chief
executive officer or by the chief financial officer of each of Parent and Buyer.
(c) Closing Deliveries. All documents, instruments, certificates, or
other items required to be delivered by Buyer pursuant to Section 7.2 shall have
been delivered.
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ARTICLE 7
CLOSING
7.1 Closing. Subject to the satisfaction or waiver of the conditions set
forth in Article 6, the Closing will take place at the executive offices of
Parent, Addison, Texas, at 10:00 a.m., local time (or at such other place and
time as Parent, Buyer and Seller may agree), on December 2, 2002 (the "Closing
Date"). Such Closing shall be effective for all purposes as of December 1, 2002.
7.2 Actions to Occur at Closing.
(a) At the Closing, Parent and/or Buyer shall deliver to Seller the
following:
(i) Purchase Price. A stock certificate for the shares of Parent
Common Stock evidencing the Purchase Price;
(ii) Certificates. The certificates referred to in Sections
6.3(a) and 6.3(b); and
(iii) Assignment and Assumption Agreement. A counterpart of the
Assignment and Assumption Agreement executed by Buyer.
(b) At the Closing, Seller shall deliver to Buyer the following:
(i) Assignment and Assumption Agreement. A counterpart of the
Assignment and Assumption Agreement executed by Seller together with any other
assignments and other transfer documents as requested by Buyer;
(ii) Consents; Acknowledgments. The original of each Consent;
(iii) Licenses, Permits, Contracts, Business Records, Etc. To the
extent they are in the possession of Seller, copies of all Permits, Assumed
Contracts, and all files and records used by Seller in connection with the
Business, which copies shall be available at the Closing; and
(iv) Certificates. The certificates described in Sections 6.2(a)
and 6.2(b).
ARTICLE 8
TERMINATION
8.1 Termination. This Agreement may be terminated prior to the Closing:
(a) by mutual consent of Parent, Buyer and Seller;
(b) by either Parent or Seller:
(i) in the event of a breach by the other party of any
representation, warranty, covenant, or agreement contained in this Agreement
which (A) would give rise to the
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failure of a condition set forth in Section 6.2(a) or 6.2(b) or Section 6.3(a)
or 6.3(b), as applicable, and (B) cannot be or has not been cured within 20 days
following receipt by the breaching party of written notice of such breach, but
in no event shall such cure period extend beyond December 31, 2002; or
(ii) if a court of competent jurisdiction or other Governmental
Entity shall have issued an order, decree, or ruling or taken any other action
(which order, decree, or ruling Parent and Seller shall use their best efforts
to lift), in each case permanently restraining, enjoining, or otherwise
prohibiting the transactions contemplated hereby or the other Transaction
Documents, and such order, decree, ruling, or other action shall have become
final and nonappealable; or
(c) by Parent:
(i) if the transactions contemplated hereby shall not have been
consummated by December 31, 2002; provided, however, that the right to terminate
this Agreement under this Section 8.1(c) shall not be available to Parent if its
breach of any representation or warranty or failure to fulfill any covenant or
agreement under this Agreement has been the cause of or resulted in the failure
of the transactions contemplated hereby to occur on or before such date;
(ii) if, at any time on and after the date hereof up to and
immediately prior to the Closing, there shall have occurred a Seller Material
Adverse Effect; or
(iii) pursuant to Section 5.9(c)(i) or (d); or
(d) by Seller if, at any time on or after the date hereof up to and
immediately prior to the Closing, there shall have occurred a Parent Material
Adverse Effect.
Notwithstanding anything in the foregoing to the contrary, a party that is
in material breach of this Agreement shall not be entitled to terminate this
Agreement except, in the case of a default by Seller, with the consent of
Parent, or in the case of a default by Parent or Buyer, with the consent of
Seller.
8.2 Effect of Termination. In the event that Parent, Buyer or Seller
terminates this Agreement as provided in Section 8.1(a), 8.1(b), 8.1(c) or
8.1(d), this Agreement shall forthwith become void and have no effect, without
any liability or obligation on the part of Parent, Buyer or Seller.
ARTICLE 9
GENERAL PROVISIONS
9.1 Survival of Representations, Warranties, and Covenants. Subject to the
remaining provisions of this Section 9.1, the representations, warranties, and
agreements in this Agreement shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any other party hereto,
any person controlling any such party or any of their officers, directors,
representatives, or agents whether prior to or after the execution of this
Agreement. None of the representations, warranties, and agreements in this
Agreement or in any
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instrument delivered pursuant to this Agreement shall survive the Closing, and
any liability for breach or violation thereof shall terminate absolutely and be
of no further force and effect at and as of the Closing, except for the
agreements that by their terms contemplate performance after the Closing.
9.2 Amendment and Modification. This Agreement may not be amended except by
an instrument in writing signed by the parties hereto.
9.3 Waiver of Compliance. Any failure of Parent or Buyer on the one hand,
or Seller, on the other hand, to comply with any obligation, covenant,
agreement, or condition contained herein may be waived only if set forth in an
instrument in writing signed by the party or parties to be bound by such waiver,
but such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement, or condition shall not operate as a waiver of,
or estoppel with respect to, any other failure.
9.4 Specific Performance. The parties recognize that in the event Seller
should refuse to perform under the provisions of this Agreement, monetary
damages alone will not be adequate. Parent and Buyer shall therefore be
entitled, in addition to any other remedies that may be available, including
money damages, to obtain specific performance of the terms of this Agreement. In
the event of any action to enforce this Agreement specifically, Seller hereby
waive the defense that there is an adequate remedy at law. In no event shall
Seller be entitled to seek specific performance with respect to any of Parent's
or Buyer's obligations arising under this Agreement.
9.5 Severability. If any term or other provision of this Agreement is
determined by a court of competent jurisdiction to be invalid, illegal, or
incapable of being enforced under any rule of applicable law, or public policy,
all other conditions and provisions of this Agreement shall nevertheless remain
in full force and effect so long as the economic or legal substance of the
transactions contemplated herein are not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal, or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated herein are consummated as originally
contemplated to the fullest extent possible.
9.6 Expenses and Obligations. Except as otherwise expressly provided in
this Agreement or as provided by law, all costs and expenses incurred by the
parties hereto in connection with the consummation of the transactions
contemplated hereby shall be borne solely and entirely by the party which has
incurred such expenses.
9.7 Parties in Interest. This Agreement shall be binding upon and, except
as provided below, inure solely to the benefit of each party hereto and their
successors, assigns, and transferees, and nothing in this Agreement, express or
implied, is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
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9.8 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied or mailed
by registered or certified mail (return receipt requested), or sent by Federal
Express or other recognized overnight courier, to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) If to Parent or Buyer, to: Concentra Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx 000 - Xxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: General Counsel
(b) If to Seller, to: Em3 Corporation
0000 Xxxxxxxx Xxxxx, Xxxxx 000 - Xxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests, or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, on the date of receipt, if telecopied, three Business Days
after the date of mailing, if mailed by registered or certified mail, return
receipt requested, and one Business Day after the date of sending, if sent by
Federal Express or other recognized overnight courier.
9.9 Counterparts. This Agreement may be executed and delivered (including
by facsimile transmission) in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
9.10 Entire Agreement. This Agreement (which term shall be deemed to
include the exhibits and schedules hereto and the other certificates, documents,
and instruments delivered hereunder) constitutes the entire agreement of the
parties hereto and supersedes all prior agreements, letters of intent and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. There are no representations or warranties, agreements,
or covenants other than those expressly set forth in this Agreement.
9.11 Governing Law. This Agreement shall be construed in accordance with
and governed by the internal law of the State of Delaware (without reference to
its rules as to conflicts of law).
9.12 Public Announcements. Seller, Parent, and Buyer shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby, except for statements required by law or by
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any listing agreements with any national securities exchange or the National
Association of Securities Dealers, Inc., or made in disclosures filed pursuant
to the Securities Act or the Exchange Act.
9.13 Assignment. Neither this Agreement nor any of the rights, interests,
or obligations hereunder shall be assigned by any of the parties hereto, whether
by operation of law or otherwise; provided, however, that without releasing
Parent and/or Buyer from any of its or their obligations or liabilities
hereunder, Parent and/or Buyer may assign or delegate any or all of its or their
rights or obligations under this Agreement to any Affiliate of Parent or any
Person with or into which Parent merges or consolidates. In the event of such an
assignment, the provisions of this Agreement shall inure to the benefit of and
be binding on Parent's and/or Buyer's assigns. Any attempted assignment in
violation of this Section 9.13 shall be null and void.
9.14 Director and Officer Liability. Other than as an assignee of this
Agreement, neither any direct or indirect holder of equity interests in Parent,
Buyer or Seller nor any past, present, or future director, officer, employee,
agent, or Affiliate of Parent, Buyer or Seller or of any such holder, shall have
any liability or obligation of any nature whatsoever in connection with or under
this Agreement or any agreement contemplated hereby or in connection with the
transactions contemplated hereby or any such other agreement.
9.15 Headings. The headings of this Agreement are for convenience of
reference only and are not part of the substance of this Agreement.
IN WITNESS WHEREOF, Seller, Parent, and Buyer have caused this Agreement to
be signed, all as of the date first written above.
EM3 CORPORATION
By:______________________________
Xxxxxxx Xxxxxx
President
CONCENTRA INC.
By:______________________________
Xxxxxxx X. Xxxx XX
Executive Vice President
CONCENTRA OPERATING CORPORATION
By:______________________________
Xxxxxxx X. Xxxx XX
Executive Vice President
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