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AGREEMENT AND PLAN OF MERGER
by and among
OMNICARE, INC.
OMNICARE ACQUISITION CORP.
and
AMERICAN MEDSERVE CORPORATION
dated as of
August 7, 1997
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Table of Contents
Page
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ARTICLE I. THE OFFER AND MERGER................................................ 1
Section 1.1. The Offer........................................................... 1
Section 1.2. Company Actions..................................................... 2
Section 1.3. Directors........................................................... 3
Section 1.4. The Merger.......................................................... 4
Section 1.5. Effective Time...................................................... 4
Section 1.6. Closing............................................................. 4
Section 1.7. Directors and Officers of the Surviving Corporation................. 4
Section 1.8. Shareholders' Meeting............................................... 5
ARTICLE II. CONVERSION OF SECURITIES............................................ 5
Section 2.1. Conversion of Capital Stock......................................... 5
Section 2.2. Exchange of Certificates............................................ 6
Section 2.3. Appraisal Rights.................................................... 7
Section 2.4. Company Plans....................................................... 8
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................... 8
Section 3.1. Organization........................................................ 8
Section 3.2. Capitalization...................................................... 9
Section 3.3. Authorization; Validity of Agreement; Company Action................ 10
Section 3.4. Consents and Approvals; No Violations............................... 10
Section 3.5. SEC Reports and Financial Statements................................ 10
Section 3.6. Absence of Certain Changes.......................................... 11
Section 3.7. No Undisclosed Liabilities.......................................... 11
Section 3.8. Litigation.......................................................... 11
Section 3.9. Employee Benefit Plans.............................................. 11
Section 3.10. Tax Matters; Government Benefits.................................... 13
Section 3.11. Intellectual Property............................................... 14
Section 3.12. Employment Matters.................................................. 15
Section 3.13. Compliance with Laws................................................ 15
Section 3.14. Vote Required....................................................... 16
Section 3.15. Environmental Laws.................................................. 16
Section 3.16. Schedule 14D-9: Offer Documents and Proxy Statement................ 18
Section 3.17. Opinion of Financial Advisor........................................ 18
Section 3.18. Brokers and Finders................................................. 18
Section 3.19. Certain Business Practices.......................................... 18
Section 3.20. Insurance........................................................... 18
Section 3.21. Product Warranties.................................................. 19
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER......... 19
Section 4.1. Organization........................................................ 19
Section 4.2. Authorization; Validity of Agreement; Necessary Action.............. 19
Section 4.3. Consents and Approvals; No Violations............................... 19
Section 4.4. Offer Documents; Proxy Statement; Schedule 14D-9.................... 20
Section 4.5. Financing........................................................... 20
Section 4.6. Litigation.......................................................... 20
ARTICLE V. COVENANTS........................................................... 20
Section 5.1. Interim Operations of the Company................................... 20
Section 5.2. Access; Confidentiality............................................. 22
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Section 5.3. Proxy Statement..................................................... 23
Section 5.4. Cooperation......................................................... 23
Section 5.5. State Takeover Statutes............................................. 24
Section 5.6. No Solicitation..................................................... 24
Section 5.7. Additional Agreements............................................... 25
Section 5.8. Publicity........................................................... 25
Section 5.9. Notification of Certain Matters..................................... 25
Section 5.10. Directors, and Officers' Insurance and Indemnification.............. 25
ARTICLE VI. CONDITIONS.......................................................... 26
Section 6.1. Conditions to Obligations of Each Party to Effect the Merger........ 26
Section 6.2. Conditions Precedent to the Obligations of the Company.............. 27
Section 6.3. Conditions Precedent to the Obligations of Parent and Purchaser..... 27
ARTICLE VII. TERMINATION......................................................... 27
Section 7.1. Termination......................................................... 27
Section 7.2. Effect of Termination............................................... 29
ARTICLE VIII. MISCELLANEOUS....................................................... 29
Section 8.1. Fees and Expenses................................................... 29
Section 8.2. Amendment and Modification.......................................... 29
Section 8.3. Nonsurvival of Representations and Warranties....................... 30
Section 8.4. Notices............................................................. 30
Section 8.5. Interpretation...................................................... 31
Section 8.6. Counterparts........................................................ 31
Section 8.7. Entire Agreement; No Third Party Beneficiaries...................... 31
Section 8.8. Severability........................................................ 31
Section 8.9. Governing Law....................................................... 31
Section 8.10. Assignment.......................................................... 31
Section 8.11. Waivers............................................................. 31
Section 8.12. Captions............................................................ 32
Annex A Certain Conditions of the Offer
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Index of Defined Terms
Defined Term Section No.
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Agreement................................................. Recitals
Acquisition Proposal...................................... 5.6(a)
Appointment Date.......................................... 5.1
Balance Sheet............................................. 3.10(a)
Beds...................................................... 3.22
Break-Up Amount........................................... 8.1(b)
By-Laws................................................... 1.4
Certificate of Incorporation.............................. 1.4
Certificates.............................................. 2.2(b)
Closing................................................... 1.6
Closing Date.............................................. 1.6
Code...................................................... 2.2(f)
Company................................................... Recitals
Company Agreements........................................ 3.4
Company Disclosure Schedule............................... 3.0
Company Material Adverse Effect........................... 3.1(a)
Company SEC Documents..................................... 3.5
Company Option............................................ 2.4(a)
Computer Software......................................... 3.11(c)
Confidentiality Agreement................................. 5.2(b)
Copyrights................................................ 3.11(c)
DGCL...................................................... l.4
Dissenting Shareholders................................... 2.1(c)
Dissenting Shares......................................... 2.3
DLJ....................................................... 3.17
D&O Insurance............................................. 5.10(b)
Effective Time............................................ 1.5
Encumbrances.............................................. 3.2(b)
Environmental Claim....................................... 3.15(g)
Environmental Laws........................................ 3.15(g)
ERISA..................................................... 3.9(a)
ERISA Affiliate........................................... 3.9(a)
Exchange Act.............................................. 1.1(a)
Expiration Date........................................... 1.1(a)
Financial Statements...................................... 3.5
GAAP...................................................... 3.5
Governmental Authority.................................... 3.13(a)
Governmental Entity....................................... 3.4
Hazardous Materials....................................... 3.15(g)
Healthcare Laws........................................... 3.13(a)
HSR Act................................................... 3.4
Indemnified Party......................................... 5.10(a)
Independent Directors..................................... 1.3(c)
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Intellectual Property..................................... 3.11(c)
Licenses.................................................. 3.11(c)
Merger.................................................... 1.4
Merger Consideration...................................... 2.1(c)
Minimum Condition......................................... 1.1(a)
Offer..................................................... 1.1(a)
Offer Documents........................................... 1.1(b)
Offer Price............................................... 1.1(a)
Offer to Purchase......................................... 1.1(a)
Option Plan............................................... 2.4(a)
Parent.................................................... Recitals
Parent Disclosure Schedule ............................... 4.0
Parent Material Adverse Effect............................ 4.1
Patents................................................... 3.11(c)
Paying Agent.............................................. 2.2(a)
PCBs...................................................... 3.15(e)
Personnel................................................. 3.13(a)
Plans..................................................... 3.9(a)
Preferred Stock........................................... 3.2(a)
Preliminary Proxy Statement............................... 5.3
Proxy Statement........................................... 1.8(a)
Purchaser................................................. Recitals
Purchaser Common Stock.................................... 2.1
Schedule 14D-1............................................ 1.1(b)
Schedule 14D-9............................................ 1.2(b)
SEC....................................................... 1.1(b)
Secretary of State........................................ 1.5
Securities Act............................................ 3.5
Shares.................................................... 1.1(a)
Special Meeting........................................... 1.8(a)
Subsidiary................................................ 3.1(a)
Superior Proposal......................................... 5.6(b)
Surviving Corporation..................................... l.4
Tax....................................................... 3.10(k)
Taxes..................................................... 3.10(k)
Tax Return................................................ 3.10(k)
Title IV Plan............................................. 3.9(a)
Trademarks................................................ 3.11(c)
Transactions.............................................. 1.2(a)
Voting Debt............................................... 3.2(a)
1996 Premium.............................................. 5.10(b)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this
"Agreement"), dated as of August 7, 1997, by and among OMNICARE, INC., a
Delaware corporation ("Parent"), OMNICARE ACQUISITION CORP., a Delaware
corporation and a wholly-owned subsidiary of Parent (the "Purchaser"), and
AMERICAN MEDSERVE CORPORATION, a Delaware corporation (the "Company").
WHEREAS, the Board of Directors of each of Parent, the
Purchaser and the Company has approved, and deems it advisable and in the best
interests of its respective stockholders to consummate, the acquisition of the
Company by Parent upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree, as follows:
ARTICLE I.
THE OFFER AND MERGER
Section 1.1. The Offer.
(a) As promptly as practicable (but in no event later than five
business days after the public announcement of the execution hereof), the
Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) a tender offer (the
"Offer") for all of the outstanding shares of Common Stock, par value $.01 per
share (the "Shares"), of the Company at a price of $18.00 per Share, net to the
seller in cash (such price, as it may be amended in accordance with the terms of
this Agreement, being referred to herein as the "Offer Price"), subject to there
being validly tendered and not withdrawn prior to the expiration of the Offer,
that number of Shares which represents at least a majority of the Shares
outstanding on a fully diluted basis (the "Minimum Condition") and to the other
conditions set forth in Annex A hereto, and shall consummate the Offer in
accordance with its terms. For purposes of this Agreement, "fully diluted basis"
means issued and outstanding Shares and Shares subject to issuance under
employee stock options and other outstanding rights to acquire Shares. The
Company agrees that no Shares held by the Company or any of its Subsidiaries (as
defined herein) will be tendered to the Purchaser pursuant to the Offer. The
obligations of the Purchaser to accept for payment and to pay for any Shares
validly tendered on or prior to the expiration of the Offer and not withdrawn
shall be subject only to the Minimum Condition and the other conditions set
forth in Annex A hereto. The Offer shall be made by means of an offer to
purchase (the "Offer to Purchase") containing the terms set forth in this
Agreement, the Minimum Condition and the other conditions set forth in Annex A
hereto. The Purchaser shall not amend or waive the Minimum Condition and shall
not decrease the Offer Price or decrease the number of Shares sought, or amend
any other condition of the Offer in any manner adverse to the holders of the
Shares without the written consent of the Company, except that Purchaser may, in
its sole discretion, waive any of the conditions to the Offer set forth in Annex
A hereto. The Purchaser shall, on the terms and subject to the prior
satisfaction or waiver of the conditions of the Offer, accept for payment and
pay for Shares validly tendered and not withdrawn as soon as practicable after
expiration of the Offer; provided, however, that if, immediately prior to the
expiration date of the Offer the Shares tendered and not withdrawn pursuant to
the Offer equal less than 90% of the outstanding Shares but more than 80% of the
outstanding Shares,
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the Purchaser may extend the Offer for a period not to exceed seven business
days, notwithstanding that all conditions to the Offer are satisfied as of such
expiration date of the Offer.
(b) As soon as practicable on the date the Offer is commenced, Parent
and the Purchaser shall file or cause to be filed with the United States
Securities and Exchange Commission (the "SEC") a Tender Offer Statement on
Schedule 14D-1 with respect to the Offer (together with all amendments and
supplements thereto and including the exhibits thereto, the "Schedule 14D-1").
The Schedule 14D-1 will include, as exhibits, the Offer to Purchase and a form
of letter of transmittal and other ancillary Offer documents and instruments
(collectively, together with any amendments and supplements thereto, the "Offer
Documents").
(c) Parent and the Purchaser will cause the Offer Documents to be filed
with the SEC and to be disseminated to holders of the Shares, in each case as
and to the extent required by applicable federal securities laws. Each of Parent
and the Purchaser, on the one hand, and the Company, on the other hand, will
promptly correct any information provided by it for use in the Offer Documents
if and to the extent that it shall have become false or misleading in any
material respect and the Purchaser will cause the Offer Documents as so
corrected to be filed with the SEC and to be disseminated to holders of the
Shares, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review the Schedule 14D-1 (including, without limitation, all
documents filed therewith as exhibits) before it is filed with the SEC. In
addition, Parent and the Purchaser will provide the Company and its counsel with
any comments, whether written or oral, Parent, the Purchaser or their counsel
may receive from time to time from the SEC or its staff with respect to the
Offer Documents promptly after the receipt of such comments.
Section 1.2. Company Actions.
(a) The Company hereby approves of and consents to the Offer and
represents and warrants that the Company's Board of Directors, at a meeting duly
called and held, has (i) unanimously determined that the terms of the Offer and
the Merger (as defined in Section 1.4) are fair to and in the best interests of
the shareholders of the Company, (ii) approved this Agreement and the
transactions contemplated hereby, including the Offer and Merger (collectively,
the "Transactions"), and (iii) resolved to recommend that the shareholders of
the Company accept the Offer, tender their Shares thereunder to the Purchaser
and approve and adopt this Agreement and the Merger; provided, that such
recommendation may be withdrawn, modified or amended if, in the opinion of the
Board of Directors, only after receipt of advice from outside legal counsel,
failure to withdraw, modify or amend such recommendation would reasonably be
expected to result in the Board of Directors violating its fiduciary duties to
the Company's shareholders under applicable law and the Company pays the fees
and expenses required by Section 8.1 hereof.
(b) Concurrently with the commencement of the Offer, the Company shall
file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9
(together with all amendments and supplements thereto and including the exhibits
thereto, the "Schedule 14D-9") which shall, subject to the provisions of Section
5.6(b), contain the recommendation referred to in clause (iii) of Section 1.2(a)
hereof. The Company further agrees to take all steps necessary to cause the
Schedule 14D-9 to be filed with the SEC and to be disseminated to holders of the
Shares, in each case as and to the extent required by applicable federal
securities laws. Each of the Company, on the one hand, and Parent and the
Purchaser, on the other hand, will promptly correct any information provided by
it for use in the Schedule 14D-9 if and to the extent that it shall have become
false and misleading in any material respect and the Company further agrees to
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and to be disseminated to holders of the Shares, in each case as
and to the extent
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required by applicable federal securities laws. Parent and its counsel shall be
given a reasonable opportunity to review and comment upon the Schedule 14D-9
before it is filed with the SEC. In addition, the Company agrees to provide
Parent, the Purchaser and their counsel with any comments, whether written or
oral, that the Company or its counsel may receive from time to time from the SEC
or its staff with respect to the Schedule 14D-9 promptly after the receipt of
such comments or other communications.
(c) In connection with the Offer, the Company will promptly furnish or
cause to be furnished to the Purchaser mailing labels, security position
listings and any available listing, or computer file containing the names and
addresses of all recordholders of the Shares as of a recent date, and shall
furnish the Purchaser with such additional information (including, but not
limited to, updated lists of holders of the Shares and their addresses, mailing
labels and lists of security positions) and assistance, and cause its
representatives and advisors to provide such assistance, as the Purchaser or its
agents may reasonably request in communicating the Offer to the record and
beneficial holders of the Shares. 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 and the Merger, Parent
and the Purchaser shall hold in confidence the information contained in any of
such labels and lists and the additional information referred to in the
preceding sentence, will use such information only in connection with the Offer,
and, if this Agreement is terminated, will upon request of the Company deliver
or cause to be delivered to, the Company all copies of such information then in
its possession or the possession of its agents or representatives.
Section 1.3. Directors.
(a) Promptly upon the purchase of and payment for any Shares by Parent
or any of its subsidiaries which represents at least a majority of the
outstanding Shares, Parent shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company as is equal to the product of the total number of directors on such
Board (giving effect to the directors designated by Parent pursuant to this
sentence) multiplied by the percentage that the number of Shares so accepted for
payment bears to the total number of Shares then outstanding. In furtherance
thereof, the Company shall, upon request of the Purchaser, promptly increase the
size of its Board of Directors or exercise its best efforts to secure the
resignations of such number of directors, or both, as is necessary to enable
Parent's designees to be so elected to the Company's Board, and shall cause
Parent's designees to be so elected. At such time, the Company shall, if
requested by Parent, also cause persons designated by Parent to constitute at
least the same percentage (rounded up to the next whole number) as is on the
Company's Board of Directors of (i) each committee of the Company's Board of
Directors, (ii) each board of directors (or similar body) of each Subsidiary (as
defined in Section 3.1) of the Company and (iii) each committee (or similar
body) of each such board.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under Section 1.3(a), including mailing to
stockholders together with Schedule 14D-9 the information required by such
Section 14(f) and Rule 14f-1 as is necessary to enable Parent's designees to be
elected to the Company's Board of Directors. Parent or the Purchaser will supply
the Company and be solely responsible for any information with respect to either
of them and their nominees, officers, directors and affiliates required by such
Section 14(f) and Rule 14f-1. The provisions of this Section 1.3 are in addition
to and shall not limit any rights which the Purchaser, Parent or any of their
affiliates may have as a holder or beneficial owner of Shares as a matter of law
with respect to the election of directors or otherwise.
(c) In the event that Parent's designees are elected to the Company's
Board of Directors, until the Effective Time (as defined below), the Company's
Board shall have at least two directors who
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are directors on the date hereof (the "Independent Directors"), provided that,
in such event, if the number of Independent Directors shall be reduced below two
for any reason whatsoever, any remaining Independent Directors (or Independent
Director, if there be only one remaining) shall be entitled to designate persons
to fill such vacancies who shall be deemed to be Independent Directors for
purposes of this Agreement or, if no Independent Director then remains, the
other directors shall designate two persons to fill such vacancies who shall not
be stockholders, affiliates or associates of Parent or the Purchaser and such
persons shall be deemed to be Independent Directors for purposes of this
Agreement. Notwithstanding anything in this Agreement to the contrary, in the
event that Parent's designees are elected to the Company's Board, after the
acceptance for payment of Shares pursuant to the Offer and prior to the
Effective Time, the affirmative vote of a majority of the Independent Directors
shall be required to (a) amend or terminate this Agreement by the Company or (b)
exercise or waive any of the Company's rights, benefits or remedies hereunder.
Section 1.4. The Merger. Subject to the terms and conditions of this
Agreement, and in accordance with the relevant provisions of the Delaware
General Corporation Law ("DGCL"), at the Effective Time, the Company and the
Purchaser shall consummate a merger (the "Merger") pursuant to which (a) the
Purchaser shall be merged with and into the Company and the separate corporate
existence of the Purchaser shall thereupon cease, (b) the Company shall be the
successor or surviving corporation in the Merger (sometimes hereinafter referred
to as the "Surviving Corporation") and shall continue to be governed by the laws
of the State of Delaware, and (c) the separate corporate existence of the
Company with all its rights, privileges, immunities, powers and franchises shall
continue unaffected by the Merger, except as set forth in this Section 1.4.
Pursuant to the Merger, (x) the Company's Amended and Restated Certificate of
Incorporation ("Certificate of Incorporation") shall be amended in its entirety
to read as the Certificate of the Purchaser, in effect immediately prior to the
Effective Time, except that Article FIRST thereof shall promptly be amended to
read as follows: "FIRST: The name of the corporation is American Medserve
Corporation" and, as so amended, shall be the Certificate of the Surviving
Corporation until thereafter amended as provided by law and such Certificate,
and (y) the By-Laws of the Purchaser (the "By-Laws"), as in effect immediately
prior to the Effective Time, shall be the Bylaws of the Surviving Corporation
until thereafter amended as provided by law, by such Certificate or by such
Bylaws. The Merger shall have the effects specified in the DGCL.
Section 1.5. Effective Time. Parent, the Purchaser and the Company will
cause a Certificate of Merger to be executed and filed on the Closing Date (as
defined in Section 1.6) (or on such other date as Parent and the Company may
agree) with the Secretary of State of Delaware (the "Secretary of State") as
provided in the DGCL. The Merger shall become effective on the date on which the
Certificate of Merger is duly filed with the Secretary of State or such time as
is agreed upon by the parties and specified in the Certificate of Merger, and
such time is hereinafter referred to as the "Effective Time".
Section 1.6. Closing. The closing of the Merger (the "Closing") shall
take place at 10:00 a.m. on a date to be specified by the parties, which shall
be no later than the second business day after satisfaction or waiver of all of
the conditions set forth in Article VI hereof (the "Closing Date"), at the
offices of Xxxxx Xxxxxxxxxx, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000, unless another date or place is agreed to in writing by the parties
hereto.
Section 1.7. Directors and Officers of the Surviving Corporation. The
directors of the Purchaser and the officers of the Company at the Effective Time
shall, from and after the Effective Time, be the directors and officers,
respectively, of the Surviving Corporation until their successors shall have
been duly elected or appointed or qualified or until their earlier death,
resignation or removal in accordance with the Certificate and the By-Laws.
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Section 1.8. Shareholders' Meeting.
(a) If required by applicable law in order to consummate the Merger,
the Company, acting through its Board of Directors, shall, in accordance with
applicable law:
(i) duly call, give notice of, convene and hold a special
meeting of its shareholders (the "Special Meeting") as promptly as
practicable following the acceptance for payment and purchase of Shares
by the Purchaser pursuant to the Offer for the purpose of considering
and taking action upon the approval of the Merger and the adoption of
this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and (x)
obtain and furnish the information required to be included by the SEC
in the Proxy Statement (as hereinafter defined) and, after consultation
with Parent, to respond promptly to any comments made by the SEC with
respect to the preliminary proxy or information statement and cause a
definitive proxy or information statement, including any amendment or
supplement thereto (the "Proxy Statement") to be mailed to its
shareholders, provided that no amendment or supplement to the Proxy
Statement will be made by the Company without consultation with Parent
and its counsel and (y) use its best efforts to obtain the necessary
approvals of the Merger and this Agreement by its shareholders; and
(iii) include in the Proxy Statement the recommendation of the
Board that shareholders of the Company vote in favor of the approval of
the Merger and the adoption of this Agreement.
(b) Parent shall vote, or cause to be voted, all of the Shares then
owned by it, the Purchaser or any of its other subsidiaries and affiliates in
favor of the approval of the Merger and the approval and adoption of this
Agreement.
Section 1.9. Merger Without Meeting of Shareholders. Notwithstanding
Section 1.8 hereof, in the event that Parent, the Purchaser and any other
Subsidiaries of Parent shall acquire in the aggregate at least 90% of the
outstanding shares of each class of capital stock of the Company, pursuant to
the Offer or otherwise, the parties hereto shall, at the request of Parent and
subject to Article VI hereof, take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after such acquisition,
without a meeting of shareholders of the Company, in accordance with Section 253
of the DGCL.
ARTICLE II.
CONVERSION OF SECURITIES
Section 2.1. Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
Shares or holders of common stock, par value $.01 per share, of the Purchaser
(the "Purchaser Common Stock"):
(a) The Purchaser Common Stock. Each issued and outstanding share of
the Purchaser Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
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(b) Cancellation of Treasury Stock and Parent-Owned Stock. All Shares
that are owned by the Company as treasury stock and any Shares owned by Parent,
the Purchaser or any other wholly owned Subsidiary of Parent shall be canceled
and retired and shall cease to exist and no consideration shall be delivered in
exchange therefor.
(c) Exchange of Shares. Each issued and outstanding Share (other than
Shares to be canceled in accordance with Section 2.1(b) and any Shares which are
held by stockholders exercising appraisal rights pursuant to Section 262 of the
DGCL ("Dissenting Shareholders")) shall be converted into the right to receive
the Offer Price, payable to the holder thereof, without interest (the "Merger
Consideration"), upon surrender of the certificate formerly representing such
Share in the manner provided in Section 2.2. All such Shares, when so converted,
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate representing any such
Shares shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration therefor upon the surrender of such certificate
in accordance with Section 2.2, without interest, or the right, if any, to
receive payment from the Surviving Corporation of the "fair value" of such
Shares as determined in accordance with Section 262 of the DGCL.
Section 2.2. Exchange of Certificates.
(a) Paying Agent. Parent shall designate a bank or trust company
reasonably acceptable to the Company to act as agent for the holders of the
Shares in connection with the Merger (the "Paying Agent") to receive in trust
from time to time, as necessary, the funds to which holders of the Shares shall
become entitled pursuant to Section 2.1(c). Such funds shall be invested by the
Paying Agent as directed by Parent or the Surviving Corporation.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record, as of the
Effective Time, of a certificate or certificates, which immediately prior to the
Effective Time represented outstanding Shares (the "Certificates"), whose Shares
were converted pursuant to Section 2.1 into the right to receive the Merger
Consideration (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Paying Agent and shall be in such
form and have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment of the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange therefor
the Merger Consideration for each Share formerly represented by such Certificate
and the Certificate so surrendered shall forthwith be canceled. No interest will
be paid or accrued on the cash payable upon the surrender of the Certificates.
If payment of the Merger Consideration is to be made to a person other than the
person in whose name the surrendered Certificate is registered, it shall be a
condition of payment that the Certificate so surrendered shall be properly
endorsed or shall be otherwise in proper form for transfer and that the person
requesting such payment shall have paid any transfer and other taxes required by
reason of the payment of the Merger Consideration to a person other than the
registered holder of the Certificate surrendered or shall have established to
the satisfaction of the Surviving Corporation that such tax either has been paid
or is not applicable. Until surrendered as contemplated by this Section 2.2,
each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive the Merger Consideration in cash as
contemplated by this Section 2.2.
(c) Transfer Books; No Further Ownership Rights in the Shares. At the
Effective Time, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration
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of transfers of the Shares on the records of the Company. From and after the
Effective Time, the holders of Certificates evidencing ownership of the Shares
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such Shares, except as otherwise provided for herein or
by applicable law. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be canceled and exchanged
as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following six months
after the Effective Time, the Surviving Corporation shall be entitled to require
the Paying Agent to deliver to it any funds (including any interest received
with respect thereto) which had been made available to the Paying Agent and
which have not been disbursed to holders of Certificates, and thereafter such
holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Paying Agent shall be liable to any
holder of a Certificate for Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(e) Lost, Stolen or Destroyed Certificates. In the event any
Certificate for Shares 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, the posting by such
Person of a bond in customary amount as indemnity against any claim that may be
made against it with respect to such Certificate, the Paying Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Merger Consideration
pursuant to Section 2.2(b) upon due surrender of and deliverable in respect of
the Shares represented by such Certificate pursuant to this Agreement.
(f) Withholding Taxes. Parent and Purchaser shall be entitled to deduct
and withhold, or cause the Paying Agent to deduct and withhold, from the
consideration otherwise payable to a holder of Shares pursuant to the Offer or
the Merger any stock transfer taxes and such amounts as are required under the
Internal Revenue Code of 1986, as amended (the "Code"), or any applicable
provision of state, local or foreign tax law, as specified in the Offer
Documents. To the extent that amounts are so withheld by Parent or Purchaser,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the Shares in respect of which such deduction
and withholding was made by Parent or Purchaser, in the circumstances described
in the Offer Documents.
Section 2.3. Appraisal Rights. Notwithstanding anything in this
Agreement to the contrary, Shares that are issued and outstanding immediately
prior to the Effective Time and which are held by stockholders who did not vote
in favor of the Merger and comply with all of the relevant provisions of Section
262 of the DGCL (the "Dissenting Shares") shall not be converted into or be
exchangeable for the right to receive the Merger Consideration, unless and until
such holders shall have failed to perfect or shall have effectively withdrawn or
lost their rights to appraisal under the DGCL. If any Dissenting Stockholder
shall have failed to perfect or shall have effectively withdrawn or lost such
right, such holder's Shares shall thereupon be converted into and become
exchangeable for the right to receive, as of the Effective Time, the Merger
Consideration without any interest thereon. The Company shall give Parent (i)
prompt notice of any written demands for appraisal of any Shares, attempted
withdrawals of such demands, and any other instruments served pursuant to the
DGCL and received by the Company relating to stockholders' rights of appraisal
and (ii) the opportunity to direct all negotiations and proceedings with respect
to demands for appraisal under the DGCL. Neither the Company nor the Surviving
Corporation shall, except with the prior written consent of Parent, voluntarily
make any payment with respect to, or settle or offer to settle, any such demand
for payment. If any Dissenting Shareholder shall fail to perfect or shall have
effectively withdrawn or lost the right to dissent, the Shares
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held by such Dissenting Shareholder shall thereupon be treated as though such
Shares had been converted into the Merger Consideration pursuant to Section 2.1.
Section 2.4. Company Plans.
(a) On the expiration date of the Offer, immediately prior to the
acceptance for payment of Shares pursuant to the Offer, each outstanding
employee stock option to purchase Shares (a "Company Option") granted under any
stock option or compensation plan or arrangement of the Company or its
Subsidiaries (collectively, the "Option Plan"), shall be surrendered to the
Company and shall be forthwith canceled and the Company shall pay to each holder
of a Company Option, by check, an amount equal to (i) the product of the number
of the Shares which are issuable upon exercise of such Company Option,
multiplied by the Offer Price, less (ii) the aggregate exercise price of such
Company Option. Prior to the Closing, the Company shall use its best efforts to
take all actions (including, without limitation, soliciting any necessary
consents from the holders of the Company Options) required to effect the matters
set forth in this Section 2.4, including the surrender, cancellation and payment
in consideration for the Company Options described in this Section 2.4(a). The
Company shall withhold all income or other taxes as required under applicable
law prior to distribution of the cash amount received under this Section 2.4(a)
to the holders of Company Options.
(b) Except as may be otherwise agreed to by Parent or the Purchaser and
the Company, the Company's Option Plan shall terminate as of the Effective Time
and the provisions in any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any of its Subsidiaries shall be deleted as of the Effective Time and
no holder of Company Options or any participant in the Option Plan or any other
plans, programs or arrangements shall have any rights thereunder to acquire any
equity securities of the Company, the Surviving Corporation or any subsidiary
thereof.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the schedule attached to this Agreement
setting forth exceptions to the Company's representations and warranties set
forth herein (the "Company Disclosure Schedule"), the Company represents and
warrants to Parent and the Purchaser as set forth below. The Company Disclosure
Schedule will be arranged in sections corresponding to sections of this
Agreement to be modified by such disclosure schedule.
Section 3.1. Organization. (a) Each of the Company and its
Subsidiaries, all of which are listed in Section 3.1 of the Company Disclosure
Schedule, is a corporation, limited liability company or partnership duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization. Complete and correct copies
of the Certificate of Incorporation and the By-Laws and all amendments thereof
to date, have been delivered to Parent. Each of the Company and its Subsidiaries
has all requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as now being conducted, except where the failure to be so organized, existing
and in good standing or to have such power, authority, and governmental
approvals would not, individually or in the aggregate, have a Company Material
Adverse Effect (as defined below). As used in this Agreement, the term
"Subsidiary" shall mean all corporations or other entities in which the Company
or the Parent, as the case may be, owns, directly or indirectly, a majority of
the issued and outstanding capital stock or similar interests or has the right
to elect a majority of the members of the Board of Directors or similar
governing body. As used in this Agreement, (i)
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"Company Material Adverse Effect" shall mean any event, change or effect that
has, or is reasonably likely to have, a material adverse effect (A) on the
condition (financial or otherwise), business, assets, liabilities, results of
operations or cash flows of the Company and its Subsidiaries, taken as a whole
or (B) on the ability of the Company to perform its obligations under this
Agreement or to consummate the transactions contemplated by this Agreement, and
(ii) the phrase "to the Company's knowledge", or words of comparable import,
shall mean facts or circumstances within the personal knowledge, after due
inquiry, of any of Xxxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxx and Xxxxxxx X.
Xxxxxxxx.
(b) The Company and each of its Subsidiaries is duly qualified
or licensed to do business and in good standing as a foreign corporation in
each jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not individually or in the aggregate have a Company Material
Adverse Effect. Except as set forth in Section 3.1 of the Company Disclosure
Schedule, the Company does not own (i) any equity interest in any corporation or
other entity or (ii) marketable securities where the Company's equity interest
in any entity exceeds five percent of the outstanding equity of such entity on
the date hereof.
Section 3.2. Capitalization. (a) The authorized capital stock of the
Company consists of 30,000,000 Shares and 1,000,000 shares of preferred stock,
par value $.01 per share (the "Preferred Stock"). As of the date hereof, (i)
12,217,936 Shares are issued and outstanding, (ii) no Shares are issued and held
in the treasury of the Company, (iii) no shares of Preferred Stock are issued
and outstanding, and (iv) 1,310,790 Shares are reserved for issuance to
employees pursuant to the Option Plan, of which 517,117 Shares are subject to
outstanding, unexercised options. Section 3.2(a) of the Company Disclosure
Schedule sets forth a true and complete list of the holders of Company Options,
including such person's name, the number of options (vested, unvested and total)
held by such person and the exercise price for each such option. Since the date
hereof, the Company has not issued or granted additional options under the
Option Plan. All the outstanding shares of the Company's capital stock are, and
all Shares which may be issued pursuant to the exercise of outstanding Company
Options will be, when issued in accordance with the respective terms thereof,
duly authorized, validly issued, fully paid and non-assessable. Except as
disclosed in Section 3.2 of the Company Disclosure Schedule, there are no bonds,
debentures, notes or other indebtedness having general voting rights (or
convertible into securities having such rights) ("Voting Debt") of the Company
or any of its Subsidiaries issued and outstanding. Except as set forth above,
except as described in Section 3.2 of the Company Disclosure Schedule and except
for the transactions contemplated by this Agreement, as of the date hereof, (i)
there are no shares of capital stock of the Company authorized, issued or
outstanding, (ii) there are no outstanding options, warrants, calls, preemptive
rights, subscriptions or other rights, agreements, arrangements or commitments
of any character, relating to the issued or unissued capital stock of the
Company or any of its Subsidiaries, obligating the Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or Voting Debt of, or other equity interest in,
the Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, or obligating the Company or
any of its Subsidiaries to grant, extend or enter into any such option, warrant,
call, subscription or other right, agreement, arrangement or commitment and
(iii) except as set forth in Section 3.2(a) of the Company Disclosure Schedule,
there are no outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any Shares, or the
capital stock of the Company, or any Subsidiary or affiliate of the Company or
to provide funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any Subsidiary or any other entity other than
loans to Subsidiaries in the ordinary course of business.
(b) All of the outstanding shares of capital stock of each of
the Subsidiaries are beneficially owned by the Company, directly or indirectly,
and all such shares have been validly issued
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and are fully paid and nonassessable and are owned by either the Company or one
of its Subsidiaries free and clear of all liens, charges, claims or encumbrances
of whatever nature ("Encumbrances").
(c) There are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries is a party with
respect to the voting of the capital stock of the Company or any of the
Subsidiaries.
Section 3.3. Authorization; Validity of Agreement; Company Action. The
Company has the requisite corporate power and authority to execute and deliver
this Agreement and to consummate the Transactions. The execution, delivery and
performance by the Company of this Agreement, and the consummation by it of the
Transactions, have been duly authorized by its Board of Directors and, except
for obtaining the approval of its shareholders as contemplated by Section 1.8
hereof, no other corporate action on the part of the Company is necessary to
authorize the execution and delivery by the Company of this Agreement and the
consummation by it of the Transactions. This Agreement has been duly executed
and delivered by the Company and, assuming that this Agreement constitutes the
legal, valid and binding obligations of Parent and the Purchaser, constitutes
the legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as may be limited by any
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors' rights generally or
by general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Section 3.4. Consents and Approvals; No Violations. Except for the
filings set forth in Section 3.4 of the Company Disclosure Schedule and the
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act, the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), state securities or blue sky laws, and the DGCL, none of the execution,
delivery or performance of this Agreement by the Company, the consummation by
the Company of the Transactions or compliance by the Company with any of the
provisions hereof will (i) conflict with or result in any breach of any
provision of the Certificate, the By-Laws or similar organizational documents of
the Company or any of its Subsidiaries, (ii) require any filing with, or permit,
authorization, consent or approval of, any court, arbitrator, tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency (a "Governmental Entity"), (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party or by which any of them or any of their properties or assets may be bound
(the "Company Agreements") or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company, any of its Subsidiaries
or any of their properties or assets, excluding from the foregoing clauses (ii),
(iii) and (iv) such violations, breaches or defaults which would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Section 3.4 of the Company Disclosure Schedule sets forth a list of all third
party consents and approvals required to be obtained in connection with this
Agreement under the Company Agreements prior to the consummation of the
transactions contemplated by this Agreement, except such third party consents
and approvals the failure of which to obtain would not have a Company Material
Adverse Effect.
Section 3.5. SEC Reports and Financial Statements. The Company has
timely filed with the SEC, and has heretofore made available to Parent, true and
complete copies of, all forms, reports, schedules, statements and other
documents required to be filed by it since November 13, 1996 and prior to the
date hereof, under the Exchange Act or the Securities Act of 1933, as amended
(the "Securities Act"), and the SEC's rules and regulations thereunder (as such
documents have been amended since the
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time of their filing, collectively, the "Company SEC Documents"). As of their
respective dates or, if amended prior to the date hereof, as of the date of the
last such amendment, the Company SEC Documents, including, without limitation,
any financial statements or schedules included therein (a) did not 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 therein, in light
of the circumstances under which they were made, not misleading and (b) complied
in all material respects with the applicable requirements of the Exchange Act
and the Securities Act, as the case may be, and the applicable rules and
regulations of the SEC thereunder. None of the Company's Subsidiaries is
required to file any forms, reports or other documents with the SEC. The
consolidated financial statements of the Company included in the Company SEC
Documents (the "Financial Statements") have been prepared from, and are in
accordance with, the books and records of the Company and its consolidated
Subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis during the
period involved (except in the case of unaudited statements, as permitted by
Form 10-Q under the Exchange Act and as may be otherwise indicated in the notes
thereto) and fairly present (subject, in the case of unaudited statements, to
normal recurring year-end adjustments and any other adjustments described
therein) the consolidated financial position and the consolidated results of
operations and cash flows (and changes in financial position, if any) of the
Company and its consolidated Subsidiaries as of the times and for the periods
referred to therein.
Section 3.6. Absence of Certain Changes. Except as disclosed in Section
3.6 of the Company Disclosure Schedule or in the Company SEC Documents filed
prior to the date hereof, since March 31, 1997, the Company and its Subsidiaries
have conducted their respective businesses only in the ordinary and usual course
and there has not occurred any events or changes (including the incurrence of
any liabilities of any nature, whether or not accrued, contingent or otherwise)
having, individually or in the aggregate, a Company Material Adverse Effect and
the Company has not taken any action which would have been prohibited under
Section 5.1 hereof.
Section 3.7. No Undisclosed Liabilities. Except (a) as disclosed in the
Financial Statements and (b) for liabilities and obligations (i) incurred in the
ordinary course of business and consistent with past practice since December 31,
1996, or (ii) as otherwise disclosed in Section 3.7 of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature, whether or not accrued, absolute, contingent or
otherwise, whether due or to become due and whether required to be reflected on
a balance sheet under GAAP that have, or would be reasonably likely to have, a
Company Material Adverse Effect or that would be required by GAAP to be
reflected in, reserved against or otherwise described in a consolidated balance
sheet of the Company (including the notes thereto).
Section 3.8. Litigation. Except as set forth in Section 3.8 of the
Company Disclosure Schedule, there are no suits, claims, actions, proceedings,
including, without limitation, arbitration proceedings or alternative dispute
resolution proceedings, or investigations pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries by or before
any Governmental Entity that, either individually or in the aggregate, if
adversely determined, would be reasonably likely to have a Company Material
Adverse Effect.
Section 3.9. Employee Benefit Plans.
(a) For purposes of this Agreement, the term "Plans" shall include:
each deferred compensation and each incentive compensation, stock purchase,
stock option and other equity compensation plan, program, agreement or
arrangement; each severance or termination pay, medical,
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surgical, hospitalization, life insurance and other "welfare" plan, fund or
program (within the meaning of section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")); each profit-sharing, stock bonus or
other "pension" plan, fund or program (within the meaning of section 3(2) of
ERISA); each employment, termination or severance agreement; and each other
employee benefit plan, fund, program, agreement or arrangement, in each case,
that is sponsored, maintained or contributed to or required to be contributed to
by the Company or by any trade or business, whether or not incorporated (an
"ERISA Affiliate"), that together with the Company would be deemed a "single
employer" within the meaning of section 4001(b) of ERISA, or to which the
Company or an ERISA Affiliate is party, whether written or oral, for the benefit
of any employee or former employee of the Company or any Subsidiary (the
"Plans"). Each of the Plans that is subject to section 302 or Title IV of ERISA
or section 412 of the Code is hereinafter referred to in this Section 3.9 as a
"Title IV Plan." Section 3.9 of the Company Disclosure Schedule sets forth all
of the Plans. Neither the Company, any Subsidiary nor any ERISA Affiliate has
any commitment or formal plan, whether legally binding or not, to create any
additional employee benefit plan or modify or change any existing Plan that
would affect any employee or former employee of the Company or any Subsidiary.
(b) Except as disclosed in Section 3.9 of the Company Disclosure
Schedule, no liability under Title IV or section 302 of ERISA has been incurred
by the Company or any ERISA Affiliate that has not been satisfied in full, and
no condition exists that presents a material risk to the Company or any ERISA
Affiliate of incurring any such liability. No Plan is a Title IV Plan.
(c) Except as disclosed in Section 3.9 of the Company Disclosure
Schedule, neither the Company or any Subsidiary, any Plan, any trust created
thereunder, nor any trustee or administrator thereof has engaged in a
transaction in connection with which the Company or any Subsidiary, any Plan,
any such trust, or any trustee or administrator (as defined in Section 3(16)(A)
of ERISA) thereof, or any party in interest (as defined in ERISA Section 3(14))
or fiduciary with respect to any Plan or any such trust could be subject to
either a civil penalty assessed pursuant to section 409 or 502(i) of ERISA or a
tax imposed pursuant to section 4975 or 4976 of the Code, which would be
material in amount.
(d) Except as disclosed in Section 3.9 of the Company Disclosure
Schedule, each Plan has been operated and administered in all material respects
in accordance with its terms and applicable law, including but not limited to
ERISA and the Code.
(e) Except as disclosed in Section 3.9 of the Company Disclosure
Schedule, each Plan intended to be "qualified" within the meaning of section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service with respect to the qualified status of such Plan under
the Code, including all amendments to the Code effected by the Tax Reform Act of
1986, and nothing has occurred since the issuance of such letter which could
reasonably be expected to cause the loss of the tax-qualified status of such
Plan and the related trust maintained thereunder. The Company has no Plans
intended to satisfy the requirements of Section 501(c)(9).
(f) Except as disclosed in Section 3.9 of the Company Disclosure
Schedule, no Plan provides medical, surgical, hospitalization, death or similar
benefits (whether or not insured) for employees or former employees of the
Company or any Subsidiary for periods extending beyond their retirement or other
termination of service, other than (i) coverage mandated by applicable law, (ii)
death benefits under any "pension plan," or (iii) benefits the full cost of
which is borne by the current or former employee (or his beneficiary) or (iv)
post-death exercise periods in effect under outstanding Company Options.
(g) Except as disclosed in Section 3.9 of the Company Disclosure
Schedule, or as set forth in Section 5.11 of this Agreement, the consummation of
the transactions contemplated by this Agreement
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will not, either alone or in combination with another event, (i) entitle any
current or former employee or officer of the Company or any ERISA Affiliate to
severance pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement, or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee or
officer.
(h) There are no pending, or to the knowledge of the Company,
threatened or anticipated claims by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such Plan
(other than routine claims for benefits) which would have a material adverse
effect upon the Plans or a Company Material Adverse Effect.
Section 3.10. Tax Matters; Government Benefits.
(a) The Company and each of its Subsidiaries have duly filed all Tax
Returns (as hereinafter defined) that are required to be filed and have duly
paid or caused to be duly paid in full or made adequate provision in accordance
with GAAP (or there has been paid or provision has been made on their behalf)
for the payment of all Taxes (as hereinafter defined) shown due on such Tax
Returns and all other Taxes for which the Company or any of its Subsidiaries is
or might be liable. All such Tax Returns are correct and complete in all
material respects and accurately reflect all liability for Taxes for the periods
covered thereby. All Taxes owed and due by the Company and each of its
Subsidiaries for results of operations through December 31, 1996 (whether or not
shown on any Tax Return) have been paid or have been adequately reflected on the
Company's balance sheet as of December 31, 1996 included in the Financial
Statements (the "Balance Sheet"). Since December 31, 1996, the Company has not
incurred liability for any Taxes other than in the ordinary course of business.
Neither the Company nor any of its Subsidiaries has received notice of any claim
made by an authority in a jurisdiction where neither the Company nor any of its
Subsidiaries file Tax Returns that the Company is or may be subject to taxation
by that jurisdiction.
(b) The federal income Tax Returns of the Company and its Subsidiaries
have not been examined by the Internal Revenue Service (or the applicable
statutes of limitation for the assessment of federal income Taxes for such
periods have expired) for any period. Neither the Company nor any of its
Subsidiaries has waived any statute of limitations in any jurisdiction in
respect of Taxes or Tax Returns or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(c) Except as set forth on Section 3.10 of the Company Disclosure
Schedule, no federal, state, local or foreign audits, examinations or other
administrative proceedings have been commenced or, to the Company's knowledge,
are pending with regard to any Taxes or Tax Returns of the Company or of any of
its Subsidiaries. No written notification has been received by the Company or by
any of its Subsidiaries that such an audit, examination or other proceeding is
pending or threatened with respect to any Taxes due from or with respect to or
attributable to the Company or any of its Subsidiaries or any Tax Return filed
by or with respect to the Company or any of its Subsidiaries. To the Company's
knowledge, there is no dispute or claim concerning any Tax liability of the
Company or any of its Subsidiaries either claimed or raised by any taxing
authority.
(d) Neither the Company nor any of its Subsidiaries is a party to any
agreement, plan, contract or arrangement that could result, separately or in the
aggregate, in a payment of any "excess parachute payments" within the meaning of
Section 280G of the Code.
(e) Neither the Company nor any of its Subsidiaries has filed a consent
pursuant to Section 341(f) of the Code (or any predecessor provision) concerning
collapsible corporations, or agreed to have Section 341(f)(2) of the Code apply
to any disposition of a "subsection (f) asset" (as such term is defined in
Section 341(f)(4) of the Code) owned by the Company or any of its Subsidiaries.
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(f) No taxing authority is asserting or, to the knowledge of the
Company, threatening to assert a claim against the Company or any of its
Subsidiaries under or as a result of Section 482 of the Code or any similar
provision of state, local or foreign law.
(g) Neither the Company nor any of its Subsidiaries is a party to any
material tax sharing, tax indemnity or other agreement or arrangement with any
entity not included in the Company's consolidated financial statements most
recently filed by the Company with the SEC.
(h) None of the Company or any of its Subsidiaries has been a member of
any affiliated group within the meaning of Section 1504(a) of the Code, or any
similar affiliated or consolidated group for tax purposes under state, local or
foreign law (other than a group the common parent of which is the Company), or
has any liability for Taxes of any person (other than the Company and its
Subsidiaries) under Treasury Regulation Section 1.1502-E or any similar
provision of state, local or foreign law as a transferee or successor, by
contract or otherwise.
(i) No liens for Taxes exist with respect to any of the assets or
properties of any of the Company or its Subsidiaries, except for statutory liens
for Taxes not yet due or payable.
(j) Neither the Company nor any of its Subsidiaries is or has been a
United States real property holding company within the meaning of Section
897(c)(2) of the Code.
(k) As used in this Agreement, the following terms shall have the
following meanings:
(i) "Tax" or "Taxes" shall mean all taxes, charges, fees,
duties, levies, penalties or other assessments imposed by any federal,
state, local or foreign governmental authority, including, but not
limited to, income, gross receipts, excise, property, sales, gain, use,
license, custom duty, unemployment, capital stock, transfer, franchise,
payroll, withholding, social security, minimum estimated, and other
taxes, and shall include interest, penalties or additions attributable
thereto; and
(ii) "Tax Return" shall mean any return, declaration, report,
claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
Section 3.11. Intellectual Property.
(a) The Company and its Subsidiaries own or have valid rights to use
all items of Intellectual Property (as defined below) utilized in the conduct of
the business of the Company and its Subsidiaries as presently conducted or as
currently proposed to be conducted, free and clear of all Encumbrances (other
than Encumbrances which, individually or in the aggregate, are not expected to
have a Company Material Adverse Effect).
(b) To the best knowledge of the Company, the conduct of the Company's
and its Subsidiaries, business and the Intellectual Property owned or used by
the Company and its Subsidiaries, do not infringe any Intellectual Property
rights or any other proprietary right of any person other than infringements
which, individually or in the aggregate, are not expected to have a Company
Material Adverse Effect. The Company and its Subsidiaries have received no
notice of any allegations or threats that the Company's and its Subsidiaries,
use of any of the Intellectual Property infringes upon or is in conflict with
any Intellectual Property or proprietary rights of any third party other than
infringements or conflicts which individually or in the aggregate are not
expected to have a Company Material Adverse
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Effect. To the Company's knowledge, no person is infringing on or violating, in
any material respect, any of the Intellectual Property rights of others.
(c) As used in this Agreement, "Intellectual Property" means all of the
following: (i) U.S. and foreign registered, unregistered and pending trademarks,
trade dress, service marks, logos, trade names, corporate names, assumed names,
business names and logos and all registrations and applications to register the
same (the "Trademarks"); (ii) issued U.S. and foreign patents and pending patent
applications, patent disclosures, and any and all divisions, continuations,
continuations-in-part, reissues, reexaminations, and extension thereof, any
counterparts claiming priority therefrom, utility models, patents of
importation/confirmation, certificates of invention and like statutory rights
(the "Patents"); (iii) U.S. and foreign registered and unregistered copyrights
(including, but not limited to, those in computer software and databases) rights
of publicity and all registrations and applications to register the same (the
"Copyrights"); (iv) all categories of trade secrets as defined in the Uniform
Trade Secrets Act including, but not limited to, business information; (v) all
licenses and agreements pursuant to which the Company has acquired rights in or
to any Trademarks, Patents, Computer Software (as defined below), rights of
publicity or Copyrights, or licenses and agreements pursuant to which the
Company has licensed or transferred the right to use any of the foregoing
("Licenses"); and (vi) all computer software, data files, source and object
codes, user interfaces, manuals and other specifications and documentation and
all know-how relating thereto (collectively, "Computer Software").
Section 3.12. Employment Matters. Neither the Company nor any of its
Subsidiaries has experienced any strikes, collective labor grievances, other
collective bargaining disputes or Claims of unfair labor practices in the last
five years. To the Company's knowledge, there is no organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of the Company and its Subsidiaries.
Section 3.13. Compliance with Laws.
(a) The Company and its Subsidiaries and, to the knowledge of the
Company and its Subsidiaries, all of their respective officers, directors,
employees, consultants or agents (collectively, the "Personnel") have complied
in all respects with all applicable statutes, regulations, rules, orders,
ordinances and other laws of the United States of America, all state, local and
foreign governments and other governmental bodies and authorities, and agencies
of any of the foregoing ("Governmental Authority") to which it is subject with
respect to healthcare regulatory matters (including, without limitation, The
Social Security Act, as amended, Sections 1128, 1128A and 1128B, 42 U.S.C.
Sections 1320a-7, 7(a) and 7(b) including Criminal Penalties Involving Medicare
or State Health Care Programs, commonly referred to as the "Federal
Anti-Kickback Statute" and The Social Security Act, as amended, Section 1877, 42
U.S.C. Section 1395nn (Prohibition Against Certain Referrals), commonly referred
to as the "Xxxxx Statute", and all statutes and regulations related to the
possession, distribution, maintenance and documentation of controlled
substances) ("Healthcare Laws")), except to the extent noncompliance would not
have a Company Material Adverse Effect. The Company and its Subsidiaries have
maintained all records required to be maintained by the FDA, DEA and State Board
of Pharmacy and the Medicare and Medicaid programs as required by applicable
Healthcare Laws, except to the extent that the failure to do so would not have a
Company Material Adverse Effect. There are no presently existing circumstances
which would result or would be likely to result in violations of any such
Healthcare Laws, except to the extent such violations would not have a Company
Material Adverse Effect.
(b) Except with respect to Healthcare Laws, the Company and its
Subsidiaries are and, to the knowledge of the Company and its Subsidiaries, all
Personnel is, in compliance with all applicable statutes, laws, ordinances,
rules, orders and regulations of any Governmental Authority (including
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without limitation, Environmental Laws (as such term is hereinafter defined in
Section 3.15) applicable to the business of the Company and its Subsidiaries),
except to the extent noncompliance would not have a Company Material Adverse
Effect. Except as set forth in Section 3.13 of the Company Disclosure Schedule,
neither the Company nor its Subsidiaries have received any notice or other
communication to the effect that, or otherwise been advised that, they are not
in compliance with any of such statutes, regulations and orders, ordinances,
other laws or undertakings, and the Company and its Subsidiaries have no reason
to anticipate that any presently existing circumstances are likely to result in
violations of any such regulations which could, in any one case or in the
aggregate, have a Company Material Adverse Effect.
(c) The Company and its Subsidiaries hold all permits necessary for the
lawful conduct of their business under and pursuant to all applicable statutes,
laws, ordinances, rules and regulations of all Federal, state, local and foreign
governmental bodies, agencies and subdivisions having, asserting or claiming
jurisdiction over it or any part of their operations, except to the extent that
the failure to do so would not have a Company Material Adverse Effect. The
Company and its Subsidiaries have correctly maintained in all respects all
records required to be maintained by the FDA, DEA and State Boards of Pharmacy
and pursuant to the requirements of the Medicare and Medicaid programs, except
to the extent that the failure to do so would not have a Company Material
Adverse Effect.
(d) The Company and its Subsidiaries are qualified for participation in
the Medicare and Medicaid programs. The Company and its Subsidiaries have timely
filed all claims or other reports required to be filed with respect to the
purchase of services by third-party payors, and all such claims or reports are
complete and accurate, except to the extent that the failure to timely file or
the failure of such claims or reports to be complete and accurate would not have
a Company Material Adverse Effect. The Company and its Subsidiaries have no
liability to any payor with respect thereto, except for liabilities incurred in
the ordinary course of business. There are no pending appeals, overpayment
determinations, adjustments, challenges, audit, litigation or notices of intent
to open Medicare or Medicaid claim determinations or other reports required to
be filed by the Company or its Subsidiaries. To the Company's knowledge, no
Personnel have been convicted of, or pled guilty or nolo contendere to any
Medicare or Medicaid program related offense or committed any offense which may
reasonably serve as the basis for suspension or exclusion from the Medicare and
Medicaid programs.
(e) There are no pharmaceutical or other products now being sold or
distributed by the Company or its Subsidiaries which, at the date hereof, would
require any approval of any governmental or administrative body, whether
federal, state, local or foreign, prior to commercial distribution of such
products, for which approval has not been obtained, except where the failure to
obtain such approval would not have a Company Material Adverse Effect. All
pharmaceutical or other products now being distributed by the Company or its
Subsidiaries and all products included in the inventories of the Company or its
Subsidiaries on the date hereof comply with applicable legal requirements of all
jurisdictions in which such pharmaceutical or other products are now being
distributed, except where the failure to so comply would not have a Company
Material Adverse Effect.
Section 3.14. Vote Required. The affirmative vote of the holders of a
majority of the outstanding Shares is the only vote of the holders of any class
or series of the Company's capital stock which may be necessary to approve this
Agreement or any of the Transactions.
Section 3.15. Environmental Laws.
(a) The Company and its Subsidiaries are in compliance with all
applicable Environmental Laws (as defined below) (which compliance includes,
without limitation, the possession by the Company and its Subsidiaries of all
permits and other governmental authorizations required under applicable
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Environmental Laws, and compliance with the terms and conditions thereof),
except where failure to be in compliance, either individually or in the
aggregate, would not have a Company Material Adverse Effect.
(b) There is no Environmental Claim (as defined below) pending or, to
the Company's knowledge, threatened against the Company or any of the
Subsidiaries or, to the Company's knowledge, against any person or entity whose
liability for any Environmental Claim the Company or any of its Subsidiaries has
or may have retained or assumed either contractually or by operation of law
except for such Environmental Claim which would not have, either individually or
in the aggregate, a Company Material Adverse Effect.
(c) There are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release or
presence of any Hazardous Material at any location, which would reasonably be
expected to form the basis of any Environmental Claim against the Company or any
of its Subsidiaries, or to the Company's knowledge, against any person or entity
whose liability for any Environmental Claim the Company or any of its
Subsidiaries has or may have retained or assumed either contractually or by
operation of law, except for such Environmental Claim which would not have,
either individually or in the aggregate, a Company Material Adverse Effect.
(d) The Company and its Subsidiaries have not, and to the Company's
knowledge, no other person has, generated, treated, placed, stored, deposited,
discharged, buried, dumped or disposed of Hazardous Materials at, on, beneath or
adjacent to any property currently or formerly owned, operated or leased by the
Company or any of its Subsidiaries, except which would not have, either
individually or in the aggregate, a Company Material Adverse Effect.
(e) Without in any way limiting the generality of the foregoing, none
of the properties owned, operated or leased by the Company or any of its
Subsidiaries contain any: underground storage tanks; asbestos; polychlorinated
biphenyls ("PCBs"); underground injection xxxxx; radioactive materials; or
septic tanks or waste disposal pits in which any Hazardous Materials have been
discharged or disposed except which would not have, individually or in the
aggregate, a Company Material Adverse Effect.
(f) There are no environmental reports, assessments, audits or studies
relating to the Company or any of its Subsidiaries or to any property currently
or formerly owned, operated or leased by the Company or any of its Subsidiaries
(i) in the possession or control of the Company or any of its Subsidiaries, or
(ii) of which the Company otherwise has knowledge.
(g) For purposes of this Agreement, (i) "Environmental Laws" means all
federal, state, local and foreign laws, statutes, codes, ordinances, rules,
directives, orders, common law, judgments, decrees, consent or settlement
agreements, permits and other governmental authorizations, and regulations
relating to pollution or protection of human health or the environment,
including, without limitation, laws relating to releases or threatened releases
of Hazardous Materials or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, release, disposal, transport or handling
of Hazardous Materials or recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Materials; (ii) "Environmental Claim" means
any claim, action, cause of action, proceeding, suit, investigation or written
notice by any person or entity alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, or penalties) arising under or pursuant to any Environmental
Law; (iii) "Hazardous Materials" means all substances defined as Hazardous
Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous
Substances Pollution Contingency
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Plan, 40 C.F.R. Section 300.5, and any other substance (including, without
limitation, wastes, including medical waste) regulated under any Environmental
Law.
Section 3.16. Schedule 14D-9: Offer Documents and Proxy Statement. None
of the Schedule 14D-9, the Proxy Statement, nor any other document filed or to
be filed by or on behalf of the Company with the SEC or any other Governmental
Entity in connection with the transactions contemplated by this Agreement, nor
any information supplied by or on behalf of the Company specifically for
inclusion in the Offer Documents will, at the respective times filed with the
SEC or other Governmental Entity or first published, sent or given to
stockholders, as the case may be, or, in the case of the Proxy Statement, at the
date mailed to the Company Stockholders and at the time of the Special Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Schedule 14D-9 and the Proxy Statement will, when filed by the
Company with the SEC or other Governmental Entity, comply as to form in all
material respects with the applicable provisions of the Exchange Act and the
rules and regulations thereunder. Notwithstanding the foregoing, the Company
makes no representation or warranty with respect to the statements made in any
of the foregoing documents based on and in conformity with information supplied
by or on behalf of Parent or Purchaser or any of their respective affiliates
specifically for inclusion therein.
Section 3.17. Opinion of Financial Advisor. The Board of Directors of
the Company has received the opinion of Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation ("DLJ") addressed to such Board, dated the date hereof, to the
effect that, as of such date, the $18.00 per Share to be received by the holders
of Shares pursuant to this Agreement is fair to such holders, a copy of which
opinion has been delivered to Parent and the Purchaser for information purposes
only. Each of Parent and Purchaser acknowledges and agrees that it may not, and
is not entitled to, rely on the opinion of DLJ delivered to the Board of
Directors of the Company. The Company will obtain the consent of DLJ to include
the opinion of DLJ in the Offering Documents.
Section 3.18. Brokers and Finders. No broker, finder or investment bank
has acted directly or indirectly for the Company, nor has the Company incurred
any obligation to pay any brokerage, finder's or other fee or commission in
connection with the transactions contemplated hereby, other than DLJ and Xxxxxxx
Xxxxx & Company, L.L.C., the fees and expenses of which have been previously
disclosed to Parent and which shall be borne by the Company.
Section 3.19. Certain Business Practices. None of the Company or any of
its Subsidiaries has made, or to the Company's knowledge, no Personnel or
representative of the Company or its Subsidiaries (in their capacities as such)
has made, directly or indirectly with respect to the business of the Company,
any bribes, kickbacks, or other illegal payments or illegal political
contributions, illegal payments from corporate funds to governmental officials
in their individual capacities, or illegal payments from corporate funds to
obtain or retain business either within the United States or abroad.
Section 3.20. Insurance. True and complete copies of all material
insurance policies maintained by the Company have been made available to the
Parent. Such policies provide coverage for the operations of the Company and its
Subsidiaries in amounts and covering such risks as are adequate in accordance
with customary industry practice to protect the assets and the business of the
Company and its Subsidiaries. Neither the Company nor any of its Subsidiaries
has received notice that any such policy is invalid or unenforceable or that
substantial capital improvements or other expenditures will have to be made in
order to continue such insurance and, so far as known to the Company and its
Subsidiaries, no such improvements or expenditures are required.
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Section 3.21. Product Warranties. Except as set forth in Section 3.21
of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries has made any express warranties with respect to products sold or
distributed by the Company and its Subsidiaries (other than passing on
warranties made by the manufacturers thereof) and, to the best of the Company's
knowledge, no other warranties have been made by Personnel. The Company has no
knowledge of any presently existing circumstances that would constitute a valid
basis for any voluntary or governmental recall of any pharmaceutical or other
product sold or distributed by the Company.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF
PARENT AND THE PURCHASER
Except as set forth in the schedule attached to this Agreement setting
forth exceptions to the Parent's and Purchaser's representations and warranties
set forth herein (the "Parent Disclosure Schedule"), the Parent and Purchaser
represent and warrant to the Company as set forth below. The Parent Disclosure
Schedule will be arranged in sections corresponding to sections of this
Agreement to be modified by such disclosure schedule.
Section 4.1. Organization. Each of Parent and the Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and has all requisite corporate or other power and authority and all
necessary governmental approvals to own, lease and operate its properties and to
carry on its business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power, authority, and
governmental approvals would not have, individually or in the aggregate, a
Parent Material Adverse Effect. As used in this Agreement, "Parent Material
Adverse Effect," shall mean any event, change or effect that has, or is
reasonably likely to have, a material adverse effect (A) on the condition
(financial or otherwise), business, assets, liabilities, results of operations
or cash flows of Parent and its Subsidiaries, taken as a whole, or (B) on the
ability of Parent or the Purchaser to perform its obligations under this
Agreement or to consummate the transactions contemplated by this Agreement.
Section 4.2. Authorization; Validity of Agreement; Necessary Action.
Each of Parent and the Purchaser has all requisite corporate power and authority
to execute and deliver this Agreement and to consummate the Transactions. The
execution, delivery and performance by Parent and the Purchaser of this
Agreement and of the Transactions have been duly authorized by the Board of
Directors of Parent and the Purchaser and no other corporate action on the part
of Parent and the Purchaser is necessary to authorize this Agreement or the
Transactions. This Agreement has been duly executed and delivered by Parent and
the Purchaser, as the case may be, and, assuming that this Agreement constitutes
the legal, valid and binding obligation of the Company, constitutes the legal,
valid and binding obligation of each of Parent and the Purchaser, as the case
may be, enforceable against each of them in accordance with its respective
terms, except as may be limited by any bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws affecting the
enforcement of creditors' rights generally or by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
Section 4.3. Consents and Approvals; No Violations. Except for the
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act, the HSR Act,
state securities or blue sky laws, and the DGCL, none of the execution, delivery
or performance of this Agreement by Parent or the Purchaser, the consummation by
Parent or the Purchaser of the Transactions or compliance by Parent or the
Purchaser with any of the provisions
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hereof will (i) conflict with or result in any breach of any provision of the
respective certificate of incorporation or by-laws of Parent or Purchaser, (ii)
require any filing with, or permit, authorization, consent or approval of, any
Governmental Entity, (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both a default or give rise to
any right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or other instrument or obligation to which Parent or the
Purchaser is a party or by which any of them or any of their respective
properties or assets may be bound, or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Parent, any of its
Subsidiaries or any of their respective properties or assets, excluding from the
foregoing clauses (ii), (iii) and (iv) such violations, breaches or defaults
which would not, individually or in the aggregate have a Parent Material Adverse
Effect.
Section 4.4. Offer Documents; Proxy Statement; Schedule 14D-9. Neither
the Offer Documents nor any other document filed or to be filed by or on behalf
of Parent or Purchaser with the SEC or any other Governmental Entity in
connection with the transactions contemplated by this Agreement nor any
information supplied by or on behalf of Parent or Purchaser specifically for
inclusion in the Schedule 14D-9 or Proxy Statement will, at the respective times
filed with the SEC or other Governmental Entity, or at any time thereafter when
the information included therein is required to be updated pursuant to
applicable law, or, in the case of the Proxy Statement, at the date mailed to
the Company's stockholders and at the time of the Special Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading. The
Offer Documents will, when filed by Parent or Purchaser with the SEC or other
Governmental Entity, comply as to form in all material respects with the
applicable provisions of the Exchange Act and the rules and regulations
thereunder. Notwithstanding the foregoing, Parent and Purchaser make no
representation or warranty with respect to the statements made in the foregoing
documents based on and in conformity with information supplied by or on behalf
of the Company or any of its affiliates specifically for inclusion therein.
Section 4.5. Financing. At the closing of the Offer, and at the
Effective Time, Parent and Purchaser will have sufficient cash resources
available to finance the transactions contemplated hereby.
Section 4.6. Litigation. Except as set forth in Parent's Annual Report
on Form 10-K for the year ended December 31, 1996, there are no suits, claims,
actions, proceedings, including without limitation arbitration proceedings or
alternative dispute resolution proceedings, or investigations pending or, to the
knowledge of Parent, threatened against Parent or any of its Subsidiaries before
any Governmental Entity that, either individually or in the aggregate, would be
reasonably likely to have a material adverse effect on the ability of Parent or
the Purchaser to perform its obligations under this Agreement or to consummate
the transactions contemplated by this Agreement.
ARTICLE V.
COVENANTS
Section 5.1. Interim Operations of the Company. The Company covenants
and agrees that, except (i) as expressly contemplated by this Agreement, or (ii)
as agreed in writing by Parent, after the date hereof, and prior to the time the
directors of the Purchaser have been elected to, and shall constitute a majority
of, the Board of Directors of the Company pursuant to Section 1.3 (the
"Appointment Date"):
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(a) the business of the Company and its Subsidiaries shall be conducted
only in the ordinary and usual course of business and consistent with past
practice and, to the extent consistent therewith, each of the Company and its
Subsidiaries shall use its reasonable efforts to preserve its business
organizations and business organizations of its Subsidiaries intact and maintain
its existing relations with customers, suppliers, employees, creditors and
business partners;
(b) the Company will not, directly or indirectly, (i) except upon
exercise of employee stock options, pursuant to which up to 517,117 Shares may
be issued, outstanding on the date hereof, issue, sell, transfer or pledge or
agree to sell, transfer or pledge any treasury stock of the Company or any
capital stock of any of its Subsidiaries beneficially owned by it, (ii) amend
its Certificate of Incorporation or By-Laws or similar organizational documents;
or (iii) split, subdivide, combine or reclassify the outstanding Shares or
Preferred Stock or any outstanding capital stock of any of the Subsidiaries of
the Company;
(c) neither the Company nor any of its Subsidiaries shall: (i) declare,
set aside or pay any dividend or other distribution payable in cash, stock or
property with respect to its capital stock other than dividends paid by
Subsidiaries of the Company to the Company or any of its wholly-owned
Subsidiaries in the ordinary course of business; (ii) issue, sell, pledge,
grant, dispose of or encumber any additional shares of, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of capital stock of any class of
the Company or its Subsidiaries, other than Shares reserved for issuance on the
date hereof pursuant to the exercise of Company Options outstanding on the date
hereof, pursuant to which up to 517,117 Shares may be issued; (iii) transfer,
lease, license, sell, mortgage, pledge, dispose of, or encumber any assets other
than in the ordinary and usual course of business and consistent with past
practice; or (iv) redeem, purchase or otherwise acquire directly or indirectly
any of its capital stock;
(d) neither the Company nor any of its Subsidiaries shall: (i) grant
any increase in the compensation payable or to become payable by the Company or
any of its Subsidiaries to any of its executive officers or employees, enter
into any contract or other binding commitment in respect of any such increase
with any of its directors, officers or other employees or any director, officer
or other employee of its Subsidiaries, and not establish, adopt, enter into,
make any new grants or awards under or amend, any collective bargaining
agreement; (ii)(A) adopt any new, or (B) amend or otherwise increase, or
accelerate the payment or vesting of the amounts payable or to become payable
under any existing, bonus, incentive compensation, deferred compensation,
severance, profit sharing, stock option, stock purchase, insurance, pension,
retirement or other employee benefit plan, agreement or arrangement; or (iii)
enter into any employment or severance agreement with or, except in accordance
with the existing written policies of the Company, grant any severance or
termination pay to any officer, director or employee of the Company or any of
its Subsidiaries; provided, however, that (i) prior to consummation of the
Offer, the Company may enter into severance agreements with the individuals set
forth in Section 5.1(d) of the Company Disclosure Schedule (the "Designated
Employees") in the form as approved by the Company's Board of Directors, (ii)
the aggregate cost of payments and benefits provided to the Designated Employees
pursuant to the terms of such severance agreements (unless otherwise amended
with the written consent of, or at the written direction of, Parent or
Purchaser) shall not exceed $2,000,000 in the aggregate, and (iii) with respect
to the severance plan described in Section 3.4 of the Company Disclosure
Schedule that covers individuals other than the Designated Employees (the
"Nondesignated Employees"): (a) the implementation of such plan and the entering
into of agreements with Nondesignated Employees shall be subject to the prior
written consent of the Purchaser, which consent shall not be unreasonably
withheld (with reasonableness to be determined based upon Purchaser's reasonable
business objectives and consistent with Purchaser's past practice), and (b) the
aggregate cost of payments and benefits provided to the Nondesignated Employees
pursuant to the terms
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of such severance agreements (unless otherwise amended with the written consent
of, or at the written direction of, Parent or Purchaser) shall not exceed
$1,000,000 in the aggregate;
(e) neither the Company nor any of its Subsidiaries shall permit any
insurance policy naming it as a beneficiary or a loss payable payee to be
canceled or terminated, except in the ordinary course of business and consistent
with past practice;
(f) neither the Company nor any of its Subsidiaries shall enter into
any contracts or transactions relating to the purchase of assets that exceed
$1,000,000 in the aggregate;
(g) neither the Company nor any of its Subsidiaries shall change any of
the accounting methods used by it unless required by GAAP, neither the Company
nor any of its Subsidiaries shall make any material Tax election except in the
ordinary course of business consistent with past practice, change any material
Tax election already made, adopt any material Tax accounting method except in
the ordinary course of business consistent with past practice, change any
material Tax accounting method unless required by GAAP, enter into any closing
agreement, settle any Tax claim or assessment or consent to any Tax claim or
assessment or any waiver of the statute of limitations for any such claim or
assessment;
(h) neither the Company nor any of its Subsidiaries shall: (i) incur or
assume any long-term debt; (ii) except in the ordinary course of business and
consistent with past practice and in an aggregate amount not to exceed
$3,000,000, incur or assume any short-term indebtedness; (iii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person; (iv) make
any loans, advances or capital contributions to, or investment in, any other
person (other than to wholly-owned Subsidiaries of the Company); (v) enter into
any material commitment or transaction (including, but not limited to, any
borrowing, capital expenditure or purchase, sale or lease of assets); or (vi)
modify, amend or terminate any of its material contracts or waive, release or
assign any material rights;
(i) neither the Company nor any of its Subsidiaries shall settle or
compromise any claim, lawsuit, liability or obligation, and neither the Company
nor any of its Subsidiaries shall pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the-payment, discharge or satisfaction of
any such claims, liabilities or obligation, (x) to the extent reflected or
reserved against in, or contemplated by, the Financial Statements, (y) incurred
in the ordinary course of business and consistent with past practice or (z)
which are legally required to be paid, discharged or satisfied;
(j) neither the Company nor any of its Subsidiaries will take, or agree
to commit to take, any action that would make any representation or warranty of
the Company contained herein inaccurate in any respect at, or as of any time
prior to, the Effective Time;
(k) except as otherwise permitted by Section 5.6(b) hereof, neither the
Company nor any of its Subsidiaries will take any action with the intent of
causing any of the conditions to the Offer set forth in Annex A not to be
satisfied; and
(l) except as otherwise permitted by Section 5.6(b) hereof, neither the
Company nor any of its Subsidiaries will enter into an agreement, contract,
commitment or arrangement to do any of the foregoing, or to authorize,
recommend, propose or announce an intention to do any of the foregoing.
Section 5.2. Access; Confidentiality.
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(a) Upon reasonable notice, the Company shall (and shall cause each of
its Subsidiaries to) afford to the officers, employees, accountants, counsel,
financing sources and other representatives of Parent, access, during normal
business hours during the period prior to the Appointment Date, to all its
properties, employees, books, contracts, commitments and records and, during
such period, the Company shall (and shall cause each of its Subsidiaries to)
furnish promptly to the Parent (a) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of federal securities laws and (b) all other information
concerning its business, properties and personnel as Parent may reasonably
request. After the Appointment Date, the Company shall provide Parent and such
persons as Parent shall designate with all such information, at such time as
Parent shall request. The Company shall promptly, and in any event within seven
business days following the date of this Agreement, deliver to Parent true and
complete copies of all Plans not previously delivered to Parent and any
amendments thereto (or if the Plan is not a written Plan, a description
thereof), any related trust or other funding vehicle, any summary plan
description required under ERISA or the Code and the most recent determination
letter received from the Internal Revenue Service with respect to each Plan
intended to qualify under Section 401 of the Code.
(b) Unless otherwise required by law and until the Appointment Date,
Parent will hold any such information which is nonpublic in confidence in
accordance with the provisions of a letter agreement dated June 4, 1997 between
the Company and the Parent (the "Confidentiality Agreement").
Section 5.3. Proxy Statement. Unless the Merger is consummated as
contemplated in Section 1.9 hereof, the Company shall, as soon as reasonably
practicable after the consummation of the Offer, prepare a preliminary form of
the Proxy Statement (the "Preliminary Proxy Statement"). The Company shall (a)
file the Preliminary Proxy Statement with the SEC promptly after it has been
prepared in a form reasonably satisfactory to the Company and Parent and (b) use
commercially reasonable efforts to promptly prepare any amendments to the
Preliminary Proxy Statement required in response to comments of the SEC or its
staff or that the Company with the advice of counsel deems necessary or
advisable and to cause the Proxy Statement to be mailed to the Company's
stockholders as soon as reasonably practicable after the Preliminary Proxy
Statement, as so amended, is cleared by the SEC.
Section 5.4. Cooperation. Subject to the terms and conditions of this
Agreement and applicable law, each of the parties shall act in good faith and
use reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective the Transactions as soon as practicable, including such actions
or things as any other party may reasonably request in order to cause any of the
conditions to such other party's obligation to consummate the Transactions to be
fully satisfied. Without limiting the foregoing, the parties shall (and shall
cause their respective subsidiaries, and use reasonable efforts to cause their
respective affiliates, directors, officers, employees, agents, attorneys,
accountants and representatives, to) consult and fully cooperate with and
provide assistance to each other in (a) the preparation and filing with the SEC
of the Offer Documents, the Schedule 14D-9, and the Preliminary Proxy Statement
and the Proxy Statement, and any necessary amendments or supplements thereto;
(b) seeking to have the Preliminary Proxy Statement cleared by the SEC as soon
as reasonably practicable after filing; (c) obtaining all necessary consents,
approvals, waivers, licenses, permits, authorizations, registrations,
qualifications, or other permissions or actions by, and giving all necessary
notices to and making all necessary filings with and applications and
submissions to, any Governmental Entity or other entity as soon as reasonably
practicable after filing; (d) seeking early termination of any waiting period
under the HSR Act; (e) providing all such information concerning such party, its
subsidiaries and its officers, directors, partners and affiliates and making all
applications and filings as may be necessary or reasonably requested in
connection with any of the foregoing; (f) in general, consummating and making
effective the Transactions; and (g) in the event and to the extent required,
amending this Agreement so that this
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Agreement and the Offer and the Merger comply with the DGCL. The parties shall
(and shall cause their respective affiliates, directors, officers, employees,
agents, attorneys, accountants and representatives to) use their reasonable
efforts to cause the lifting of any preliminary injunction or restraining order
or other similar order issued or entered by any court or other Governmental
Entity preventing or restricting consummation of the transactions contemplated
hereby in the manner provided for herein. Prior to making any application to or
filing with a Governmental Entity or other entity in connection with this
Agreement (other than filing under the HSR Act), each party shall provide the
other party with drafts thereof and afford the other party a reasonable
opportunity to comment on such drafts.
Section 5.5. State Takeover Statutes. The Company, Parent and Purchaser
will cooperate to take reasonable steps to (a) exempt the Offer and the Merger
from the requirements of any applicable state takeover law and (b) assist in any
challenge by any of the parties to the validity or applicability to the Offer or
the Merger of any state takeover law.
Section 5.6. No Solicitation. (a) Neither the Company nor any of its
Subsidiaries shall (and the Company shall use its best efforts to cause its
officers, directors, employees, representatives and agents, including, but not
limited to, investment bankers, attorneys and accountants, not to), directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Parent, any of its affiliates or
representatives) concerning any proposal or offer to acquire all or a
substantial part of the business and properties of the Company or any of its
Subsidiaries or any capital stock of the Company or any of its Subsidiaries,
whether by merger, tender offer, exchange offer, sale of assets or similar
transactions involving the Company or any Subsidiary, division or operating or
principal business unit of the Company (an "Acquisition Proposal"), except that
nothing contained in this Section 5.6 or any other provision hereof shall
prohibit the Company or the Company's Board from (i) taking and disclosing to
the Company's stockholders a position with respect to a tender or exchange offer
by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under the
Exchange Act, or (ii) making such disclosure to the Company's stockholders as,
in the good faith judgment of the Board, after receiving advice from outside
counsel, is required under applicable law, provided that the Company may not,
except as permitted by Section 5.6(b), withdraw or modify, or propose to
withdraw or modify, its position with respect to the Offer or the Merger or
approve or recommend, or propose to approve or recommend any Acquisition
Proposal, or enter into any agreement with respect to any Acquisition Proposal.
The Company will immediately cease any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. The Company also shall promptly request each person which has
heretofore executed a confidentiality agreement in connection with its
consideration of acquiring the Company to return all confidential information
heretofore furnished to such person by or on behalf of the Company.
(b) Notwithstanding the foregoing, prior to the acceptance of Shares
pursuant to the Offer, the Company may furnish information concerning the
Company and its Subsidiaries to any corporation, partnership, person or other
entity or group pursuant to appropriate confidentiality agreements, and may
negotiate and participate in discussions and negotiations with such entity or
group concerning an Acquisition Proposal if (x) such entity or group has
submitted a bona fide written proposal to the Company relating to any such
transaction which the Board determines in good faith, after consulting with a
nationally recognized investment banking firm, represents a superior transaction
to the Offer and the Merger and (y) in the opinion of the Board of Directors of
the Company, only after receipt of advice from outside legal counsel to the
Company, the failure to provide such information or access or to engage in such
discussions or negotiations would reasonably be expected to cause the Board of
Directors to violate its fiduciary duties to the Company's shareholders under
applicable law (an Acquisition Proposal which satisfies clauses (x) and (y)
being referred to herein as a "Superior Proposal"). The Company will immediately
notify Parent of the existence of any proposal or inquiry received by the
Company, the
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identity of the party making such proposal or inquiry, and the terms (both
initial and modified) of any such proposal or inquiry (and will disclose any
written materials delivered in connection therewith) and the Company will keep
Parent reasonably informed of the status (including amendments or proposed
amendments) of any such proposal or inquiry. The Company will promptly provide
to Parent any material non-public information regarding the Company provided to
any other party which was not previously provided to Parent. At any time
following notification to Parent of the Company's intent to do so (which
notification shall include the identity of the bidder and the material terms and
conditions of the proposal) and if the Company has otherwise complied with the
terms of this Section 5.6(b), the Board of Directors may withdraw or modify its
approval or recommendation of the Offer and may enter into an agreement with
respect to a Superior Proposal, provided it shall (i) take no such action unless
it shall notify Parent promptly of its intention, and in no event shall such
notice be given less than two business days prior to the earlier of the public
announcement of such withdrawal or modification of its recommendation or the
Company's termination of this Agreement, and (ii) concurrently with entering
into such agreement pay or cause to be paid to Parent the Break-Up Amount (as
defined below) plus any amount payable at the time for reimbursement of expenses
pursuant to Section 8.1(b). If the Company shall have notified Parent of its
intent to enter into an agreement with respect to a Superior Proposal in
compliance with the preceding sentence and has otherwise complied with such
sentence, the Company may enter into an agreement with respect to such Superior
Proposal.
Section 5.7. Additional Agreements. Subject to the terms and conditions
herein provided, each of the parties hereto shall use all reasonable efforts to
take, 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, or
to remove any injunctions or other impediments or delays, legal or otherwise, to
achieve the satisfaction of the Minimum Condition and all conditions set forth
in Annex A and Article VI, and to consummate and make effective the Merger and
the other transactions contemplated by this Agreement as soon as practicable
hereafter. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of the Company, Parent and Purchaser shall use all
reasonable efforts to take, or cause to be taken, all such necessary actions.
Section 5.8. Publicity. The initial press release with respect to the
execution of this Agreement shall be a joint press release acceptable to Parent
and the Company. Thereafter, so long as this Agreement is in effect, neither the
Company, Parent nor any of their respective affiliates shall issue or cause the
publication of any press release or other announcement with respect to the
Merger, this Agreement or the other Transactions without the prior consultation
of the other party, except as such party reasonably believes, after receiving
the advice of outside counsel, may be required by law or by any listing
agreement with a national securities exchange or trading market.
Section 5.9. Notification of Certain Matters. The Company shall give
prompt notice to Parent and Parent shall give prompt notice to the Company, of
(i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at or prior to
the Effective Time and (ii) any material failure of the Company, Parent or the
Purchaser, as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to this Section 5.9 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
Section 5.10. Directors, and Officers' Insurance and Indemnification.
(a) For five years after the Effective Time, the Surviving Corporation (or any
successor to the Surviving Corporation) shall indemnify, defend and hold
harmless the present and former officers and directors of the Company and its
Subsidiaries, determined as of the Effective Time (each an "Indemnified Party")
against all losses,
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claims, damages, liabilities, costs, fees and expenses (including reasonable
fees and disbursements of counsel and judgments, fines, losses, claims,
liabilities and amounts paid in settlement (provided that any such settlement is
effected only upon receipt of the written consent of the Parent or the Surviving
Corporation which consent shall not unreasonably be withheld)) arising out of
actions or omissions occurring at or prior to the Effective Time to the full
extent required under applicable Delaware law, the terms of the Certificate of
Incorporation or the By-Laws, as in effect at the date hereof, and the terms of
any indemnification agreement entered into with the Company prior to the date
hereof and disclosed in Schedule 5.10 of the Company Disclosure Schedule;
provided that, in the event any claim or claims are asserted or made within such
five-year period, all rights to indemnification in respect of any such claim or
claims shall continue until disposition of any and all such claims.
(b) Parent or the Surviving Corporation shall maintain the Company's
existing officers, and directors' liability insurance ("D&O Insurance") for a
period of not less than three years after the Effective Time; provided, that the
Parent may substitute therefor policies of substantially equivalent coverage and
amounts containing terms no less favorable to such former directors or officers;
provided, further, if the existing D&O Insurance expires, is terminated or
canceled during such period, Parent or the Surviving Corporation will use all
reasonable efforts to obtain substantially similar D&O Insurance; provided,
further, however, that in no event shall Parent, the Surviving Corporation or
the Company be required to pay aggregate premiums for insurance under this
Section 5.10(b) in excess of 150% of the aggregate premiums paid by the Company
in 1996 on an annualized basis for such purpose (the "1996 Premium"); and
provided, further, that if the Parent or the Surviving Corporation is unable to
obtain the amount of insurance required by this Section 5.10(b) for such
aggregate premium, Parent or the Surviving Corporation shall obtain as much
insurance as can be obtained for an annual premium not in excess of 150% of the
1996 Premium.
(c) Any Indemnified Party wishing to claim indemnification under this
Section 5.10, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify the Surviving Corporation thereof, but the
failure to so notify shall not relieve the Surviving Corporation of any
liability or obligation it may have to such Indemnified Party except, and only
to the extent, that such failure prejudices the Surviving Corporation. In the
event of any such claim, action, suit, proceeding or investigation (whether
arising before, at or after the Effective Time), the Surviving Corporation shall
have the right to assume the defense thereof and the Surviving Corporation shall
not be liable to such Indemnified Parties for any legal expenses of other
counsel or any other expenses subsequently incurred by such Indemnified Parties
in connection with the defense thereof, except that if the Surviving Corporation
elects not to assume such defense or counsel reasonably satisfactory to Parent
for the Indemnified Parties advises that there are actual conflicts of interest
between the Surviving Corporation and the Indemnified Parties, the Indemnified
Parties may retain counsel satisfactory to them, and the Surviving Corporation
shall pay all reasonable fees and expenses of such counsel.
ARTICLE VI.
CONDITIONS
Section 6.1. Conditions to Obligations of Each Party to Effect the
Merger. The respective obligation of each party hereto to effect the Merger
shall be subject to the satisfaction on or prior to the Effective Time of each
of the following conditions, any and all of which may be waived, in whole or in
part, by the Company, Parent or the Purchaser, as the case may be, to the extent
permitted by applicable law:
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(a) Shareholder Approval. This Agreement shall have been adopted and
the Merger shall have been approved by the requisite vote of the holders of the
Shares, if required by applicable law, in order to consummate the Merger.
(b) Statutes; Court Orders. No federal or state governmental or
regulatory body or court of competent jurisdiction shall have enacted, issued,
promulgated or enforced any statute, rule, regulation, executive order, decree,
judgment, preliminary or permanent injunction or other order that is in effect
and that prohibits, enjoins or otherwise restrains the consummation of the
Merger; provided however, that the parties shall use all commercially reasonable
efforts to cause any such decree, judgment, injunction or order to be vacated or
lifted.
(c) Purchase of Shares in Offer. Parent, the Purchaser or their
affiliates shall have purchased Shares pursuant to the Offer, except that this
condition shall not apply if Parent, the Purchaser or their affiliates shall
have failed to purchase Shares pursuant to the Offer in breach of their
obligations under this Agreement.
(d) HSR Approval. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.
Section 6.2. Conditions Precedent to the Obligations of the Company.
The obligation of the Company to effect the Merger is also subject to the
satisfaction at or prior to the Effective Time of the following condition,
unless waived by the Company:
(a) Accuracy of Representations and Warranties. All representations and
warranties made by Parent and Purchaser herein shall be true and correct, unless
the inaccuracies (without giving effect to any materiality or material adverse
effect qualifications or materiality exceptions contained therein) under such
representations and warranties taking all the inaccuracies under all such
representations and warranties together in their entirety, do not, individually
or in the aggregate, result in a Parent Material Adverse Effect.
Section 6.3. Conditions Precedent to the Obligations of Parent and
Purchaser. The obligation of the Parent and Purchaser to effect the Merger is
also subject to the satisfaction at or prior to the Effective Time of the
following additional condition, unless waived by either of Parent or Purchaser.
(a) Accuracy of Representations and Warranties.. All representations
and warranties made by the Company herein shall be true and correct, unless the
inaccuracies (without giving effect to any materiality or material adverse
effect qualifications or materiality exceptions contained therein) under such
representations and warranties taking all the inaccuracies under all such
representations and warranties together in their entirety, do not, individually
or in the aggregate, result in a Company Material Adverse Effect.
ARTICLE VII.
TERMINATION
Section 7.1. Termination. This Agreement may be terminated and the
Transactions contemplated herein may be abandoned at any time prior to the
Effective Time, whether before or after shareholder approval thereof:
(a) By the mutual written consent of Parent and the Company.
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(b) By either of the Company or Parent:
(i) if the Offer shall have expired without any Shares being
purchased therein; provided, however, that the right to terminate this
Agreement under this Section 7.1(b)(i) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of Parent or the
Purchaser, as the case may be, to purchase the Shares pursuant to the
Offer on or prior to such date;
(ii) if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action (which order, decree, ruling
or other action the parties hereto shall use their reasonable efforts
to lift), which permanently restrains, enjoins or otherwise prohibits
the consummation of the Offer or the Merger and such order, decree,
ruling or other action shall have become final and non-appealable; or
(iii) if the Offer has not been consummated prior to October
5, 1997; provided, that the right to terminate this Agreement under
this Section 7.1(b)(iii) shall not be available to any party whose
misrepresentation in this Agreement or whose failure to perform any of
its covenants and agreements or to satisfy any obligation under this
Agreement has been the cause of, or resulted in, the failure of Parent
or the Purchaser, as the case may be, to purchase Shares pursuant to
the Offer on or prior to such date.
(c) By the Company:
(i) if Parent, the Purchaser or any of their affiliates shall
have failed to commence the Offer on or prior to five business days
following the date of the initial public announcement of the Offer;
provided, that the Company may not terminate this Agreement pursuant to
this Section 7.1(c)(i) if the Company is at such time in breach of its
obligations under this Agreement such as to cause a Company Material
Adverse Effect;
(ii) in connection with entering into an agreement with
respect to a Superior Proposal in accordance with Section 5.6(b),
provided it has complied with all provisions thereof, including the
notice provisions therein, and that it makes simultaneous payment of
the Break-Up Amount as provided in Section 8.1(b); or
(iii) if Parent or the Purchaser shall have breached in any
material respect any of their respective representations, warranties,
covenants or other agreements contained in this Agreement, which is not
cured, in all material respects, within 30 days after the giving of
written notice by the Company to Parent or the Purchaser, as
applicable.
(d) By Parent:
(i) if either Parent or the Purchaser is entitled to terminate
the Offer as a result of the occurrence of any event set forth in
paragraph (d) of Annex A hereto;
(ii) if the Offer is not commenced as provided in Section 1.1
as a result of actions or inaction by the Company that result in the
failure of a condition specified in Annex A hereto, or the Offer is
terminated or expires as a result of the failure of a condition
specified in Annex A hereto, unless such termination or expiration has
been caused by or resulted from the failure of Parent or Purchaser to
perform any covenants and agreements of Parent or Purchaser contained
in this Agreement; or
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(iii) if (A) the Company shall have breached in any respect
any of its representations or warranties contained in this Agreement,
unless the inaccuracies (without giving effect to any materiality or
material adverse effect qualifications or materiality exceptions
contained therein) under such representations and warranties taking all
the inaccuracies under all such representations and warranties together
in their entirety, do not, individually or in the aggregate, result in
a Company Material Adverse Effect or (B) the Company shall have
breached or failed to perform any obligation or to comply with any
agreement or covenant to be performed or complied with by it under the
Agreement, other than, any breach or failure which would not have,
either individually or in the aggregate, a Company Material Adverse
Effect (in each of cases (A) and (B), which breach or failure has not
been cured within thirty (30) days following receipt of written notice
thereof by Parent specifying in reasonable detail the basis of such
alleged breach or failure).
Section 7.2. Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 7.1, written notice thereof shall forthwith
be given to the other party or parties specifying the provision hereof pursuant
to which such termination is made, and this Agreement shall forthwith become
null and void and of no further force or effect, and no party hereto (or any of
its affiliates, directors, officers, agents or representatives) shall have any
liability or obligation hereunder, except in any such case (a) as provided in
Sections 5.2(b) (Confidentiality), 5.8 (Publicity), 7.2 (Effect of Termination)
and 8.1 (Fees and Expenses), which shall survive any such termination and (b) to
the extent such termination results from the breach by such party of any of its
representations, warranties, covenants or agreements contained in this
Agreement, provided, however, that a party's damages for any such breach shall
be limited to such party's actual damages and neither party shall be entitled to
seek consequential or special damages for any such breach.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. Fees and Expenses. (a) Except as contemplated by this
Agreement, including Section 8.1(b) hereof, all costs and expenses incurred in
connection with this Agreement and the consummation of the Transactions shall be
paid by the party incurring such expenses.
(b) If (x) the Company shall terminate this Agreement pursuant
to Section 7.1(c)(ii), (y) Parent shall terminate this Agreement pursuant to
Section 7.1(d)(i) hereof, or (z) either the Company or Parent terminates this
Agreement pursuant to Section 7.1(b)(i) and (1) prior thereto there shall have
been publicly announced another Acquisition Proposal, or (2) (i) the Company
shall have entered into a definitive agreement relating to an Acquisition
Proposal, or (ii) a business combination or other transaction contemplated by an
Acquisition Proposal shall have been consummated, in each of cases (i) and (ii)
prior to or within six months following such termination, then the Company
agrees that it will immediately thereafter pay to Parent, in same day funds, an
amount (the "Break-Up Amount") equal to $6,700,000.
Section 8.2. Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the shareholders of the Company
contemplated hereby, by written agreement of the parties hereto, by action taken
by their respective Boards of Directors (which in the case of the Company shall
include approvals as contemplated in Section 1.3(b)), at any time prior to the
Closing Date with respect to any of the terms contained herein; provided,
however, that after the approval of this Agreement by the stockholders of the
Company, no such amendment, modification or supplement shall reduce the amount
or change the form of the Merger Consideration.
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Section 8.3. Nonsurvival of Representations and Warranties. None of the
representations and warranties contained in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time.
Section 8.4. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given or made as of
the date delivered, mailed or transmitted, and shall be effective upon receipt,
if delivered personally, telecopied (which is confirmed) or sent by an overnight
courier service, such as Federal Express, 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 the Purchaser, to:
Omnicare, Inc.
2800 Chemed Center
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xx. Xxxx X. Xxxxxxxx
President
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
(b) if to the Company, to:
American Medserve Corporation
000 Xxxxxx Xxxx.
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxx
President
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
with a copy to:
Xxxxxxx, Carton & Xxxxxxx
Quaker Tower
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
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Section 8.5. Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation". As used in this Agreement, the term "affiliates" shall have the
meaning set forth in Rule 12b-2 of the Exchange Act..
Section 8.6. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be. considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties.
Section 8.7. Entire Agreement; No Third Party Beneficiaries. This
Agreement and the Confidentiality Agreement (including the documents and the
instruments referred to herein and therein): (a) constitute the entire agreement
and supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, and (b) except as
provided in Section 5.10 is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder.
Section 8.8. Severability. Any term or provision of this Agreement that
is held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
Section 8.9. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
Section 8.10. 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) without the prior written
content of the other parties, except that the Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned Subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
Section 8.11. Waivers. At any time prior to the Effective Time, Parent
(for Parent and Purchaser), on the one hand, or the Company, on the other hand,
may, to the extent legally allowed, extend the time specified herein for the
performance of any of the obligations or other acts of the other, waive any
inaccuracies in the representations and warranties of the other contained herein
or in any document delivered pursuant hereto, or waive compliance by the other
with any of the agreements or covenants of such other party or parties (as the
case may be) contained herein. Any such extension or waiver shall be valid only
if set forth in a written instrument signed on behalf of the other party or
parties to be bound thereby. No such extension or waiver shall constitute a
waiver of or estoppel with respect to, any subsequent or other breach or failure
to strictly comply with the provisions of this Agreement. The failure of any
party to insist on strict compliance with this Agreement or to assert any of its
rights or remedies hereunder or with respect hereto shall not constitute a
waiver of such rights or remedies.
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Section 8.12. Captions. The Table of Contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
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IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
OMNICARE, INC.
By /s/ Xxxx X. Xxxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President
OMNICARE ACQUISITION CORP.
By /s/ Xxxx X. Xxxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President
AMERICAN MEDSERVE CORPORATION
By /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
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ANNEX A
CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the offer, and in
addition to (and not in limitation of) the Purchaser's rights to extend and
amend the Offer at any time in its sole discretion (subject to the provisions of
the Merger Agreement), the Purchaser shall not be required to accept for payment
or, subject to any applicable rules and regulations of the SEC, including Rule
14e-l(c) under the Exchange Act (relating to the Purchaser's obligation to pay
for or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any tendered Shares, and may
terminate or amend the Offer as to any Shares not then paid for, if (i) the
Minimum Condition has not been satisfied, (ii) if any applicable waiting period
for the Offer under the HSR Act has not expired, or (iii) at any time on or
after the date of the Merger Agreement and before the time of acceptance for
payment for any such Shares, any of the following events shall have occurred:
(a) there shall be threatened, instituted or pending any suit,
action or proceeding by or before any Governmental Entity against the Purchaser,
Parent, the Company or any Subsidiary of the Company (i) seeking to prohibit or
impose any material limitations on Parent's or the Purchaser's ownership or
operation (or that of any of their respective Subsidiaries or affiliates) of all
or a material portion of their or the Company's businesses or assets, or to
compel Parent or the Purchaser or their respective Subsidiaries and affiliates
to dispose of or hold separate any material portion of the business or assets of
the Company or Parent and their respective Subsidiaries, in each case taken as a
whole, (ii) challenging the acquisition by Parent or the Purchaser of any Shares
under the Offer, seeking to restrain or prohibit the making or consummation of
the Offer or the Merger or the performance of any of the other transactions
contemplated by the Agreement, or seeking to obtain from the Company, Parent or
the Purchaser any material damages, (iii) seeking to impose material limitations
on the ability of the Purchaser, or render the Purchaser unable, to accept for
payment, pay for or purchase some or all of the Shares pursuant to the Offer and
the merger, (iv) seeking to impose material limitations on the ability of
Purchaser or Parent effectively to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote the Shares purchased by
them on all matters properly presented to the Company's stockholders, or (v)
which otherwise is reasonably likely to have a Company Material Adverse Effect;
(b) there shall be any action taken by a Governmental Entity
or any statute, rule, regulation, judgment, administrative interpretation, order
or injunction enacted, entered, enforced, promulgated, or deemed applicable, to
the Company, Parent, Purchaser, the Offer or the Merger, or any other action
shall be taken by any Governmental Entity that is reasonably expected to result,
directly or indirectly, in any of the consequences referred to in clauses (i)
through (v) of paragraph (a) above;
(c) there shall have occurred any other event, change or
effect after the date of the Agreement which, either individually or in the
aggregate, would have, or be reasonably likely to have, a Company Material
Adverse Effect;
(d)(i) the Board of Directors of the Company or any committee
thereof shall have modified in a manner adverse to Parent or the Purchaser or
withdrawn its approval or recommendation of the Offer, the Merger or the
Agreement, or approved or recommended any Acquisition Proposal; (ii) the Company
shall have entered into any agreement with respect to any Superior Proposal in
accordance with Section 5.6(b) of the Agreement; or (iii) the Board of Directors
of the Company resolves to do any of the foregoing;
(e) the representations and warranties of the Company set
forth in the Agreement shall not be true and correct, in each case (i) as of the
date referred to in any representation or warranty which
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40
addresses matters as of a particular date, or (ii) as to all other
representations and warranties, as of the date of the Agreement and as of the
scheduled expiration of the Offer, unless the inaccuracies (without giving
effect to any materiality or material adverse effect qualifications or
materiality exceptions contained therein) under such representations and
warranties, taking all the inaccuracies under all such representations and
warranties together in their entirety, do not, individually or in the aggregate,
result in a Company Material Adverse Effect;
(f) the Company shall have breached or failed to perform any
obligation or to comply with any agreement or covenant to be performed or
complied with by it under the Agreement other than any breach or failure which
would not have, either individually or in the aggregate, a Company Material
Adverse Effect (which breach or failure has not been cured within thirty (30)
days following receipt of written notice thereof by Parent specifying in
reasonable detail the basis of such alleged breach or failure);
(g) any person, entity or "group" (as such term is used in
Section 13(d)(3) of the Exchange Act) other than Parent or any of its affiliates
acquires beneficial ownership (as defined in Rule 13d-3 promulgated under the
Exchange Act), of at least 30% of the outstanding Shares of the Company;
(h) the Agreement shall have been terminated in accordance
with its terms; which, in the sole judgment of Parent or the Purchaser, in any
such case, and regardless of the circumstances (including any action or inaction
by Parent or the Purchaser) giving rise to such condition makes it inadvisable
to proceed with the Offer and/or with such acceptance for payment of or payment
for Shares; or
(i) there shall have occurred (i) any general suspension of,
or limitation on prices for, trading in securities on any national securities
exchange or in the over-the-counter market in the United States, (ii) the
declaration of any banking moratorium or any suspension of payments in respect
of banks or any limitation (whether or not mandatory) on the extension of credit
by lending institutions in the United States, (iii) the commencement of a war,
material armed hostilities or any other material international or national
calamity involving the United States, (iv) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material acceleration
or worsening thereof, or (v) any decline, measured from the date hereof, in the
Standard & Poor's 500 Index by an amount in excess of 25%.
The foregoing conditions are for the sole benefit of Parent
and the Purchaser, may be asserted or waived by Parent or the Purchaser
regardless of the circumstances giving rise to such condition (including any
action or inaction by Parent or the Purchaser not in violation of the Agreement)
and may be asserted or waived by Parent or the Purchaser in whole or in part at
any time and from time to time in the sole discretion of Parent or the
Purchaser, subject in each case to the terms of the Merger Agreement. The
failure by Parent or the Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time.
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